142 F.4th 1252
10th Cir.2025Background
- Jill Finley became totally disabled in 2007 and received long-term disability insurance coverage from her employer's policy with Reliance Standard Life Insurance Company (Reliance).
- Reliance initially paid, then terminated, and later reinstated, Finley's long-term disability benefits following an administrative appeal by her legal guardian, Nancy Stark.
- Disputes arose over whether Reliance could deduct Social Security Disability (SSD) benefits from Finley's monthly insurance payments.
- Stark sued under ERISA for: (1) an equitable surcharge for losses due to the benefits' termination, (2) breach of fiduciary duty related to internal records for the appeal, and (3) alleged wrongful SSD deductions.
- The district court dismissed all claims for failure to state a claim; Stark appealed.
- The Tenth Circuit affirmed the district court’s dismissal of all claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Equitable relief (attorney's fees) under ERISA § 1132(a)(3) | ERISA allows equitable surcharge for harm from benefits’ termination, covering attorney's fees for securing reinstatement | Attorney's fees for pre-litigation administrative proceedings are not authorized by ERISA | Attorney's fees (pre-litigation) not recoverable as surcharge under ERISA |
| SSD offset deduction from monthly benefits | Reliance’s deduction violated policy terms and internal guidelines, and breached fiduciary duties | Policy permits SSD offset; plaintiff failed to timely appeal the deduction or exhaust administrative remedies | Claim time-barred and unpreserved; failure to exhaust administrative remedies |
| Harm from failure to provide records during administrative appeal | Defendant’s conduct caused extra costs for medical/vocational evidence gathering; requested court-ordered relief | No concrete harm alleged distinct from other claims, all harms derivative | Insufficient concrete harm alleged; appeal unsuccessful |
Key Cases Cited
- Varity Corp. v. Howe, 516 U.S. 489 (ERISA provides a remedy for breaches of fiduciary duty related to payment of claims)
- CIGNA Corp. v. Amara, 563 U.S. 421 (scope of equitable remedies under ERISA § 1132(a)(3))
- Sutton v. Utah State Sch. for Deaf & Blind, 173 F.3d 1226 (10th Cir. 1999) (standard for Rule 12(b)(6) motions)
- Whitehead v. Okla. Gas & Elec. Co., 187 F.3d 1184 (10th Cir. 1999) (ERISA exhaustion doctrine)
- Lyons v. Jefferson Bank & Tr., 994 F.2d 716 (10th Cir. 1993) (issue preservation requirements on appeal)