On March 5, 2015, an en banc panel of the United States Court of Appeals for the Sixth Circuit issued its decision in Rochow v. Life Insurance Company of North America, Inc., 780 F.3rd 364 (2015). (A copy of the decision is available here, Rochow v. LINA En Banc.) Previously, the Sixth Circuit affirmed a district court decision which ordered a disability insurer to disgorge profits totaling $3.8 million dollars for wrongfully withholding disability insurance payments for more than seven years. A United States District Court found that the insurance company had wrongfully denied ERISA disability benefits and permitted disgorgement relief in addition to the payment of past due benefits for breaching its fiduciary duties to the insured.
Originally, on December 6, 2013, in a 2-1 decision, the Sixth Circuit affirmed the disgorgement award. On February 19, 2014, the Court vacated its decision and granted the insurer’s en banc petition. On rehearing, after dispensing with a number of procedural arguments, the Court reversed the district court. In its decision, the Court held that an award of disgorging the profits earned on the withheld funds was not allowed where payment of full benefits had been ordered under another provision of ERISA. The Court determined that an award of benefits along with a potential award of prejudgement interest provided the insured complete relief under ERISA.
Notably, and over a sharp dissent, the Rochow Court emphasized that ERISA §502(a)(3), 29 U.S.C. § 1132(a)(3) provides for a number of distinct causes of action which may be deployed when an ERISA participant is left without a remedy under ERISA §502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B). That provision of the ERISA statute is used most often to enforce a participant’s right to benefits. The Court found that since the plaintiff could be afforded full relief under ERISA Section 502(a)(1)(B), claims for additional relief under other provisions of the statute would not be allowed. The Court held the two causes are distinct and do not overlap to provide relief beyond the payment of benefits if such relief is available to a participant.