COYNE & DELANY COMPANY, Plaintiff-Appellee, v. BLUE CROSS & BLUE SHIELD OF VIRGINIA, INCORPORATED, Dеfendant-Appellant, and STANDARD SECURITY LIFE INSURANCE COMPANY OF NEW YORK, Defendant.
No. 95-3180
United States Court of Appeals for the Fourth Circuit
December 16, 1996
PUBLISHED. Argued: October 30, 1996. Appeal from the United States District Court for the Western District of Virginia, at Charlottesville. B. Waugh Crigler, Magistrate Judge. (CA-94-18-C)
Before WILKINSON, Chief Judge, and WILKINS and LUTTIG, Circuit Judges.
COUNSEL
ARGUED: R. Gordon Smith, MCGUIRE, WOODS, BATTLE & BOOTHE, L.L.P., Richmond, Virginia, for Appellant. James Nichol
OPINION
WILKINSON, Chief Judge:
Coyne & Delany Company brought suit against Blue Cross and Blue Shield of Virginia under the Employee Retirement Income Security Act of 1974 (ERISA),
We reverse. ERISA does not afford fiduciaries a cause of action for benefits. ERISA is a “comprehensive and reticulated statute” which does not provide remedies other than those expressly set forth by Congress. Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 146-47 (1985). We therefore decline Coyne & Delany‘s invitation to read into the more general language of ERISA section 502(a)(3) an action for fiduciaries which Congress saw fit to deny them under the specific terms of section 502(a)(1)(B).
I.
Coyne maintained until 1991 a group health insurance plan under contract with Blue Cross. Seeking to reduce its premiums, Coyne cancelled the Blue Cross policy and replaced it with a self-insured plan. Coyne obtained a reinsurance policy for the new plan under which Standard Security Life Insurance Company would pay any benefit obligations incurred by Coyne in excess of $10,000.
The new plan became effectivе April 1, 1991. Prior to that date, Tyree had been hospitalized for a heart condition. He was on sick
Coyne paid $160,000 to Tyree‘s health care providers for his medical expenses and sought reimbursement from Standard under the reinsurance policy. At this point Coyne learned that Tyree was not in fact covered under either the reinsurance contract or the self-funded plan. Both contain an “active service” requirement which Tyree failed to meеt because he was not at work on the effective date of either document and never returned to work prior to his death.
Consequently, Coyne sought to recover its money from Blue Cross based on a provision of the Blue Cross plan which states:
If the Member received Major Medical Services for a condition befоre his coverage ends, the Benefits of this Contract for Major Medical Services that Member receives for that condition after his coverage ends will be provided:
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d. until the Member becomes covered under any other group coverage.
Blue Cross declined payment on the ground that Tyree was “covered” by other insurance within the meaning of the Blue Cross policy.
Coyne then brought this action claiming that Blue Cross violated its fiduciary duties by unreasonably denying Tyree benefits. Appellee sought $160,000 in damages, contending that its mistaken payments were the result of this breach of fiduciary duty. Coyne also requested specific performance of thе Blue Cross policy regarding Tyree‘s medical bills for the period after April 1, 1991.
The magistrate judge denied Coyne any monetary recovery, but held that Tyree was covered under the Blue Cross policy and directed Blue Cross to process and pay “all claims for medical services ren-
II.
Section 502(a) provides the exclusive statement of civil actions available under ERISA to the Secretary of Labor, participants, beneficiaries, and fiduciaries. See Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 52 (1987). Federal jurisdiction is limited “to the suits by the entities specified in the statute.” Provident Life & Accident Insurance Co. v. Waller, 906 F.2d 985, 987 (4th Cir. 1990). Congress did not, however, simply make the actions enumerated in section 502(a) generally available to all these parties. Instead, “[s]ection 502(a) specifies which persons . . . may bring actions fоr particular kinds of relief.” Franchise Tax Board of California v. Construction Laborers Vacation Trust, 463 U.S. 1, 25 (1983). In relevant portion, section 502(a) states:
A civil action may be brought --
(1) by a participant or beneficiary --
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(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 fоr appropriate relief under section 1109 of this title [Liability for breach of fiduciary duty];
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter [Protection of Employee Benefit Rights,
29 U.S.C. §§ 1001-1169 ] or 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.
A.
Although Coyne directs our attention to sections 502(a)(2) and (a)(3), the analysis of who may recover benefits under ERISA must begin with section 502(a)(1)(B), the section which specifically provides a cause of action for benefits. Coyne‘s description of its claim as one for breach of Blue Cross’ fiduciary duty does not alter the fact that it is seeking medical benefits which it claims are owed to Tyree. To permit the suit to proceed as a breach of fiduciary duty action would encourage parties to avoid the impliсations of section 502(a)(1)(B) by artful pleading; indeed every wrongful denial of benefits could be characterized as a breach of fiduciary duty under Coyne‘s theory.
As Coyne appears to concede, fiduciaries have no cause of action under section 502(a)(1)(B). See Provident Life, 906 F.2d at 987-88. By its terms, this provision permits only “a participаnt or beneficiary” to sue for benefits. The omission of fiduciaries is striking. If Congress had wanted to enable fiduciaries to recover benefits on behalf of participants and beneficiaries, it could have done so easily by including them in section 502(a)(1)(B) as it did in other provisions of section 502(a). Despite this clear expression of сongressional intent, Coyne nonetheless contends that a fiduciary may bring a suit for benefits under sections 502(a)(2) and (a)(3).
B.
Section 502(a)(2), however, also offers Coyne no assistance. The Supreme Court in Russell clearly held that any recovery under section
Here the order granted individual benefits to a single participant, perhaps the quintessential example of relief that is not available under section 502(a)(2). Such an award is impermissible as it in no sense “inures to the benefit of the plan as a whole.” Id. at 140.
C.
Examination of section 502(a)(3) reinforces the conviction that Congress did not intend to authorize fiduciaries to sue for benefits. To begin with, its very language suggеsts that Congress did not contemplate that section 502(a)(3) would be used by plaintiffs seeking individual relief. Section 502(a)(3) speaks broadly of “any act or practice” which violates “any provision of this subchapter” or “the terms of the plan.”
Coyne, however, contends that its claim clearly fits within the terms оf section 502(a)(3). It notes that the parties agree that both Coyne and Blue Cross are fiduciaries with respect to the Blue Cross
The defect in this reading of section 502(a)(3) is that it would render meaningless the omission of fiduciaries in section 502(a)(1)(B). “Absent clear congressionаl intent to the contrary, we will assume the legislature did not intend to pass vain or meaningless legislation.” Gulf Life Insurance Co. v. Arnold, 809 F.2d 1520, 1524 (11th Cir. 1987). To accept Coyne‘s position, we would have to assume that the failure to mention fiduciaries was not deliberate but only an oversight. The Supreme Court, however, has warned us against presuming that omissions in section 502(a) are inаdvertent: “The six carefully integrated civil enforcement provisions found in § 502(a) of the statute . . . provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” Russell, 473 U.S. at 146.
This warning is particularly relevant here, where Congress has addressed both the specific remedy at issue and thе precise question of who is entitled to pursue that remedy. In fact, the inclusion of fiduciary actions in both section 502(a)(2) and section 502(a)(3) reinforces the view that their omission from section 502(a)(1) was deliberate and that Congress simply did not intend to provide fiduciaries with a cause of action for benefits.
Coyne‘s argument also fails to address adequately the fact that section 502(a)(3) does not provide “equitable relief” but only ”appropriate equitable relief.”
The Supreme Court‘s recent discussion of section 502(a)(3) in Varity Corp. v. Howe, 116 S. Ct. 1065 (1996), underscores our understanding of the section. It is true that the Varity Court characterized section 502(a)(3) as a “catchall” provision and found that its terms “are broad enough to cover individual relief for breach of a fiduciary obligation.” Id. at 1076, 1078. Even in finding that section 502(a)(3) was a catchall provision, however, the Court stated that it provides “equitable relief for injuries caused by violations that § 502 does not elsewhere adequately remedy.” Id. at 1078 (emphasis added). As the Court explained:
We should expect that courts, in fashioning “appropriate” equitable relief, will keep in mind the “special nature and purpose of employee benefit plаns,” and will respect the “policy choices reflected in the inclusion of certain remedies and the exclusion of others.” Pilot Life Ins. Co., 481 U.S., at 54, 107 S.Ct., at 1556. See also Russell, 473 U.S., at 147, 105 S.Ct., at 3092-3093; Mertens, 508 U.S., at 263-264, 113 S.Ct., at 2072. Thus, we should expect that where Congress elsewhere provided adequate relief for a beneficiary‘s injury, there will likely be no need for further equitable relief, in which case such relief normаlly would not be “appropriate.”
Varity, 116 S. Ct. at 1079. Section 502 provides a remedy for the wrongful denial of benefits; it is simply one that only a participant or beneficiary such as Tyree can claim. The absence of reported cases involving benefits claims brought by fiduciaries is testimony to the adequacy of the 502(a)(1) remedy and to thе inappropriateness of the action asserted here.
In awarding benefits in Varity, the Supreme Court did nothing to authorize wholesale fiduciary suits for benefits. The Varity Court noted that ERISA is intended to protect participants and beneficiaries
Proscribing fiduciary suits for benefits also respects the ERISA requirement that claimants use internal procedures provided by their benefit plans before bringing an ERISA action. This exhaustion requirement is grounded in section 503, which requires ERISA benefit plans to provide notice and an explanation of any claim denial and to afford claimants reasonable opportunity to receive a “full and fair review” of the decision denying their claim.
We find no indication in section 502(a) that Congress meant to vary the rеmedies available to a fiduciary depending on the nature of the plan in question. On its face, section 502(a) does not draw distinctions among fiduciaries but simply uses the unadorned term “fiduciary.” The definition of “fiduciary” does qualify fiduciary status -- a party generally is a fiduciary only to the extent that it provides investment advice or exercises discretionary authority in managing or administering the plan -- but this qualification does not relate to a plan‘s method of paying claims.
III.
The text, structure, and purpose of ERISA all lead to one conclusion -- that Coyne lacked standing to bring a suit to recover benefits for Tyree. Any change in the statute will have to come from Cоngress, not the courts. We therefore reverse the judgment of the district court and remand with instructions to dismiss this action.
REVERSED