The Fourth Circuit Court of Appeals, in keeping with its earlier McCravy ruling, sent the case of Moon v. BWX  back to the District Court to give Plaintiff an opportunity to amend her complaint to bring equitable claims under ERISA  § 502(a)(3).   On remand, the District  Court rejected Plaintiff’s proposed  amended complaint as failing to state a viable claim.  Moon v. BWXTechnologies, Inc., 2013 U.S.  Dist. LEXIS 95626 (July 9, 2013). 

The Background:  During BWX’s annual enrollment period in late 2005, Mr. Moon, a BWX employee, enrolled for life insurance coverage for the coming 2006 plan year.  Shortly thereafter, he ceased work due to a disability.  In January of 2006, Mr. Moon received a confirmation statement of his life insurance enrollment choice, which erroneously classified him as an active non-disabled employee.  Premiums were collected and accepted for the coverage (albeit, late).  Mr. Moon died in late 2006.  When Ms. Moon claimed benefits under the life insurance policy, MetLife, the plan’s insurer, denied her claim on the basis that Mr. Moon’s coverage under the terms of the plan ended when he ceased working;  therefore no coverage was in place at the time of his death.     

The District Court and the Fourth Circuit Court of Appeals agreed that Plaintiff had no claim for benefits under ERISA  § 502(a)(1)(B) because the plan language clearly provided that Mr. Moon’s coverage ceased when he stopped working.   The issue on remand was whether Plaintiff had a claim for which she could find relief under ERISA  § 502(a)(3), such as reformation, surcharge, and equitable estoppel, using Cigna v. Amara as a guide.  

The District Court first addressed Plaintiff’s claim for reformation, rejecting it quickly on the basis that Plaintiff“failed to sufficiently allege any type of fraudulent conduct,” a necessary element.   Specifically, the District Court found that the January 2006 Confirmation Statement was nothing more than a confirmation of Mr. Moon’s benefit selections in a “run-of-the-mill employee benefit plan, weeks before his retirement," and therefore was insufficient to rise to the level of fraud in this case.

Next, in noting that the equitable remedy of surcharge is grounded upon a breach of fiduciary duty, the Court started with the first element:  "Before one can conclude that a fiduciary duty has been violated, it must be established that the party charged with the breach meets the statutory definition of 'fiduciary.'" The Court went on to find that the actions by BWX’s Human Resource Manager in collecting premiums and sending out confirmation statements were not fiduciary in nature: “Under the Department of Labor's (DOL) regulation …  non-fiduciary administrative functions [include] the ‘collection of contributions’ and ‘advising participants of their rights and options under the plan.’ The regulation goes on to explain that a person who performs the type of functions described above (including ‘collection of contributions’ and ‘advising participants of their rights and options under the plan’) is not a fiduciary because ‘such person does not have discretionary authority or discretionary control respecting management of the plan…’”

Finally, the District Court held that Ms. Moon’s equitable estoppel claim likewise required the element of fiduciary status by Defendant, at least in its case, because Plaintiff’s estoppel theory was premised upon Defendant’s lack of affirmative disclosure to Mr. Moon that his coverage terminated when he ceased working.  In other words, no wrongful nonfeasance could occur without a duty to act in the first place:  “This is not a case where the defendant ‘actively and deliberately misleads the plaintiff to the plaintiff's detriment.’”    

The District Court dismissed the case, but Ms. Moon has filed an appeal.