noting that "it violates an ERISA provision for a Plan Administrator not to provide a valid SPD" (emphasis added)
How later courts described this case
- noting that "it violates an ERISA provision for a Plan Administrator not to provide a valid SPD" (emphasis added)
- holding that “[a]n incomplete SPD violates ‘§ 102 of ERISA and [is] also a fiduciary violation’” because plan sponsors have a “[d]uty of disclosure” under ERISA
- applying Firestone and noting that under abuse-of- discretion review an administrator's decision will be upheld even if it falls on "the low end" of what might be considered "a continuum of reasonableness"
- recognizing that, if an administrator correctly interprets a plan, “our inquiry ends”
Written by the judges who cited it.
The opinion
Case: 15-30762 Document: 00513580159 Page: 1 Date Filed: 07/06/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-30762
United States Court of Appeals
Fifth Circuit
FILED
LINDA SINGLETARY, July 6, 2016
Lyle W. Cayce
Plaintiff - Appellant Clerk
v.
UNITED PARCEL SERVICE, INCORPORATED; PRUDENTIAL
INSURANCE COMPANY OF AMERICA; UNITED PARCEL SERVICE
FLEXIBLE BENEFITS PLAN,
Defendants - Appellees
Appeal from the United States District Court
for the Eastern District of Louisiana
Before KING, SOUTHWICK, and HAYNES, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
Linda Singletary purchased life insurance for herself and her husband
through her employer, United Parcel Service. Her husband, Timothy
Singletary, was an active-duty soldier in the United States Army. He was
killed in a weekend motorcycle accident while off base and not on duty.
Prudential Insurance Company of America denied his widow’s claim pursuant
to an exclusion for active-duty servicemen. Mrs. Singletary brought suit,
claiming she had no notice of the exclusion and that the exclusion is otherwise
unenforceable. The district court granted summary judgment for Prudential
and UPS.
We AFFIRM.
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No. 15-30762
FACTS AND PROCEDURAL BACKGROUND
Linda Singletary worked for United Parcel Service and participated in
the UPS Flexible Benefits Plan (the “Plan”), which provides group life
insurance coverage to UPS employees. The carrier of the Plan is Prudential
Life Insurance Company of America. Under the Plan, Mrs. Singletary could
purchase supplemental dependent life insurance for her “Qualified
Dependents.” On August 22, 2012, she purchased $500,000 in dependent
insurance for her husband, Timothy Singletary. Under the Plan, however, a
“spouse [or] Domestic Partner . . . is not [a] Qualified Dependent while . . . on
active duty in the armed forces of any country.”
Timothy Singletary was an active-duty soldier, stationed at Fort Hood in
Texas. He had the rank of Specialist in the United States Army. On October
21, 2012, Specialist Singletary was killed in a motorcycle accident in Texas.
After his death, Mrs. Singletary submitted a life insurance claim for benefits.
Prudential investigated her claim. It reviewed the Army Report of Casualty,
which indicated that Specialist Singletary was not on duty at the time of his
death. Prudential contacted the Army to confirm that the deceased had been
an active-duty soldier. The Army confirmed, explaining the “off duty” notation
on the Report of Casualty meant only that Specialist Singletary was not on
duty at the time of his accident. Prudential then denied the claim because the
deceased was on active duty at the time of his death.
Mrs. Singletary twice appealed to Prudential, making two principal
arguments. First, she argued the active-duty exclusion was not disclosed to
her. She claimed that the only document she received was a Summary Plan
Description (“SPD”). The SPD did not list the relevant exclusion. Other
documents that did contain the exclusion, such as an “Enrollment Kit” and
“Certificate of Coverage,” were not sent to her. Second, she argued the
exclusion is otherwise unenforceable because it is contrary to Louisiana law.
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Prudential denied both appeals. She then filed the present suit in federal
court, seeking to recover benefits allegedly due to her under the Employee
Retirement Income Security Act (“ERISA”). See 29 U.S.C. § 1132(a)(1)(B). She
also advanced state law claims. The district court granted summary judgment
to UPS and Prudential, holding that Prudential correctly denied the claim
pursuant to the exclusion and the exclusion was enforceable. This timely
appeal was then filed.
DISCUSSION
We review the district court’s summary judgment ruling de novo,
“applying the same standard as the district court.” Haverda v. Hays Cnty., 723
F.3d 586, 591 (5th Cir. 2013). We address the ERISA claim before turning to
the state-law claims.
I. Overview of ERISA
ERISA “permits a person denied benefits under an employee benefit plan
to challenge that denial in federal court.” Metropolitan Life Ins. Co. v. Glenn,
554 U.S. 105, 108 (2008). When reviewing a denial of benefits made by an
ERISA plan administrator, the court applies a de novo standard of review,
“unless the benefit plan gives the administrator . . . discretionary authority to
determine eligibility for benefits or to construe the terms of the plan.”
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). If the plan
confers this discretionary authority on the administrator, we review the
exercise of the authority for abuse of discretion. Holland v. Int’l Paper Co. Ret.
Plan, 576 F.3d 240, 246 (5th Cir. 2009). Here, all parties agree that the plan
vests discretionary authority with the administrator. Hence, our review is for
abuse of discretion.
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We generally evaluate an administrator’s decision in a two-step analysis.
See Baker v. Metro. Life Ins. Co., 364 F.3d 624, 629 (5th Cir. 2004). First, we
must determine whether the administrator’s interpretation was legally
correct. Id. at 629−30. If so, our inquiry ends. Id. If not, we must determine
whether the administrator’s interpretation was an abuse of discretion. Id. at
630. “A plan administrator abuses its discretion where the decision is not
based on evidence, even if disputable, that clearly supports the basis for its
denial.” Holland, 576 F.3d at 246 (quotation marks omitted). Moreover, “[i]f
the . . . decision is supported by substantial evidence and is not arbitrary or
capricious, it must prevail.” Corry v. Liberty Life Assurance Co. of Boston, 499
F.3d 389, 397 (5th Cir. 2007). Ultimately, “our review of the administrator’s
decision need not be particularly complex or technical; it need only assure that
the administrator’s decision fall somewhere on a continuum of reasonableness
– even if on the low end.” Id. at 398.
Here, Prudential correctly interpreted the exclusion as barring the
claim. The Plan indicates that a spouse is not a qualified dependent when the
spouse is on active-duty in the armed forces of any country. Moreover, it was
not an abuse of discretion for Prudential to interpret the exclusion to apply
regardless of whether a spouse was on military duty at the time of an
occurrence. The only evidence was that Specialist Singletary was an active-
duty soldier, which is a continuous status, 24/7/365, during the period of
enlistment. Benefits are not owed because he was not a qualified dependent.
Mrs. Singletary argues that Prudential abused its discretion by
enforcing an exclusion of which she was not on notice. She claims that the only
document she received was the Summary Plan Description. Prudential
admitted in the administrative proceedings below that the SPD did not
mention the exclusion. Even so, under ERISA, the claim Mrs. Singletary has
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brought requires us simply to interpret the Plan. Because the Plan does not
allow benefits for a spouse who was on active military duty, the claim fails.
As all who wrestle with it know, ERISA is complicated. It has at least
six civil enforcement provisions. See 29 U.S.C. § 1132(a)(1)−(6); Ingersoll-Rand
Co. v. McClendon, 498 U.S. 133, 144 (1990). Mrs. Singletary brought her claim
under the one that states a “civil action may 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 . . . .” 29 U.S.C. § 1132(a)(1)(B).
This present claim cannot arise under the terms of the Plan because coverage
for a beneficiary who is an active-duty soldier does not exist in the Plan.
One of our sister circuits discussed a related situation in which, for
reasons that arguably were unfair, coverage did not exist. See Strom v.
Goldman, Sachs & Co., 202 F.3d 138 (2d Cir. 1999), abrogated on other grounds
by Great–West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002). There,
the plan administrator had not timely processed an application for coverage;
the beneficiary died before the increased coverage had become effective. Id. at
141−42. Strom’s widow filed suit using the same cause of action as has Mrs.
Singletary, namely, Section 1132(a)(1)(B). The Second Circuit upheld the
denial of the claim, holding that this cause of action “only authorizes the
recovery of benefits due under the terms of a plan, and, as a result of the
defendant’s error, Strom never qualified for supplemental life insurance.”
Wilkins v. Mason Tenders Dist. Council Pension Fund, 445 F.3d 572, 583 (2d
Cir. 2006) (discussing the holding in Strom).
Importantly, to succeed under Section 1132(a)(1)(B), the claimant must
show that he or she “qualif[ies] for the benefits provided in that plan.” Id. For
this cause of action, courts do not look for equitable or other reasons the insurer
should provide benefits not strictly owed under the Plan. That is not to say
ERISA has no door through which such claims can proceed, but Section
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1132(a)(1)(B) is not open to such a claim. We will later discuss two possibly
relevant causes of action under ERISA.
In the present case, the Plan states that the beneficiary, Mrs. Singletary,
is “eligible to become [an] insured for Dependents Insurance while” she has “a
Qualified Dependent.” A “Qualified Dependent” is defined to be, among other
things, a “spouse.” A spouse, though, “is not [a] Qualified Dependent while on
active duty in the armed forces of any country . . . .” Thus, Section 1132(a)(1)(B)
would provide relief had Prudential failed to follow the terms of the Plan, but
it does not provide relief from a proper application of those terms.
Mrs. Singletary is not seeking to enforce the Plan. She instead is seeking
relief from the provisions of the Plan because of lack of notice of something that
she does not dispute is actually in the Plan. She argues that the SPD’s failure
to disclose this exclusion violated ERISA, and therefore, Prudential should be
estopped from relying on the exclusion. ERISA requires that an insurer’s SPD
list “circumstances which may result in disqualification, ineligibility, or denial
or loss of benefits . . . .” 29 U.S.C. § 1022(b).
An equitable claim such as this one can be brought, but “failure to comply
with ERISA’s SPD requirements cannot be the basis for a [Section
1132](a)(1)(B) benefit claim.” 1 LEE T. POLK, ERISA PRACTICE AND LITIGATION
§ 3:23 (2016). Two other sections, though, are possible bases for the claim.
ERISA provides that “a fiduciary with respect to a plan who breaches any of
the responsibilities, obligations, or duties imposed upon fiduciaries by this
subchapter shall be personally liable” for damages resulting from the breach.
29 U.S.C. § 1109(a). On appeal, Mrs. Singletary argues she received no notice
of the active-duty exclusion, which would mean that the Plan Administrator
failed to comply with the obligation to send her a compliant SPD. Sending a
proper SPD is statutorily identified as a duty: in an ERISA section entitled
“Duty of disclosure and reporting,” the first obligation listed is to send the SPD
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with the necessary disclosures to participants and beneficiaries. 29 U.S.C.
§ 1021(a)(1). 1 Liability for such breaches, the Supreme Court has pointed out,
may be imposed under Section “1132(a)(2) – the second of ERISA’s ‘six carefully
integrated civil enforcement provisions,’ . . . – [which] allows the Secretary of
Labor or any plan beneficiary, participant, or fiduciary to bring a civil action
‘for appropriate relief under section’” 1109. Mertens v. Hewitt Assocs., 508 U.S.
248, 252−53 (1993) (citation omitted).
Another provision, Section 1132(a)(3), is also a possibility for this claim.
It provides that a participant or beneficiary of a plan may “obtain other
appropriate equitable relief” as a result of “any act or practice which violates
any provision of this subchapter or the terms of the plan . . . .” 29 U.S.C. §
1132(a)(3); see CIGNA Corp. v. Amara, 563 U.S. 421, 439 (2011). Because it
violates an ERISA provision for a Plan Administrator not to provide a valid
SPD to a beneficiary or participant, and because the provision creating the
duty, Section 1021(a), is in the same ERISA subchapter as Section 1132(a)(3), 2
it may be that a claim for failure to disclose the exclusion could also have been
brought under subsection (a)(3). Bringing a claim under subsection (a)(3) for
an omission from an SPD seeks to “estop application of the plan provision
under a court’s authority to provide ‘appropriate equitable relief.’” STEPHEN
R. BRUCE, PENSION CLAIMS: RIGHTS AND OBLIGATIONS 397−98 (2d ed. 1993).
An incomplete SPD violates “Section 102 of ERISA and [is] also a fiduciary
violation.” Id. at 398.
The Eighth Circuit has stressed the difference between bringing a claim
for benefits under a plan and bringing a claim for equitable relief:
1 The “plan administrator’s duty of . . . disclosing information to participants . . . [is]
located in subparts D, E and F”; subpart F deals with SPDs. 29 C.F.R. § 2520.101-1.
2 Section 1132 is in Chapter 18, Subchapter I, Part 5, while Section 1021 is in Part 1.
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Although his ultimate goal is to continue receiving disability
income benefits . . . section [1132](a)(1)(B) authorizes a participant
to bring an action to recover benefits . . . under the terms of the
plan. Ross is not seeking to obtain benefits under the terms of the
Plan. Rather, he is seeking to reform the Plan by obtaining a
declaration that the purported [Plan provisions] are void. Section
[1132](a)(1)(B) does not authorize such a claim.
Ross v. Rail Car Am. Grp. Disability Income Plan, 285 F.3d 735, 740 (8th Cir.
2002). 3
Finally, the Supreme Court has indicated that inadequate notice claims
are equitable claims appropriate for resolution when a claim is brought under
Section 1132(a)(3). See Amara, 563 U.S. 421. That case dealt with changes to
CIGNA’s basic pension plan. Id. at 424. CIGNA failed to notify its employees
of the alterations. Id. When the employees sued, the district court reformed
the plan to remove the changes. Id. at 435. As basis for its authority to reform
the plan, the district court cited Section 1132(a)(1)(B), the same provision
employed in this case. Id. The Supreme Court disagreed, stating that a court
has no authority under that section “to change the terms of the plan as they
previously existed,” but it only allows enforcing a plan’s provisions. Id. at
435−36. In what a concurring opinion labels “dicta,” the Court went on to say
that appropriate equitable relief was likely available under Section 1132(a)(3).
Id. at 438−42, 446−50 (Scalia, J., concurring).
Applying these holdings, we conclude that Mrs. Singletary’s claim that
Prudential should be estopped because it gave her no notice is not cognizable
under her pled cause of action. Further, we should not transform a Section
1132(a)(1)(B) suit into a Section 1132(a)(2) or (a)(3) suit. “ERISA . . . expressly
authorizes several claims for relief. Several procedural, as well as substantive,
3In Strom, the Second Circuit also eventually offered “‘equitable relief’ within the
meaning of Section [1132](a)(3)(B).” 202 F.3d at 150.
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aspects of the litigation vary according to the specific claim alleged in the
complaint . . . . Following the lead of the Supreme Court . . . courts now look
closely at the particular § 502(a) claim for relief being alleged. Courts are
extremely reluctant to improvise or alter these forms of action.” Ronald Dean,
ERISA Claims for Relief, SN021 ALI-ABA 225, 227 (2008).
We need not resolve whether subsection (a)(2) or (a)(3) is the better fit.
The claim could have been brought by referring to both sections. The problem
here is that the only source for the claim used by the plaintiff was the
inapplicable Section 1132(a)(1)(B).
It also is important to examine everything that occurred in district court
addressing the basis of this claim. We start with the point we have been
discussing, namely, that the complaint sought to enforce the Plan and not seek
equitable relief from it. That focus is shown not only from the citing of only
one of the civil enforcement provisions on which to base her claim, but also in
the manner in which she articulated the reasons she was entitled to relief.
Count I of the initial complaint 4 states that
Mrs. Singletary submitted substantial evidence establishing that
although Mr. Singletary was a member of the armed services . . .
at the time of his death, he was stationed stateside and was “off
duty” . . . . Mr. Singletary, as a result, was a qualified dependent
of Mrs. Singletary under the terms and conditions of the Plan.
Mrs. Singletary, accordingly, is entitled to an award of . . . life
insurance benefits due as a result of the death of her spouse under
the terms of the Plan. 29 U.S.C. § 1132(a)(1)(B).
Thus, Mrs. Singletary’s argument in the district court was that she was
entitled to benefits under the “terms of the Plan” because her husband was not
on active duty, making the exclusion inapplicable.
4 The first amended complaint did not alter the ERISA claim.
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In no district court filing was there a reference to 29 U.S.C. § 1022(a),
the provision outlining what SPDs must contain. In fact, the only mention of
“SPD” or “Summary Plan Description” in any document filed by Mrs.
Singletary in the district court was in her Memorandum in Opposition to
Motions for Summary Judgment. There, she wrote “that the SPD was silent
as to the military status policy exclusion.” This reference, though, was in the
section dealing with Louisiana law. As she argued, under Louisiana law, the
insurer must show that the “certificate of insurance was delivered or that the
insured otherwise had notice.” Thus, Mrs. Singletary’s mention of the SPD
omission was in the context of whether she “otherwise had notice” for purposes
of Louisiana law. In summary, Mrs. Singletary’s ERISA argument in the
district court was only that she was entitled to benefits under the plan. It was
not until her brief in the current appeal that she based the unenforceability of
the exclusion on an SPD violation. That is too late. See LeMaire v. La. Dep’t
of Transp. & Dev., 480 F.3d 383, 387 (5th Cir. 2007).
II. State law
Mrs. Singletary makes two arguments that under Louisiana law the
exclusion is unenforceable. Her first is that UPS or Prudential was required
to deliver to her a certificate of coverage because of the following statute:
Certificates. A provision that the insurer will issue to the
policyholder for delivery to the employee, or member, whose life is
insured under such policy, an individual certificate setting forth a
statement as to the insurance protection to which he is entitled.
LA. STAT. ANN § 22:942(7). Her second is that an insurance exclusion based
purely on military status is illegal. A Louisiana statute provides that:
No policy of group life insurance . . . in this state shall contain any
provision which excludes . . . liability for death . . . while the
insured has a specified status, except the following . . . :
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(1) As a result of war declared or undeclared under
conditions specified in the policy.
(2) While in the military, naval, or air forces of any country
at war, declared or undeclared; or in any ambulance,
medical, hospital, or civilian noncombatant unit serving
with such forces, either while serving with or within six
months after termination of service in such forces or units.
Id. § 22:943(A)(1)–(2). We do not address whether Louisiana law offers her
relief, however, because we determine that state’s law does not apply.
The Plan states that it is governed by Georgia law. “We have not
previously addressed how we should decide residual choice of law disputes in
the ERISA context. However, we have held that we should apply federal
common law choice of law principles when we exercise federal question
jurisdiction over a case.” Jimenez v. Sun Life Assurance. Co. of Canada, 486
F. App’x 398, 406 (5th Cir. 2012). At issue in Jimenez was whether Texas or
Louisiana law applied to the extent that ERISA did not preempt both. Id. at
405. The plaintiff, Jimenez, advocated for Louisiana law, but the Plan
specified Texas law. Id. at 407. We noted that under federal common law,
there are “three possible approaches to resolving this choice of law issue,” but
that we did not need to “decide among these competing standards . . . because
. . . Jimenez . . . failed to satisfy his burden to establish that we should not
enforce the Policy’s choice of law clause under any standard . . . .” Id. at 408.
The same is true in this case. Here, Mrs. Singletary’s only argument for
why Louisiana law should apply is that “Louisiana has a strong interest in its
citizen insureds receiving requisite written notice,” and that because the
defendants have chosen to insure Louisiana citizens, they should be subject to
its laws. This very public policy argument was rejected in Jimenez. There,
Jimenez argued that a particular section of Louisiana law was the “public
policy of the State of Louisiana and is mandatory to all insurance policies
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which apply to insureds who reside in Louisiana.” Id. at 406. We held this
concern insufficient “to void the Policy’s choice of law provision.” Id. at 408.
Moreover, unlike in Jimenez where the accident actually occurred in Louisiana
involving Louisiana citizens, here the accident occurred in Texas. 5 See id.
Hence, Mrs. Singletary has not provided sufficient argument that the forum
selection clause in the Plan should be void.
Mrs. Singletary argues that she should still prevail under Georgia law.
She points out that Georgia law has a similar provision requiring that the
insurer “show that the certificate of insurance was delivered or that the
insured otherwise had notice and therefore assented to the terms of the master
policy excluding coverage for pre-existing conditions.” Investor’s Nat’l Life Ins.
Co. v. Norsworthy, 287 S.E.2d 66, 67–68 (Ga. App. 1981); GA. CODE § 33-27-
3(a)(7). We hold that this provision of Georgia law is preempted by ERISA.
ERISA preempts “any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144(a). ERISA’s
preemptive scope is expansive and limited only by the savings clause. Id.
§ 1144(b)(2)(A). Here, Mrs. Singletary acknowledges that her “employee
welfare benefit plan [is] governed by the Employee Retirement Income
Security Act.” Given that she is relying on Section 33-27-3(a)(7) to strike a
provision of a plan governed by ERISA, Section 33-27-3(a)(7) relates to her
employee benefit plan. See Shaw v. Delta Airlines, Inc., 463 U.S. 85, 98 (1983).
Since ERISA preemption applies to Section 33-27-3(a)(7), the statute is
saved only if it is: (1) “directed toward entities engaged in insurance”; and (2)
“substantially affect[s] the risk pooling arrangement between the insurer and
the insured.” Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329,
5Although Mrs. Singletary’s complaint states that she is a “resident of the Parish of
Jefferson, State of Louisiana,” there is no information in the record about whether Specialist
Singletary or the other persons involved in the motorcycle accident were Louisiana residents.
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341−42 (2003). Section 33-27-3(a)(7) may be directed towards insurance
entities, but it does not substantially affect the risk pooling agreement between
insurers and the insureds. Section 33-27-3(a)(7) simply requires a certificate
be sent from an insurer (Prudential) to a policyholder (UPS) to the insured
(Singletary). It does not affect the risk pooling agreement at all. Therefore,
Section 33-27-3(a)(7) is not saved from preemption.
AFFIRMED.
13