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Plaintiff’s § 1132(a)(2) Claim Dismissed – N.D. Ca.

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  • Plaintiff’s § 1132(a)(2) Claim Dismissed – N.D. Ca.

    Plaintiff’s § 1132(a)(2) Claim Dismissed – N.D. Ca.

    Attached hereto is a case out of the Northern District of California, Mauerman v. Sun Life Assurance Company of Canada. In this case, plaintiff asserted, among others, a cause of action for injunctive relief pursuant to ERISA § 1132(a)(2) in connection with his claim for LTD benefits requesting:

    An order enjoining the alleged improper acts and practices, or such
    other equitable or remedial relief with respect to Mr. Mauerman
    and the Plan as the Court may deem appropriate, including but not
    limited to the issuance of an injunction:
    • Requiring that Sun Life stop limiting its explanations in its
    denial letters to boilerplate reciting that a claimant may
    “submit written comments, documents, records or other
    information relating to their claim for benefits,” and
    provide in addition thereto an adequate, detailed and
    understandable description of the additional material or
    information necessary for the claimant to perfect the claim
    and an explanation of why such material or information is
    necessary;
    • Prohibiting Sun Life from denying or terminating claims
    for benefits, without affording the claimant an opportunity
    to be examined by a physician or other appropriate
    practitioner of Sun Life’s choosing, in cases where the
    claimant’s own treating physicians and/or practitioners
    unanimously opine that the claimant is unable to work; and
    • Prohibiting Sun Life from denying or terminating claims
    based on the absence of “objective” evidence where no
    such requirement is imposed by the terms of the Plan or of
    any insurance policy issued by Sun Life to the Plan, or
    where the condition under consideration is not susceptible
    to confirmation by “objective” testing or measurement.
    Defendant moved to dismiss the injunctive relief cause of action, and the court granted the motion.

    Section 1132(a)(2) states, “A civil action may be brought . . . by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title.” Section 1109(a) provides that a fiduciary that breaches their duties under ERISA “shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate.” This claim “gives a remedy for injuries to the ERISA plan as a whole, but not for injuries suffered by individual participants as a result of a fiduciary breach.” Wise v. Verizon Commc’ns, Inc., 600 F.3d 1180, 1189 (9th Cir. 2010) (citing LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S. 248, 254, 256 (2008)).

    To allege a claim for breach of fiduciary duty under Section 1132(a)(2), Mauerman must
    allege that Sun Life injured the Plan or otherwise jeopardized the entire Plan or put at risk Plan assets. See ibid. (quoting Amalgamated Clothing & Textile Workers Union, AFL-CIO v. Murdock, 861 F.2d 1406, 1414 (9th Cir. 1988)). The amended complaint essentially alleges that Sun Life has repeatedly and in similar ways mishandled individual Plan participants’ claims for benefits, including Mauerman’s. As our court of appeals has recognized, however, “[a] fiduciary’s mishandling of an individual benefit claim does not violate any of the fiduciary duties defined in ERISA.” Amalgamated Clothing, 861 F.2d at 1414 (citing Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142 (1985)).

    Mauerman acknowledges that Wise upheld the dismissal of a similar claim where the plaintiff “state[d] conclusions about the Plan Administrators’ alleged fiduciary breach — including assertions that the Plan Administrators failed to investigate, consult with qualified medical experts, or evaluate claims fairly — without alleging facts tending to show that any claim besides [the plaintiff’s] was mishandled or that the result of any such mishandling caused plan-wide injury.” 600 F.3d at 1189–90 (emphasis added). He nevertheless contends his claim is distinguishable because he alleges that Sun Life has mishandled other claims, and that Sun Life’s “ongoing and persistent conduct has degraded the security and reliability of Plan benefits,” which amounts to “plan-wide” injury (see Dkt. No. 21 at 3–4). But the same nebulous “plan-wide” injury could be alleged in the same conclusory fashion by any ERISA plaintiff complaining of a wrongful denial of benefits, inasmuch as any wrongful denial theoretically “degrade[s] the security and reliability of Plan benefits.” If, as Mauerman argues, this was all it took to show “plan-wide injury” as contemplated in Wise, the distinction between “injuries to the ERISA plan as a whole” and “injuries suffered by individual participants as a result of a fiduciary breach” — repeatedly enforced by both the Supreme Court and our court of appeals — would be a nullity. See, e.g., Wise, 600 F.3d at 1189.

    Mauerman’s untenable position finds no support in In re WellPoint, Inc. Out-of-Network UCR Rates Litig., 865 F. Supp. 2d 1002 (C.D. Cal. 2011) (Judge Philip Gutierrez), a nonbinding decision he erroneously cites as “Ninth Circuit law” (see Dkt. No. 21 at 3). In WellPoint, plaintiff subscribers, providers, and medical associations sued defendant insurers for breach of fiduciary duty under Section 1132(a)(2), among other things, based on allegations of “a systematic effort” to conceal and knowingly use depressed rates to compute benefits for outof- network services. Significantly, the plaintiffs alleged that this systematic breach injured “all plan subscribers by forcing them to pay more for [out-of-network] medical services than they would have if a correct [rate] was applied” and further injured “all [out-of-network] plan providers because they [lost] patients who [could not] pay the inflated out-of-pocket costs.” Judge Gutierrez, applying Wise, declined to dismiss the claim, finding that the plaintiffs’ allegations “clearly show[ed] harm to more than just the individuals bringing suit” and were “not conclusory.” Id. at 1043–44.

    The same cannot be said for Mauerman’s claim here, which hinges on a conclusory assertion of “plan-wide” injury and fails to allege facts showing any harm to more than just individual Plan participants. In short, the amended complaint fails to state a claim for relief under Section 1132(a)(2).
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