Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Alberth v. Southern Lakes Plumbing & Heating, Inc., No. 19-CV-62, 2021 WL 2779038 (E.D. Wis. July 2, 2021) (Mag. J. Nancy Joseph). Plaintiff Alberth prevailed in his claim for a cash value payout under an ERISA-governed life insurance benefit plan, and was also awarded statutory penalties. He filed a motion for attorney’s fees, which defendant opposed. The court found that Alberth had achieved “some success on the merits” and thus passed the Supreme Court’s threshold test for an award of fees. The court further ruled that the Seventh Circuit’s five-factor test weighed in favor of awarding fees. In particular, the court highlighted that defendant had acted in bad faith “during the entire course of this litigation.” The court found that Alberth’s attorney’s requested rate of $450 per hour was reasonable and in line with other rates charged by lawyers in the Milwaukee area. However, the court reduced the number of hours requested slightly to account for administrative tasks. Finally, the court rejected defendant’s argument that the fee should be reduced because it was disproportionate to the amount of benefits at issue, finding that any disparity was not “significant enough to warrant further scrutiny.” The court awarded fees in the amount of $59,352.24.
Sweda v. The University of Pennsylvania, No. CV 16-4329, 2021 WL 2665722 (E.D. Pa. June 29, 2021) (Judge Gene E.K. Pratter). Plaintiffs in this class action case, alleging unreasonable recordkeeping and administrative fees, filed an unopposed motion for class certification after the parties reached a settlement. The court granted the motion finding that all elements were satisfied under Rule 23(a), 23(b)(1)(A) and 23(b)(1)(B). Plaintiffs also requested preliminary approval of the class settlement which was granted under the requirements of Rule 23(e).
Disability Benefit Claims
DeBold v. Liberty Life Assurance Co. of Boston, No. 20-CV-11802-ADB, 2021 WL 2646677 (D. Mass. June 28, 2021) (Judge Allison D. Burroughs). In December 2001, an accident rendered plaintiff a quadriplegic. Thereafter, the insurance company approved and began paying long-term disability benefits. In October 2018, plaintiff’s benefits decreased by $797.04 per month. The decrease resulted from her decision to “roll over” a lump sum of roughly $106,000 from her employer pension account to her individual retirement account (IRA). Liberty Life took the position that the “rollover” transaction was income from another source, which required a decrease in plaintiff’s benefits under the plan. Plaintiff argued that because she did not directly receive any money, and there was no tax liability, she did not have any “income.” Under abuse of discretion review, the court upheld the reduction of benefits. It stated it would have reached the same decision if the de novo standard applied. This was because, as plaintiff admitted, the plan authorized the reduction in benefits. The court rejected plaintiff’s argument that the non-taxable nature of the event was significant, reasoning that plaintiff identified no principle of contract law or interpretation that suggested that the relevant portions of the Wachovia Plan—which she conceded authorized Wells Fargo to reduce her long-term disability benefits following the rollover—were invalid or unenforceable because they resulted in a change in benefits even where there were no tax consequences. The court also concluded that, even though ERISA does not control plaintiff’s IRA, it does not follow that actions that plaintiff took in connection with her IRA—such as depositing a lump sum retirement payment into it—could not trigger reductions in her long-term disability benefits under the Wachovia Plan.
Talamantes v. Metropolitan Life Ins. Co., Case No. 20-50953, 2021 WL 2660251 (5th Cir. June 29, 2021) (Before Circuit Judges Davis, Duncan, and Oldham). Plaintiff filed this ERISA suit to recover long-term disability benefits from MetLife, which denied coverage. The district court severed the coverage issue from the remaining issues in this case. The decision on coverage turned on whether Standard Insurance Co., the carrier for calendar year 2016, or MetLife, the carrier for 2017, provided coverage. The district court granted summary judgment in favor of MetLife and entered a final judgment dismissing the case against it. The court had concluded that Standard, which had been previously dismissed, covered the claim. The Fifth Circuit reversed and remanded on appeal. The Fifth Circuit reviewed the policy language in the 2016 Standard Insurance policy. Standard's policy stated in its insuring clause, “If you become Disabled while insured under the Group Policy, we will pay LTD Benefits according to the terms of the Group Policy after we receive Proof of Loss.” MetLife's 2017 policy described when its insurance took effect and provided coverage when an employee was covered under a prior plan: “If You are Actively at Work on the day before the Replacement Date, You will become insured for Disability Income Insurance under this certificate on the Replacement Date.” The Fifth Circuit found that the Replacement Date was January 1, 2017, and it was undisputed that plaintiff was “Actively at Work” the day before the new policy attached. The parties agreed that MetLife would not provide coverage for benefits due if coverage was provided by Standard's policy. However, the Fifth Circuit then found that plaintiff met the conditions to be temporarily recovered under the specific provision in the Standard policy which excluded coverage when an employee experienced a temporary recovery. The court further found that the “Effect of Temporary Recovery” clause in the Standard policy excluded coverage for long term disability benefits under the circumstances of the case, and thus plaintiff became insured under the MetLife policy during his temporary recovery period.
Boersma v. Unum Life Ins. Co. of Am., No. 3:19-CV-0649, 2021 WL 2661969 (M.D. Tenn. June 29, 2021) (Judge Aleta A. Trauger). Plaintiff sued Unum claiming she was disabled by multiple conditions, including arthritis and fibromyalgia. The court recognized that plaintiff, like many patients who suffer from chronic pain, appeared to have presented a diagnostic and treatment challenge. Her treating physicians seemed to be uncertain in determining what her symptoms should be attributed to. Ultimately, though, every reviewing physician—including those whose conclusions were favorable to Unum—concluded that her symptoms, as described, were consistent with a diagnosis of fibromyalgia. Moreover, the court noted plaintiff had provided more than bare assertions of her symptoms. She also corroborated their severity with narrative evidence from her family members and opinions of the physicians who have a long history of treating her, as well as medical records that, although they did not show the severity of her condition, did confirm that she had long-standing complaints consistent with her current diagnosis. Plaintiff also provided an FCE confirming her disability. In contrast, the court viewed the explanations for why plaintiff’s fibromyalgia would not be disabling as mostly unpersuasive and based on the unsupported and conclusory assertion that a lack of corroborating physical manifestations of a disease necessarily established that disease’s non-disabling nature. In particular, the court concluded that Unum’s reviewing physician, Dr. Scott Norris, seemed to have simply assumed that fibromyalgia would never be disabling for the purposes of a sedentary job. The court found this conclusion particularly troubling given that Dr. Norris was not a rheumatologist and did not have meaningful expertise in the condition. Finally, the court held that plaintiff’s own history of professional success and dedication to her career tended to weigh against any inference that she would falsify or exaggerate her symptoms to avoid her career responsibilities. The court therefore concluded that plaintiff had carried her burden of establishing that she was disabled and entitled to benefits under her long-term disability plan.
McCulloch v. Hartford Life & Accident Ins. Co., No. 19-cv-07716, 2021 WL 2651294, (N.D. Cal. June 28, 2021) (Judge Susan Illston). Plaintiff filed a motion pursuant to Rule 54(b) seeking judgment as to some, but not all issues in his putative class action against Hartford. By way of background, the parties agreed to bifurcate the issue of whether plaintiff was disabled during the elimination period from the question of what the appropriate classes, if any, were under the long-term disability plan (LTD Plan) applicable to plaintiff. On December 2, 2020, the court issued an Order on Findings of Fact and Conclusions of Law and found that plaintiff was disabled during the elimination period. As a result, plaintiff sought judgment pursuant to Rule 54(b) awarding long term disability benefits and reinstatement to the LTD Plan. Hartford opposed the motion, claiming that the finding of disability was common to multiple causes of action, that plaintiff “does not have to wait long” for a ruling on the entire case and that the ruling plaintiff sought would result in piecemeal litigation. The court disagreed and reasoned that plaintiff’s disability and class eligibility claims involve different factual issues, that there was no just reason for delay, and the different factual issues ensures that the case will not go back to the Ninth Circuit on the same set of facts. The court granted plaintiff’s request under Rule 54(b).
Cherry v. Prudential Ins. Co. of Am., No. C21-27 MJP, 2021 WL 2662183 (W.D. Wash. June 29, 2021) (Judge Marsha J. Pechman). Plaintiff Cherry brought this action for unpaid benefits and breach of fiduciary duty under ERISA against Prudential. Cherry agreed that review of his unpaid benefits claim should be limited to the record before the plan administrator, but filed a motion to compel, seeking discovery on his breach of fiduciary duty claim. Prudential argued that Cherry’s Section 502(a)(3) claim for breach of fiduciary duty was duplicative of his unpaid benefits claim, and thus discovery should not be allowed under either claim. However, the court noted that “courts have consistently permitted discovery on Section 1132(a)(3) claims.” The court acknowledged that “the claims overlap,” but Cherry had made additional and different allegations in his (a)(3) claim. For example, he alleged that Prudential “solicited medical opinions from consultants ‘it knows to be biased’” and relied on their opinions even when presented with information showing that they were “unqualified or unreliable.” The court thus granted Cherry’s motion for limited discovery.
Advanced Physicians, S.C. v. National Football League, No. 20-10998, __ Fed. Appx. __, 2021 WL 2773112 (5th Cir. July 1, 2021) (Before Circuit Judges Davis, Duncan, and Oldham). Plaintiff is a medical provider that treated former NFL players. Cigna, the administrator of the NFL’s medical benefit plan, stopped making payments to the provider, allegedly because the NFL instructed Cigna to do so because the injuries being treated were “work-related,” which is excluded under the NFL’s plan. Plaintiff sued the NFL under state law for tortious interference, but the district court dismissed the claim because it was preempted by ERISA. Plaintiff appealed, and the Fifth Circuit affirmed. The court found that the essence of plaintiff’s complaint was that “the NFL wrongfully facilitated a coverage denial.” Coverage denials are quintessential ERISA claims. Furthermore, proper interpretation of the NFL benefit plan formed an essential part of plaintiff’s tort claim. As a result, plaintiff’s tortious interference claim was preempted by ERISA and was properly dismissed.
HMO La. v. Gupta, Civil Action No. 21-522 Section “R” (1)-02595, 2021 WL 2678933 (E.D. La. June 30, 2021) (Judge Sarah S. Vance). Before the Court was plaintiff’s motion to remand the matter to state court. Defendant opposed the motion and moved for leave to conduct discovery on the jurisdictional issue. Because the court found that neither ERISA nor FEHBA completely preempted plaintiff’s claims, and because it concluded that the discovery defendant sought would not affect the result, the court granted plaintiff’s motion to remand, and denied defendant's motion for discovery. The Court noted that for a district court to exercise removal jurisdiction, grounds for complete preemption must exist: (1) an individual, at some point in time, could have brought the claim under ERISA, and (2) there is no legal duty independent of ERISA or the plan terms that is implicated by the defendant's actions. Because these requirements were not met, the court granted plaintiff’s motion to remand.
Life Insurance & AD&D Benefit Claims
Gray v. Minn. Life Ins. Co., CIVIL ACTION H-19-4672, 2021 WL 2637403 (S.D. Tex. Jun. 25, 2021) (Judge Gray H. Miller). The plaintiff sought reconsideration of the court’s determination that Minnesota Life had “substantially complied” with federal law in its denial of plaintiff’s accidental death and dismemberment benefits after he suffered severe injuries due to a fall while having a seizure. Plaintiff argued that the court had been “clearly erroneous” in its finding that plaintiff was not entitled to benefits. The court confirmed that the denial letters had been sufficiently clear and addressed the appropriate facts. It also confirmed that it saw no basis to believe that plaintiff’s seizures were caused by plaintiff’s automobile accident several years prior to the onset of the seizures and thus were caused by an “accident.”
Medical Benefit Claims
Bellon v. PPG Emp. Life & Other Benefits Plan, No. 5:18-CV-114, 2021 WL 2656753 (N.D.W. Va. June 28, 2021)(Judge Gina M. Groh). Former employees of PPG brought this lawsuit against their former employer when PPG transferred its responsibility to plaintiffs under the retiree health plan to Axiall and shortly after Axiall gave notice to plaintiffs that it was terminating its retiree health plan. The court determined ERISA does not prevent a sponsor from terminating an ERISA plan and there was no clear language in the plan stating that plaintiffs’ rights were vested. Additionally, the court determined that plaintiffs had no recourse against PPG since Axiall was the current plan sponsor and PPG had no obligation to plaintiffs. Finally the court stated that PPG had not breached any fiduciary duties to plaintiffs by transferring its obligations under the plan to Axiall. Defendant’s motion for summary judgment was granted and the case was dismissed.
Zahuranec v. CIGNA Healthcare, Inc., No. 1:19CV2781, 2021 WL 2665754 (N.D. Ohio June 29, 2021) (Judge Pamela A. Baker). Plaintiff filed suit against Cigna for pre-authorizing and actually paying for the cost of her bariatric surgery, which she later decided was not medically necessary and regretted. She alleged that Cigna “reviewed [her] medical records and failed, refused, or neglected to properly apply its own guidelines to determine medical necessity of the bariatric surgical procedure” that she underwent in December 2013. Plaintiff claimed that Cigna "breached the terms of the insurance policy by authorizing her medical provider to perform a surgical procedure for which she did not qualify” under the Plan. Cigna argued that plaintiff could not assert a claim under Section 502(a)(1)(B) to enforce her rights under the Plan because she failed to sufficiently allege what rights she seeks to enforce. Cigna further argued that, as a matter of law, plaintiff was not entitled to either equitable relief or compensatory damages under ERISA Section 502(a)(1)(B). The court found that plaintiff failed to state a claim under Section 502(a)(1)(B) because the premise of her argument was that she did not receive any “benefits” under the Plan relating to her bariatric surgery because she did not “strictly comply” with all of the requirements of her plan and, therefore, the surgery was not “medically necessary.” As to her breach of fiduciary duty claim, while Cigna did grant plaintiff's request to cover the costs of the surgery, it did not make any representation (much less a misrepresentation) to Plaintiff regarding whether or not she should undergo that surgery. The court therefore granted Cigna’s motion to dismiss.
James C. v. Anthem Blue Cross & Blue Shield, No. 2:19-CV-38, 2021 WL 2532905 (D. Utah June 21, 2021) (Judge Clark Waddoups). The court ruled on the parties’ cross motions for summary judgment regarding Anthem’s denial of payment for residential treatment services received by plaintiff’s minor daughter, M.C. The court found discretionary language required an arbitrary and capricious review. The court found that any alleged procedural irregularities (i.e., delay in deciding appeal and inconsistent and/or incomplete reasons as to why Anthem was deny coverage) did not require the court to review Anthem’s denial de novo. Furthermore, the court found that the record contained sufficient evidence to support Anthem’s determination that M.C.’s treatment was not medically necessary, both under an arbitrary and capricious or a de novo standard of review. Specifically, the court found M.C. was not “manifesting symptoms and behaviors which represent a deterioration from their usual status and include either self injurious or risk taking behaviors that risk serious harm.” Regarding the federal mental health parity claim, the court found the plan’s threshold for treatment at a residential center was not more restrictive than for a skilled nursing facility. The court found the definitions comparable and did not violate the Parity Act. The court therefore granted defendant’s motion for summary judgment.
Pension Benefit Claims
Knepper v. Volvo Grp. N. Am., No. CV ELH-18-02879, 2021 WL 2685271 (D. Md. June 30, 2021) (Judge Ellen L. Hollander). Plaintiff Knepper accrued pension benefits over the course of his 22-year employment with Mack Trucks and its successor, Volvo Group North America (VGNA). Various pension plans were in effect during his employment. Knepper filed suit against VGNA and VGNA’s retirement plan for their alleged failure to calculate accurately and pay his pension benefits. Specifically, Plaintiff asserted two claims. First, he sought 34 months of retroactive early retirement benefits from the Mack and VGNA plans for the period of August 1, 2013, when he left employment, through June 1, 2016, when he began receipt of normal retirement benefits. Second, he alleged that since he began receiving his normal retirement benefits in June 2016, he had been underpaid regarding his monthly benefit under the Mack plan. Defendants filed a motion for summary judgment, arguing: (1) Knepper’s late application constituted a waiver of his rights to retroactive benefits; (2) his miscalculation claim was barred because he failed to exhaust his administrative remedies; and (3) defendants were not responsible for the conduct of the Mack plan. Knepper opposed this motion, not by contesting defendants’ facts or arguments, but by arguing that the court should “equitably toll” any deadlines he might have missed. The court found that equitable tolling does not traditionally apply to time limits specified in ERISA plan provisions. Even if equitable tolling could apply, the court found that Knepper did not meet the “high bar necessary to invoke it” and granted defendants’ motion in full.
Pleading Issues & Procedure
Faith Reg’l Health Servs. v. Ironshore Indem., Inc., No. 8:20CV444, 2021 WL 2682277 (D. Neb. June 30, 2021) (Judge Robert F. Rossiter, Jr.). A magistrate judge ruled in this ERISA case that plaintiff was not entitled to a jury trial, after which plaintiff filed an objection with the district court judge. Plaintiff argued that its breach of fiduciary duty claim under 29 U.S.C. § 1132(a)(2) was not an equitable claim or a claim for plan benefits. Instead, it was a legal claim for money damages, and thus plaintiff was entitled to a jury trial. The court rejected this argument and upheld the magistrate judge’s ruling, concluding that plaintiff had no constitutional right to a jury trial.
Open MRI & Imaging of RP Vestibular Diagnostics, P.A. v. Cigna Health & Life Ins. Co., No. CV-20-10345-KM-ESK, 2021 WL 2680153 (D.N.J. June 30, 2021) (Judge Kevin McNulty). Plaintiff is a medical provider that administered COVID-19 tests to patients insured by Defendant Cigna. It alleged that Cigna violated ERISA by refusing to pay for those tests. Cigna moved to dismiss, arguing that the provider had not adequately alleged that its patients had assigned their rights under ERISA to the provider. The court agreed with the provider that it was not required to prove the existence of such assignments, but noted that the provider had not even alleged that such assignments existed. Thus, the court granted Cigna’s motion and gave the provider leave to amend to properly allege that its patients had assigned their rights to it.
Windmill Wellness Ranch, L.L.C. v. Meritain Health, Inc., No. SA-20-CV-01388-XR, 2021 WL 2635845 (W.D. Tex. June 25, 2021) (Judge Xavier Rodriguez). Plaintiff, an out-of-network mental health provider, filed suit alleging that defendants underpaid the provider’s claims. Defendants moved to dismiss, asserting that the provider lacked standing to assert the claims under ERISA. Windmill claimed derivative standing under ERISA based on an agreement signed by a patient allowing Windmill to pursue legal remedies on the patient’s behalf. The court, however, found the plan barred assignment and the Fifth Circuit had previously found a lack of standing under ERISA based on an anti-assignment clause with very similar language. Although plaintiff asserted that defendants should be equitably estopped from raising the anti-assignment clause for the first time six months after the lawsuit was filed, the court found defendants timely raised the anti-assignment clause in response to the allegations first raised in the second amended complaint and did not waive an argument based on the plan’s anti-assignment language. The court also found that defendants did not acquiesce to plaintiff’s jurisdictional standing by paying Windmill directly. The court granted the motion and dismissed the complaint with prejudice.
Standard of Review
The Advisory Comm. of MTS Sys. Corp. Ret. Sav. Plan & Tr. v. Nelson, No. CV 20-1435 (PAM/BRT), 2021 WL 2635153 (D. Minn. June 25, 2021) (Judge Paul A. Magnuson). Richard Nelson participated in the MTS Systems Corporation Retirement Savings Plan and Trust (“the plan”) through T. Rowe Price. As ERISA requires, 29 U.S.C. §§ 1055(c)(1)(A)(i), 1055(c)(2)(A), the plan's terms dictated that Mr. Nelson's wife, Linda, would be the beneficiary unless Mr. Nelson validly designated and Mrs. Nelson validly consented to a different beneficiary. Mr. Nelson passed away on November 9, 2019. Prior to his death, Mr. Nelson executed a beneficiary-designation form, naming Ms. Swanson the sole beneficiary of his retirement account. On November 15, 2019, six days after Mr. Nelson's death, Ms. Swanson filed a claim for benefits, requesting that the funds in Mr. Nelson's account be disbursed and transferred to her. On November 20, 2019, Mrs. Nelson called T. Rowe Price, questioning the change in beneficiary. Both women claimed to be Mr. Nelson's account beneficiary. Although Mrs. Nelson admitted that she signed spousal-consent waiver, she claimed that she did so only because Ms. Swanson used fraud and undue influence to convince her to sign. The Committee agreed, ultimately concluding that “the spousal consent of Mrs. Nelson on the Beneficiary Designation obtained on November 6, 2019 is invalid based on undue influence and misrepresentation by Ms. Swanson.” The court concluded that the Committee's careful examination of relevant third-party evidence supported a finding that the Committee did not abuse its discretion in concluding that the decedent’s wife was entitled to the benefits.
Boilermaker-Blacksmith Nat’l Pension Tr. v. Ironhead Marine, Inc., No. 5:21-cv-06008-DGK, 2021 WL 2763174 (W.D. Mo. July 1, 2021) (Judge Greg Kays). This case was brought by the trustees of a multi-employer pension plan against a participating employer for delinquent contributions. The employer counter-claimed for overpaid contributions, and filed a motion to transfer venue from the Western District of Missouri to the Northern District of Ohio, where it is located. The court denied the motion, concluding that venue was proper in Missouri because the plan is administered there. The court further found that the employer had not met its burden to show that the convenience factors under 28 U.S.C. § 1404(a) favored transfer, as transfer would merely “shift the inconvenience from one party to another.” Finally, the court found that the interests of justice would not favor transfer because plaintiff was entitled to its choice of forum, the court had already invested resources in the case, and much of the work in the case could be done electronically.
Your ERISA Watch is made possible by the collaboration of the following Kantor & Kantor attorneys: Brent Dorian Brehm, Jaclyn Conover, Beth Davis, Sarah Demers, Elizabeth Green, Elizabeth Hopkins, Andrew Kantor, Monica Lienke, Anna Martin, Susan Meter, Tim Rozelle, Peter Sessions, Stacy Tucker, and Zoya Yarnykh.
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Your ERISA Watch is edited by Elizabeth Hopkins and Peter Sessions. Each week our goal is to provide you with the benefit of the expertise of knowledgeable ERISA litigators who are on the frontline of benefit claim and fiduciary breach litigation. Although our firm represents plaintiffs, we strive to provide objective and balanced summaries so they are informative for the widest possible audience.
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