Source: http://www.erisa-claims.com/blog/gore-v-el-paso-energy-a1b-or-a3-relief.cfm
Timestamp: 2019-04-24 18:29:53+00:00

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Gore v. El Paso Energy: (a)(1)(B) or (a)(3) relief?
I talked about my frustration about the federal judiciary’s collective amnesia regarding pleading in the alternative under Federal Rule of Civil Procedure 8(a) some days ago. You can find those comments here. A new case from the U.S. Court of Appeals for the Sixth Circuit yesterday provides another helpful perspective on the relationship between ERISA §502(a)(1)(B), the section providing recovery for wrongfully denied plan benefits and §502(a)(3), which authorizes courts to provide “other appropriate equitable relief” to redress violations of the plan or the terms of ERISA. Gore v. El Paso Energy Corp. LTD Plan, ___ F.3d ___, (6th Cir. 2007), 2007 U.S. App. LEXIS 3905, deals with an individual who worked for an employer with a disability plan that provided benefits for 24 months if an employee was disabled from their own occupation. After the initial two year period, the employee had to be disabled from any occupation to receive benefits. The company was purchased by another company, El Paso Energy. Representatives from El Paso Energy told Gore that after the purchase, the disability plan would continue to provide two years of “own occupation” disability benefits. However, shortly after the purchase, El Paso Energy funded the disability plan by purchasing an insurance policy from Liberty Life that provided only one year of “own occupation” disability benefits before switching to the “any occupation” standard. Gore became disabled shortly thereafter. Liberty Life paid one year of disability benefits and thereafter determined that even though Gore may have continued to be disabled from his own occupation, he could work in any occupation so it cut off Gore's benefits after one year. Gore sued Liberty Life for wrongful denial of benefits arguing that he was in fact disabled from any occupation after the first year of benefits. He also brought another cause of action against El Paso Energy arguing that they had misrepresented the benefits he was entitled to when they told him they would continue to provide own occupation disability benefits for two years rather than only one. The trial court ruled against Gore on the first claim because it determined he was able to work in any occupation after one year. It then dismissed Gore’s misrepresentation claim against his employer on the basis that it was simply a repackaged claim for benefits duplicating the first claim for unpaid insurance policy money. The Sixth Circuit reversed the trial court on this last point. The appeal court discussed the relationship between (a)(1)(B) claims, those for violation of the terms of the ERISA plan, and (a)(3) claims, those for “appropriate equitable relief” based on violations of the ERISA plan or for violation of the statute itself. It acknowledged the Supreme Court’s language in Varity Corp. v. Howe, 516 U.S. 489 (1996) stating that ordinarily equitable claims under (a)(3) will not be necessary where a claim under (a)(1)(B) provides adequate relief for a claimant However, the Sixth Circuit pointed out that Gore’s claim for misrepresentation was independent of his claim for wrongfully denied benefits. Even if he lost his argument that he was entitled to benefits under the terms of the disability insurance policy, he could still argue that the employer’s misrepresentation of the terms of that policy provided a basis to award him those benefits. Furthermore, the relief provided from (a)(1)(B) was not as broad as the “appropriate equitable relief” provided under (a)(3). So, two things were key to the Sixth Circuit analysis. First, the fact that a claim for wrongful denial of benefits under (a)(1)(B) did not address the separate claim for misrepresentation. Second, the fact that the misrepresentation claim was brought by Gore against his employer, not the disability insurer. The decision recognizes that if Gore had prevailed on his claim for benefits against the insurer, his claim for misrepresentation against his employer would have been moot. This is because all the compensation Gore sought under the misrepresentation claim would have been provided under the successful breach of contract claim and he wouldn't be able to recover the same money twice. But because he lost his (a)(1)(B) claim for breach of contract, the misrepresentation claim was still available to provide a potential source for recovery. The Sixth Circuit sent the case back to the trial court with instructions that it evaluate the misrepresentation claim with its request for appropriate equitable relief with the end in mind that potential remedies could be in the form of reformation, rescission, reinstatement, equitable estoppel or promissory estoppel.
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