The primary weapon wielded by ERISA claimants derives from ERISA § 502(a)(1)(B), codified at 29 U.S.C. 1132(a)(1)(B), which authorizes a civil action “to recover benefits due.” Still, a bit further down the list appears what many courts and commentators have dubbed the “catchall” provision: ERISA § 502(a)(3). That provision authorizes suit to obtain, among other things, “other appropriate equitable relief.” The question facing the Sixth Circuit, not to mention countless courts before it, was under what circumstances, if any, a claimant should be permitted to pursue both types of claims in tandem.
The claimant in the case, Daniel Rochow, was able to demonstrate that his long-term disability insurer’s decision to deny benefits was arbitrary and capricious, and he thus succeeded with his (a)(1)(B) claim. While benefits were being withheld, however, his insurer garnered huge investment returns on the withheld amounts. Pointing to those profits, Mr. Rochow leveled a claim under the equitable remedy of disgorgement, which he maintained was authorized under § 502(a)(3).
Over protests by the insurer, the district court allowed the disgorgement claim to go forward, and by a vote of 2-1, a panel of Sixth Circuit judges subsequently affirmed, 737 F.3d 415. Thereafter, the Sixth Circuit agreed to rehear the case en banc, and on March 5, 2015, by an extremely tight margin, the panel decision was vacated. According to the majority, which pointed to the Supreme Court’s decision in Varity Corp. v. Howe, 516 U.S. 489, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), to allow Mr. Rochow to recover disgorged profits under § 502(a)(3) in addition to his “benefit recovery” under § 502(a)(1)(B) would “result in an impermissible duplicative recovery, contrary to clear Supreme Court and Sixth Circuit precedent.” The dissent, in contrast, argued that Mr. Rochow had been harmed in two (2) distinct ways, and that neither of the claims that he sought to advance, standing alone, was adequate to bring him the “make whole” relief that anyone in his position deserves.
The narrowness with which the en banc rehearing was decided portends potential Supreme Court review, but the case’s procedural irregularities (discussed at length in one of the concurrences) may prove to be a potent obstacle.
Rochow v. Life Ins. Co. of N. Am., 780 F.3d 364 (6th Cir. 2015)