Here’s a new case out of the Southern District of Texas, Beverly Price and Dale Price v. Life Insurance Company of North America. In this matter, the decedent had life insurance and was diagnosed with terminal cancer. LINA denied his claim after his death alleging that he or the plaintiffs failed to convert the policy. Plaintiffs brought suit for benefits and, in the alternative, for breach of fiduciary duty. Defendant responded with a 12(b)(6) motion. The court first finds that the alternative breach of fiduciary duty claim is duplicative.

While the Prices assert that the alleged breach of fiduciary duty by Northgate entitles them to an “equitable surcharge” – a monetary remedy typically available under § 502(a)(3) – the essence of their complaint is the alleged wrongful denial of benefits pursuant to the terms of the Plan and Policy. This is true even if their claim is pled in the alternative, as the focus is on the substantive injury alleged to have occurred. The injury alleged under § 502(a)(3) is indistinguishable from the Prices’ § 502(a)(1)(B) claim against the Plan and LINA and is essentially a claim for benefits denied.

In addition, the Prices assert a plausible claim for relief pursuant to § 502(a)(1)(B). The Prices’ complaint identifies the Plan and Policy at issue, describes the Decedent’s approved FMLA leave, and contends that the denial of benefits violated the terms set forth in the Plan and Policy relating to insurance coverage while on approved FMLA leave. Dkt. 1 ¶¶ 17, 20, 21, 25, 36, 37. Thus, the Prices have adequate redress pursuant to § 502(a)(1)(B), which provides a direct mechanism to address the injury for which they seek equitable relief. See Swenson v. United of Omaha Life Ins. Co., 876 F.3d 809, 812 (5th Cir. 2017). This subsequently forecloses the possibility of a § 502(a)(3) claim for breach of fiduciary duty regardless of whether the § 502(a)(1)(B) claim against LINA and the Plan is ultimately successful. However, one potential exception to this prohibition relates to claims alleging a deficient SPD.
The court next finds that the defendant Northgate should be dismissed for any deficiency in the SPD.

In the instant case, the court agrees with Northgate that in most cases a plausible § 502(a)(1)(B) claim for benefits due under the terms of the plan generally forecloses the ability to bring a simultaneous claim for equitable relief under § 502(a)(3). However, as Manuel states, claims relating to alleged SPD deficiencies are an exception to this rule and it is clear that the Prices have claimed there was a deficiency in the SPD potentially prepared by Northgate. Dkt. 1 ¶¶ 43–44.

However, Northgate is not named or ever referred to as the Plan Administrator in the Plan, Policy, or Agreement. To the contrary, the Plan and Policy documents clearly identify AHC as the Plan Administrator. Dkt. 17, Ex. 1 at 22. Further, the Agreement between ARES and Northgate makes clear that ARES was to retain control over the Plan’s administration and management. Dkt. 17, Ex. 2 at 5, 8. Thus, Northgate had no duty to furnish a valid SPD pursuant to § 101(a) of ERISA and is not responsible for its alleged deficiencies, similar to that of Prudential in Manuel. See Singletary, 828 F.3d at 349 (“[I]t violates an ERISA provision for a Plan Administrator not to provide a valid SPD to a beneficiary or participant”) (emphasis added). Northgate’s motion to dismiss the Prices’ claim under § 502(a)(3) of ERISA is therefore GRANTED.
The opinion is attached below.
Attached Files