Watson v. Deaconess Waltham Hospital

United States Court of Appeals
For the First Circuit
____________________
No. 01-2133
LARKIN D. WATSON IV,

Plaintiff, Appellant,

v.
DEACONESS WALTHAM HOSPITAL, CAREGROUP, INC., LIBERTY LIFE
ASSURANCE CO. OF BOSTON,
Defendants, Appellees.
____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]

____________________
Before
Torruella, Circuit Judge,
Bownes, Senior Circuit Judge,
and Lynch, Circuit Judge.

____________________

Robert LeRoux Hernandez for appellant.

Philip M. Cronin with whom Joseph K. Scully and Peabody &
Arnold LLP were on brief for appellee.

____________________

August 8, 2002
____________________
 LYNCH, Circuit Judge. Larkin Watson, fifty-six years old

and totally disabled due to a heart condition, is unemployed and

not receiving Long Term Disability (LTD) benefits.1 He claims

that, at pertinent times when he would have been eligible for LTD

coverage through his employer, he was never told of the

eligibility. As a result, he made choices about the number of

hours he worked, not understanding that a consequence of his

choices was that he was no longer eligible for LTD coverage. By

the time that Watson says he did learn of the LTD policy and

submitted his application, that application was denied on a number
of grounds; had he applied earlier and made different choices, he

says he would have been given the LTD benefits he now needs.
Watson sued his employers and plan administrators under the
Employee Retirement Security Act of 1974 ("ERISA"), 29 U.S.C. §§

1001-1461 (2000).
Watson does not sue the Plan for denial of benefits under
ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B); there would be

obvious problems in doing so. Rather, he attempts to fit his claim
into the particular circumstances in which benefits plan
participants and beneficiaries may bring claims alleging breach of

fiduciary duty by plan administrators and others. See, e.g.,

Varity Corp. v. Howe, 516 U.S. 489 (1996).

1
After we heard oral argument but before this decision
issued, plaintiff Larkin Watson died. Pursuant to Fed. R. App. P.
43(a)(1), his widow, Lyndsey Watson, was substituted as the
plaintiff. For purposes of convenience, we refer to the plaintiff
as Larkin Watson.

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 The district court granted judgment for Deaconess Waltham

Hospital, Watson's employer, Watson v. Deaconess Waltham Hosp., 141

F. Supp. 2d 145 (D. Mass. 2001), declined to allow Watson to amend
his complaint to add previous plan administrators as defendants,

Watson v. Deaconess Waltham Hosp., No. 00-10583-WGY (D. Mass. June

1, 2001), and also granted summary judgment for the Liberty Life
Assurance Co. of Boston, the LTD insurer after January 1, 1996,

Watson v. Deaconess Waltham Hosp., No. 00-10583-WGY (D. Mass. June

29, 2001). We affirm the district court's decisions, although our

reasoning differs in some respects.

We summarize the heart of our reasoning. ERISA does

require plan administrators to provide certain benefits plan

information, such as Summary Plan Descriptions, to all plan
participants and beneficiaries. 29 U.S.C. § 1024(b). ERISA also

provides limited and specific remedies if an administrator fails to

do so. Id. at § 1132(a)(1), (c)(1)(B). When ERISA itself has
specified a duty and a corresponding remedy, we will impose a

further duty on fiduciaries only in very narrow circumstances.
Even assuming Deaconess was a fiduciary, Watson has not presented

facts that fit him into those narrow circumstances. This is not a

case in which misrepresentations were made to Watson, nor is this

a case in which he requested the LTD information and the response

was inadequate.

I.

The facts are largely undisputed. The parties agreed

that the district court judge should consider the case against

-3-
Deaconess as a case stated. See Cont'l Grain Co. v. P.R. Mar.
Shipping Auth., 972 F.2d 426, 429 n.7 (1st Cir. 1992). The case

against the insurer was resolved on summary judgment.
Larkin Watson first began working for Waltham-Weston

Hospital, the predecessor to Deaconess Hospital, in October 1992,

as a part-time employee working twenty-four hours per week as an
Addictions Counselor. During the orientation on his first day of

work, Watson reviewed and signed an "Employee Orientation

Checklist," which included a list of possible benefits. Several of

the benefit programs are checked off, and others have notations

such as "not interested" or "gave info -- will decide." On the

line for the LTD Insurance program is the notation "N/A." Watson

testified in his deposition that he did not know what "LTD
Insurance" meant and that the human resources representatives

simply told him that it did not apply to him. Watson was also

given a two-page "Part Time Employee Benefits Summary" listing the
conditions under which part-time employees became eligible for

various types of benefits; LTD benefits were not listed or

discussed on this form. At that time, the hospital's LTD insurance

plan was provided through the Confederation Life Insurance Company

(not a party to this action) and required that an employee work at

least thirty-six hours per week in order to be eligible. All

parties agree that Watson was not eligible for LTD plan

participation when he began his employment in October 1992.

On November 5, 1993, Watson changed his employment

status. According to an affidavit of the hospital's Director of

-4-
Human Resources, Watson became a "full-time" Addictions Counselor

at that time. In a letter offering him the full-time position,

Watson's supervisor wrote, "[F]ull-time benefits will be available
to you. Please discuss these issues with the representative from

human resources."2 Watson says that he discussed the "benefits of

the new full-time job" with the Assistant Director of Human
Resources and the Human Resources Benefits Coordinator and that, at

that time, he opted to enroll in the major medical and dental

plans. Watson says that no one informed him that, as a full-time

employee, he was eligible for LTD benefits, nor was he given any

summary plan description or other notice of benefits. The

hospital's LTD plan was an employer-pay-all plan, under which

Watson automatically became a beneficiary because he was a full
time employee working at least thirty-six hours per week; no action

was required on his part to enroll.

In late 1995, Watson began having health problems related
to a heart condition and, as a result, began missing days at work.

In early 1996, his supervisor, Lynne Foster, had several

conversations with him, asking him if he would like to reduce his

hours to part-time work, because she believed that he was having

trouble keeping up with full-time work due to his health condition.

Watson says that these conversations "induced" him to change his

status to part-time employment at thirty-two hours per week,

2
According to Deaconess's Director of Human Resources, the
hospital has since instituted a policy of sending any employee who
changes from part-time to full-time status, or vice versa, a letter
explaining any changes in his or her benefits.

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effective on March 17, 1996. Again, no one informed him that there

could be changes in his benefits eligibility as a result of this

change. Watson says that he contacted someone in Human Resources
to ask how the change would affect his major medical and dental

benefits, but that he never requested a listing of benefits for

which he was or would be eligible. Nor did he ask anyone about any
disability benefits.

For the next three years, Watson worked as a part-time

employee. Between June 1998 and February 1999, Watson repeatedly

requested a return to full-time employment. He says that he first

became aware of the existence of the LTD policy on about February

3, 1999, when he learned of the policy from a Human Resources

employee. On March 29, 1999, he returned to full-time work, but
his medical condition apparently deteriorated. On or about April

28, 1999, his doctor informed the hospital that Watson was totally

disabled and would be unable to return to work because of his heart
condition. As a result, in 1999, Watson was a full-time employee

for less than a month.

On July 28, 1999, after the expiration of the LTD

policy's ninety-day "elimination period" (a waiting period after

the onset of the disability before benefits will be paid), Watson

submitted a disability claim form to Liberty Life Assurance.

Liberty had taken over as carrier of Deaconess Waltham's LTD policy

as of January 1, 1996, and Deaconess Waltham had renewed the policy
with Liberty effective January 1, 1998. Watson's claim was denied

on November 19, 1999 because Liberty determined that Watson's

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disability was due to a condition that predated his plan

enrollment.3

When Watson returned to full-time work in March 1999, the
hospital and Liberty agreed to waive the standard six-month waiting

period for plan eligibility; otherwise, Watson would not have been

covered by the plan at all after only a month's worth of full-time
employment. After determining that Watson's April 1999 disability

was barred by the preexisting condition clause, Liberty also

considered whether Watson was disabled as of December 29, 1995,

when he was first hospitalized for his heart problems. Liberty

determined that a claim based on a December 29, 1995, disability

onset date must be denied because: (1) although Watson was

scheduled to work forty hours per week in December 1995, his time
cards indicated that he worked only 32 hours per week in the three

weeks prior to December 29 and was therefore not eligible as a

full-time employee;4 (2) any claim based on a December 29, 1995

3
Under the Confederation Life Insurance Policy, in effect
when Watson first became a full-time employee, preexisting
conditions were covered if the employee had been actively at work
and insured for twelve consecutive months. The Northwestern Mutual
policy did not cover preexisting conditions, but did have a
grandfather clause covering preexisting conditions if the applicant
had been covered by the Confederation policy. The Liberty Life
Assurance policy covered preexisting conditions if the individual
was insured under the Northwestern Mutual policy and was in active
employment and insured as of January 1, 1995. Therefore, it
appears that if Watson had maintained his eligibility, he would not
have had a problem concerning the onset date of his heart
condition.
4
The hospital suggested at oral argument that Watson was
never eligible for the LTD plan, as he worked fewer than thirty-six
hours per week. Watson concedes that sometime after November 26,
1995, his hours fell below thirty-six hours per week. There does
not appear to be any evidence that Watson was not covered by the

-7-
disability should have been filed by April 28, 1997; and (3)

evidence showed that Watson's condition improved and he was not

disabled after December 29, 1995. Watson appealed Liberty's
decision, and Liberty again denied his claim. Watson filed this

federal lawsuit on March 27, 2000.

During the course of Watson's employment, a series of
different LTD policies was in effect. We outline the policies

here, and attach an Appendix for further clarification.

When Watson began working for the hospital, the LTD

carrier was Confederation, and the hospital (then Waltham-Weston

Hospital) functioned as the plan administrator. On November 1,

1994, Northwestern Mutual Life Insurance Company became the carrier

for the hospital's LTD plan. This plan remained in effect until
January 1, 1996. The plan administrator under this Northwestern

Mutual policy was the hospital's Human Resources Director, Fred

plan between November 5, 1993, and November 26, 1995. The evidence
in the record shows that Watson worked at least thirty-six hours
during most weeks in 1995. At his deposition, Watson testified
that his position was a forty hour per week position, although he
admitted that from January to March of 1996 he was working far
fewer hours due to his heart condition. In addition, the Human
Resources Director, Fred Sussman, apparently told Watson at some
point that he was eligible for the LTD policy from November 5,
1993, until March 17, 1996. Watson's argument is that he would
have acted differently had he known of his eligibility for LTD
coverage as a full-time employee; the fact that he allowed his
hours to slip below the coverage minimum at some point prior to
changing to part-time employment status does not undercut this
argument. If he would have refused part-time employment in order
to maintain his eligibility, presumably he would have also made
sure he did not let his hours drop. Moreover, the Northwestern
policy, in effect during 1995, may have covered Watson even if his
hours dropped below thirty-six hours. The policy defines an
employee as "an active part-time or full-time employee . . .
regularly scheduled to work on at least a 36-hour-per-week basis .
. . ." (emphasis added).

-8-
Sussman. Effective February 1, 1995, the hospital was bought by

Pathway Health Network (Pathways) and became the Deaconess Waltham

Hospital;5 the hospital's Human Resources Director, Sussman,

continued as the plan administrator. On January 1, 1996, Liberty

Life Assurance became the carrier for the LTD policy.6 The

hospital's parent company (first Pathways and then, after October

1, 1996, Caregroup) was the named sponsor and plan administrator

under the Liberty Life Assurance policy. Effective January 1,

1998, a new LTD policy came into effect, also carried by Liberty

Life Assurance and also with Caregroup as the plan administrator.
II.

A. Standards of Review

On appeal, Watson argues that, if he had known of the LTD
policy and his eligibility for it, he would have taken steps in

1995 and 1996 to ensure his continued eligibility or he would have
applied for partial disability benefits at that time. He argues
that his subsequent ineligibility was the result of the hospital's

and the insurer's failure to inform him. This, he says, violated

5
Deaconess has admitted that it assumed the assets and
liabilities of Waltham-Weston Hospital.
6
Watson has argued that the Liberty policy was in effect
during 1995; his only support for this is a copy of the policy
stating that its effective date is January 1, 1995. The district
court found, however, that the effective date written in the policy
referred to other Pathways hospitals, covered by the same LTD
policy, and that the Liberty policy did not take effect at Waltham
Deaconess until January 1, 1996. The defendants have introduced
evidence to support this finding, and Watson has not introduced
anything to convince us that the district court's finding is
clearly erroneous.

-9-
the hospital's fiduciary duty under ERISA, 29 U.S.C. § 1104(a), or,

in the alternative, violated ERISA's "catch all" provision, id. §

1132(a)(3). Second, and for the same reasons, he argues that the

district court erred in dismissing his complaint for failure to

state a claim against Caregroup, the hospital's parent company,

which was designated as the plan administrator under the Liberty

Life Assurance policy.

Third, he argues that the district court abused its

discretion in refusing to allow him to amend his complaint to add

the Human Resources Director and Pathways, the predecessor to
Caregroup, as defendants.

Finally, he argues that the district court erred in
granting summary judgment to Liberty because Liberty was a
necessary party for full relief, discovery was needed to ascertain

Liberty's role in failing to inform Watson, and the complaint
against Liberty was timely.
Watson and defendant Deaconess Waltham agreed to have the

district court decide their cross-motions for summary judgment as
a case stated. We review de novo a district court's legal
conclusions in a case stated, but its factual findings, and any

inferences that the court drew from the stipulated facts, are
subject to only clear error review. See United Paperworkers Int'l

Union v. Int'l Paper Co., 64 F.3d 28, 31-32 (1st Cir 1995). Watson

can prevail on appeal against Deaconess only if he shows that the

district court's factual determinations are clearly erroneous or if

the district court made an error of law.

-10-
 We review the district court's grant of Liberty Life

Assurance's summary judgment motion and Caregroup's motion to

dismiss de novo, making all reasonable factual inferences in favor
of Watson. Rochester Ford Sales, Inc. v. Ford Motor Co., 287 F.3d

32, 38 (1st Cir. 2002); Martin v. Applied Cellular Tech., Inc., 284

F.3d 1, 5-6 (1st Cir. 2002).
As for the denial of Watson's motion to amend his

complaint to add additional defendants, we typically review the

district court's denial of a motion to amend a complaint for abuse

of discretion, keeping in mind Rule 15(a)'s mandate that leave to

amend "shall be freely given when justice so requires." Fed. R.

Civ. P. 15(a); see Hatch v. Dep't for Children, Youth & their

Families, 274 F.3d 12, 19 (1st Cir. 2001). "If, however, leave to
amend is not sought until after discovery has closed and a summary

judgment motion has been docketed, the proposed amendment must be

not only theoretically viable but also solidly grounded in the
record [and] . . . supported by substantial evidence." Hatch, 274

F.3d at 19. Therefore, we will review the district court's denial

of the motion to amend under the substantial evidence standard of

review.

B. Breach of Fiduciary Duty

ERISA issues can be enormously complicated and this case,

in theory, raises at least half a dozen abstruse issues. In the

end, the outcome turns on the question of whether there was any

breach of any fiduciary duty by Deaconess in any of its ERISA roles

-11-
vis-à-vis Watson. We will streamline the analysis and make certain

preliminary assumptions and rulings in Watson's favor.

The case concerns three different time periods when
duties were possibly owed to Watson: when he took full-time status

in 1993; when he had discussions with Waltham Deaconess about his

health condition and work hours in 1995-96; and when he took part-
time status in 1996. Watson asserts two different types of claims:

first, that there was an absolute fiduciary duty, redressable by

this action, to provide him with the LTD benefits information and,

second, that, even if his first claim fails, once he made a general

inquiry about benefits, there was a duty of disclosure of the LTD

plan's existence and terms.

These claims need to be understood in context. Watson's
complaint did not allege a cause of action against the plan itself.

This is not an action against a plan for a wrongful denial of

benefits,7 but against an alleged fiduciary for breaching its duty,
invoking the catchall provisions of 29 U.S.C. § 1132(a)(3).

ERISA provides that those who act as fiduciaries have

certain duties with respect to welfare plan participants and

beneficiaries. A fiduciary must, among other things, follow a

"prudent man standard of care":

[A] fiduciary shall discharge his duties with respect to
a plan solely in the interest of the participants and
beneficiaries and . . . with the care, skill, prudence,
and diligence under the circumstances then prevailing
that a prudent man acting in a like capacity and familiar

7
That may be because he was not eligible for benefits
based on his heart condition when he finally applied, due to the
preexisting condition limitation.

-12-
 with such matters would use in the conduct of an
enterprise of a like character and with like aims.
Id. § 1104(a)(1). A fiduciary may be liable to the plan for

violations of this duty. Id. § 1109; see Mass. Mut. Life Ins. Co.

v. Russell, 473 U.S. 134 (1985).
In addition, an individual plan participant or

beneficiary may bring suit for equitable relief for breach of

fiduciary duty under ERISA's so-called "catch all" provision, which

states that:

A civil action may be brought . . . by a participant,
beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this subchapter
or the terms of the plan, or (B) to obtain other
appropriate equitable relief (i) to redress such
violations or (ii) to enforce any provisions of this
subchapter or the terms of the plan . . . .

29 U.S.C. § 1132(a)(3) (1994); see Varity Corp., 516 U.S. at 509-

15. The Supreme Court has interpreted § 1132(a)(3) as "a safety
net, offering appropriate equitable relief for injuries caused by

violations that [29 U.S.C. § 1132] does not elsewhere adequately

remedy."8 Varity Corp., 516 U.S. at 512.

8
Deaconess argues that Watson's claim is not equitable,
claiming that he essentially is seeking money damages. This court
has recently noted the uncertainty surrounding whether a claim for
reinstatement of beneficiary status or equitable restitution of
past due benefits can be classified as a request for equitable
relief or a request for money damages, Barrs v. Lockheed Martin
Corp., 287 F.3d 202, 206 (1st Cir. 2002), particularly in light of
the recent Supreme Court holding in Great-West Life & Annuity
Insurance Company v. Knudson, 122 S. Ct. 708 (2002). In Great-West
Life, the Supreme Court held that § 1132(a)(3) relief is available
only in cases that follow the historical model for cases brought at
equity. It stated that "[a]lmost invariably . . . suits seeking .
. . to compel the defendant to pay a sum of money to the plaintiff
are suits for 'money damages,' . . . since they seek no more than
compensation for loss resulting from the defendant's breach of
legal duty," id. at 713 (quoting Bowen v. Massachusetts, 487 U.S.

-13-
 Deaconess urges us to dispose of this case on the grounds

that it was not a fiduciary at any pertinent time. For the first

time period, in 1993 when Watson had full-time status, Deaconess
had no relationship with Watson: he worked for Waltham-Weston

Hospital, not Deaconess. The district court reasoned that Watson

would have to overcome ERISA's section 409(b), 29 U.S.C. § 1109(b),
in order to impute any liability on the part of Weston-Waltham for

events in 1993 to Deaconess. Watson, 141 F. Supp. 2d at 149.

Section 409(b) states that a successor fiduciary does not, in that

capacity, assume liability for breach of fiduciary duty of an

earlier fiduciary.9 The district court's analysis was misplaced.

879, 918-19 (1988) (Scalia, J., dissenting)), and that suits for
restitution were ordinarily only available "where money or property
identified as belonging in good conscience to the plaintiff could
clearly be traced to particular funds or property in the
defendant's possession." Id. at 714. It is not yet clear how the
line of precedent from our sister circuits indicating that
restitution and reinstatement are equitable remedies under §
1132(a)(3), see, e.g., Griggs v. E.I. Dupont De Nemours & Co., 237
F.3d 371, 384 (4th Cir. 2001); Bowerman v. Wal-Mart Stores, Inc.,
226 F.3d 574, 592 (7th Cir. 2000), will be affected by Great-West.
Compare Ross v. Rail Car Am. Group Disability Income Plan, 285 F.3d
735, 740-411 & n.7 (8th Cir. 2002) (plaintiff seeking declaration
that plan amendments were void and restoration of full benefits
under original plan presented equitable claim under § 1132(a)(3)),
with Kishter v. Principal Life Ins. Co., 186 F. Supp. 2d 438, 445
(S.D.N.Y. 2002) (beneficiary's claim for insurance money she
claimed she would have received if not for fiduciary's breach of
duty was foreclosed by Great-West). Because we decide this case
for the defendants on other grounds, we need not decide whether
Great-West would preclude the type of relief Watson seeks.
9
The subsection's language is as follows:
No fiduciary shall be liable with respect to a breach of
fiduciary duty under this subchapter if such breach was
committed before he became a fiduciary or after he ceased
to be a fiduciary.

29 U.S.C. § 1109(b).

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Nothing in section 409(b) precludes a later fiduciary from assuming

by contract the ERISA obligations of a former fiduciary. The

district court never ruled on this contract question. The
evidence10 does seem to show that Deaconess assumed by contract any
liability incurred by Waltham-Weston, including Waltham-Weston's

liability as the plan administrator and fiduciary.
During the 1995 period, the Human Resources Director of

Deaconess, Fred Sussman, was the named plan administrator. Whether

that makes Deaconess a fiduciary depends on the answer to several

questions: (1) whether Watson has shown that Deaconess was

responsible for Sussman's ERISA activities; (2) whether the facts

of that responsibility made Deaconess a plan administrator;11 (3)

whether a plan administrator is per se a fiduciary,12 or whether

10
The only evidence in the record on this point is
deposition testimony from Sussman, the Human Resources Director,
who said that Deaconess Waltham assumed the assets and liabilities
of Waltham-Weston Hospital as part of the February 1995 purchase.
11
See, e.g., J.F. Jordan, et al., Handbook on ERISA
Litigation § 3.02[B], at 3-33 (2d ed. 2001) ("[F]iduciary status
with respect to the administration or management of the plan may
arise from the . . . employer's exercise of the responsibilities of
the plan administrator although the employer has not been so
formally designated, or from the employer's exercise of de facto
control over the plan administrator or other parties responsible
for the management of the plan." (footnotes omitted)).
12
We have previously proceeded on the assumption that a
plan administrator is a fiduciary. See, e.g., Barrs, 287 F.3d at
206 ("Lockheed, as the named administrator of the plan, is a
fiduciary under ERISA."); see also UAW v. Skinner Engine Co., 188
F.3d 130, 148 (3d Cir. 1999) ("The law in this circuit instructs
that 'when a plan administrator explains plan benefits to its
employees, it acts in a fiduciary capacity.'" (quoting In re Unisys
Corp. Retiree Med. Benefit "ERISA" Litig., 57 F.3d 1255, 1261 n.10
(3d Cir. 1995)); Canada Life Assurance Co. v. Estate of Lebowitz,
185 F.3d 231, 237 (4th Cir. 1999) ("By the very nature of the
position, a plan administrator is a fiduciary with respect to her

-15-
instead a functional test should be applied even to plan

administrators to decide whether they are fiduciaries;13 and (4)

whether, if a functional test must be applied, Sussman's functions
bring Deaconess into that fold. We need not decide here whether

Deaconess bears a fiduciary responsibility by virtue of Sussman's

functions.
The question at the heart of this case is what was the

extent of Deaconess's fiduciary obligations, if any, and whether it

failed to meet its obligations. Reduced to its essence, Watson's

claim is that the hospital violated its fiduciary obligation by not

informing him of the existence of the LTD plan or giving him the

proper plan documents when he was eligible for the plan, and by not

mentioning the loss of LTD eligibility when he made the change to
part-time employment in March 1996, particularly when he asked

someone in Human Resources how the change would affect his medical

and dental benefits. This brings together two related strands of
ERISA cases: those involving plaintiffs seeking substantive

remedies, such as reinstatement or retroactive benefits, based on

a fiduciary's failure to comply with ERISA's technical notice and

disclosure requirements; and those involving a fiduciary's failure

own policy."); Bd. of Trs. of the CWA/ITU Negotiated Pension Plan
v. Weinstein, 107 F.3d 139, 141 (2d Cir. 1997) ("[T]he Department
of Labor['s guidance] interpreting ERISA make clear that the
administrator and trustees of a pension plan are fiduciaries within
the meaning of the statute . . . .").
13
See Harris Trust & Sav. v. Provident Life & Accident Ins.
Co., 57 F.3d 608, 613-14 (7th Cir. 1995); Kyle Rys. v. Pac. Admin.
Servs., 990 F.2d 513, 516 (9th Cir. 1993); Baker v. Big Star Div.
of the Grand Union Co., 893 F.2d 288, 290 & n.2 (11th Cir. 1990);
Boucher v. Williams, 13 F. Supp. 2d 84, 91 (D. Me. 1998).

-16-
to communicate information relevant to the beneficiary's employment

decisions. Watson relies primarily on the latter, while the

defendants rely primarily on the former. Both must be considered
in order to assess Watson's claim.

1. Failure to comply with ERISA notice requirements

ERISA contains specific sections requiring plan
administrators to provide participants with information, including

a summary plan description. 29 U.S.C. §§ 1021, 1024. Plan

participants have a cause of action under 29 U.S.C. § 1132(a)(1)(A)

against plan administrators who fail to comply with a request to

provide any such information. Section § 1132(c)(1)(B) specifies

the relief available to such plaintiffs, allowing for penalties of

$100 per day and "such other relief as [the court] deems proper."
These penalties are limited, however, as the court may only order

relief if the plan administrator fails to provide the appropriate

documentation within thirty days after a participant requests it.

Id. Watson did originally bring a claim under this subsection, but

the district court granted summary judgment for Deaconess on this

claim, because Deaconess supplied Watson with the most recent plan

documentation when he first requested it in 1999. That ruling is

not at issue in this appeal.

Watson tries to side-step this limitation by saying he

now relies only on the equitable relief provision in § 1132(a)(3).

The side-step does not work:

[W]here ERISA itself specifies a notice requirement,
courts must be especially cautious in creating additional
ones.

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 Absent a promise or misrepresentation, the courts
have almost uniformly rejected claims by plan
participants or beneficiaries that an ERISA administrator
has to volunteer individualized information taking
account of their peculiar circumstances. This view
reflects ERISA's focus on limited and general reporting
and disclosure requirements, and also reflects the
enormous burdens an obligation to proffer individualized
advice would inflict on plan administrators. In general,
increased burdens necessarily increase costs, discourage
employers from offering plans, and reduce benefits to
employees.

Barrs v. Lockheed Martin, 287 F.3d 202, 207-08 (1st Cir. 2002)

(holding that there was no fiduciary breach in failure to provide

information to beneficiary not entitled to information under §

1024(b)(1)) (footnotes and citations omitted).

The Supreme Court has held that, although § 1132(a)(3) is
a "catch all" remedy, relief is not "appropriate" within the

meaning of this subsection "where Congress elsewhere provided

adequate relief for a beneficiary's injury" and there is "no need
for further equitable relief." Varity Corp., 516 U.S. at 512,

515.14 The Court has repeatedly emphasized that "ERISA is a

'"comprehensive and reticulated statute,"'" Great-West Life &

Annuity Ins. Co. v. Knudson, 122 S. Ct. 708, 712 (2002) (quoting

Mertens v. Hewitt Assocs., 508 U.S. 248, 251 (1993) (quoting

Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361

(1980))), and the Court has "therefore been especially 'reluctant

to tamper with [the] enforcement scheme' embodied in the statute by

14
The Court has further clarified that "Varity Corp. did
not hold . . . that § 502(a)(3) is a catchall provision that
authorizes all relief that is consistent with ERISA's purposes and
is not explicitly provided elsewhere." Great-West, 122 S.Ct. at
719 n.5.

-18-
extending remedies not specifically authorized by its text," id.
(quoting Russell, 473 U.S. at 147) (alteration in original).

This court and our sister circuits have taken a narrow
approach towards ERISA plaintiffs who attempt to assert procedural

notice and disclosure violations outside the context of § 1132(c).

We have previously held, in the context of a § 1132(a)(1)(B) denial
of benefits claim, "that ERISA's notice requirements are not meant

to create a system of strict liability for formal notice failures,"

and a plaintiff must show prejudice in order to claim relief.

Terry v. Bayer Corp., 145 F.3d 28, 39 (1st Cir. 1998); see also

Govoni v. Bricklayers, Masons & Plasterers, 732 F.2d 250, 252 (1st

Cir. 1984) ("Case law suggests . . . that to secure relief, Govoni

must show some significant reliance upon, or possible prejudice
flowing from, the faulty plan description.").

Technical violations of ERISA's notice provisions

generally do not give rise to substantive remedies outside
§ 1132(c) unless there are some exceptional circumstances, such as

bad faith, active concealment, or fraud. See, e.g., Panaras v.

Liquid Carbonic Indus. Corp., 74 F.3d 786, 789 (7th Cir. 1996) (no

remedy under § 1132(a)(1)(B) for technical violations, absent

exceptional circumstances such as bad faith, concealment, or

induced reliance); Ackerman v. Warnaco, Inc., 55 F.3d 117, 124-25

(3d Cir. 1995) (substantive remedies are not available for

violation of reporting requirements absent extraordinary

circumstances such as bad faith or active concealment); Kreutzer v.

A.O. Smith Corp., 951 F.2d 739, 743-45 (7th Cir. 1992) (holding

-19-
that technical violations only warrant a benefits award in cases of

bad faith, concealment or unfair administration). One of the few

cases to award substantive remedies for a technical disclosure
violation, Blau v. Del Monte Corporation, 748 F.2d 1348 (9th Cir.

1985), involved a situation where the employer actively concealed

its benefits policy from most employees for several years, id. at
1351-52.

These cases, concerned mostly with denial of benefits

claims under 29 U.S.C. § 1132(a)(1)(B), do not necessarily dispose

of a fiduciary breach claim under § 1132(a)(3), see Jordan v.

Federal Express Corp., 116 F.3d 1005, 1010-14 (3d Cir. 1997)

(finding fiduciary breach for technical violation but no claim

under § 1132(a)(1)(B)), but they are instructive. The Fifth
Circuit, at least, has pursued a similarly narrow approach with

regards to alleged fiduciary breaches arising out of technical

violations, holding that a "[f]ailure to fulfill procedural
requirements [of notice] . . . does not give rise to a substantive

damage remedy [for fiduciary breach] . . . except[ ] . . . when the

violations are continuous and amount to substantive harm." Hines

v. Mass. Mut. Life Ins. Co., 43 F.3d 207, 211 (5th Cir. 1995).

These notice and disclosure cases indicate, at a minimum, that a

technical violation in and of itself cannot be considered a

fiduciary breach. Rather, some other circumstance must be present.

The Supreme Court has cautioned that we must be mindful

of the "competing congressional purposes [behind ERISA], such as

Congress' desire to offer employees enhanced protection for their

-20-
benefits . . . and . . . 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." Varity Corp., 516 U.S. at 497.

In this case, there were no extraordinary circumstances

indicating that the fiduciary breached its duty. Deaconess did not
actively conceal its policy, and there are no allegations that it

regularly failed to comply with notice requirements. To the

contrary, the hospital had an annual "benefit fair," scheduled for

the open enrollment period, which all of the benefits carriers

attended in order to answer employees' questions. Further, new

employees regularly received a checklist of benefits for which they

were eligible. Indeed, Watson was given a sheet indicating that he
was not eligible for LTD insurance as a part-time employee. There

was no evidence that the hospital acted in bad faith. It appears

that Watson simply slipped through the cracks in this system when
he switched from part-time to full-time employment status, an

unfortunate occurrence but not bad faith, concealment, or fraud.
2. Failure to communicate information relevant to employment
decision

Watson also argues that, apart from the failure to inform

him of the LTD Plan when he started full-time employment in

November 1993, he should have been informed of the consequences of

his employment decision in the course of the discussions about his

returning to part-time status, particularly his discussions about

benefits in 1995-96.

-21-
 There is little evidence about those discussions.

Watson's deposition testimony is as follows:

Question: In March of 1996 when you decided to go on a
part-time basis did you discuss with [your supervisor]
the effect of going on part time on your benefits?

Answer: Well, I believe that I would have thought she
wouldn't know and that I called Human Resources as to how
it affected major medical and Delta Dental.
Question: Did you do that?

Answer: I believe so.

The Supreme Court in Varity Corp. specifically reserved

the question of "whether ERISA fiduciaries have any fiduciary duty

to disclose truthful information on their own initiative, or in

response to employee inquiries." 516 U.S. at 506. Many of our

sister circuits have held that, in certain circumstances, a
fiduciary has an obligation to accurately convey material

information to beneficiaries, including material information that

the beneficiary did not specifically request.15 See Griggs v. E.I.

Dupont De Nemours & Co., 237 F.3d 371, 380-81 (4th Cir. 2001);

Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 590 (7th Cir.

2000); Harte v. Bethlehem Steel Corp., 214 F.3d 446, 452 (3d Cir.),

15
In Vartanian v. Monsanto Co., 131 F.3d 264 (1st Cir.
1997), we noted, but did not decide, the question of whether a
fiduciary has an affirmative duty to inform beneficiaries of
information when the beneficiary has not specifically inquired.
Id. at 268 n.4. Vartanian involved a plaintiff who inquired about
the possibility of a retirement incentive package. Id. at 266. We
held that a fiduciary only has a responsibility to disclose the
possibility of an upcoming package if the package is under "serious
consideration." Id. at 268. The problem in Vartanian was that the
employee was requesting prospective information, about an event
that might or might not come to pass. This is a different question
than the question of when a fiduciary has a duty to disclose
information about plans already in existence.

-22-
cert. denied, 531 U.S. 1037 (2000); Krohn v. Huron Mem'l Hosp., 173
F.3d 542, 547-48, 550 (6th Cir. 1999); Barker v. Am. Mobil Power

Corp., 64 F.3d 1397, 1403 (9th Cir. 1995); Eddy v. Colonial Life

Ins. Co., 919 F.2d 747, 750-52 (D.C. Cir. 1990).

There are two limitations on the imposition of an

affirmative fiduciary duty to inform beneficiaries of material

facts about the plan. First, a duty only arises if there was some

particular reason that the fiduciary should have known that his

failure to convey the information would be harmful. See, e.g.,

Griggs, 237 F.3d at 381-82 (fiduciary learned that employee's
planned rollover election was not possible under tax code, but

failed to inform him); Barker, 64 F.3d at 1402-03 (fiduciary

suspected plan mismanagement and failed to inform beneficiaries);
Eddy, 919 F.2d at 749 (plaintiff inquired about continuation rights

for health insurance and fiduciary failed to inform him of
conversion rights). A failure to inform is a fiduciary breach only
where the fiduciary "knew of the confusion [detrimental to the

participant] generated by its misrepresentations or its silence."
UAW v. Skinner Engine Co., 188 F.3d 130, 148 (3d Cir. 1999); accord

Griggs, 237 F.3d at 381 ("[A]n ERISA fiduciary that knows or should

know that a beneficiary labors under a material misunderstanding of
plan benefits that will inure to his detriment cannot remain silent
. . . ."); Krohn, 173 F.3d at 548 ("[T]he 'duty to inform . . .

entails . . . an affirmative duty to inform when the trustee knows
that silence might be harmful.'" (quoting Bixler v. Cent. Pa.

Teamsters Health & Welfare Fund, 12 F.3d 1292, 1300 (3rd

-23-
Cir.1993)); Shea v. Esenstein, 107 F.3d 625, 629 (8th Cir. 1997)
("[A]n ERISA fiduciary has a duty to speak out if it 'knows that

silence might be harmful'" (quoting Bixler, 12 F.3d at 1300));
Eddy, 919 F.2d at 752 ("Once [the beneficiary] had made clear his

situation, [the fiduciary] had a duty to provide the material

information.").
Second, fiduciaries need not generally provide

individualized unsolicited advice. See, e.g., Griggs, 237 F.3d at

381 ("ERISA does not impose a general duty requiring ERISA

fiduciaries to ascertain on an individual basis whether each

beneficiary understands the collateral consequences of his or her

particular election."); Bowerman, 226 F.3d at 590-91 ("ERISA does

not require 'plan administrators to investigate each participant's
circumstances and prepare advisory opinions for literally thousands

of employees.'" (quoting Chojnacki v. Ga.-Pac. Corp., 108 F.3d 810,

817-18 (7th Cir. 1997))); Maxa v. John Alden Life Ins. Co., 972
F.2d 980, 985-86 (8th Cir. 1992) (finding no fiduciary duty

"individually to notify participants and/or beneficiaries of the
specific impact of the general terms of the plan upon them"). It

is "uncontroversial . . . that a fiduciary does not have to

regularly inform beneficiaries every time a plan term affects

them." Harte, 214 F.3d at 454.

As to the first limitation, there is insufficient

evidence in the record to suggest that any of the Human Resources

employees knew or should have known that Watson was likely to need

LTD benefits in either 1993 or 1995-96. See Joyce v. RJR Nabisco

-24-
Holdings Corp., 126 F.3d 166, 175 (3d Cir. 1997) ("We cannot say
that RJR knew, or had good reason to know, that Joyce was likely to

be eligible for [LTD] benefits.") Sussman testified that, although
he discussed Watson's poor attendance with Watson's supervisor, he

was not aware of Watson's health problems until 1999. Even if the

other Human Resources representatives had information that Watson's
health was poor, they had nothing to indicate that his condition

was likely to deteriorate to the point of total disability. After

all, Watson worked part-time for almost three years from 1996 on

and sought a full-time job roughly two years after he went to part-

time work.

As to the second limitation, neither the Human Resources

employee who responded to Watson's inquiry about medical benefits,
nor the employee who processed his change of employment status

paperwork, violated any fiduciary duty by failing to conduct a sua

sponte personalized benefits assessment for Watson. There is no
evidence that either Human Resources employee had any reason to

think that Watson was unaware of his benefits and the basic

eligibility requirements for them.

Watson has a stronger argument that the Human Resource

employees should have known he would be interested in partial

disability benefits, which provide income replacement for

individuals who must reduce their work schedule due to disability.

However, there is scant information in the record about Watson's

conversations with the Human Resources employees. Watson has not

pointed to sufficient facts to suggest that they had reason to know

-25-
of his partial disability or impending full disability. Further,

there is no evidence that in 1995-1996 the defendants knew that

Watson had not been given the LTD information in 1993, or that he
was unaware of LTD insurance altogether. The only thing in the

record on this point suggests just the opposite. When he first

began employment in October 1992, Watson signed a benefits
information sheet that listed the LTD Insurance program, with a

notation "N/A." See, e.g., Joyce, 126 F.3d 166 (no fiduciary

breach in failing to inform employee of LTD benefits where employee

had received and read benefits manual).

The only case we have found in which an appeals court

held that a failure to adequately inform a plan beneficiary about

plan requirements constituted a breach of fiduciary duty where the
fiduciary had no reason to know that the beneficiary would be

harmed by the lack of information is Jordan, 116 F.3d at 1014-17.

The Jordan court reversed a grant of summary judgment where the
employer had failed to provide the employee with an official

Summary Plan Description of his retirement benefits and had failed
to inform him that retirement elections were nonrevocable after

retirement, despite the facts that the employee never inquired

about revocability and the employer had no reason to suspect that

revocability would be an issue. Id. However, in Jordan, the

plaintiff apparently had no way of knowing that the election was

nonrevocable; he was provided with information about the plan,

which said nothing about the revocability of the election and

therefore could be considered misleading. Watson, in contrast, has

-26-
not introduced evidence that the information he was given was in

any way misleading, either directly or by omission. See Varity
Corp., 516 U.S. at 506; Eddy, 919 F.2d at 749 (fiduciary's
technical distinction between policy conversion and policy

continuation was misleading to beneficiary). Further, Watson could

have discovered the existence of the plan if he had attended the
annual benefit fair, or if he had asked for a full listing of all

benefits for which he was eligible.

Watson also alleges that Deaconess was in breach of its

fiduciary duty by inducing him to reduce his schedule to part-time

so that he would lose his disability benefits. There is nothing in

the record to support such a claim. The evidence in the record is

that his supervisor encouraged him to accept part-time status
because of the trouble he had in fulfilling the requirements of his

full-time job. Although there is evidence that the supervisor

spoke with the Human Resources director, there was no evidence that
they discussed Watson's disability benefits, or even the fact that

Watson was ill.

C. Other Appropriate Equitable Relief Under ERISA

Watson argues that Deaconess may be liable even if it did

not act as a fiduciary because the ERISA equitable relief

provision, 29 U.S.C. § 1132(a)(3), is not limited to suits for

breach of fiduciary duty. He argues that the hospital violated its

duty under 29 U.S.C. §§ 1021 and 1024 to provide him with a summary

plan description within ninety days after the employee becomes a

plan participant and to notify him of changes in the plan, 29

-27-
U.S.C. § 1024(b)(1)(A),16 and that § 1132(a)(3) entitled him to seek
equitable relief for this violation.

Our discussion above disposes of Watson's claim:
substantive remedies typically are not available for violations of

ERISA's technical notice and disclosure requirements. For garden

variety technical violations, beneficiaries are limited to their
remedies under § 1132(c). Watson has no remedy under § 1132(a)(3).

D. Complaint Against Caregroup

The district court granted Caregroup's Rule 12(b)(6)

motion to dismiss without prejudice to Watson, because Watson had

not pled that Caregroup acted in bad faith with regard to the

nondisclosure of the policy, and a simple violation of the

disclosure requirement did not constitute a fiduciary breach.
Caregroup argues that neither Caregroup, nor its

predecessor Pathways, acted as plan administrator prior to January

1, 1996, and that there was no way that either company could have
had any duty to Watson prior to 1996. Caregroup further argues

that, under 29 U.S.C. § 1024(b)(1), it had ninety days after

January 1, 1996, to provide Watson with information about the plan,

if he in fact was a plan participant at that time. Watson concedes

that he had ceased to be a plan participant before this ninety day

16
Section 1024(b) only requires that the administrator
supply summary plan descriptions to "each participant, and each
beneficiary receiving benefits under the plan." Therefore, Watson
was only entitled to receive a plan description during the period
of time that he was actually a plan participant. See Barrs, 287
F.3d at 207. We assume for these purposes that he was a plan
participant during the period that he was a full-time employee,
from November 5, 1993, until late 1995.

-28-
period elapsed, and therefore he can have no claim against

Caregroup for any failure to provide him with a summary plan

description. Insofar as Watson is claiming that Caregroup violated

a fiduciary duty by not otherwise informing him of the LTD policy

when he changed his employment status in March 1996, Watson has not

alleged sufficient facts to support such a claim. Watson does not

allege that he ever contacted Caregroup, that Caregroup ever

provided him with any misleading information, or that any other

circumstances existed that would suggest a breach of fiduciary

duty. The complaint against Caregroup was properly dismissed.
E. Denial of Motion to Amend Complaint

On May 15, 2001, after the close of discovery, Watson
attempted to amend his complaint to add two additional defendants:
Fred Sussman, the hospital's Human Resources Director and the plan

administrator from November 1994 through 1995; and Pathways, the
plan administrator from January 1996 until October 1996. This was
Watson's second attempt to amend his complaint to add defendants;

in March 2001, the district court had allowed Watson's post
discovery motion to add Liberty and Caregroup as defendants. The
district court denied Watson's second motion to amend, holding that

the "proposed new claims are largely untimely under the relevant
statute of limitations, would be subject to dismissal for failure
to state a claim, and would result in undue delay and further

prejudice to the parties." Watson v. Deaconess Waltham Hosp., No.

00-10583-WGY, slip op. at 3 (D. Mass. June 1, 2001). Watson argues

that his delay is due to the fact that he did not receive a copy of

-29-
the first Liberty LTD policy (in effect from January 1, 1996, until

January 1, 1998) until March 29, 2001, when he received it in

response to a subpoena, and therefore was uncertain what policy was
in effect during the early months of 1996.

Watson argues that the claims against Pathways and

Sussman were within ERISA's statute of limitations. ERISA provides
that claims based on a breach of fiduciary duty must be brought

within six years of the breach or "the latest date on which the

fiduciary could have cured the breach or violation," and within

three years of the date on which the plaintiff had actual knowledge

of the breach. 29 U.S.C. § 1113. In cases of fraud or

concealment, ERISA provides an alternate statute of limitations of

six years from the date the plaintiff discovers the breach. Id.

Watson argues that the plan administrators could have cured the

breach up until March 1996, at which point he went part-time and

became ineligible for the plan, and that he did not discover the
breach until he learned of the plan's existence in February 1999.

He also alleges fraud and concealment.
Absent fraud or concealment, a claim against Sussman

would have to have been brought by December 31, 2001 (six years

after the date on which Sussman ceased to be a plan administrator).

Watson did not attempt to add Sussman until several months after

this date had passed. There is no evidence in the record that

Sussman took any steps to conceal the existence of the LTD policy.

Sussman promptly provided Watson with copies of the Confederation,

Northwestern, and Liberty policies when Watson requested them in

-30-
1999. The Liberty policy Sussman provided was the more recent

policy, in effect from 1998 onwards, which had superseded the

Liberty policy that took effect in 1996. But the cover memo from
Sussman clearly indicated that the Northwestern policy was in

effect only until December 31, 1995. This is not concealment, and

any ERISA claim against Sussman based on fiduciary breach was
barred by the statute of limitations. At any rate, as we have held

there was no breach by Deaconess, there was also no breach by

Sussman.

As to Pathways, the defendants correctly argue that

Pathways Health Network cannot be added as a defendant because it

no longer exists. Watson's claims against Pathways would, in any

event, fail for the same reason that his claim against Caregroup,
discussed above, must fail.

F. Claims Against Policy Carrier

The district court entered summary judgment for Liberty
Life Assurance, the policy carrier from January 1, 1996 onwards, on

all counts, following the same reasoning that it had used to enter
judgment on case stated for Deaconess. We agree that Watson has

not presented facts sufficient to suggest that Liberty was in

breach of any fiduciary duty to him by failing to inform him of the

existence of the Liberty policy in 1996.17 It was the plan

17
Because we hold that there was no fiduciary breach, we
need not reach the question of whether the Liberty plan's
requirement that any legal suit be filed within one year from the
time he was required to file his proof of claim is an unreasonable
modification of the ERISA statute of limitations, or whether such
a policy-based limitation would apply to fiduciary breach claims
(or only to claims based on the policy itself, such as denial of

-31-
administrator's responsibility to provide Watson with the summary

plan description and, as we held above, even a failure to comply

with this responsibility does not, under ordinary circumstances,
constitute a breach of fiduciary duty. Moreover, Liberty had no

interactions with Watson during the crucial time period in which he

allowed his LTD eligibility to lapse and failed to apply for
partial disability benefits. Therefore, Liberty did not breach any

fiduciary duty, either by its acts or its failure to act.

III.

Conclusion

The judgments entered by the district court are affirmed.

No costs are awarded.

benefits claims).

-32-
Appendix A

Date Employment Plan Insurer Plan
Status Administrator
10/5/92 Part-time, Confederation Waltham-Weston
(Watson scheduled at 24 Hospital
begins work) hrs/wk
11/5/93 Full-time, " "
scheduled at 40
hrs/wk
11/1/94 " Northwestern HR Director
for Waltham-
Weston
Hospital
(Sussman)
2/1/95 " " HR Director
(hospital for Deaconess
bought by Hospital
Deaconess) (Sussman)
11/95 Full-time, but " "
Watson concedes
he was actually
working fewer
than 36 hrs/wk
12/19/95 " " "
(Watson
hospitalized
for heart
problems)
1/1/96 " Liberty Pathways
3/17/96 Part-time, " "
scheduled at 32
hrs/wk
10/1/96 " " Caregroup
1/1/1998 (new " " "
policy, also
through
Liberty)
2/3/99 " " "
(Watson first
learns of LTD
policy)

-33-
3/29/99 Full-time " "
4/28/99 Disability leave " "

-34-