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DUNNIGAN v. METROPOLITAN LIFE INS. CO.
March 8, 2000
HELEN DUNNIGAN, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
METROPOLITAN LIFE INSURANCE COMPANY, DEFENDANT.
The opinion of the court was delivered by: Scheindlin, District Judge.
This uncertified class action raises a narrow but important
issue that remains unsettled in the Second Circuit, namely
whether a plan beneficiary may maintain an action under the
Employee Retirement Income Security Act of 1974 ("ERISA"),
29 U.S.C. § 1001 et seq., solely to recover interest on plan
benefits that were paid after a period of delay. Although the
majority of courts to consider this issue have found that ERISA
does not provide a remedy for those who seek interest on delayed
benefit payments rather than payment of benefits themselves, both
the Third and Seventh Circuits recently recognized the viability
of independent claims for interest under the statute.
Plaintiff Helen Dunnigan and the other purported class members
are beneficiaries of various long-term disability insurance
policies issued by defendant Metropolitan Life Insurance Company
("MetLife").*fn1 Plaintiffs seek, pursuant to two alternative
provisions of ERISA, an award of interest on disability benefit
payments they received retroactively from MetLife. Plaintiffs do
not dispute the principal amounts of their benefit payments.
Rather, plaintiffs complain that MetLife's delay in payment of
those benefits deprived them of the time value of their money.
Although the language and policy of ERISA, together with common
law contract principles, support recognition of an independent
cause of action for recovery of interest under the statute, any
such action requires an individualized assessment of the facts
and equities surrounding each claim and thus cannot be maintained
on behalf of a class of plaintiffs. Accordingly, and for the
reasons that follow, defendant's motion is granted in its
Dismissal of a complaint for failure to state a claim pursuant
to Rule 12(b)(6) is proper only where "it appears beyond doubt
that the plaintiff can prove no set of facts in support of [her]
claim that would entitle [her] to relief." Harris v. City of
N Y, 186 F.3d 243, 247 (2d Cir. 1999). "The task of the court
in ruling on a Rule 12(b)(6) motion is merely to assess the legal
feasibility of the complaint, not to assay the weight of the
evidence which might be offered in support thereof." Cooper v.
Parsky, 140 F.3d 433, 440 (2d Cir. 1998) (internal quotations
omitted). Thus, in deciding such a motion, the court must accept
as true all material facts alleged in the complaint and draw all
reasonable inferences in the nonmovant's favor. Harris, 186
F.3d at 247. Nevertheless, "[a] complaint which consists of
conclusory allegations unsupported by factual assertions fails
even the liberal standard of Rule 12(b)(6)." De Jesus v. Sears,
Roebuck & Co., 87 F.3d 65, 70 (2d Cir. 1996) (internal
quotations omitted). In deciding a Rule 12(b)(6) motion, the
district court must limit itself to facts stated in the
complaint, documents attached to the complaint as exhibits or
documents incorporated in the complaint by reference. See
Dangler v. New York City Off Track Betting Corp., 193 F.3d 130,
138 (2d Cir. 1999).
The facts and allegations set forth below are taken from the
Complaint. They are presumed true for purposes of this motion.
MetLife is an insurance company with its principal place of
business in New York, New York. Complaint ¶ 5. MetLife issues
disability insurance policies for employee welfare benefit plans
nationwide. Id. ¶¶ 5-6. With respect to the various MetLife
disability insurance policies at issue in this case, MetLife is a
"fiduciary" within the meaning of section 3(21)(A) of ERISA,
29 U.S.C. § 1002(21)(A). Id. ¶ 7.
In October 1990, Dunnigan joined the New York City office of
Deloitte & Touche as an auditor. Id. ¶ 14. Deloitte & Touche
provides its employees with disability insurance through a group
Long Term Disability Plan (the "Deloitte Plan" or the "Plan")
issued by MetLife. See Summary Plan Description of Deloitte &
Touche Long Term Disability Plan ("Deloitte Plan Summary"), Ex. A
to Affidavit of Scott Riemer, Counsel for Plaintiff ("Riemer
Aff."), at 4.17.*fn3 The Deloitte Plan is an employee welfare
benefit plan within the meaning of section 3(1) of ERISA,
29 U.S.C. § 1002(1). Complaint ¶ 4. Dunnigan enrolled in the
Deloitte Plan and was at all relevant times a plan "participant"
within the meaning of section 3(7) of ERISA, 29 U.S.C. § 1002(7).
In March 1994, Dunnigan was diagnosed with Chronic Fatigue
Syndrome. Id. ¶ 15. She was rendered totally disabled by the
disease. Id. On July 11, 1994, Dunnigan applied to MetLife for
long-term disability benefits. Id. ¶ 16. MetLife denied
Dunnigan's application for benefits on November 15, 1994. Id. ¶
17. MetLife's denial of benefits was issued approximately 125
days after Dunnigan filed her application. The Complaint makes no
allegations with respect to the circumstances surrounding
MetLife's denial of plaintiff's application. Specifically, the
Complaint does not allege that the denial of benefits, or the
125-day delay in notification, were due to any bad faith on the
part of MetLife.
On February 15, 1995, Dunnigan appealed MetLife's denial of
benefits. Id. ¶ 19. In a letter dated August 2, 1995, MetLife
denied plaintiff's appeal and stated that plaintiff could bring
no further appeals. Id. ¶ 21. MetLife's denial of plaintiff's
appeal was issued approximately 165 days after she filed her
initial appeal. Again, the Complaint makes no allegations with
respect to the circumstances surrounding MetLife's denial of
plaintiff's appeal. Specifically, the Complaint does not allege
that the denial of plaintiff's appeal, or the 165-day delay in
notification, were due to any bad faith on the part of MetLife.
From August 1995 through November 1998, plaintiff retained
counsel and submitted additional appeals to MetLife. Id. ¶ 23.
Then, in February 1999, MetLife reversed its denial of
plaintiff's disability benefits and granted plaintiff retroactive
benefits for the period from June 23, 1994 through January 31,
1999. Id. ¶ 24. MetLife tendered those retroactive benefits in
a lump sum payment by check dated February 8, 1999. Id. ¶ 25.
The lump sum amount was calculated by multiplying plaintiff's
monthly benefit as specified under the terms of the Deloitte Plan
by the number of months from the date of entitlement — here, June
23, 1994. Id. ¶ 8(c). The Complaint does not make any
allegations as to why, in February 1999, MetLife reversed its
position regarding plaintiff's entitlement to benefits. Nor does
the Complaint allege that the more than four year delay between
the time plaintiff first applied for benefits and MetLife's
determination that she was eligible for such benefits was due to
bad faith on the part of MetLife.
As a matter of company policy, MetLife did not pay plaintiff
any interest on her retroactive benefits. Id. ¶ 26. Cindy
McKillip, Case Management Specialist for MetLife, informed
plaintiff's counsel that "regardless of the factual
circumstances[,] MetLife never pa[ys] interest on back benefits
except when ordered to do so by a court of law." Id. ¶ 28.
Plaintiff commenced litigation on June 4, 1999. Three months
later, on September 29, plaintiff filed the instant
In the Complaint, plaintiff seeks to represent a proposed class
of persons who:
(a) were covered by a policy of longterm disability
insurance issued by MetLife, id. ¶ 8(a);
(b) were determined by MetLife, after a period of
delay, to be totally disabled and entitled to
disability benefits, id. ¶ 8(b);
(c) were paid retroactive benefits in a lump sum by
MetLife, id. ¶ 8(c); and
(d) were not paid interest on those retroactive
benefits, id. ¶ 8(d).
Plaintiff contends that she and the purported class members are
entitled to an award of interest on their retroactive benefits to
compensate them for "the time-value loss" of receiving benefit
payments in a lump sum after a period of delay. Id.
Defendant moved to dismiss the Complaint on November 4, 1999,
arguing that claims for interest on delayed benefit payments
cannot be maintained under ERISA. On December 9, the Secretary of
the United States Department of Labor requested permission to
file an amicus curiae brief. With the Court's permission, the
Department of Labor filed an amicus brief in support of
plaintiff's claims for interest on December 22.*fn6 On January
12, 2000, defendant replied jointly to plaintiff's opposition and
the Department of Labor's amicus brief.
As set forth above, defendant's motion turns upon the issue of
whether a plan beneficiary may maintain an action under ERISA
solely to recover interest on benefits that were paid
retroactively after a period of delay. Before analyzing the
applicable legal principles, it is helpful to consider the
gravamen of the Complaint through the lens of common sense and
basic notions of fairness.
Plaintiff's claim for interest is premised upon the truism that
monthly benefits have a time-value component that is lost when
those benefits are paid retroactively in a lump sum. See Pl.
Opp. at 7-8. To illustrate, there is a real economic difference
between a payment of $1,000 in June 1994 and payment of that same
$1,000 in February 1999. If an employee is entitled to a benefit
payment of $1,000 in June 1994 but does not receive that payment
until February 1999, then the employee has lost the present value
of her June 1994 benefit payment.
At the same time, administrators of employee benefit plans face
the enormous administrative task of processing applications for
disability benefits and determining which employees are entitled
to such benefits under the terms of the relevant plan. Some
period of delay between an employee's application for benefits
and the plan's final determination of eligibility is necessary
and inevitable. The question is whether, under ERISA, the
employee is entitled to — and the plan is responsible for —
payment of interest as compensation for the period of delay.
In Varity Corp. v. Howe, 516 U.S. 489, 497, 116 S.Ct. 1065,
134 L.Ed.2d 130 (1996), the Supreme Court described ERISA as
embodying "competing congressional purposes". On the one hand,
there is "Congress' desire to offer employees enhanced protection
for their benefits . . . and, on the other, its desire not to
create a system that is so complex that administrative costs, or
litigation expenses, unduly discourage employers from offering
welfare benefit plans in the first place." Id. The Varity
Court instructed that in resolving issues that arise under ERISA,
"courts may have to take account of" these competing
congressional goals. Id. This case requires exactly that — a
fair balancing between the rights of the plan beneficiary and the
integrity and reasonable administration of the plan.
Turning now to the statute, section 502(a) of ERISA sets forth
"six carefully integrated civil enforcement provisions" that
constitute an "interlocking, interrelated, and interdependent
remedial scheme". Massachusetts Mutual Life Ins. Co. v.
Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 87 L.Ed.2d 96
(1985). Two of those provisions, sections 502(a)(1)(B) and
502(a)(3)(B), are relevant to resolution of the instant dispute.
Section 502(a)(1)(B) authorizes a plan participant or
beneficiary to sue "to recover benefits due to [her] under the
terms of [her] plan, to enforce [her] rights under the terms of
the plan, or to clarify [her] rights to future benefits under the
terms of the plan." 29 U.S.C. § 1132(a)(1)(B). Section
502(a)(3)(B) allows a plan participant or beneficiary "to obtain
other appropriate equitable relief (i) to redress [violations of
ERISA or the terms of an ERISA plan] or (ii) to enforce any
provisions of this subchapter or the terms of the plan."
29 U.S.C. § 1132(a)(3)(B).
Plaintiff invokes both sections as alternate grounds for
recovery of interest. Although I conclude that only 502(a)(3)(B)
supports recovery of such relief under the statute, I address
plaintiff's arguments with respect to each provision below,
keeping in mind the need ...