The plaintiff, Manuel, is a former employee of Turner Industries. During his employment, Manuel participated in a group employee disability plan sponsored by Turner and insured by Prudential Insurance Company. The plan provides that benefits are payable when “Prudential determines that” a participant is unable to work. The plan also provides that participants must submit proof of disability “satisfactory to Prudential.” The summary plan description (SPD) adds that Prudential “has the sole discretion to interpret” the plan. Manuel alleges he became unable to work and claimed benefits under the plan. His STD claim was approved and paid. Once he exhausted these benefits, he applied for long term disability, which was denied at every level of internal adjudication because Prudential concluded that Manuel’s claim was subject to a preexisting condition exclusion. Naturally, to better understand his rights, Manuel requested plan documents from Turner — his employer and the plan administrator. Turner responded by providing an SPD and a Group Insurance Certificate. Manuel followed up by requesting additional documents, and Turner provided the Group Insurance Contract.

Initially, the Fifth Circuit reversed the dismissal of ERISA Section 502(a)(3) claims for appropriate equitable relief on the basis that such claims sought the same injury as the Section 502(a)(1) denial of benefits claims. The defendants “argue that Manuel did not prove additional facts necessary to support the kind of equitable relief requested (e.g., detrimental reliance) and that none of ERISA’s documentary requirements were actually violated. While these arguments may prove correct, we take no position on them. Because the district court concluded that, as a threshold matter, SPD claims could not be maintained under ERISA § 502(a)(3) and dismissed all related discovery requests as moot, the district court deprived Manuel of the opportunity to establish the elements of a valid ERISA § 502(a)(3) claim. Because it is too early to tell if Manuel would have been successful in so doing, we reverse the district court’s decision” as to Turner.  At the same time, however, the Court affirmed the dismissal as to Prudential, as Prudential was not the Plan Administrator, and it is only the Administrator who is responsible to provide a participant with plan documents.

Then, turning to the claim for benefits, the Court of Appeal first addressed the question of whether the plan documents sufficiently vested the defendants with discretion: “Manuel contends that while the SPD includes a delegation of discretion to Prudential, this delegation is not included in the plan documents themselves. Prudential points to terms in the plan documents that it claims confer discretion. First, the plan indicates that a participant is ‘disabled when Prudential so determines.’ Second, the plan requires participants receiving benefits to ‘submit proof of continuing disability satisfactory to Prudential.’ A split exists as to whether plan language requiring a claimant to submit proof of loss ‘satisfactory to [a claims administrator]’ confers discretion. Rather than jumping headlong into the fray, we elect a more restrained approach. This court has recognized that ambiguous plan language must be given a meaning as close as possible to what is said in the plan summary. Here the SPD is clear. It says that the ‘Claims Administrator has the sole discretion to interpret the terms of the Group Contract, to make factual findings, and to determine eligibility for benefits.’ The deep circuit split as to whether the plan language constitutes an express delegation of discretion strongly suggests that the plan language is at least ambiguous. Since we must look to the SPD in cases where the plan language is ambiguous, we conclude that discretion has been delegated to the claims administrator under the plan.”

However, the Court of Appeal found that the District Court failed to account for Prudential’s inherent conflict of interest under Glenn. “Had the district court considered the conflict, it might have permitted limited conflict discovery, and the court ultimately might have concluded that Prudential abused its discretion when it concluded that Manuel had a preexisting condition.”

The Court of Appeal next reversed the District Court’s dismissal of plaintiff’s Section 510 claims against Prudential on the basis that Prudential was not the plaintiff’s employer. Acknowledging a split in the Circuits, the Court was persuaded by the reasoning that: “Since both terms, ‘employer’ and ‘person,’ are defined by ERISA we must assume that Congress used the term ‘person’ deliberately” and concluding that the definition of “person” under ERISA §510 includes some non-employers.

Finally, the Court addressed the claim for penalties under Section 502(c): “Manuel’s allegations are not just limited to the fact that the documents are undated and unsigned. Instead he focuses on the fact that the documents produced by Turner are somewhat different from the copies provided, in the administrative record, by Prudential. The fact that some documents contained in the administrative record were not produced by Turner might suggest that Turner did not produce all of the documents that it was required to produce under ERISA. Most importantly, Manuel alleges that the plan documents in the administrative record contain a plan amendment not included in the Turner production. Record evidence supports this contention. Turner responds by arguing that it produced a complete SPD that included all of the information required under ERISA and its regulations. But ERISA mandates more than the production of a valid SPD upon request for plan documents. The administrator must provide documents which include the ‘instruments under which the plan is established or operated.‘ ERISA §104(b)(4). This court has held that ERISA requires a plan administrator to produce plan documents upon written request from a participant or beneficiary. Whether the amendment contained in the Prudential administrative record constitutes a formal legal document governing the plan is unclear. Only an amendment executed in accordance with the Plan’s own procedures and properly noticed could change the Plan. The existence of the amendment in the Prudential administrative record creates a material question of fact as to whether that amendment has been properly executed and has, accordingly, become a component of the plan. If the amendment is valid, it is part of the plan, and should have been produced by Turner. If Turner did not produce the entire plan document, the district court has ‘discretion’ to assess a penalty. So, while the district court may ultimately exercise discretion as to whether and to what extent a penalty should be assessed, that inquiry is distinct from the question of whether Turner violated a term of ERISA for which a penalty could be assessed.”

Manuel v. Turner Industries, 905 F.3d 859 (5th Cir. 2018).