Fifth Circuit Explains Breach of Fiduciary Remedies and Need for Complete Plan Documents

An important case out of the Fifth Circuit issued earlier this week outlines several issues related to ERISA. However, we want to highlight its explanation of the scope of ERISA’s equitable remedies, as well as its impact on ERISA penalty claims for failing to produce relevant Plan documents. Manuel v. Turner Indus. Grp., L.L.C., No. 17-30835, 2018 WL 4689974 (5th Cir. Oct. 1, 2018).  

Michael Manuel worked for Turner Industries Group LLC and participated in its group short and long term disability plan. The Plan was insured and administered by Prudential Insurance Company of America. Under the Plan, benefits were payable when participants submit proof of disability “satisfactory to Prudential.” However, the Summary Plan Description (“SPD”) gave Prudential the “sole discretion” to interpret the Plan. Manuel requested plan documents from Turner. The company initially provided the SPD and a Group Insurance Certificate. It later provided the Group Insurance Contract.  

After exhausting his administrative remedies, Manuel sued Turner and Prudential for various violations under ERISA and state law. The district court rejected all of Manuel’s claims. However, the three judge panel reversed and remanded the district court’s dismissal of Manuel’s claims for fiduciary breach and failure to provide Plan documents against Turner and his claim for plan benefits against Prudential.  

In his breach of fiduciary duty claim, Manuel alleged that Turner breached its fiduciary duties in failing to timely provide a SPD that complied with ERISA requirements. Manuel claimed that an SPD was not provided to him within 90 days after he enrolled in the Plan and that the SPD failed to comply with ERISA because it did not include the Plan’s preexisting condition exclusion, reimbursement provision, or delegation of interpretive discretion to Prudential. The Court determined that Manuel’s claims for injuries relating to SPD deficiencies are cognizable under ERISA §502(a)(3).  

Manuel also sought penalties against Turner under ERISA §502(c) because the company did not provide the appropriate formal written and signed plan document. The district court determined that Manuel received all of the documents to which he was entitled. The Fifth Circuit disagreed because Turner produced documents that were different from what Prudential provided in the administrative record.   

The Court explained that ERISA mandates more than the production of a valid SPD upon request for plan documents. Here, there was a question whether the amendment contained in the Prudential administrative record was a formal legal document governing the Plan. If the amendment was valid, then Turner should have produced it. The Fifth Circuit thus reversed and remanded the district court’s resolution of Manuel’s ERISA §502(c) claim. If Manuel can prove that a penalty could be assessed, the district court must consider if any such penalty is appropriate.  

Claimants who are not provided proper Plan documents from the employers should review this opinion carefully, as it provides valuable guidance about the types of remedies that are available under ERISA.

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