Dorothy Hamilton v. Unum Life Insurance Co. , 217 F.3d 1321 ( 2000 )

Dorothy HAMILTON, Plaintiff-Appellant,
v.
ALLEN-BRADLEY COMPANY, INCORPORATED, Defendant-Appellee.
No. 99-11766.
United States Court of Appeals,
Eleventh Circuit.
July 10, 2000.
Appeal from the United States District Court for the Southern District of Georgia.(No. 98-00041-CV-3),
Dudley H. Bowen, Jr., Chief Judge.
Before ANDERSON, Chief Judge, and BLACK and HALL*, Circuit Judges.
HALL, Circuit Judge:
Dorothy Hamilton ("Hamilton") appeals the grant of summary judgment entered in favor of Allen-
Bradley Company, Inc. ("Allen"). Hamilton had sued Allen for breach of fiduciary duty under the Employee
Retirement Income Security Act ("ERISA"). We have jurisdiction pursuant to 28 U.S.C. § 1291.
I
Hamilton was employed by Allen as a "repair service operator," a job that required her to repeatedly
manipulate heavy objects. Sometime in 1993 she developed carpal tunnel syndrome, and by October 1994,
she was completely unable to perform her job as a result of her carpal tunnel syndrome and diabetes. She had
surgery for her carpal tunnel syndrome, but with poor results. In February 1995, she returned to work briefly,
but had to quit after a couple of days, and never returned to work after that. Hamilton applied and was
granted social security disability benefits.
After Hamilton realized that she could no longer work, she inquired of Melba Lee ("Lee"), Allen's
human resources director, about whether she could qualify for long-term disability. Hamilton asserts that on
this occasion and on several more occasions from 1994 until 1996, Lee stated that Hamilton did not qualify.
According to Hamilton, Lee also refused to give Hamilton a claim form, and did not inform Hamilton of the
*
Honorable Cynthia Holcomb Hall, U.S. Circuit Judge for the Ninth Circuit, sitting by designation.
identity of the insurer for the disability plan. At Allen, employees are required to go through the human
resources department when they seek to apply for disability benefits. Lee does not remember ever having
turned Hamilton away, but admits that she fields about 50 calls every week and therefore, Hamilton may have
asked her for an application without her remembering the event. Allen claims that pursuant to company
policy, on March 12, 1995, a letter was mailed to Hamilton containing the disability application. Lee stated
in her deposition that she did not know if that letter was ever sent and Hamilton states that she never received
it.
In 1996, after another request by Hamilton for a disability application, Lee forwarded to her a health
insurance claim instead. Hamilton contacted the health insurer, CIGNA, which told her that all requests for
benefits had to go through Lee. (CIGNA was not the insurer for the disability plan). Therefore Hamilton
contacted Lee again, who allegedly did not respond to Hamilton's further solicitations.
In 1997, Hamilton encountered several former Allen employees who were all receiving disability
benefits under Allen's disability plan. At this point, Hamilton contacted Lee again and this time received the
correct application form for her disability insurer, UNUM insurance. Hamilton returned the form to Lee who
sent it onto UNUM which denied Hamilton's claim on the basis that Hamilton had not properly complied with
the notice and proof-of-claim requirements of the policy, i.e. Hamilton's claim was untimely.
In December 1997, Hamilton appealed the denial of her claim to UNUM. Her basis for the appeal
was that Hamilton was required to go through Lee before she could file a claim, had done so in a timely
fashion, but was prevented from sending UNUM her application by Lee. In fact, Hamilton asserted that Allen
knew in September 1994, that Hamilton was having medical problems, and actually separated Hamilton from
work in October 1995, for "being unable to return to work." UNUM rejected her appeal, and Hamilton filed
suit against UNUM and Allen in Georgia state court. UNUM and Allen removed to federal court and moved
for summary judgment which the district court granted. Hamilton only appeals the ruling as it pertains to
Allen and argues that she should prevail because: (1) Allen is culpable for wrongfully denying Hamilton her
2
benefits; and (2) Allen breached its fiduciary duty by failing to provide her with the necessary information
needed to file her disability claim.
II
We review de novo an order granting summary judgment, applying the same legal standards as the
district court. See Wolf v. Coca-Cola Co., 200 F.3d 1337, 1339 (11th Cir.2000). As such, the record has to
be viewed in the light most favorable to the non-moving party. See Holbrook v. City of Alpharetta, 112 F.3d
1522, 1525-26 (11th Cir.1997).
A. WRONGFUL DENIAL
1. Waiver
The Federal Rules of Civil Procedure provide that a complaint contain a short and plain statement
of the claim showing that the pleader is entitled to relief, and a respective demand for that relief. See FRCP
8(a). Detail is not the bedrock on which a proper complaint stands; all that is required is that the defendant
be put on notice of the claim being asserted against it and the ground on which it rests. See Sams v. United
Food & Commercial Workers International Union, AFL-CIO, CLC, 866 F.2d 1380, 1384 (11th Cir.1989).
Thus, the form of the complaint is insignificant, even if it fails to categorize correctly the legal theory giving
rise to the claim, so long as the complaint alleges the facts on which relief can be granted. See Evans v.
McClain of Georgia, Inc., 131 F.3d 957, 964 n. 2 (11th Cir.1997).
Allen's primary contention in the context of Hamilton's wrongful denial claim is that she has failed
to raise it until now and therefore it should be deemed waived. The complaint which Hamilton filed in state
court seeks a reinstatement of her disability benefits based on a wrongful denial, and names both UNUM and
Allen as defendants. Allen is alleged as not having appropriately forwarded Hamilton's request for benefits
to UNUM. See Complaint at 3, ¶ 9. Even though the complaint is not a model of clarity, the fact that the only
relief sought was reinstatement of benefits based on a wrongful denial, and Allen was named as a party,
should have put Allen on notice that this allegation was being leveled against it by Hamilton. See Itel Capital
3
Corp. v. Cups Coal Co., Inc., 707 F.2d 1253, 1258 (11th Cir.1983). Moreover, the district court's opinion
states that Hamilton is "alleging that Defendants [i.e. UNUM and Allen] wrongfully denied her claim for
long-term disability benefits." See District Court Opinion at 1. Because the district court construed
Hamilton's wrongful denial claim as being brought against both defendants, it is incorrect for Allen to argue
at this late date that such a claim is being raised for the first time on appeal. Therefore, we will review
Hamilton's appeal for wrongful denial of benefits on the merits.
2. Merits
ERISA provides that a "civil action may be brought by a participant or beneficiary ... to recover
benefits due ... under the terms of [the] plan." See 29 U.S.C. § 1132(a)(1)(B). In the Eleventh Circuit, this
section confers a right to sue the plan administrator for recovery of benefits. See Rosen v. TRW, Inc., 979
F.2d 191, 193-94 (11th Cir.1992). Therefore, if the employer is administering the plan, then it can be held
liable for ERISA violations. See id. at 193-94. Proof of who is the plan administrator may come from the
plan document, but can also come from the factual circumstances surrounding the administration of the plan,
even if these factual circumstances contradict the designation in the plan document. See id. at 193.
The key question on this issue is whether Allen had sufficient decisional control over the claim
process that would qualify it as a plan administrator under Rosen. This requires an analysis of the facts
surrounding the administration of the disability plan. The first fact is that the plan booklet states that any
claim must be made to UNUM. This would seem to cut in Allen's favor.
However, Hamilton offers testimony by Lee to the effect that Allen requires its employees to go
through its human resources department in order to obtain an application for disability benefits. This fact
places Allen in sufficient control over the process to qualify as the plan administrator notwithstanding the
language of the plan booklet. See Law v. Ernst & Young, 956 F.2d 364, 373-74 (1st Cir.1992). Moreover,
Allen's benefit choice booklet states: "Plan Administrator—Manager, Employee Benefit Programs, Allen
Bradley Company, .... The Plan Administrator has designed the identified insurance companies and the Allen
4
Bradley Company as its agents to administer the Plan, to process all claims and appeals, and to provide other
administrative services." (Emphasis added). Hamilton points out that Allen did carry out its administrative
designation by handing out the claim forms itself without getting prior permission from UNUM, and by
fielding questions about the plan from employees. Hamilton also includes an excerpt of Lee's deposition that
identifies Milwaukee (Allen's headquarters) as the headquarters of the plan administration. Under the factual
inquiry outlined in Rosen, there are sufficient indicators that point to Allen as a plan administrator.
Allen's arguments against the above conclusion are misplaced. First, Allen points to law in other
circuits which does not allow for the employer to be designated as a co-plan administrator for the purposes
of liability. See e.g. Crocco v. Xerox Corp., 137 F.3d 105, 107 (2d Cir.1998); Madden v. ITT Long Term
Disability Plan for Salaried Employees, 914 F.2d 1279, 1287 (9th Cir.1990). Because there is law going in
the opposite direction in this circuit, we are bound to follow the law of our circuit and Allen's argument is
without merit.
The second argument that Allen raises is that because Hamilton's claim was untimely, she has no
cause of action for wrongful denial. The essence of this second argument is correct, but the result applies
only to UNUM, and not to Allen, because there is a material dispute of fact as to whether Hamilton informed
Allen during the time in which her claim request would have been timely. Allen goes on to distract this Court
by citing extensive law for the proposition that UNUM's notice requirement cannot be imputed to Allen for
purposes of UNUM's liability. See UNUM Life Insurance Co. of America v. Ward, 526 U.S. 358, 379, 119
S.Ct. 1380, 143 L.Ed.2d 462 (1999). Again Allen is correct on the legal statement, but again, Allen is
incorrect as to its application because Ward concerned a claim against the insurer and not the employer.
Therefore, because the district court did not proceed with any further analysis on this issue, but dismissed
Hamilton's case for lack of a remediable claim, we remand the case for a determination of the other elements
of a wrongful denial claim.
B. FIDUCIARY DUTY
5
1. Waiver
Like for the previous issue, Allen offers a waiver argument to parry Hamilton's claim against it.
Allen's argument is two-fold: (1) that because the complaint did not include any breach of fiduciary claims,
then Hamilton should be barred from bringing them before this Court because it would be the first time that
any court would review them; and (2) that Hamilton's claim that Allen should be liable because it failed to
disclose truthful information about the plan should be barred because it was never raised before.
We reject both of Allen's waiver arguments. First, even though it is true that the original complaint
never mentioned any breach of fiduciary duties against Allen, it is clear that the district court considered such
claims in the context of the summary judgment motions, seeing that the district court opinion contains a
whole separate section on Hamilton's claim against Allen for breach of fiduciary duties. See District Court
Opinion at 11-14. The district court, as was within its discretion, must have construed Hamilton's summary
judgment opposition as a motion for leave to amend her complaint, and therefore this issue is properly before
this Court. See Kaplan v. Rose, 49 F.3d 1363, 1370 (9th Cir.1994).
Allen's second argument is similarly flawed. Allen claims that Hamilton never raised the issue of
Allen's failure to disclose truthful information as a basis for her breach of fiduciary duty claim. In its opinion,
the district court phrases Hamilton's claim as Allen's "failure to provide her with the necessary forms to file
her disability claim." See District Court Opinion at 13. The step between this phraseology, and the one used
by Hamilton now is a tiny one, if one exists at all. The facts on which Hamilton is basing her claim have not
changed, and therefore we will entertain her claim on the merits.
2. Merits
ERISA provides that "a fiduciary shall discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries ... for the exclusive purpose of ... providing benefits to
participants and their beneficiaries ... with the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the
6
conduct of an enterprise of a like character and with like aims." See 29 U.S.C. § 1104(a)(i)(A) & (B). ERISA
also provides remedies for breaches of fiduciary duties by stating that any fiduciary who breaches its
responsibilities shall be personally liable to return any losses incurred as a result of the breach to the plan.
See 29 U.S.C. § 1109(a). Allen claims, and the district court agreed, that § 1109(a) provides an exclusive
remedy under ERISA and that no private right of action is allowed. Both Allen and the district court relied
on Simmons v. Southern Bell Tel. & Tel. Co., 940 F.2d 614, 617 (11th Cir.1991) which held that such a
private right of action does not exist.
The main problem in relying on Simmons is that this case had been reversed by the Supreme Court
over three years before the district court entered its ruling in this case. See Varity Corp. v. Howe, 516 U.S.
489, 506-515, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996). In Varity, the Supreme Court tackled the exact same
issue presented here, whether § 1109 functions as an exclusive remedy for breaches of fiduciary duties or
whether remedies outside the statute can exist. The Supreme Court adopted the latter approach by stating that
there was nothing in the statute, or in the legislative history, which indicated that § 1109 functioned as a
limitation of rights, given the statute's overall purpose in benefitting injured beneficiaries. See Varity, 516
U.S. at 511-512, 116 S.Ct. 1065. Therefore, the Supreme Court concluded that any losses, the remedy of
which was not contemplated within ERISA, provide a private right of action through the catch-all phrase of
29 U.S.C. § 1132(a)(3). See id. at 512, 116 S.Ct. 1065.
Allen makes a great deal about the fact that the Varity argument was not raised before the district
court, and therefore is to be deemed waived. Allen's argument is problematic at best, because as an officer
of the court, it was both Hamilton's and Allen's duty to point out to the district court that Simmons had been
abrogated. It seems presumptuous for Allen to now bring this particular waiver argument before this Court
after failing to properly carry out its duties before the district court.
Allen's other argument is that Varity does not apply in this case because Hamilton has not asserted
a cause of action under the catch-all provision of ERISA, but rather under a provision where the statute has
7
already contemplated a remedy. See 29 U.S.C. § 1132(a)(1)(B). The Supreme Court, in Varity, has already
implicitly rejected this argument by saying that it is ERISA itself that acts as the safety net; if a violation has
no appropriate remedy provided by ERISA, then the catch-all provision acts as a safety net by offering
appropriate equitable relief. See Varity, 516 U.S. at 512, 116 S.Ct. 1065. It is irrelevant under what heading
Hamilton pled, because if the remedy she seeks is outside ERISA, as it is in this instance (because a private
cause of action is not contemplated within the four corners of the statute), then the catch-all provision
automatically applies. Thus, Hamilton has standing to bring a cause of action against Allen.
The final two issues which remain to be determined are whether Allen is a fiduciary, and, if so,
whether material issues of fact exist as to whether any fiduciary duty was breached by it. The first issue does
not seem to be contested by Allen. In fact, the facts necessary to determine whether Allen is a fiduciary under
the plan are identical to those which go to determine whether Allen is a plan administrator. ERISA defines
a fiduciary with respect to the plan as someone who has any discretionary authority over the administration
of the plan. See 29 U.S.C. § 1002(21)(A). Therefore, because, as analyzed in part II.A.2. above, the facts
show that Allen was a plan administrator seeing that it maintained discretionary authority under the plan, then
it necessarily follows that Allen is also a fiduciary under ERISA.
There is disputed evidence as to whether Allen provided Hamilton with the necessary forms and
information for her to bring her claim on time. If the failure to convey such data is a breach of a fiduciary
duty, then this issue is ripe for jury determination. Precedent indicates that Allen did have a fiduciary duty
that obligated it, at the very least, to forward Hamilton's requested claim to UNUM. Particularly instructive
is Krohn v. Huron Memorial Hospital, 173 F.3d 542 (6th Cir.1999). In Krohn, the employer failed to submit
a disability application, which was brought to it by a covered employee, to the insurer upon the belief that
the employee was not interested in applying for benefits. See id. at 546. The Krohn court held that the
employer was not entitled to second-guess the employee's intentions and had to forward the request to the
insurer, and a failure to do so constituted a breach of a fiduciary duty. See id. at 551-52. Equally instructive
8
is ERISA itself which states that a plan administrator is performing a fiduciary act when making a
discretionary determination about whether a claimant is entitled to benefits. See 29 U.S.C. § 1104(a)(1)(D).
Allen tries to distinguish the facts of Krohn by pointing out that eventually, once Hamilton gave it
a completed claim application, it forwarded it to UNUM. This ignores Hamilton's contention that Allen
should have forwarded the request when Hamilton initially went to Lee within the period which would have
saved her claim from being untimely.
In this case, like in Krohn, the employer made a decision regarding whether or not to convey
information to the insurance company. Such a failure resulted in the loss of benefits for the employee. In
Krohn it was the failure to mail the completed claim form; here, it is the refusal to contact the insurance
company on the grounds that Lee believed that Hamilton had no claim. Therefore Allen performed a
fiduciary act and is liable if such an act is deemed wrongful.
Allen is also incorrect in its argument that failure to disclose information to Hamilton does not rise
to the level of a fiduciary duty. Precedent states that a "fiduciary must give complete and accurate
information in response to participants' questions." Drennan v. General Motors Corp., 977 F.2d 246, 251
(6th Cir.1992). Even though Allen is correct in noting that the Supreme Court explicitly declined to decide
this issue, see Varity, 516 U.S. at 506, 116 S.Ct. 1065, Allen cannot point to any case stating the opposite
conclusion of the Drennan (and Krohn ) decisions. As such, Allen's failure to disclose information to
Hamilton, if true, is also a breach of a fiduciary duty.
Allen is, however, correct in its assertion that Hamilton's claim that Allen should have provided
claim forms to her does not reach the level of a fiduciary duty. ERISA specifies that the plan administrator
must furnish, on written request, any information regarding the operation of the plan. See 29 U.S.C. §
1024(b)(4). It is undisputed that Hamilton never presented a written request for the claim forms, nor is it
disputed that precedent has established that claim forms do not fall within the category of documents covered
by § 1024. See Allinder v. Inter-City Products Corp. (USA), 152 F.3d 544, 548-50 (6th Cir.1998). Therefore,
9
Allen did not have a fiduciary duty to provide Hamilton with claim forms without prior proper solicitation
by Hamilton.
In sum, the district court erred in dismissing Hamilton's wrongful termination claim because Eleventh
Circuit law states that such claims are properly asserted against the employer who acts as a plan administrator.
The district court also erred in granting summary judgment for Allen on Hamilton's breach of fiduciary duty
claims because it relied on a reversed case, and because most of the acts that Hamilton has alleged Allen
committed fall under the rubric of fiduciary acts.
III
For the foregoing reasons, we REVERSE the district court's decision on both issues and REMAND
for further proceedings consistent with this opinion.
10