On January 30, 2012, a group of participants in Lowe’s Companies, Inc.’s Group Medical Plan, filed a class action complaint in the Southern District of New York alleging that they were wrongfully denied medical benefits. In Milling v. Lowe’s Companies, Inc., Case No. 12-CIV-0724, plaintiffs brought suit pursuant to ERISA § 502(a)(3) for defendants’ alleged violation of their fiduciary duties. Notably, plaintiffs seek what they claim is an exclusively equitable relief in the form of reinstatement of coverage and equitable restitution to reimburse health care expenses and premium payments caused by their loss of coverage.
The complaint alleges that, during open enrollment for the 2011 plan year, all participants in the Group Medical Plan were required to affirmatively re-enroll through a new computer system if they wished to maintain their medical coverage. Prior practice required participants to re-enroll annually, but if participants did not make any new selections in coverage, then they automatically would receive the same coverage as the prior year. Plaintiffs allege that defendants chose to communicate this change in practice by word of mouth, asking managers to inform their subordinates of this change. Plaintiffs allege that defendants did not distribute any written notices about the change; they did not distribute a summary of material modification or amend the summary plan description; and they did not provide computer training to ensure successful re-enrollment. As a result, plaintiffs allege thousands of employees lost their health insurance during 2011 due to their inability to successfully re-enroll.
Plaintiffs specifically allege two violations of fiduciary duties under ERISA § 404(a): (1) as a result of the failure to develop a system to ensure that participants could properly re-enroll, defendants failed to act solely in the interest of such participants; and (2) as a result of the failure to act in accordance with plan documents, namely, the summary plan description which stated participants would receive their previous coverage if they did not make new selections during re-enrollment, defendants breached their general fiduciary duties. Under both causes of action, they seek equitable restitution under ERISA § 502(a)(3) to compensate them for losses suffered as a result of defendants’ breach of fiduciary duties owed to them and members of the class.
Last year, the Supreme Court’s opinion in Cigna Corp. v. Amara raised the question of whether a broader set of equitable remedies is available in certain ERISA suits. The approach of the Lowe’s plaintiffs is unusual, and makes it a case to watch in light of Amara. It remains to be seen if this complaint will succeed given the numerous strong defenses to this claim; however, employers should be aware of this potential trend.