United States: Potential Erosion Of The Distinction Between Benefits Denials And Breach Of Fiduciary Duty Under ERISA In The Tenth Circuit

A recent decision from a federal district court in the Tenth Circuit provides an example of the potential erosion of the distinction between claims for wrongful denial of benefits and breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA), following the Sixth Circuit's 2013 decision in Rochow v. LINA, 737 F.3d 415 (6th Cir. 2013) (Rochow II), in which a three-member panel of that court affirmed the district court's order requiring disgorgement of profits flowing from the wrongful denial of benefits.

In Faltermeier v. Aetna Life Ins. Co., No. 15-CV-2255-JAR-TJJ (D. Kan. May 28, 2015), the district court allowed a plan participant to amend his complaint to include a breach of fiduciary duty based on the insurer's alleged failure to consider an expert report that was submitted just one day before the final decision denying benefits was issued.

Although the Sixth Circuit sitting en banc ultimately vacated the Rochow II decision in Rochow v. Life Ins. Co. of North America, 780 F.3d 364 (6th Cir. Mar. 5, 2015) (Rochow III), thus maintaining the distinction between denial of benefits and breach of fiduciary duty, the rationale of Rochow II may have nevertheless inspired some creative advocacy on behalf of plan participants/beneficiaries to which counsel for insurers and claims fiduciaries should be prepared to respond, as illustrated by the Faltermeier decision.

ERISA Background

ERISA provides for six remedial provisions, including review and recovery of wrongfully denied benefits pursuant to §502(a)(1), and the "catch-all" breach of fiduciary duty provision pursuant to §502(a)(3).

Federal district courts are permitted to review the denial of benefits under an arbitrary and capricious standard based on the administrative record before the claims administrator. The applicable standard for the equitable claims brought pursuant to §502(a)(3) is that of a prudent person exercising the care, skill, prudence and diligence under the prevailing circumstance. 29 U.S.C. §1104(a)(1)(B). ERISA and its implementing regulations generally permit deference to plan administrators and claims fiduciaries. Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989).

Where the claim fiduciary makes not only the benefit determination but also the plan funding decision, there is a conflict of interest. That conflict is a factor to be considered in determining whether the decision-making was arbitrary and capricious but may "prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy." Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008).

Use of an independent medical review to support the claim fiduciary's initial decision renders the conflict of interest factor of limited weight. Fite v. Bayer Corp., 554 Fed. Appx. 712 (10th Cir. 2014) (benefits claim denial affirmed). Further, a claim fiduciary may not assert a different basis to support the denial on judicial review of the decision, but he/she may change the basis for denial from that listed in the initial denial to the final denial decision (from a claimant's appeal of the initial denial) as supported by the administrative record. Id.

Tenth Circuit Precedent on Benefit Denials and Breach of Fiduciary Duty

The Tenth Circuit has historically disallowed a participant's or beneficiary's claim for breach of fiduciary duty pursuant to §502(a)(3) when ERISA provides for another adequate remedy, such as recovery of improperly denied benefits pursuant to §502(a)(1)(B). See, e.g., Moore v. Berg Enters., Inc., 201 F.3d 448 n.2 (10th Cir. 1999) (citing Varity Corp. v. Howe, 516 U.S. 489, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996)).

Recent District Court Decision: Faltermeier

In Faltermeier, however, the district court allowed a plan participant to amend his complaint to include a breach of fiduciary duty based on the claim fiduciary's alleged failure to consider an expert report that was submitted just one day before its final decision denying benefits was issued. The expert report allegedly supported the plan participant's position that he was disabled from his occupation and that his condition was permanent and progressive. In opposing the motion to amend, the claim fiduciary argued it was futile given that the breach of fiduciary duty claim was based on a wrongful denial of benefits, and therefore subject to dismissal. The district court allowed the amendment, reasoning that the breach of fiduciary duty cause of action could be asserted as an alternative claim for relief.

There are several potential consequences of the district court's decision to allow the amendment in Faltermeier. On the denial of benefits claim, the court will review the record before the plan administrator under the abuse of discretion standard. However, the plan participant will also be entitled to discovery related to whether there was a breach of fiduciary duty and to produce evidence for the court to determine if there was a breach of a fiduciary duty. In other words, the court will likely be able to review and consider the expert report, which was not part of the administrative record, in determining whether the denial of benefits was improper. The district court would essentially be reviewing the denial of benefits de novo, and not under the arbitrary and capricious standard. The result is not only an erosion of the distinction between claims for denial of benefits and breach of fiduciary duty but also an erosion of the claim fiduciary's discretionary authority.

Whether the claim fiduciary should have considered the expert report – new information – in Faltermeier is a factor to consider under the "abuse of discretion" standard applicable in benefits denials under ERISA §502(a)(1)(B), but only if the information was timely submitted and not considered or discussed in the final denial. If the expert report was untimely submitted, the failure to consider or to discuss that information would typically not constitute an abuse of discretion.

Practice Pointer

Faced with the simple allegation that the administrator may not have considered an expert report relevant to the participant's claim for benefits – which arguably feels unfair – the court in Faltermeier may have felt compelled to address the perceived inequity by allowing the amendment. In cases similar to this one, a potential response could be to request a remand in order to have a clearer record regarding timeliness and a better understanding of whether consideration of a denial of claim is supported by the record before the claims administrator, even with the availability of the additional information.

Whether the breach of fiduciary claim in Faltermeier will ultimately be successful is an open question, as Aetna subsequently filed a motion to dismiss that claim, including inter alia an argument of failure to exhaust administrative remedies on the breach of fiduciary duty claim. Nevertheless, Faltermeier illustrates that creative advocacy on behalf of plan participants/beneficiaries following Rochow II may couple typically dismissible remedies and expand the nature of relief sought, notwithstanding Rochow III.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.