Fifth Circuit Opines on when Claims may be Properly Maintained under ERISA § 502(a)(1)(B) Versus § 502(a)(3)

The U.S. Court of Appeals for the Fifth Circuit recently addressed “the labyrinthine complexities of ERISA law and practice.”  Manuel v. Turner Industries Group, LLC, et al., No. 17-30835 (5th Cir. Oct. 1, 2018).  In this wide-ranging opinion, the Fifth Circuit highlighted the importance of identifying the underlying purported injury to understand whether an ERISA § 502(a)(3) claim (a claim for equitable relief) is duplicative of a claim that could have been brought under ERISA § 502(a)(1)(B) (a claim to recover benefits or enforce a right under the terms of a plan), in which case it should be dismissed.


Plaintiff was a former employee of defendant Turner Industries Group, LLC and a participant in the company’s group employee short-term and long-term disability plan (the "Plan"), which was sponsored by the company and insured by Prudential Insurance Company of America.  Plaintiff filed suit against defendants alleging a breach of fiduciary duty under § 502(a)(3) of ERISA after his claim for long term disability (LTD) benefits was denied and after the insurer sought repayment of the short-term disability (STD) benefits it had paid. 

The district court dismissed plaintiff’s claims on the grounds that the relief plaintiff sought should have been brought under § 502(a)(1)(B) of ERISA, which generally governs claims for benefits, as opposed to § 502(a)(3), which can only be invoked if the claim is not governed by a different portion of § 502(a). 

Fifth Circuit Decision

Propriety of ERISA § 502(a)(1)(B) Claims versus ERISA § 502(a)(3) Claims

On appeal, plaintiff argued that his claims were brought under the correct ERISA provision.  The Fifth Circuit began by highlighting that ERISA § 502(a)(1)(B), which provides that a civil action may be brought by a participant “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,” has been construed by the Supreme Court narrowly, and that such claims are generally limited to actions respecting the interpretation of plan documents and payment of claims.

On the other hand, ERISA § 502(a)(3), which provides that a civil action may be brought “by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter 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,” provides for equitable relief and creates a broad cause of action.  The court noted, however, that when ERISA § 502(a)(1)(B) governs a claim, an ERISA § 502(a)(3) claim generally may not be maintained.  In light of this precedent, the court explained that it is critical to look at the underlying purported injury to understand whether an ERISA § 502(a)(3) action is duplicative of a claim that could have been brought under ERISA § 502(a)(1)(B).

The court construed plaintiff’s claim against the insurer as having two parts:  (1) the insurer improperly asserted new grounds for denying his LTD benefits at the last level of appeal, and (2) the insurer failed to identify the independent medical reviewer who recommended denial of his LTD claim.  The court concluded that claims that assert “problematic claims procedures” can be brought under ERISA § 502(a)(1)(B), and, therefore, it affirmed the district court’s dismissal of these claims under ERISA § 502(a)(3).

The Fifth Circuit considered a number of other claims and arguments as well.  We highlight the most interesting ones below.

ERISA § 510 Claims do not Require an Employment Relationship

The Fifth Circuit next turned to plaintiff’s appeal of the district court’s dismissal of his ERISA § 510 claim, which generally prohibits interfering with protected rights under ERISA. The district court had dismissed the § 510 claim against the insurer, holding that a valid § 510 claim can only be brought against an employer, but not a third party.  The Fifth Circuit disagreed, and held that ERISA § 510 claims may be maintained against non-employers. 

Limited Situations in Which an Equitable Lien on Overpayments may be Valid

The court also turned to plaintiff’s appeal of the district court’s order in favor of the insurer on the insurer’s overpayment counterclaim.  The court found, in accordance with a 2016 Supreme Court case, that an equitable lien could only be enforced against specifically identified funds that remained in plaintiff’s possession, as opposed to plaintiff’s general assets.  The court therefore remanded the case so that the district court could determine whether plaintiff kept his STD benefits separate from his general assets such that an equitable lien was warranted.

Practical Considerations

The Fifth Circuit’s decision in Manuel v. Turner Industries Group, LLC:

  • Contains one of the clearest discussions of the types of benefit claims that can be maintained as claims for breach of fiduciary duty;
  • Serves as a good reminder that one can interfere with protected rights without actually being the individual’s employer; and
  • Provides helpful guidance concerning the ability to place an equitable lien on overpayments.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.