Stark v. Reliance Standard Life Insurance CompanyStark v. Reliance Standard Life Insurance Company
Gerald E. Durbin, II, and Marcus Glen Mullins, Durbin, Larimore & Bialick, Oklahoma City, Oklahoma, for Plaintiff-Appellant.
Joshua Bachrach, Wilson Elser Moskowitz, Edelman & Dicker, Philadelphia, Pennsylvania (Leasa M. Stewart, GableGotwals, Oklahoma City, Oklahoma, with him on the brief), for Defendant-Appellee.
Before MATHESON, EBEL, and CARSON, Circuit Judges.
CARSON, Circuit Judge.
Congress enacted the Employee Retirement Income Security Act (“ERISA“) to protect employee-benefit-plan participants and their beneficiaries by authorizing civil
I.
In May 2007, thirty-one-year-old Jill Finley suffered a sudden death cardiac arrest resulting in a hypoxic brain injury. At the time, Finley worked as a mortgage underwriter for Provident Funding Associates, LP, but the injury left her totally disabled and unable to work. Provident Funding Associates provided long term disability insurance to its employees through Defendant Reliance Standard Life Insurance, so in June 2007, Finley filed a claim with Defendant for coverage. Finley included in her claim a physician‘s statement stating that she was “unable to return to work of any kind at this time” because of her brain injury.
Defendant approved Finley‘s claim in January 2008, stating that she retroactively would receive benefits due from August 2007 to December 2007 and that it would nеed additional information to support disability benefits beyond December 2007. In the letter approving her claim, Defendant also stated that if she expected her “illness or injury” to prevent her “from performing substantial work activity for a period not less than twelve (12) months, it may be in [her] best interest to apply for Social Security Disability (SSD) benefits.” It continued:
Under certain circumstances, your group policy allows us to deduct an estimate of the amount of the SSD benefit that you may be eligible to receive (see the applicable policy for details). As it is questionable whether or not your particular illness or injury will prevent you from performing substantial work activity for a period of 12 months, we will not reduce your monthly benefit by an estimated SSD benefit amount at this time. However, should further documentation suggest that you[r] illness or injury will prevent you from performing substantial work activity for a period of 12 months, future [long term disability] benefits payable by Reliance Standard Life Insuranсe Company may be reduced by an estimated SSD benefit amount.
Defendant‘s internal Claims Department Administrative Procedure Manual states that “[u]nder the typical [long term disability] policy, no insured is required to file a claim for Social Security benefits.” But, it continues, “it is often in their best interest to do so.”
In a February 2008 letter, Defendant informed Finley that it would begin deducting her estimated SSD from her monthly benefit payments in accordance with the Benefits Provisions section of her long-term-disability-insurance рolicy. The Benefits Provisions describes how Defendant
The Monthly Benefit will be reduced by the estimated amount. If benefits have been estimated, the Monthly Bеnefit will be adjusted when we receive proof:
(1) of the amount awarded; or
(2) that benefits have been denied and the denial cannot be further appealed.
If we have underpaid the Monthly Benefit for any reason, we will make a lump sum payment. If we have overpaid the Monthly Benefit for any reason, the overpayment must be repaid to us.
The policy also clarifies that the monthly payment “will stop on the earliest of . . . the date the Insured ceases to be Totally Disabled . . . or the date thе Insured fails to furnish the required proof of Total Disability.”
The next month, Finley‘s guardian asked Defendant to waive the estimated SSD deduction from her long-term-disability payments because of financial hardship. The long-term-disability policy itself does not include a waiver provision, but under Defendant‘s Claims Department Administrative Procedure Manual, Defendant can waive the offset for estimated SSD benefits in certain circumstances, including financial hardship. Defendant agreed to waive the estimated SSD deduction while Plaintiff‘s SSD application was pending.
In December 2009, an administrative law judge found that Finley had been totally disabled since May 26, 2007 and was entitled to SSD benefits starting November 2007. In March 2010, Defendant sent Finley a letter stating that because she started receiving SSD payments of $1,034.00 per month, it had overpaid her by $27,676.73 because its payments under the policy “should have been reduced by [her] monthly income from [ ] the SS Administration.” The letter explained that once Finley reimbursed Defendаnt for overpayment, her monthly long term disability benefit would be $966.21—the amount she would have received from Defendant minus the amount she received from SSD.
For the next several years, Defendant kept paying Finley long-term-disability payments, and Defendant periodically reviewed Finley‘s claim to ensure Finley remained totally disabled. In April 2022, Defendant terminated Finley‘s benefits, stating that recent testing did not support that she was totally disabled. Finley‘s guardian hired attorneys and submitted an administrative appeal, contending that Defendant‘s termination was erroneous as Finley was still totally disabled.
On January 23, 2023, Defendant reinstated Finley‘s long-term-disability benefits. Through counsel, Finley requested that Defendant pay “attorney fee[s] and cost for having to pursue the re-instatement of her [long-term-disability] benefits.” Defendant responded and declined the request, stating it was not required to pay attorney‘s fees. Finley petitioned Defendant for financial-hardship relief and reimbursement for the “SSD offsets it has dеducted from [Finley‘s long-term-disability] benefits since 2008.” Defendant responded that based on Finley‘s policy, the SSD offset is “both correct and appropriate” and that under the policy, it “must
On October 24, 2023, Finley‘s legal guardian filed suit against Defendant in the United States District Court for the Western District of Oklahoma, alleging three claims for relief under ERISA: first, benefits pursuant to
II.
A complaint‘s legal sufficiency is a question of law, so we review de novo a district court‘s decision on a
III.
Plaintiff first contends that she plausibly claims relief under
The Supreme Court has referred to
U.S. 421, 440–42 (2011) (citing Second Restatement § 199; J. Adams, Doctrine of Equity: A Commentary on the Law as Administered by the Court of Chancery 61 (7th Am. ed. 1881)). The surcharge remedy, in particular, “extend[s] to a breach of trust committed by a fiduciary
Plaintiff seeks to recover the costs of successfully appealing the termination of her long-term-disability benefits. She contends that ERISA оbliges Defendant to make her whole for the attorney‘s fees and costs she incurred from Defendant‘s fiduciary breaches. She argues that
All but one circuit court to consider the issue concluded that the Supreme Court‘s Amara decision authorizes “monetary remedy against a trustee, sometimes called a ‘surcharge,‘” as an “exclusively equitable” remedy available under
We disagree. Along with providing for private enforcement actions, ERISA contains a limited fee-shifting provision in
Some circuits have also highlighted that Congress enacted ERISA to promote “‘the soundness and stability of plans with respect to adequate funds to pay promised benefits.‘” Id. at 317 (quoting
We agree with our sister circuits’ reasoning that under
Plaintiff maintains she does not seek attorney‘s fees under
She cites Castillo v. Metro. Life Ins. Co., 970 F.3d 1224, 1230 (9th Cir. 2020) in support. Like Plaintiff here, the plaintiff in Castillo sought an award of attorney‘s fees under
The court explained that
We agree with the Castillo court that because pre-litigation attorney‘s fees are unavailable for ERISA plaintiffs,
IV.
Plaintiff next claims that she alleges a plausible claim for relief under
We nеed not address the merits of Plaintiff‘s claim for reimbursement of the SSD offset, because these claims are time-barred and waived. In March 2010, Defendant sent Finley a letter explaining the SSD offset and her right to appeal under ERISA. In the letter, Defendant explained that under the terms of her long-term-disability policy, it could reduce her monthly long-term-disability-benefit payment by the amount she received or was entitled to receive as a result of her disability, and it stated that after the SSD offset, her monthly benefit would be $966.21. The letter also stated that she “could request a review of this determination” by submitting her request in writing within 180 days along with “any reasons why [she] feel[s] the determination is incorrect.” Plaintiff never requested a review of Defendant‘s SSD-offset determination during the 180-day window nor any time before April 10, 2023. In fact, Plaintiff did not respond to Defendant‘s contentions that Plaintiff failed to exhaust her administrative remedies.
ERISA contains no explicit exhaustion requirement, but we have held that “exhaustion of administrative (i.e., company or plan-provided) remedies is an implicit prerequisite to seeking judicial relief.” Whitehead v. Okla. Gas & Elec. Co., 187 F.3d 1184, 1190 (10th Cir. 1999) (quoting Held v. Manufacturers. Hanover Leasing Corp., 912 F.2d 1197, 1206 (10th Cir. 1990)). This prerequisite “derives from the exhaustion doctrine permeating all judicial review of administrative agency action[] and aligns with ERISA‘s overall structure of placing primary responsibility for claim resolution on fund trustees.” Id. (quoting McGraw v. Prudential Ins. Co. of Am., 137 F.3d 1253, 1263 (10th Cir. 1998)). Without it, “premature judicial interference with the interpretation of a plan would impede those internal processes which result in a completed rеcord of decision making for a court to review.” Id. Plaintiff‘s failure to exhaust her administrative remedies prevents us from granting her the relief she seeks.
But even if Plaintiff had satisfied the exhaustion requirements, she failed to preserve her arguments that Defendant could offset her SSD only if she elected to seek Social Security benefits, that Defendant forced her to file for SSD in violation of Defendant‘s internal policies, and that the term “elect,” in the context of her policy, was ambiguous. We have repeatedly held that “where an issue is raised but not pursued in the trial court, it cannot be the basis for the appeal,” and “vague, arguable references to [a] point in the district court proceedings do not . . preserve the issue on appeal.” Lyons v. Jefferson Bank & Tr., 994 F.2d 716, 722 (10th Cir. 1993) (citing Monarch Life Ins. Co. v. Elam, 918 F.2d 201, 203 (D.C. Cir. 1990)). In her objection to Defendant‘s motion to dismiss, Plaintiff cursorily mentioned these arguments only in her Statement of Facts section by asserting: Defendant “forced
V.
Plaintiff also alleges other harms relating to Defendant‘s breach of its fiduciary duty to her by “failing to provide the records she requested during her administrative appeal,” as these breaches “deprived [her] of the opportunity to review the purported basis for [Defendant]‘s termination of her benefits and caused her to incur additional expense to obtain evidence from Provident, her treating doctors, and a vocational rehabilitation consultant during her administrative appeal.” In her complaint‘s Prayer for Relief section, she specifies the relief she seeks with respect to each claim she asserts. As to her claim for relief based on Defendant‘s failure to provide her records she requested during her administrative appeal—her third claim for relief—she asks the court to:
- Declare that Defendant has breached its fiduciary duty to Plaintiff;
- Order Defendant to pay the attorney‘s fees and costs Plaintiff incurred to hire an attorney to pursue the administrative appeal to have her long term disability benefits reinstated;
- Order Defendant to reimburse Plaintiff for the SSD offset deductions it has taken from her long term disability benefits since 2008, plus prejudgment interest;
- Declare that Plaintiff has a right to receive her future monthly long term disability benefits from Defendant without SSD offset deductions;
- Award Plaintiff reasonable attorney‘s fees and costs of suit pursuant to
ERISA § 502(g), 29 U.S.C. § 1132(g) ; and - Provide such other relief as the Court deems equitable and just.
In its ordеr, the district court dismissed her third claim for relief, stating that Plaintiff “alleges no concrete harms resulting from these alleged breaches” but rather “simply reiterates [her] request for attorney‘s fees and reimbursement of Other Income Benefit deductions.” The district court continued: “[E]ven assuming that [Defendant‘s] termination decision was arbitrary and capricious, benefits have been restored, and [Plaintiff] pleads no concrete harms stemming from the alleged irregularities in [Defendant‘s] handling of doсuments in the course of her appeal.”
We agree. As evidenced by the relief she seeks to recover, this claim is basically a reiteration of her other two claims. The harm she alleges, at its core, stems from Defendant breaching its fiduciary duty by wrongfully terminating Plaintiff‘s benefits and improperly offsetting from her monthly payment the amount she receives in SSD. To make her whole, she seeks attorney‘s fees and to recover the money Defendant withheld due to her SSD. Because wе affirm the district court‘s dismissal of her claims for relief under
AFFIRMED.
CARSON
Circuit Judge