Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Hoffman v. Packer, No. 19-CV-10686-RWZ, 2021 WL 2953260 (D. Mass. July 13, 2021) (Judge Zobel). After Plaintiffs obtained a default judgment on their claim for benefits under the of defendant R.M. Packer Co., Inc.’s retirement plan they filed an unopposed motion for attorneys’ fees in the total amount of $500,658.50 and $960.01 in costs. Plaintiffs counsel claimed fees for 160 hours researching and drafting an eighteen-page complaint and 391.4 hours spent researching and drafting their second motion for default that involved the individual accounts and judgments for each plaintiff. The court concluded that time claimed for each of these filings was well in excess of what would be considered reasonable for more complex filings. The court also concluded that number of hours that plaintiffs’ counsel spent on discovery was based on significant inefficiencies. Ultimately, the court awarded $250,000.00 in fees and full costs.
City Gear, LLC v. WH Adm'rs, Inc., No. 2:19-cv-02213-TLP-tmp, 2021 WL 2954414 (W.D. Tenn. Jul. 14, 2021) (Judge Thomas L. Parker). A plan sponsor sued an insurance companies and other fiduciaries under ERISA claiming that the defendants refused to pay valid claims. After the court entered default judgment, the plaintiff moved for attorney’s. Based on the factors outlined in Dept. of Labor v. King, 775 F.2d 666, 669 (6th Cir. 1985), the court determined that attorney fees should be awarded. The court awarded the requested fees of $56,982.50 and costs of $24,467.35.
Breach of Fiduciary Duty
Staropoli v. Metropolitan Life Insurance Co., No. CV 19-2850, 2021 WL 2939936 (E.D. Pa. July 13, 2021) (Judge Gene E.K. Pratter). Plaintiff, who worked for JP Morgan, sued the “Benefits Executive” of her ERISA-covered life insurance plan for breach of fiduciary duty. In 2004, she enrolled her then-husband for dependent supplemental term life insurance. Under the terms of the plan only spouses were eligible for coverage. In the event of divorce, coverage continued only if it was ported or converted. The plan required participants to provide notice of a divorce to the Benefits Executive. In 2013, plaintiff divorced her then-husband, and the coverage was terminated. In 2014, plaintiff provided JPMorgan with the divorce papers. In 2015, plaintiff reenrolled her ex-husband for supplemental life insurance benefits. Plaintiff paid premiums on these benefits until her ex-husband died in 2018. Plaintiff claimed the Benefits Executive breached its fiduciary duty by either omission or misrepresentation. However, before reaching those arguments, the court noted that the claim was not barred under 29 U.S.C. § 1113, ERISA’s statute of repose or limitations, because plaintiff did not have actual knowledge of the alleged breach until 2018. Regarding the breach by omission, plaintiff argued that the Benefits Executive breached its fiduciary duties by omitting three categories of information. First, she faulted the Benefits Executive for not providing her individual notice that her ex-husband was ineligible for coverage when JPMorgan received her divorce paperwork in 2013. Second, and similarly, she faulted the Benefits Executive for not providing her individual notice that her ex-husband was eligible to “port” or convert his policy after JPMorgan received her divorce paperwork. Third, she faulted the Benefits Executive for not preventing her from re-enrolling her ex-husband in 2015. However, because there was no evidence that JPMorgan or the Benefits Executive were on notice that plaintiff was confused about the terms of the plan, the court held the fiduciaries were under no ERISA obligation to correct what turned out to have been plaintiff’s mistaken assumption. In the court’s words, “The Court cannot simply assume that an employee who learned of Ms. Staropoli’s divorce would (1) recall that fact between one and a half to two and a half years later, (2) recall the terms of Ms. Staropoli’s life insurance policy, and then (3) realize that Ms. Staropoli must be operating on a misunderstanding of the plan. While the Court must ‘make every reasonable inference in [the non-moving] party's favor,’ it will not make inferences that are unreasonable or fantastical.” Regarding misrepresentation, plaintiff argued that the Benefits Executive misled her into believing that her ex-husband was covered in two ways: first, by withdrawing premiums from her paycheck for supplemental life insurance coverage; and second, by listing her ex-husband as a covered dependent on the company’s “Benefits Web Portal.” She argued these two “representations” misled her into believing that her ex-husband was covered. The court was not persuaded. It noted that, if anything, the fact that the withdrawals included the word “spouse” should have been a signal that something was amiss—not a reassurance that everything was in order. By withdrawing funds for spouse supplemental life insurance, the Benefits Executive was not representing that the ex-husband still qualified under the terms of the plan any more than it was representing that the ex-husband was still plaintiff’s spouse, something she certainly knew was untrue. The court held, plaintiff’s belief there was coverage was objectively unreasonable because the law charged her with knowledge of the contents of the summary plan document, as well as other supplementary documents, all of which stated in plain English that only spouses could be covered, and that divorce would terminate coverage. Thus, the court granted summary judgment to the Benefits Executive.
Disability Benefit Claims
Anthony Furfari v. Pension Benefit Guaranty Corporation, No. 20-2424, 2021 WL 2949169, (D.D.C. July 14, 2021) (Judge Colleen Kollar-Katelly). In this action, plaintiff sought disability pension benefits under a pension plan guaranteed by the Pension Benefit Guaranty Corporation (“PBGC”). Plaintiff, who worked at Riverside Market, which was then a division of a company called Penn Traffic, was injured on the job and was permanently limited to light duty work. Riverside Market did not have a light duty position available and terminated plaintiff effective December 1, 2006. In 2008, plaintiff sought disability benefits under the pension plan. The Pension Plan defines disability, in part, as the inability to resume duties with the employer or such other duties with the employer that are deemed acceptable. For reasons that are unclear, the PBGC made eligibility for benefits contingent on the receipt of disability benefits from the Social Security Administration (“SSA”). On November 18, 2009, Penn Traffic filed for bankruptcy and the PBGC became the trustee. The PBGC guarantees disability benefits that were nonforfeitable as of the pension plan termination date (i.e., the date of filing of the bankruptcy petition). In 2017, plaintiff again pursued his disability pension benefits and advised the PBGC that he had been awarded SSA disability benefits effective October 10, 2010. The PBGC determined that plaintiff was not eligible for benefits because he was found to be disabled by the SSA after the termination date of the Pension Plan. Plaintiff filed this lawsuit challenging PBGC’s decision and the parties filed cross motions for summary judgment. In the lawsuit, plaintiff for the first time alleged that the plain language of the pension plan did not condition receipt of benefits on a SSA disability award. The court determined that the issue exhaustion requirement did not apply, because the proceeding before PBGC was more inquisitorial and less adversarial. As to the merits of the PBGC’s decision, the court vacated the PBGC's decision because it concluded that the language of the pension plan did not condition eligibility for benefits on a decision by the SSA and the PBGC did not explain why it imposed such an eligibility requirement. The court remanded the case to the PBGC for further proceedings.
Kollar v. Sun Life Assurance Co. of Can., No. C20-5278-JCC, 2021 WL 2949801 (W.D. Wash. July 14, 2021) (Judge John C. Coughenour). Plaintiff filed an ERISA action to challenge defendant’s denial of his long-term disability (“LTD”) benefits. Defendant had previously denied plaintiff’s claim for short-term disability (“STD”) benefits, plaintiff had sued, and the court had granted summary judgement to defendant, finding plaintiff did not meet the definition of disability to be entitled to STD benefits. On the LTD claim, defendant argued (1) collateral estoppel precluded re-litigation of whether plaintiff was disabled under the plan since it was decided on the STD claim, and (2) even if collateral estoppel did not apply, the record did not show that plaintiff was disabled. The court rejected the collateral estoppel argument, explaining that the issue in this case was whether the record before the administrator at the time LTD claim was rejected established disability, and the decision on the records for the STD claim was separate. In response to defendant’s argument that plaintiff could not meet his burden to prove he was disabled under the plan, plaintiff had responded suggesting that the court should hold a traditional in-person bench trial with live testimony, rather than a bench trial on the papers via cross-motions for judgment on the administrative record. The court clarified that a bench trial on the record was appropriate here and gave plaintiff an opportunity to file a cross motion for judgment under Rule 52, holding the remainder of defendant’s motion in abeyance.
Wolff v. Aetna Life Ins. Co., No. 4:19-CV-01596, 2021 WL 2986370 (M.D. Pa. July 15, 2021) (Judge Matthew Brann). Plaintiff filed suit after Aetna, his disability insurer, sought reimbursement from plaintiff's third-party recover from a motor vehicle accident. Plaintiff alleged that by seeking such reimbursement, defendant violated state law as well as the terms of the policy. Plaintiff moved for discovery in the form of a list of all persons who were issued policies under the same Plan. Defendant argued that any such list should be limited to residents of Pennsylvania because plaintiff asserted claims only under state law. The court granted plaintiff's motion, finding that Aetna misconstrued plaintiff's allegations, which clearly asserted that Aetna violated both Pennsylvania law and the terms of the policy, which are governed by federal common law. As a result, the court concluded that the pool of potential class members is broader than just individuals who live in Pennsylvania.
Allen v. Life Ins. Co. of N. America, et al., Case No. 3:20-CV-00704-BJB-CHL, 2021 WL 2926016 (W.D. Ky. July 12, 2021) (Mag. Judge Colin H. Lindsay). Plaintiff filed an action related to the denial of long-term disability benefits under her comprehensive short-term disability policy provided by Defendant Fifth Third Bank, N.A. (“Fifth Third”) and administered by Defendant Life Insurance Company of America (“LINA”). In January 2021, the court entered a scheduling order establishing a fact discovery deadline of October 29, 2021. In March 2021, defendants filed motions for summary judgment. Defendants thereafter filed separate motions to stay discovery. With respect to LINA’s motion to stay, the court found the balance of the relevant interests weighed against granting the stay. The court noted that in civil litigation, the default is that parties are entitled to discovery and that the filing of a dispositive motion is insufficient to warrant a stay of discovery. With respect to Fifth Third’s motion, however, the court found that the burden of proceeding with discovery outweighed plaintiff’s hardship in staying discovery because Fifth Third established that plaintiff’s discovery requests were expansive and one-sided. The court further found that Fifth Third’s motion for summary judgment would simplify the issues in dispute, such that the discovery plaintiff sought would require Fifth Third to expend significant time and resources answer questions for claims that were pending dismissal. Accordingly, the court exercised its broad discretion and inherent power to stay discovery until preliminary questions that may dispose of the case were determined as to Fifth Third.
AA Medical, P.C. v. Iron Workers Locals 40, 361, 417 Health Fund, 2:20-cv-4333 (DRH), (ST) 2021 WL 2895666 (E.D.N.Y. July 9, 2021) (Judge Dennis R. Hurley). Plaintiff filed suit alleging numerous causes of action: (1) failure to abide by a health plan's terms in violation of the Employment Retirement Income and Security Act; (2) breach of fiduciary duty in violation of ERISA; (3) breach of contract; (4) breach of insured's contract with Defendant; (5) breach of third-party beneficiary contract; (6) unjust enrichment, (7) quantum meruit, and (8) account stated. This entire matter relates to Defendant's alleged nonpayment of benefits arising from services rendered to Plaintiff's patient and assignor of rights under an ERISA health plan. The court, after reviewing all the issues, held that Plaintiff's state law causes of action are preempted, and its ERISA causes of action are time-barred. Accordingly, it granted defendant’s Motion to Dismiss.
Medical Benefit Claims
Todd R., et al. v. Premera Blue Cross Blue Shield of Alaska, No. C17-1041JLR, 2021 WL 2911121 (W.D. Wash. July 12, 2021) (Judge James L. Robart). Plaintiffs sought benefits for residential treatment for their daughter. The case returned to the district court after the Ninth Circuit vacated and remanded the court’s previous findings of fact and conclusions of law. Previously, the district court had ruled in favor of plaintiffs based on the sixth medical necessity factor in Premera’s Medical Policy, which covers care when a patient has stabilized during inpatient hospitalization treatment and requires structured setting and around the clock behavioral care. On appeal, the Ninth Circuit found the court’s conclusion on the sixth factor clearly erroneous. The district court again considered the parties’ cross motions for judgment on the pleading based on a de novo review. The court found the Ninth Circuit order was not dispositive on medical necessity because it did not foreclose plaintiffs from attempting to show that residential treatment was medically necessary under any of the other medical necessity factors. The court found the Milliman Care Guidelines comport with generally accepted standards of care and rejected plaintiffs’ arguments that the first and fourth medical necessity factors were met. The court granted Premera’s motion for judgment on the pleadings.
Abdilnour v. Blue Cross of Idaho Health Serv., Inc., No. 1:17-CV-00412-DWM, 2021 WL 2981979 (D. Idaho July 7, 2021) (Judge Donald W. Malloy). Idaho Blue Cross (“Blue Cross”) was the plan administrator for plaintiff’s employer’s health insurance plan. Plaintiff was required to take two air ambulance rides from an out-of-network provider to receive emergency medical care. The plan provided that if an out-of-network provider was used, the insured would pay the difference between the Maximum Allowance and the billed charges. Plaintiff contested the amount Blue Cross determined to be the Maximum Allowance. The plan contained language granting Blue Cross discretion to determine claims and interpret the plan. The court determined that only a minimal conflict of interest existed because the plan was funded through employer assets and employee contributions, and there was no evidence Blue Cross had not acted properly when administering the claim. It therefore applied an abuse of discretion standard to its review of Blue Cross’s plan interpretation. The court found Blue Cross’s interpretation to be consistent with the plan terms and upheld its decision, denied plaintiff’s motion for summary judgment, and granted Blue Cross’s motion for summary judgment.
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