Petition for Writ of Certiorari — Powell v. Chesapeake & Potomac Telephone Co.

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Text

Supreme Court, U.S.

2k ew

APR 1? 968

JOSEPH e. SPANIOL, JR.

CLERK

No.

—

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1985

ELEANOR POWELL,

Petitioner,

CHESAPEAKE AND POTOMAC TELEPHONE COMPANY OF

VIRGINIA, CONNECTICUT GENERAL LIFE INSURANCE

COMPANY, AMERICAN TELEPHONE AND TELEGRAPH,

INC., AND AT & T COMMUNICATIONS OF VIRGINIA,

INC.,

Respondents

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Gilbert K. Davis

Davis & Harris

Fox Mill Professional Building

2579 John Milton Drive

Herndon, Virginia 22071

(703) 476-1022

Attorney for Petitioner

QUESTIONS PRESENTED

1. Whether punitive or extracontrac-

tual damages are available for breaches of

fiduciary duty under §§ 101, 404 and

503 of the Employee Retirement Income Secur-

ity Act where the action is brought under §§

502(a)(1) and (3) of that Act.

2. Whether § 514 of the Employee

Retirement income Security Act preempts state

law claims for intentional inflicticn of

emotional distress, breach of contract,

breach of a duty of fair dealing and the

Virginia Unfair Practices Act where the plan

administrator of a self-insured fund is an

insurance company.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ..- + «© + «© « =» i

TABLE OF CONTENTS .. ++ + © «© © =» ii

TABLE OF AUTHORITIES . . + + «© «© « -« iii

OPINIONS BELOW . ..- «© «© © «© © «© =» 2

JURISDICTIONAL STATEMENT . ..- «© « - 2

STATUTES INVOLVED ....-. ++ «© « » 2

STATEMENT OF THE CASE .. + + « « « 3

REASONS FOR GRANTING THE WRIT .. .- 7

I. THE FOURTH CIRCUIT'S PUNITIVE

DAMAGES RULING REFLECTS A CON-—

TINUING CONFLICT BETWEEN DE-

CISIONS OF FEDERAL COURTS . . 7

ow THE DENIAL OF PUNITIVE DAMAGES

BY THE LOWER COURT IS INCONSIS~-

TENT WITH THE LANGUAGE AND IN-

TENT OF ERISA ...-. + «© «© « « 11

ee oe THE DECISION BELOW REGARDING

PREEMPTION OF STATE LAW CON-

FLICTS WITH THE DECISIONS OF

OTHER FEDERAL COURTS AND IS

CONTRARY TO THE GENERAL PUR-

POSES OF ERISA .. + « «© « « 14

COMELUSIO“N . « «© « 2% & B°e0 es Se 2 19

APPENDIX A ‘— oe

APPENDIX B ee a 426 eee

APPENDIX C ie & & oe ee

TABLE OF AUTHORITIES

Cases

American Progressive Life & Health In-

Surance Co. cf New Yock v. Corcoran,

715 F.2d 784 (2d Cir. 1983)

Bittner v. Sadoff & Rudoy Industries,

490 F. Supp. 534 (E.D. Wis. 1980)

Bobo v. 1950 Pension Plan, 548 F. Supp.

623 (W.D.N.Y. 1982). . «8

Carpenters Health & Welfare Trust Fund v.

Darnas Corp., Cal. App. 3d ,

222 Cal. Rptr. 668 (1986)

Cattin v. General Motors Corp., 612 F.

Supp. 948 (E.D. Mich. 1985)

Dependahl v. Falstaff Brewing Corp., 653

F.2d 1208 (8th Cir.), cert. denied,

454 U.S. 968 (1981) ‘ —

Diano v. Central States Health, Welfare

& Pension Funds, 551 F. Supp. 861

(N.D. Ohio 1982).

Donovan v. Mazzola, 716 F.2d 1226 (9th

Cir. 1984).

Gilliken v. Hughes, 609 F. Supp. 178 (D.

Del. i985). ck 4 * & 4 a Als

Hood v. Prudential Insurance Co. of

America, 460 So. 2d 1227 (Ala.

984)

hee

Hurn v. Retirement Fund Trust of Plumbing

Industry, 424 F. Supp. 80 (C.D. Cal.

1976) gt as OS Gl ae a oe oe

“1ii-

rage

16,18

TABLE OF AUTHORITIES (Continued)

Cases Page

International Union, United Automobile,

Aerospace & Agricultural Implement

Workers of America v. Federal Forge,

Inc., 583 F. Supp. 1350 (W.D. Mich.

Lf § See er er igre ee ge ee te ee es

Kann v. Keystone Resources, Inc., 575

F. Supp. 1084 (W.D. Pa. 1983) ..... 9

Kanne v. Connecticut General Lite Insurance

Co., 607 F. Supp. 899 (C.D. Cal.

See a a ee he ee ee ee eee eee SS 18

Metropolitan Life Insurance Co. v.

Massachusetts, 105 S. Ct. 2380 (1985) . 17

Meyer v. Phillip Morris, Inc., 575 F. Supp.

hase CBs. WO. E983) «6.606 Cee ew ee «6 ED

Miner v. International Typographical Union

Negotiated Pension Plan, 601 F. Supp.

Leee tos COLO. ESGSIs + « «% * ee oe hue l)|6lUR RS

Peacock Buick, Inc. v. Durkin, 221 Va. 1133,

yy a A Oe Eee eh } GS ee ee ee ee ee

Peyton v. Rowe, 391 U.S. 57 (1968) ..... 18

Russell] v. Massachusetts Mutual Life Insurance

Co., 722 F.2d 482 (9th Cir.), rev'd,

ioe 8. Ce. Bees Cigeeis «© «© « & & @ ee) 6B hs

Shaw v. Delta Air Lines, Inc., 463

- Sg Be) 3 Seer ee ee ee ee ee

Shaw v. International Association of

Machinists & Aerospace Workers Pension

Plan, 563 F. Supp. 653 (C.D. Cal.

cena? «= 4) sk eS ee oe we ee ee /+~ «= EG

TABLE OF AUTHORITIES (Continued)

Cases Pade

Wilson v. Pye, 6 Empl. Ben. Cas. (BNA)

Yel SG Me Pee Pe. SD eee ee 10

Winterrowd v. David Freedman & Co.,

144 F.426 623 (3tnm Cit. i968). + « 8

Zittrower v. Warco, 582 F. Supp. 1471

(N.D. Ga. 1984) 10

Statutes

Employee Retirement Income Security Act

("ERISA")

. 128 Oe SI 3 6 eee

£01 (29 U.8.0. § £021) « 2 «© es ss es CC

> 404 (29 U.S.C. § 1104) . « 2. « = «© « «© £f10

409 (29 U.S.C. § 1109) . ~~ ~~ «~~ «© 8,9

S02 (29 U.8.6. 9 Side 2 ss 6 us & pees

10,11

§ $03 (26-G.858. 8 1s eee ee

§ 514 (29 U.S.C. § 1144) . 2. 2 2 6 2 2 « ) SepGellel:

16,17

Va. Code Amn.

S Baki CIO) «6 5 se 6 Os CSR we eee 3

S SB.1-5GR. 6 6 ee Ue Re eee 3

S$ 38.1-52.1

ee)

TABLE OF AUTHORITIES (Continued)

Page

G.G. Bogert & G.T. Bogert, The Law of Trusts

and Trustees § 862 (2d ed.

1982) 2 2 ewe eo ee we se we oe ow wo oo | bD GS

Ghiardi & Kircher, Punitive Dama

Taw & Practice § 20.06 (198

ges:

H.R. Rep. No. 93-1280, 93rd Cong., 2d

Sess., reprinted in 1974

U.S. Code Cong. & Ad. News 5038 .... 12

H.R. Rep. No. 93-533, 93rd Cong., 2d Sess.,

reprinted in 1974 U.S. Code Cong.

& Ad. News 4639 . ... 2. 2+ © © © © «© © 17

-Vl1-

No.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1985

ELEANOR POWELL,

Petitioner.

CHESAPEAKE AND POTOMAC TELEPHONE COMPANY OF

VIRGINIA, CONNECTICUT GENERAL LIFE INSURANCE

COMPANY, AMERICAN TELEPHONE AND TELEGRAPH,

INC., AND AT & T COMMUNICATIONS OF VIRGINIA,

INC.,;

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

To the Honorable Chief Justice and

Associate Justices of the Supreme Court of

the United States:

Petitioners pray that a writ of

certiorari issue to review the judgment of

the United States Court of Appeals for the

Fourth Circuit entered in this case on

December 18, 1985.

a is aS a ee a a A ei i a epee a pre ee

OPINIONS BELOW

The opinion of the Court of Appeals

is reported at 780 F.2d 419 (4th Cir. 1985),

and is reproduced in Appendix A. The order

of the United States District Court for the

Eastern District of Virginia is not reported.

It is reproduced in Appendix B.

JURISDICTIONAL STATEMENT

The judgment of the Court of Appeals

for the Fourth Circuit was entered on Decem-

ber 18, 1985. By order dated March 21, 1986,

the Chief Justice extended the time within

which to file a petition for a writ of cer-

tiorari to and including April 17, 1986. The

jurisdiction of tle Court is invoked under 28

U.S.C. § 1254(1).

STATUTES INVOLVED

The pertinent provisions of §§ 101,

404, 502, 503 and 514 of the Employee Retire-

ment Income Security Act of 1974 ("ERISA"),

as amended, 29 U.S.C. §§ 1021, 1104, i132,

1133 and i144 (1982) as well as Va. Code Ann.

§§ 38.1-1(10), 38.1-52.1 and 38.1-50A. These

provisions are reproduced in pertinent part

in Appencix C.

STATEMENT OF THE CASE

Petitioner, Eleanor Powell, was employed

by respondent C & P Telephone Company of

Virginia (C & P) as a long distance telephone

operator from approximately 1960 to January,

1577. During tnis period AT & T was the

parent company of C & P. In January, 1978,

Mrs. Powell retired due to severe back pain

caused by a degenerative disc disease. From

January, 1977 to January, 1978, Mrs. Powell

received sick pay benefits. In February,

1978, a determination was mace by the Em-

ployee Benefits Committee of C & P that Mrs.

Powell was entitled toc benefits under the

long term disability plan maintained by C & P

for its non-management employees. Payments

were begun under the plan retroactive to

January 30, 1978.

In March, 1978, C & P entered into an

Administrative Services Agreement with

respondent Connecticut Generai Life Insurance

Company ("Connecticut General") whereby Con-

necticut General became responsible for the

administration of benefits under the long

term disability plan, including the evalua-

tion and payment of claims. During the

period from 1978 to 1983, Connecticut General

paid the disability benefits to Mrs. Powell.

On two occasions, Connecticut General ter-

minated Mrs. Powell's benefits, but in both

cases the benefits were reinstated. In 1983,

Connecticut General terminated all benefits

when Mrs. Powell received social security

benefits. Connecticut General also demanded

a return of a portion of the monies paid her

under the plan, alleging an overpayment on

the grounds that the plan was intended only

to supplement other income to bring the total

to a base level.

During the period from 1978 to 1983,

Mrs. Powell received various letters and

other correspondence from Connecticut General

requesting additional information and tests

regarding her disability. She contacted both

C & P and Connecticut General regarding

these requests but no satisfactory answer was

received. Mrs. Powell contends that some of

the information sought by Connecticut General

was already in its possession or was other-

wise unnecessary. Mrs. Powell also contends

that she requested a copy of her claim file,

but no copy was ever received.

On July 17, 1984, Mrs. Powell filed

an amended complaint in the United States

District Court for the Eastern District of

Virginia. The action was brought under § 502

of ERISA, 29 U.S.C. § 1132, and raised several

pendent state claims. The complaint sought

compensatory and punitive damages under the

following five counts:

1. Breach of fiduciary duties

under §§ 10i, 404 and 503 of ERISA;

ne Intentional infliction of

emotional distress;

3. Violation of Virginia's Unfair

Trade Practices Act;

4, Breach of implied duty of good

faith and fair dealing;

a. Breach of contract.

On respondents’ motion for summary

judgment, the district court dismissed the

complaint on the grounds that the state law

claims were preempted by ERISA and that puni-

tive damages are not available under ERISA.

The claim for other damages under ERISA was

denied on the grounds that Mrs. Powell had

already received all benefits due her under

the disability plan (App. B at 2).

The Fourth Circuit affirmed the dis-

trict court's ruling as to the preemption of

the state law claims as well as the denial of

punitive damages under ERISA. The court held

that the state law claims "related to" an

employee benefit plan and were therefore

subject to the preemption provision of § 514

of ERISA, 29 U.S.C. § 1144 (App. A at 5). The

court also held that although Connecticut

General is an insurance company, it was not

acting as such in its role of plan adminis-

trator and therefore the exception for laws

regulating insurance was not applicable (App.

A. at 10-11). With respect to punitive

damages the court held that such damages did

not constitute "other appropriate equitable

relief" under § 502(a)(3), 29 U.S.C.

§ 1132(a)(3), and that such damages were

therefore not available under ERISA (App. A

at 13).

REASONS FOR GRANTING WRIT

This case presents two important

questions regarding the nature of relief

available to plan participants and beneficia-

ries under ERISA and state law. Both of

these questions have widespread significance

beyond this case and are the subject of con- |

flicting decisions in lower courts. Related

issues have previously been raised before

this Court, but the Court has not resolved

the issues raised here. A resolution of these

issues is necessary to settle the conflicts

among the lower courts and to insure that

ERISA is uniformly applied.

THE FOURTH CIRCUIT'S PUNITIVE DAMAGES

RULING REFLECTS A CONTINUING CONFLICT

BETWEEN DECISIONS OF FEDERAL COURTS.

Review of the Fourth Circuit Court of

Appeals' ruling on punitive and extracontrac-

tual damages is essential to resolve a con-

tinuing conflict regarding the imposition of

such damages under ERISA. Since the enact-

ment of ERISA in 1974, the federal courts

have been sharply divided on the availability

of punitive damages under ERISA. The leading

case denying the availability of such damages

is Dependahl v. Falstaff Brewing Corp., 653

F.2d 1208 (8th Cir.), cert. denied, 454 U.S.

968 (1981), in which the court stated that

punitive damages are not avaiiable under

ERISA. 653 F.2d at 1216 (dictum). On the

other hand, the Ninth Circuit ruled in Russell

v. Massachusetts Mutual Life Insurance Co.,

722 F.2@ 482 (Sth Cir.is ceva, 105 SB. Cee

3085 (1985) and Winterrowd v. David Freedman

& Co., 724 F.2d 823 (9th Cir. 1984), that

punitive damages could be imposed under ERISA.

The Russell decision was subsequently

reversed by the Court, but the reversal was

expressly limited to actions brought under §

409 of ERISA. 105 S. Ct. at 3089 n.5. More-

over, the Court's decision in Russell was

based primarily on language peculiar to § 409

and has little effect on cases brought under

different sections of the Act. Accordingly,

the Russell decision does not resolve the

question raised here.

Various federal district courts have

considered the availability cf punitive

damages in non-§ 409 cases, and different

results have been reached. Some courts have

held that punitive damages are available

where a fiduciary breaches his fiduciary

\ duties, see, e.g., Miner v. International

Typographical Union Negotiated Pension Plan,

601 F. Supp. 1390, 1393 (D. Colo. 1985);

Gilliken v. Hughes, 609 F. Supp. 178, 182 (D.

Del. 1985), while others have ruled that such

damages are available under specific sections

of ERISA. E.g., Bittner v. Sadoff & Rudoy

Industries, 490 F. Supp. 534 (E.D. Wis.

1980) (punitive damages available for viola-

tion of § 440); cf. Kann v. Keystone Re-

sources, Inc., 575 F. Supp. 1084, 1094-95

(W.D. Pa. 1983) (no punitive damages under

the facts). On the other hand, some courts

-10-

have found that punitive damages may not be

imposed under ERISA in non-§ 409 cases. E.g.,

Meyer v. Phillip Morris, Inc., 575 F. Supp.

1232 (E.D. Mo. 1983) (no punitive damages

under § 104(b)(1) and (3)); Zittrower v. War-

co, 582 F. Supp. 1471 (N.D. Ga. 1984) (no

punitive damages under ERISA); Diano v. Cen-

tral States Health, Welfare & Pension Funds,

551 F. Supp. 861 (N.D. Ohio 1982) (same).

The continuing confusion in this area

is reflected in Wilson v. Pye, 6 Empl. Ben.

Cas. (BNA) 2761 (N.D. Ill. 1986), a case

decided after the Russell decision was handed

down. In that case, the plaintiff alleged

violations of §§ 104, 404 and 406 and brought

the action under §§ 502(a)(1), (2) and (3).

The court denied punitive damages under the

facts of the case but noted that the exact

contours of the majority's reasoning in

Russell were ambiguous, id. at 2764, and

added that such damages may be available

where the plan participant is individually

injured by a fiduciary's breach and the ac-

tion is brought under § 502(a)(3).

-jJj-

It 1s essential that the Court

resolve the continuing controversy regarding

the availability of punitive damages under

these circumstances.

} i

THE DENIAL OF PUNITIVE DAMAGES

BY THE LOWER COURT IS INCONSISTENT

WITH THE LANGUAGE AND INTENT OF

ERISA.

The Fourth Circuit's ruling misap-

plies the law applicable in the instant case

and reflects a basic misunderstanding of the

purposes of ERISA. Section 502(a)(3) allows

a plan participant to obtain "appropriate

equitable relief," which the Fourth Circuit

restricted to relief available under the

common law of trusts. The court then found

that punitive damages are not available under

that law and are therefore not available

under ERISA. This analysis fails on two

counts. First, there is a substantial body

of opinion which provides that punitive

damages are available under the common law of

trusts where fraud or malice is proven.

G.G. Bogert & G.T. Bogert, The Law of Trusts

and Trustees § 862 (2d ed. 1982); Ghiardi &

Kircher, Punitive Damages: Law & Practice

§ 20.06 (1985). Under Virginia law, punitive

damages may be received where malice is

established, Peacock Buick, Inc. v. Durkin,

221 Va. 1133, 277 S.E.2d 225, 227 (1981), and

the petitioner, Mrs. Powell, has attempted to

meet that standard in this case.

Second, although Congress intended to

engraft trust law principles onto the

enforcement scheme of ERISA, Congress also

intended that the "special nature" of em-

ployee benefit plans be considered. H.R.

Rep. No. 93-1280, 93rd Cong., 2d Sess. re-~

printed in 1974 U.S. Code Cong. & Ad. News

5038, 5083. Thus, as was noted in Justice

Brennan's concurring opinion in Russell,

[clourts must always bear in mind the

ultimate consideration whether

allowance or disallowance of

particular relief would best

effectuate the underlying purposes of

ERISA--enforcement of strict fiduciary

standards of care in the

administration of all aspects of

pension plans and promotion of the

best interests of participants and

beneficiaries.

105 Ss. ct. at 3099. Further, "[c]ourts have

-]3-

also recognized that in enacting ERISA,

Congress made more exacting the requirements

of the common law of trusts relating to em-

ployee benefit trust funds." Donovan v.

Mazzola, 716 F.2d 1226, 1231 (9th Cir. 1984)

(quoted in Russell v. Massachusetts Mutual

Life Insurance Co., supra, 105 S. Ct. at 3098

n.17 (concurring opinion)).

The Fourth Circuit's failure to

recognize this fundamental rule, as expressed

in Justice Brennan's concurring opinion in

Russell and by other courts, has resulted in

its erroneous decision. Moreover, the result

is directly contrary to the result reached by

the federal district court in Miner v. Inter-

national Typographical Union Negotiated Pension

Plan, supra, which held that punitive damages

are consistent with the overall design of

ERISA and the common law of trusts. 601 F.

Supp. at 1393.

A decision of this Court is therefore

necessary to overturn the erroneous decision

of the lower court and to provide further

guidance as to the availability of punitive

-14-

damages in non-§ 409 cases.

Iil

THE DECISION BELOW REGARDING PREEMPTION

OF STATE LAW CONFLICTS WITH THE

DECISIONS OF OTHER FEDERAL COURTS AND IS

CONTRARY TO THE GENERAL PURPOSES OF

ERISA.

In Shaw v. Delta Air Lines, Inc., 463

U.S. 85 (1983), this Court ruled that a state

law which directly affected the substantive

terms of an employee benefit plan was a law

which "related to" that ata and was

therefore preempted by § 514 of ERISA, 29

U.S.C. § 1144. In so ruling, the Court added

that some state actions may affect employee

benefit plans in "too tenuous, remote, or

peripheral a manner to warrant a finding that

the law ‘relates to' the plan" but declined to

draw a line between the two situations. 463

U.S. at 100 n.2l.

In the absence of a definitive

Supreme Court ruling, lower courts heve

reached conflicting conclusions regarding the

preemption of state causes of action of

general application. Thus, while some courts

-15-

have held that ERISA does not preempt an

action for intentional infliction of emo-

tional distress, e.g., International Union,

United Automobile, Aerospace & Agricultural

Implement Workers of America v. Federal Forge,

Inc., 583 F. Supp. 1350, 1357 (W.D. Mich.

1984); Bobo v. 1950 Pension Plan, 548 F.

Supp. 623 (W.D.N.Y. 1982), other courts have

found such claims to be preempted. E.g.,

Russell v. Massachusetts Mutual Life Insurance

Co., supra, 722 F.2d at 485; Hurn v. Retire-

ment Fund Trust of Plumbing Industry, 424 F.

Supp. 80, 82 (C.D. Cal. 1976). A similar

conflict exists as to breach of contract

claims. Compare Cattin v. General Motors

Corp., 612 F. Supp. 948, 950 (E.D. Mich.

1985) (no preemption) with Shaw v. Inter-

national Association of Machines & Aerospace

Workers Pension Plan, 563 F. Supp. 653, 659

(C.D. Cal. 1983) (preemption). A decision by

this Court is necessary to resolve these

conflicts.

The Fourth Circuit erroneously ruled

that the state law claims “relate to" an

-16-

employee benefit plan. Instead, these claims

relate to the conduct of the respondents

rather than to the plan. By definition, the

term "state law" is restricted to laws

affecting the "terms and conditions" of

employee benefit plans, <9 U.S.C.

§ 1144(c)(2), and several courts have so

ruled. See, e.g., Hood v. Prudential In-

Surance Co. of America, 460 So. 2d 1227, 1230

(Ala. 1984) (claim of bad faith refusal to

pay benefits does not affect terms and condi-

tions of plan and is not preempted); Car-

penters Health & Welfare Trust Fund v. Darnas Corp.,

___ Cal. App. 3d __, 222 Cal. Rptr. 668, 671

(1986) (ERISA preempts only laws regulating

terms and conditions of plan). The lower

court's ruling is also contrary to the gener-

al intent of ERISA to protect the interests

of participants in employee benefit plans and

their beneficiaries, 29 U.S.C. § 1001(b), and

to provide “the full range of legal and

equitable remedies available in both state

and federal courts" to injured persons. H.R.

Rep. Ne. 93-533, 93rd Cong., 2d Sess. re-

SRS aaea aaa nee aes ee:

-l7-

printed in 1974 U.S. Code Cong. and Ad. News,

4639, 4655.

The preemption provisions of ERISA

are also subjec* to the qualification that a

law which "regulates insurance" is not

preempted. 29 U.S.C. § 1144{(b)(2)(A). In

Metropolitan Life Insurance Co. v. Massachusetts,

105 S. Ct. 2380 (1985), this Court rejected

the contention that this "insurance saving

clause" applied only to "traditional" in-

Surance laws. The court's decision in Metro-

politan Life, however, did not set forth any

basic guidelines for determining when a iaw

"regulates insurance."

Because of the burgeoning growth of

employee benefit plans and the expanding

influence of insurance companies cn those

plans, it is essential that this Court

consider the extent to which state laws are

applicable to insurance companies when they

act as plan administrators of self-insured

plans. Various courts have indicated that

imsurance companies should be subject to

state laws, notwithstanding ERISA, where the

«it.

law relates to the conduct of the company

rather than to the benefits of the plan.

See, e.g., American Progressive Life &

Health Insurance Co. of New York v. Corcoran,

715 F.2d 784, 787 (2d Cir. 1983) (no

preemption where law related to conduct of

business by insurance company rather than to

pian); Kanne v. Connecticut General Life In-

surance Co., 607 F. Supp. 899, 904-905 (C.D.

Cal. 1985) ("laws regulating an insurance

company or policy from an insurance company

are saved from preemption"); Hood v. Pruden-

tial Insurance Co. of America, supra. Such a

result is consistent with the broad remedial

purposes of ERISA.

The Fourth Circuit's construction of

the phrase "regulates insurance” was drawn

too narrowly. ERISA is a remedial statute,

and it should be liberally construed to carry

out its purpose. Peyton v. Rowe, 391 U.S.

54, 65 (1968). It would be incongruous if a

statute which was intended to increase the

remedies available to plan participants and

beneficiaries were construed to deny remedies

traditionally available to injured parties.

Unless it is reversed, the Fourth Circuit's

decision could leave many injured

participants and beneficiaries without an

adequate remedy, particularly if punitive

damages are found unavailable under ERISA.

CONCLUSION

For the foregoing reasons, a writ of

certiorari should issue to review the

judgment and opinion of the Court of Appeals

for the Fourth Circuit.

Respectfully submitted,

GILBERT K. DAVIS

Davis & Harris

Fox Mill Professional Bldg.

2579 John Milton Drive

Herndon, Virginia 22071

(703) 476-1022

Attorney for Petitioner

CERTIFICATE OF SERVICE

I hereby certify that three (3)

copies of the foregoing Petition for Writ of

Certiorari, filed on behalf of Petitioner

Eleanor Powell were duly served upon the

Respondents Chesapeake and Potomac Telephone

Company of Virginia, Connecticut General Life

Insurance Company and American Telephone and

Telegraph, Inc. by placing same in the United

States Mail first class postage prepaid,

certified return receipt requested, addressed

to: 417-8 e

Jeffrey Anne Tatum, Attorney at Law

Counsel for Connecticut General Life

Insurance Co.

1920 N Street, N.W., Suite 420

Washington, D.C. 20036

Stephen M. Colangelo, Esquire

Counsel for Chesapeake and Potomac

Telephone Company and American Telegraph

1199 N. Fairfax Street

P.O. Box 1101

Alexandria, Virginia 22313 le

ilbert K. Davis

Davis and Harris

Fox Mill Professional Bldg.

2579 John Milton Drive

Herndon, Virginia 22071

(703) 476-1022

APPENDIX A

No. 85-1072

Eleanor Powell,

Appellant,

versus

Chesapeake and Potomac Telephone Company

of Virginia; Connecticut General Life

Insurance Company, a Cigna Company, and

American Telephone and Telegraph, Inc.,

a New York Corporation,

Appellees.

and

AT&T Communications of Virginia, Inc.,

Defendant.

Appeal from the United States District Court

for the Eastern District of Virginia, at

Alexandria. Albert V. Bryan, Jr., Chief

District Judge. (C/A 84-554)

Argued November 8, 1985.

Decided December 18, 1985

Before WIDENER and PHILLIPS, Circuit Judges,

and HILTON, United States District Judge for

the Eastern District of Virginia, sitting by

designation.

Diane H. Mahshie (James R. Tate; Tate and

Bywater, Ltd. on brief):for Appeilant;

Jeffrey Anne Tatum (Adams, Duque & Hazeltine

on brief); Stephen M. Colangelo (Boothe,

Prichard & Dudley; Rodney H. Glover; Thomas &

Riske on brief) for Appellees.

PHILLIPS, Circuit Judge:

Eleanor Powell, a former employee of

C&P Telephone Company of Virginia (C&P) and a

beneficiary under its self-funded employee

benefit plan (the Plan), sued that company,

its former parent, AT&T, and Connecticut

General Life Insurance Company (Connecticut

General), the Plan's administrator, for the

breach of various fiduciary duties under the

Employee Retirement Income Security Act of

1974 (ERISA), 29 U.S.C. § 1001 et seg., in the

handling of her claim for disability bene-

fits. 1/ Although she had received all the

benefits to which she was entitled, Powell

sought $5 million in extracontractual and

punitive damages under ERISA, and also sought

l1 Specifically, the complaint alleges

that C&P and Connecticut General failed to

Gischarge their fiduciary duties solely in

the interest of Plan beneficiaries pursuant

to 29 U.S.C. § 1104(a)(1); breached their

duties of disclosure under 29 U.S.C. § 1021;

and failed to provide Powell with adequate

written notice of termination, as required by

29 U.S.C. § 1133(1).

court's pendent jurisdiction over Virginia

state claims for intentional infliction of

emotional distress, breach of an implied

covenant of good faith and fair dealing,

breach of contract, and violation of

Virginia's Unfair Trade Practices Act, Va.

Code § 38.1-49, et seg. (1950), based on the

same alleged misconduct as gave rise to her

federal cause of action under ERISA. The

district court granted the defendants'

motions for cummary judgment and dismissed

all of Powell's claims. We agree with the

district court that Powell's state law claims

are preempted by ERISA, and that

extracontractual and punitive damages are

not, in these circumstances, available under

ERISA, and we therefore affirm.

Powell received disability benefits

under the Plan from February 1978 through May

1983. She complains of constant harassment

by C&P and Connecticut General throughout

this period, causing her and her son.

emotional distress and precipitating her

divorce. According to Powell, the appellees

repeatedly demanded unnecessary medical

reports, refused to provide her attorney with

copies of her claim file, and unjustifiably

withheld benefit payments on two occasions.

Powell's benefits were terminated in

June 1983, after she received a substantial

Social Security award, which represented

monthly benefits retroactive to July 1977.

When combined with the Social Security award,

Powell's Plan benefits exceeded 50% of her

base pay prior to disability, the benefits

ceiling under the Plan. Powell refused C&P's

request to refund the overpayment.

Thereafter, Powell filed this action

and the defendants counterclaimed for a

refund of benefits. The counterclaim was

nonsuited after Powell's complaint was

dismissed, and this appeal followed.

A. Preemption of State Law Claims.

With certain stated exceptions, 2/

ERISA preempts "any and all State laws inso-

far as they may now or hereafter relate to

any employee benefit plan" governed by ERISA.

29 U.S.C. § 1144(a). "State law" is defined

to include "all laws, decisions, rules

regulations, or other state action having the

effect of law, of any State." 29 U.S.C. §

1144(c)(1).

In Shaw v. Delta Air Lines, Inc., 463

U.S. 85, 96-97 (1983), the Supreme Court,

citing legislative history and referring to

the language and structure of the statute,

construed the preemption clause in its

broadest sense, and held that "[a] law

‘relates to' an employee benefit plan

if it has a connection with or reference to

2 The most important of these

exceptions allow continued operation of state

insurance, banking, and securities laws, 29

U.S.C. § 1144(b)(2)(A), and generally

applicable criminal laws, 29 U.S.C.

§ 1144(b)(4).

such a plan.“ Thus, the scope of § 1144(a) is

not limited to state laws "specifically

designed to affect employee benefit plans.“

Id. at 98.

The state laws at issue in Shaw, the

New York Human Rights Law (prohibiting

discrimination in employment plans on the

basis of pregnancy), and New York's .

Disability Benefits Law (requiring employers

to pay sick-leave benefits to employees

unable to work due to pregnancy), "clearly

"relate to'" employee benefit plans. Id. at

97. The Court observed, however, that some

state actions may affect employee benefits

plans in "too tenuous, remote, or peripheral

a manner to warrant a finding that the law

‘relates to' the plan." Id. at 100, n.21l.

This category includes, for example, state

garnishment of a spouse's pension income to

enforce alimony and support orders. Id.;

citing American Telephone and Telegraph Co.

v. Merry, 592 F.2d 118 (2d Cir. 1979).

In this case, none of the state laws

under which Powell claims relief have any ,

intrinsic connection with employee benefit

plans. The question is therefore whether

state law claims which relate to the

administration of an ERISA-governed plan, but

which arise under general state laws which

themselves have no impact on employee benefit

plans, are within the scope of ERISA pre-

emption. Given the “unparaileled breadth" of

the preemption clause, Holland v. Burling-

ton Industries, Inc., No. 84-2241(L), slip

op. at 17 (4th Cir. Sept. 3, 1985), and the

broad remedial policy of ERISA, we hold that

state laws, insofar as they are invoked by

beneficiaries claiming relief for injuries

arising out of the administration of employee

benefit plans, “relate toe" such plans and,

absent an applicable exemption, are preempted

by ERISA.

The preemption clause effectuates a

broad remedial policy to protect the in-

terests of participants in ERISA-governed

plans and their beneficiaries “by estab-

lishing standards of conduct, responsibility,

and obligation for fiduciaries of employee

benefit plans, and by providing for approp-

riate remedies, sanctions, and ready access

to the Federal courts." 29 U.S.C. § 1001(b).

Thus, ERISA imposes extensive duties on plan

administrators, 29 U.S.C. §§ 1101-1114, and

provides a comprehensive scheme for the cri-

minal and civil enforcement of fiduciary

obligations, 29 U.S.C. §§ 1131-1132.3/

3 Under 29 U.S.C. § 1132, entitled "Civil

enforcement," a plan participant or beneficiary

may sue to recover benefits due under the

plan, to enforce his rights under the plan,

or to clarify his rights to future benefits

under the plan, § 1132(a)(1)(B); or, if the

plan administrator fails or refuses to comply

with a request for certain information, a

beneficiary may recover, subject to the

court's discretion, up to $100 a day from

such failure or refusal, § 1132(a)(1)(A); or,

a participant, beneficiary, or fiduciary may

bring an action to enjoin administrative acts

which violate ERISA or the terms of the plan

or to obtain “other appropriate equitable

relief" to redress such violations or to

enforce provisions of ERISA or the terms of

the plan. § 1132(a)(3). A plan may recover

from its administrator any losses resulting

from the breach of fiduciary duties and may

seek "such other equitable or remedial relief

as the court may deem appropriate, including

removal of such fiduciary," § 1109(a). Any

person who willfully violates the provisions

of ERISA may be fined, upon conviction, up to

$5,000, or imprisoned up to one year, or both,

and in the case of violations by other than an

individual, a fine of up to $100,000 may be

imposed, § 1131. For other remedies, includ

ing those available to the Secretary, see §§

1132(a)(4), (a)(5), (a)(6), (b); for availability

of attorney's fees and costs, see § 1132(g9).

To the extent that ERISA redresses the mis-

handling of benefits claims or other mal-

administration of employee benefit plans, it

preempts analogous causes of action, whatever

their form or label under state law. See

Dependahl v. Falstaff Brewing Corp., 653 F.2d

1208, 1215-16 (8th Cir. 1981) (“If Congress

has already provided \a remedy [under ERISA], .. .

the state law is preempted, regardless of

whether or not a conflict exists which

involves a direct interference by the state

law with [ERISA]."). A contrary rule would

undermine ERISA's important policy of

promoting uniformity in employee benefit

laws, reflected in the legislative history,

in the Act's declaration of policy, and in

the preemption clause itself, by creating the

"potential . . . for conflicting employer

obligations and variable standards of

recovery." Holland, No. 84-2241(L), slip op.

at 17-18. Accordingly, the state law claims

on this case, all of which relate exclusively

to alleged breaches of fiduciary

responsibility in the administration of C&P's

employee benefit plan, "relate to" the plan

and, unless an exception applies, are

preempted, leaving Powell to such remedies as

are available under ERISA.

This analysis comports with several

recent Ninth Circuit decisions in which that

court concluded that state claims based on

the maladministration of employee benefit

plans are preempted by ERISA, even where the

state statutory and common law under which

the claims arise bears no inherent connection

with ERISA-governed plans. See Ellenburg

v. Brockway, Inc., 763 F.2d 1091, 1095 (9th

Cir. 1985); Scott v. Gulf Oil Corp., 754 F.2d

149-, 1504-05 (9th Cir. 1985); Blau v. Del

Monte Corp., 748 F.2d 1348, 1356 (9th Cir.

1984); Russell v. Massachusetts Mutual Life

Insurance Co., 722 F.2d 482, 487-88 (9th Cir.

1983), rev'd on other grounds, 0.8. P

53 U.S.L.W. 4938 (U.S. June 27, 1985).

See also Gilbert v. Burlington Industries,

Inc., 765 F.2d 320, 327 (2d Cir. 1985).

Powell contends that even if her

state law claims are within the scope of

ERISA's preemption provision, her claims for

breach of an implied covenant of good faith

and fair dealing and for violations of the

Virginia Unfair Trade Practices Act, both of

which purport to impose duties on insurers, 4/

are nevertheless rescued from preemption by

an “insurance saving clause," which provides

that ERISA does not "exempt or relieve any

person from any law of any State which

regulates insurance. ..." 29 U.S.C.

§ 1144(b)(2)(A). We disagree. The insurance

4 The Virginia Unfair Trade Practices

Act constitutes Article 6 of Virginia's

Insurance Code and declares as its purpose

the regulation of trade practices in the

business of insurance. Specifically, Powell

alleges in her complaint that the defendants

violated § 38.1-52.1 which provides that "[n]Jo

person shall make, issue, [or] circulate...

any estimate, illustration, circular,

statement, sales presentation, omission, or

comparison which (1) Misrepresents the

benefits, advantages, conditions or terms of

any insurance policy."

The implied covenant of good faith

arises, in certain circumstances, from the

"relationship of confidence and trust...

between the insurer and the insured which

imposes upon the insurer the duty to deal

fairly with the insured in the handling and

disposition of any claim covered by the

policy." Aetna Casualty & Surety Co. v.

Price, 206 Va. 749, 761, 146 S.E.2d 220, 227-

28 (1966).

saving clause is limited by the so-called

"deemer clause," which provides that no

employee benefit plan "shall be deemed to be

an insurance company or other insurer...

or to be engaged in the business of insurance...

for purposes of any law of any State

purporting to regulate insurance companies

[or] insurance contracts ...." 29 U.S.C.

§ 1144(b)(2)(B). Thus, C&P cannot be deemed to

be an insurer or otherwise engaged in the

business of insurance by virtue of its

sponsorship of the Plan and Powell's claims

against C&P under state laws regulating

insurance are not exempted from preemption by

the insurance saving clause.

Since Connecticut General is not an

"employee benefit plan," the deemer clause is

inapplicable to it. See 29 U.S.C.

§ 1144(b)(2)(B). Powell contends that as an

insurance company, Connecticut General is

subject to state iaws regulating insurance,

including the implied covenant of good faith

and fair dealing and the Virginia Unfair

Trade Practices Act, and that these claims

are therefore saved from preemption by the

insurance saving clause, § 1144(b)(2)(A).

We read the insurance savings clause,

however, to exempt from ERISA's preemptive

effect only those state insurance laws that

regulate the "business of insurance."

Regulation of the “business of insurance" is

expressly reserved to the states by the

McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1115,

5/ and ERISA's insurance saving clause, which

is similarly worded and which reflects the

concerns of McCarran-Ferguson, is most

reasonably construed to cover the same

category of state insurance regulation. See

Metropolitan Life Insurance Co. v.

Massachusetts, G.8. » BS B.B.biscBe

4616, 4621 n.21 (U.S. June 3, 1985) ("The

ERISA saving clause . . . appears to have

been designed to preserve the McCarran-

Ferguson Act's reservation of the business of

5 The McCarran-Ferguson Act provides,

in pertinent part, that "No Act of Congress

shall be construed to invalidate, impair, or

Supersede any law enacted by any State for

the purpose of regulating the business of

7 insurance... ." 15 U.S.C. § 1012(b). —

insurance to the States.").

The primary features of an insurance

contract are the spreading and underwriting

of a policyholder's risk. Group Life &

_ Health Insurance Co. v. Royal Drug Co., 440

U.S. 205, 211 (1979). In enacting the

McCarran-Ferguson Act, "Congress was concer-

ned with the type of state regulation that

centers around the contract of insurance ....

SEC v. National Securities, Inc., 393 U.S.

453, 460 (1969). The Act did not, however,

"purport to make the States supreme in

regulating all the activities of insurance

companies; . . . only when they are engaged

in the ‘business of insurance' does the

statute apply." Id. at 459-60.

In its role as Plan administrator,

Connecticut General neither spreads nor un-

derwrites insurance risks; there is no in-

surance policy or contract. Rather, Connec-

ticut General provides certain purely

administrative claims processing functions

pursuant to an administrative services agree-

ment with the Plan's sponsor,

C&P.6/ Thus, notwithstanding that Virginia's

implied covenant of fair dealing and Unfair

Trade Practices Act may in some circumstances

reach even the purely administrative

activities of insurers, 7/ such regulation

would not bear upon the "business of

insurance" within contemplation of ERISA's

insurance saving clause and thus is not saved

from preemption by ERISA.

B. Availability of Extracontractual and

Punitive Damages Under ERISA

Having received all of the benefits

to which she is entitled, Powell seeks extra-

6 Under the administrative services

agreement, Connecticut General agreed, among

other things, to provide standard claim forms

for the administration of the plan; to

determine the propriety of claims in

accordance with C&P's claims administrations

procedures and practices; to issue checks,

drawn against C&P's funds, in payment of

clams; to prepare monthly and annual reports;

and to review each claim that has been denied

for compliance with ERISA when the claimant

requests such review.

7 We express no opinion whether such

private causes of action, in another context,

would be cognizable under Virginia law. It

is worth noting, however, that the Virginia

Unfair Trade Practices Act also purports to

regulate "the business of insurance in

accordance with the intent of Congress" as

expressed in the McCarran-Ferguson Act. Va.

Code § 38.1-49 (1950).

contractual and punitive relief under ERISA

to compensate her for various alleged physi-

cal ailments, the decline of her marriage,

her son's emotional distress, and the de-

terioration of her mental health, on account

of the mishandling of C&P and Connecticut

General of her disability claim. Powell

contends that such extraordinary relief is

available under 29 U.S.C. § 1132(a)(3) which

authorizes a civil action by a plan benefi-

ciary "(A) to enjoin any act or practice

which violates any provision of [ERISA] or

the terms of the plan, or (B) to obtain other

appropriate equitable relief, (i) to redress

such violations or (ii) to enforce any provi-

sions of [ERISA] or terms of the plan." (Em-

phasis added.) In Massachusetts Mutual Life

Insurance Co. v. Russell, U.8. » 33

U.S.L.W. 4938 (U.S. June 27, 1985), the

Supreme Court held that extracontractual and

punitive damages are not availabl=s under

§ 1132(a)(1)(B), which authorizes a civil

action by a plan 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." The question whether or to

what extent extracontractual and punitive

relief is authorized by way of the catchall

provision in § 1132(a)(3) for “other

appropriate equitable relief" was expressly

reserved. Id. at 4940 n.5.

Powell urges that notwithstanding the

use of the word "equitable" in § 1132(a) (3)

and its implications for excluding the damage

remedies she seeks, ERISA incorporates the

fiduciary standards and principles of trust

law, the violation of which, although

orcinarily redressed in equity, may

nevertheless give rise to monetary damages in

appropriate cases. The legislative history

Supports Powell's theory that Congress

intended to import into ERISA principles of

trust law, see H.R. Rep. No. 533, 93d Cong.,

lst Sess. 11 (1973), as does the language of

29 U.S.C. § 1104(a), which expressly

| incorporates a general "prudent man" standard

of care for ERISA fiduciaries.

Powell's argument is self-defeating,

however, because even assuming that “other

appropriate equitable relief" may, in certain

circumstances, include extracontractual or

punitive damages, such relief is generally

not available in an action by a beneficiary

against a trustee for breach of trust. See

Restatement (Second) of Trusts § 205 (1959)

(liability for breach of trust is limited to

(a) loss in value of trust estate; (b)

profits accrued by trustee; or (c) profits

lost to estate); G. Bogert & G. Bogert, the

Law of Trusts & Trustees, § 862 (2d ed. 1982)

(trustee is usually charged only with the

loss in value of the trust estate although

exemplary damages are occasionally awarded in

a few states where malice or fraud is

involved); A. Scott, The Law of Trusts, §

198.1 (1967) ("where the trustee is not under

an immediate and unconditional duty to pay

money to the beneficiary, the beneficiary

cannot maintain an action at law against

him."). Thus, the provision for "other

appropriate equitable relief," whatever it

embraces, cannot be held to authorize

extracontractual or punitive damages for the

breach of a plan administrator's fiduciary

duties under ERISA. 8/

Accordingly, the district court

properly granted the defendants’ motions for

summary judgment as to Powell's claims for

extracontractual and punitive damages under

ERISA, and her complaint was properly

dismissed.

AFFIRMED.

8 We observe that the maladministration

alleged by Powell does not rise to a "will-

ful" violation of ERISA for purposes of the

. Act's criminal enforcement provision, 29

U.S.C. § 1131.

APPENDIX B

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF VIRGINIA

ALEXANDRIA DIVISION

ELEANOR POWELL,

Plaintiff,

V. CIVIL ACTION NO. 84-554-A

THE CHESAPEAKE AND

POTOMAC TELEPHONE

COMPANY OF VIRGINIA,

et al.,

)

Defendants. )

ORDER

For the reasons stated from the

bench, the court finding that the plaintiff's

complaint is grounded basically in the Em-

ployee Retirement Income Security Act

(ERISA), 29 U.S.C. § 1001, et seg., the civil

enforcement provisions of which are contained

in 29 U.S.C. § 1132; that the defendant Ameri-

can Telephone & Telegraph Company, Inc.

(AT&T) owed no duty to the plaintiff under

the circumstances of this case; that the

plaintiff has been paid all the contractual

benefits pursuant to the plan adopted by her

employer, The Chesapeake and Potomac Tele-

phone Company of Virginia (C & P) to which

she was entitled; that in its capacity as

administrator of the plan, Connecticut Gener-

al Life Insurance Company (Connecticut Gener-

-al) was not engaging in the business of in-

Surance so as to invoke 29 U.S.C. § 1144(b)

(2)(A); and the court being of the opinion

in accordance with Shaw v Delta Air-

lines, Inc., 463 U.S. 87 (1983); Dependahl v.

Falstaff Brewing Corp., 653 F.2d 1208 (1981);

and Russell v. Mass. Mut. Life Ins. Co., 722

F.2d 482 (1983), that Counts II, III, IV and

V, being counts for intentionai infliction of

emotional distress, misrepresentation of dis-

ability plan and benefits in violation of Va.

Code § 38.1-49, breach of implied duty of fair

dealing, and breach of contract, are pre-

empted by ERISA, and that the plaintiff is

not entitled to extra contractual damages or

punitive damages (contra Russell, supra), it

is hereby ORDERED that:

1. The defendants' motion for

summary judgment on Counts it; III, IV and V

of the complaint is granted on the grounds

that those counts are preempted by ERISA.

Og ee ne ee eee

2. The motion of the defendant

At&T for summary judgment on Count I is

granted because of the lack of involvement of

that defendant in any ERISA violation.

3. The motion of the defendant C & P

and Connecticut General Life Insurance Com-

pany for summary judgment on Count I is granted

for the reason that the only damages pursuant

to ERISA to which the plaintiff would be

entitled have already been paid, and the

plaintiff is not entitled to punitive

damages.

4. The complaint is dismissed.

/s/

Alexandria, Virginia

December 2lst, 1984

APPENDIX C

29 U.S.C.

§ 1021. Duty of disclosure and reporting

(a) Summary plan description and

information to be furnished to participants

ani beneficiaries

The administrator of each employee

benefit plan shall cause to be furnished in

accordance with section 1024(b) of this title

to each participant covered under the plan

and to each beneficiary who is receiving

benefits under the plan--

(1) a summary plan description described

in section 1022(a)(1) of this title; and

) the information described in section

(3) and 1025(a) and (c) of this title

(b) Plan description, modifications and

changes, and reports to be filed with

Secretary of Labor

The administrator shall, in accordance

with section 1024(a) of this title, file

with the Secretary--

(1) the summary plan description

described in section 1022(a)(1) of this

title;

(2) a plan description containing the

matter required in section 1022(b) of this

title;

(3) modifications and changes referred

to in section 1022(a)(2) of this title;

(4) the annual report containing the

information required by section 1023 of this

title; and

(5) terminal and supplementary reports

as required by subsection (c) of this

section.

§ 1104. Fiduciary duties

(a) Prudent man standard of care

(1) Subject to sections 1103(c) and (d),

1342, and 1344 of this title, 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 partici-

pants and their beneficiaries; and

(ii) defraying reasonable expenses

of administering the plan

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

diligence under the circumstances when

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;

the plan so as to minimize the risk of large

losses, unless under the circumstances it is

clearly prudent not to do so; and

(D) in accordance with the documents and

instruments governing the plan insofar as

such documents and instruments are consistent

with the provisions of this subchapter or

subchapter III of this chapter.

§ 1132. Civil enforcement

(a) Persons empowered to bring a civil action

A civil action may be brought--

(1) by a participant or beneficiary--

(A) for the relief provided for in

subsection (c) of this section, or

(B) 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;

(2) by the Secretary, or by a

participant, beneficiary or fiduciary for

appropriate relief under section 1109 of this

title;

(3) by a participant, beneficiary, or

fiduciary (A) to enjoin any act or practice

which violates any provision of this

subchapter of the terms of the plan, or (B)

to obtain other appropriate equitable relief

(i) to redress such violations or (ii) to

enforce any provisions of this subchapter or

the terms of the plan;

(4) by the Secretary, or by a

participant, or beneficiary for appropriate

relief in the case of a violation of 1025(c)

of this title;

requested information

Any administrator who fails or refuses

to comply with a request by this subchapter

to furnish a participant or beneficiary

(unless such failure or refusal results from

matters reasonably beyond the control of the

administrator) by mailing the material

requested to the last known address of the

requesting participant or beneficiary within

30 days after such request may in the court's

discretion be personally liable to such

participant or beneficiary in the amount of

up to $100 a day from the date of such

failure or refusal, and the court may in its

discretion order such other relief as it

deems proper.

(d) Status of employee benefit plan as entity

i (1) An employee benefit plan may sue or

aaa aaa

be sued under this subchapter as an entity.

Service of summons, supoena [sic], or other

legal process of a court upon a trustee or an

admininstrator of an employee benefit plan in

his capacity as such shall constitute service

upon the employee benefit plan. In a case

where a plan has not designated in the

summary plan description of the plan an

individual as agent for the service of legal

process, service upon the Secretary shall

constitute such service. The Secretary, not

later than 15 days after receipt of service

under the preceding sentence, shall notify

the administrator or any trustee of the plan

of receipt of such service.

(2) Any money judgment under this

subchapter against an employee benefit plan

shall be enforceable only against the plan as

an entity and shall not be enforceable

against any other person unless liability

against such person is established in his

individual capacity under this subchapter.

(e) Jurisdiction

(1) Except for actions under subsection

(a)(1)(B) of this section, the district

courts of the United States shall have

exclusive jurisdiction of civil actions under

this subchapter brought by the Secretary or

by a participant, beneficiary, or fiduciary.

State courts of competent jurisdiction and

district courts of the United States shall

have concurrent jurisdiction of actions under

subsection (a)(1)(B) of this section.

(2) Where an action under this

subchapter is brought in a district court of

the United States, it may be brought in the

district where the plan is administered,

where the breach took place, or where a

defendant resides or may be found, and

process may be served in any other district

where a defendant resides or may be found.

(£) Amount in controversy; citizenship of

parties

The district courts of the United States

shall have jurisdiction, without respect to

the amount in controversy or the citizenship

of the parties, to grant the relief provided

for in subsection (a) of this section in any

action.

§ 1133. Claims procedure

In accordance with regulations of the

Secretary, every employee benefit wlan

shall--

(1) provide adequate notice in writing

to any participant or beneficiary whose claim

for benefits under the plan has been denied,

setting forth the specific reasons for such

denial, written in a manner calculated to be

understood by the participant, and

(2) afford a reasonable opportunity to

any participant whose claim for benefits has

been denied for a ful) and fair review by the

appropriate named fiduciary of the decision

denying the claim.

§ 1144. Other laws

(a) Supersedure; effective date

Except as provided in subsection (b) of

this section, the provisions of this

subchapter and subchapter III of this chapter

shall supersede any and all State laws

insofar as they may now or hereafter relate

to any employee benefit plan described in

section 1003(a) of this title and not exempt

under section 1003(b) of this title. This

section shall take effect on January 1, 1975.

(b) Construction and application

(1) This section shall not apply with

respect to any cause of action which arose,

or any act or omission which occurred, before

: January 1, 1975.

(2)(A) Except as provided in

subparagraph (B), nothing in this subchapter

shall be construed to exempt or relieve any

person from any law of any State which

regulates insurance, banking, or securities.

(B) Neither an employee benefit pian

described in section 1003(a) of this title,

which is not exempt under section 1003(b) of

this title (other than a plan established

primarily for the purpose of providing death

benefits), nor any trust established

primarily for the purpose of providing death

benefits), nor any trust established under

such a plan, shall be deemed to be an

insurance company or other insurer, bank,

trust company, or investment company or to be

engaged in the business of insurance or

banking for purposes of any law of any State

purporting to regulate insurance companies,

insurance contract, banks, trust companies,

Or investment companies.

(3) Nothing in this section shall be

construed to prohibit use by the Secretary of

services or facilities of a State agency as

permitted under section i136 of this title.

For purposes of this section:

(1) The term "State law" includes all

laws, decisions, rules, regulations, or other

State action having the effect of law, of any

State. A law of the United States applicable

niv to the District of Columbia shall be

ipeates us a State law rather than a law of

the United States.

(2) The term "State" includes a State,

any political subdivisions thereof, or any

agency or instrumentality of either, which

purports to regulate, directly or indirectly,

the terms and conditions of employee benefit

plans covered by this subchapter.

Va. Code Ann.

§ 38.1-l1. Definitions.

(10) “Insurance transaction" and

"insurance business" includes solicitation,

negotiations preliminary to execution, and

execution of an insurance contract, and the

transaction of matters subsequent to

execution of the contract and arising out of

at.

§ 38.1-50. Definitions.--When used in this

article: A. "Person" means any individual,

corporation, association, partnership,

reciprocal exchange, interinsurer, Lloyds

insurer, fraternal benefit society, and any

other legal entity engaged in the business of

insurance, including agents, brokers and

adjusters. "Person" shall also mean medical,

surgical, hospital, dental, and optometric

service plans as provided for in chapters 23,

24 ard 25 (§§ 38.1-810 to 38.1-862) of Title

38.1 of the code of Virginia. For the

purposes of this article, such service plans

shall be deemed to be engaged in the business

of insurance.

§ 38.1-52.1. Misrepresentations and faise

advertising of insurance policies.--No person

shall make, issue, circujate, or cause to be

made, issued or circulated, any estimate,

illustration, circular, statement, sales

presentation, omission, or comparison which:

1. Misrepresents the benefits,

advantages, conditions or terms of any

insurance policy;

2. Misrepresents the dividends or share

of the surplus to be received on any

insurance policy;

3. Makes any false or misleading

statements as to the dividends or share of

surplus previously paid on any insurance

policy;

4. Is misleading or is a

misrepresentation as to the financial

condition of any person, or as t% the legal

reserve system upon which any life insurer

operates;

5. Uses any name or title of any

insurance policy or class of insurance

policies which misrepresents the true nature

thereof;

6. Is a misrepresentation for the

purpose of inducing or tending to induce the

lapse, forfeiture, exchange, conversion, or

Surrender of any insurance policy;

7. IS a misrepresentation for the

purpose of effecting a pledge or assignment

of or effecting a loan against any insurance

policy; or

8. Misrepresents any insurance policy

as being a share or shares of stock.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.