1The third member of the panel, Judge King, recused herself

at oral argument. The decision of the remaining two members of

the panel constitute a quorum. See 28 U.S.C. § 46(d) (1988). 

1

United States Court of Appeals,

Fifth Circuit.

No. 93-9132.

Mary Nell HINES, Guardian of Bobby Alan Parker, PlaintiffAppellant,

v.

MASSACHUSETTS MUTUAL LIFE INS. CO., et al., Defendants,

GECO Geophysical Co., Inc., Defendant-Appellee.

Feb. 1, 1995.

Appeal from the United States District Court for the Northern

District of Texas.

Before WISDOM and DUHÉ, Circuit Judges.1

DUHÉ, Circuit Judge:

Mary Nell Hines, the guardian of Bobby Alan Parker, appeals

the district court's grant of summary judgment in favor of GECO

Geophysical Co., Inc. (GECO). Hines had asserted discrimination,

breach of fiduciary duty, and wrongful denial of benefits claims

under the Employee Retirement Income Security Act of 1974 (ERISA),

29 U.S.C. §§ 1001-1461 (1988). We affirm.

BACKGROUND

Parker was an employee of GECO in 1982. A GECO Group Medical

Plan (the "Plan"), helped full-time employees with hospitalization

and medical costs. Until September 30, 1982, the Plan consisted of

a group insurance policy written by Massachusetts Mutual Life

Insurance Company (the "Mass. policy"), which allowed for
 

2Hines also named Massachusetts Mutual as a defendant, but

the life insurance company is not a party to this appeal because

it settled with Hines. 

2

discontinuation of insurance at any time. On that date, GECO

cancelled the Mass. policy and replaced it with a policy written by

Connecticut General Life Insurance Company (the "Conn. policy").

Parker was a participant in the Plan on April 14, 1982, at

which time he sustained totally disabling injuries in an automobile

accident. When GECO switched policies four and one-half months

later, Parker's condition was not covered under the Conn. policy

because it excluded preexisting conditions. Nevertheless, the

Mass. policy covered Parker for one year after its termination.

Thereafter, GECO paid Parker's medical bills until September 30,

1988.

Parker has not returned to work, and Hines has been his

guardian since 1988. After GECO stopped paying benefits in 1988,

Hines brought this action against GECO on behalf of Parker.2 She

asserts four discrimination claims under Section 510 of ERISA, 29

U.S.C. § 1140, three breach of fiduciary duty claims under Section

404, 29 U.S.C. § 1104, and two wrongful denial of benefit claims

under Section 502, 29 U.S.C. § 1132. GECO moved for summary

judgment, which the district court granted. Hines appeals.

DISCUSSION

Summary judgment is appropriate when "there is no genuine

issue as to any material fact." Fed.R.Civ.P. 56(c). Our review is

de novo and we consider all the facts contained in the summary

judgment record and the inferences to be drawn therefrom in the
 

3Section 510 provides in relative part:

It shall be unlawful for any person to discharge,

fine, suspend, expel, discipline, or discriminate

against a participant or beneficiary for exercising any

right to which he is entitled under the provisions of

an employee benefit plan ... or for the purpose of

interfering with the attainment of any right to which

such participant may become entitled under the Plan....

29 U.S.C. § 1140 (1988). 

3

light most favorable to the non-moving party. Weyant v. Acceptance

Ins. Co., 917 F.2d 209, 212 (5th Cir.1990).

I. Section 510 claims

Hines raises four claims under ERISA Section 510:3

1. That GECO unlawfully interfered with Parker's rights under

the Plan by singling him out not to be covered under the Conn.

policy;

2. That GECO unlawfully interfered with Parker's rights under

the Plan by singling him out not to have benefits after

October 1, 1988;

3. That GECO interfered with Parker's rights under the Plan by

failing to keep him covered under the Plan; and

4. That GECO interfered with Parker's rights under the Plan by

failing to keep him covered under the policy after his

disability, while still covering similarly situated employees.

Essentially, Hines concentrates on two actions taken by GECO: (1)

the September 30, 1982 switch in Plan coverage from the Mass.

policy to the Conn. policy; and (2) the October 1, 1988

termination of benefits paid to Parker.

The district court granted summary judgment on Hines's

discrimination claims for two reasons. First, Hines failed to

provide evidence of GECO's specific intent to interfere with

Parker's purported rights. Second, Hines failed to establish any
4

existing or entitled rights with which GECO purportedly interfered.

The district court's first reason applies to GECO's switch in

policies. The second reason applies to the termination of

payments.

 Hines contends that GECO switched policies in 1982 with the

specific intent of discriminating against Parker. An essential

element of a Section 510 claim is proof of defendant's specific

discriminatory intent. McGann v. H & H Music Co., 946 F.2d 401,

404 (5th Cir.1991). Hines contends that she has created a fact

issue by showing that Parker was treated differently than other

similarly situated employees. The district court disagreed with

her because Hines's evidence of disparate treatment consisted

solely of deposition testimony by GECO employees who stated that

they did not know whether Parker was the only employee affected by

the switch in policies.

In McGann, the employer limited the plan's $1,000,000

life-time coverage to $5000 for AIDS-related claims. An employee

who discovered his affliction with AIDS several months earlier

brought suit under Section 510. The employer's stated purpose for

changing the coverage was to reduce costs. We determined that

McGann failed to show that the employer's reduction in coverage,

except for its effect, specifically intended to deny him medical

coverage. Id. In this case, the switch in policies affected

Parker because his condition was not covered under the new policy.

Nevertheless, Hines offers no positive evidence to prove a specific

intent to discriminate against Parker. Under McGann, her evidence
 

4"ERISA precludes oral modifications to benefit plans." 

Degan v. Ford Motor Co., 869 F.2d 889, 895 (5th Cir.1989). 

 

5Two circuits have restricted the scope of § 510 to acts

that affect the employer-employee relationship; in other words,

plan amendments by themselves cannot be actionable under § 510. 

See Haberern v. Kaupp Vascular Surgeons Ltd. Defined Benefit

Pension Plan, 24 F.3d 1491, 1504 (3d Cir.1994), petition for

cert. filed, 63 U.S.L.W. 3477 (Nov. 17, 1994) (No. 94-1037); 

McGath v. Auto-Body North Shore, 7 F.3d 665, 670 (7th Cir.1993); 

see also West v. Butler, 621 F.2d 240, 245 (6th Cir.1980)

(reviewing ERISA's legislative history and explaining that § 510

was "aimed primarily at preventing unscrupulous employers from

discharging and harassing their employees in order to keep them

from obtaining vested pension rights"). But see Vogel v.

Independence Fed. Sav. Bank, 728 F.Supp. 1210, 1225-26

(D.Md.1990) (denying summary judgment because termination of

coverage only affected beneficiary); see also Aronson v. Servus

Rubber, Div. of Chromalloy, 730 F.2d 12, 16 (1st Cir.)

(suggesting in dictum that a plan could be discriminatorily

modified), cert. denied, 469 U.S. 1017, 105 S.Ct. 431, 83 L.Ed.2d

357 (1984).

5

of a specific intent to discriminate cannot withstand summary

judgment.

On the termination of benefits, Hines fails to establish a

right to which Parker is entitled. Hines contends that the Mass.

policy remains GECO's Plan because GECO did not properly amend the

Plan.4 As inferential proof of an improper amendment, Hines points

to the fact that Parker never received notice of the switch in

policies. Nevertheless, the record directly shows that GECO gave

written notice of termination to Massachusetts Mutual on September

29, 1982, and obtained the Conn. policy as a replacement. As a

result, Parker had no rights under the Mass. policy when GECO

terminated payments on October 1, 1988. We conclude that the

district court properly granted summary judgment on the Section 510

claims.5
We expressly reserved the question of § 510's scope in

a previous case. See McGann, 946 F.2d at 405-06 & n. 8; 

see also Owens v. Storehouse, Inc., 984 F.2d 394, 399-400

(11th Cir.1993) (following McGann ). Because the scope of §

510 was not raised in the district court and because we

agree with the district court's conclusions, we need not

address the question and again reserve it. 

 

6Section 404(a)(1) provides:

[A] fiduciary shall discharge his duties with respect

to a plan solely in the interest of the participants

and beneficiaries and—

(A) for the exclusive purpose of:

(i) providing benefits to participants and their

beneficiaries; and

(ii) defraying reasonable expenses of

administering the plan;

(B) with the care, skill, prudence, and diligence

under the circumstances then prevailing that a

prudent man acting in a like capacity and familiar

with such matters would use in the conduct of an

enterprise of a like character and with like aims;

....

(D) in accordance with the documents and

instruments governing the plan insofar as such

documents and instruments are consistent with

[ERISA].

11 U.S.C. § 1104 (1988). 

6

II. Section 404 claims

Hines makes three breach of fiduciary duty claims under ERISA

Section 404:6

1. That GECO violated a statutory fiduciary duty by failing to

keep Parker covered under the Plan;

2. That GECO breached reporting and disclosure requirements

under ERISA by failing to notify Parker in writing about

modification of the Plan in connection with the 1982 change in

group insurance carriers;
7

3. That GECO failed to report a modification of the Plan in

connection with Parker's change in status resulting from the

switch in group insurance carriers.

The district court denied summary judgment on GECO's statute of

limitations defense. Nevertheless, the court granted summary

judgment for three reasons: (1) ERISA does not provide relief for

complaints about the design of the Plan; (2) breach of procedural

duties do not give rise to a substantive damage remedy; and (3)

recovery for breach of fiduciary duty under ERISA is to the Plan,

not to a participant or beneficiary.

The district court's first ground for granting summary

judgment applies to Hines's first claim. The district court

determined that GECO's decision to switch policies and leave

Parker's condition without coverage was a design complaint and not

actionable under ERISA. We agree. An employer that amends a Plan

"does not act as a fiduciary, and thus cannot violate its fiduciary

duty, provided that the benefits reduced or eliminated are not

accrued or vested at the time, and that the amendment does not

otherwise violate ERISA or the express terms of the Plan."

Izzarelli v. Rexene Prods. Co., 24 F.3d 1506, 1524 (5th Cir.1994).

Parker had no vested benefits at the time of the switch in

policies. The switch in policies did not violate ERISA. Lastly,

because the Mass. policy could be terminated at any time, the

switch in policies did not violate the express terms of the Plan.

GECO did not violate any statutory fiduciary duty by not covering

Parker's condition under the Conn. policy.

Likewise, Hines cannot recover for GECO's failure to fulfill
 

7Because we agree with the district court's first two

grounds for granting summary judgment on the breach of fiduciary

duty claims, we need not reach its third ground. 

 

8Section 502(a) allows a civil action to be brought by a

participant or beneficiary "to recover benefits due to him under

the terms of his Plan, to enforce his rights under the terms of

the Plan, or to clarify his rights to future benefits under the

terms of the Plan" or "(A) to enjoin any act or practice which

violates any provision of this subchapter or the terms of the

Plan, or (B) to obtain other appropriate equitable relief." 29

U.S.C. § 1132(a)(1), (3) (1988). 

8

procedural requirements. Failure to fulfill procedural

requirements generally does not give rise to a substantive damage

remedy. Lewandowski v. Occidental Chem. Corp., 986 F.2d 1006, 1008

(6th Cir.1993); Blau v. Del Monte Corp., 748 F.2d 1348, 1353 (9th

Cir.), cert. denied, 474 U.S. 865, 106 S.Ct. 183, 88 L.Ed.2d 152

(1985). The exception occurs when the violations are continuous

and amount to substantive harm. See Blau, 748 F.2d at 1353.

GECO's failure to notify Parker of the switch in policies does not

amount to a continuous procedural violation. Furthermore, Parker

suffered no substantive harm from the lack of notice since he

received benefits from GECO for five years after his benefits under

the Mass. policy terminated. We conclude that the district court

properly granted summary judgment on the breach of fiduciary duty

claims.7

III. Wrongful denial of benefits claims

 Hines raises two claims under ERISA Section 502:8

1. That GECO wrongfully failed to keep Parker insured; and

2. That GECO wrongfully failed to continue benefits for Parker

after October 1, 1988.

The district court noted that, in addition to equitable relief,
9

Section 502(a) allows recovery, enforcement, or clarification of

specific rights or benefits to which plan beneficiaries and

participants are entitled under the terms of a plan. Because

Parker was not entitled to benefits when GECO terminated payments

on October 1, 1988, the district court granted summary judgment on

Hines's Section 502 claims.

We agree with the district court's assessment of these claims.

Parker received all the benefits to which he was entitled under the

Mass. policy. Hines has not shown that Parker is entitled to any

further benefits. Parker may have had unlimited coverage under the

Mass. policy when it was in effect, but that coverage was not

permanent because GECO could amend or terminate that policy at any

time. Thus, GECO broke no promise to Parker. See McGann, 946 F.2d

at 405 (noting that ERISA does not require vesting of medical

benefits once they are included in a welfare plan). We conclude

that the district court properly granted summary judgment on

Hines's Section 502 claims.

CONCLUSION

For the foregoing reasons, the district court's judgment is

AFFIRMED.