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Your ERISA Watch – First Circuit Holds That Full and Fair Review Requires Timely Disclosure of All Relevant Documents

Jette v. United of Omaha Life Ins. Co., No. 20-1719, __ F.4th __, 2021 WL 5231971 (1st Cir. Nov. 10, 2021) (Before Circuit Judges Howard and Thompson, and District Court Judge Raul Arias-Marxuach).
 
ERISA, as our readers know, requires that plan fiduciaries employ a “full and fair” claims procedure for reviewing benefit claims. But courts have grappled with what exactly this entails and specifically, whether this requires that a plan participant or beneficiary making a claim for benefits be given an opportunity to review and respond to medical reports before they are relied upon by the claims administrator to deny the claim. The answer from the First Circuit is a resounding “yes,” regardless of what version of the Department of Labor’s claims regulation applies.
 
Plaintiff Karen Jette was a legal assistant at a law firm that sponsored a disability plan in which she was a participant. This plan was administered by Defendant United of Omaha. Ms. Jette developed back problems for which she eventually underwent surgery. She then applied for and eventually received first short-term and then long-term disability benefits. A year later, as she was required to do under the plan, Ms. Jette applied for Social Security Disability benefits, which were granted. Then, a few months later, United of Omaha terminated her benefits based on the opinions of two reviewing, but non-examining, doctors hired by United who concluded that she could perform her sedentary work as a legal assistant.
 
Ms. Jette appealed and submitted additional information, including medical records and affidavits. She also pointed to the approval of her Social Security claim as further evidence of disability. Finally, citing ERISA’s “full and fair” review provision, she expressly requested that United provide her with any new medical opinion at least 30 days prior to the end of the appeals process so that she could respond. United, however, responded to this last request in the negative, stating that it had no obligation to provide her an opportunity to review and respond to any new medical evidence and that it had no intention of doing so. Consistent with this response, United declined, prior to issuing its decision affirming the denial, to provide Ms. Jette with the report of Dr. Donald Thomson, who, after examining Ms. Jette, concluded that she was able to engage in “seated activities with occasional standing and walking.”
 
The district court affirmed the denial of benefits, agreeing with United that it had no obligation to disclose Dr. Thomson’s report prior to its final denial decision. The court reasoned that United did not use Dr. Thomson’s report to find a new reason to deny the claim since United simply used his report as additional support for the conclusion of United’s reviewing doctors at the initial denial stage that Ms. Jette was able to perform sedentary work. The district court then granted summary judgment in favor of United, concluding that there was substantial evidence to support United’s termination of Ms. Jette’s benefits.
 
The First Circuit, however, saw matters differently. The court looked to the language of the applicable claims regulation, which stated that during a “full and fair” claims review process, a claimant must be provided all documents “relevant” to the claim. Refusing to read this broad language narrowly, the court concluded that this provision was applicable not just to the initial claims denial, but also to the determination on appeal. Nor was the First Circuit persuaded by the district court’s reasoning that documents need only be provided if they are used as a new reason to deny benefits. Rather, the plain language of the claims regulation encompasses any document that “[w]as submitted, considered, or generated in the course of making the benefit determination,” whether or not it “was relied upon.” More broadly, the court noted that United’s proposed reading of the regulation would frustrate the purposes of “full and fair” review by unreasonably preventing claimants from responding to evidence. Ms. Jette’s reading, on the other hand, was found by the First Circuit to be consistent with prior case law from the Ninth Circuit and with the Department of Labor’s position as expressed in both an amicus brief filed in 2009, before the events of the case, and in a preamble to a later version of the regulation. With respect to the Department of Labor guidance, the court concluded that the brief was entitled to “Auer” deference, and the preamble statement, as an unambiguous expression in the context of a published regulation, to controlling weight deference even though it was published after the events in question.
 
On these bases, the First Circuit concluded that United violated the regulation and failed to provide “full and fair review” of Ms. Jette’s claim by failing to provide her with Dr. Thomson’s report before issuing its final denial. The court also concluded that Ms. Jette was prejudiced by this failure, and ordered the “claim to go back to the administrative stage” to allow Ms. Jette the opportunity to submit additional “comments, documents, records and other information,” responding to Dr. Thomson’s report “before United makes a new determination on the thus supplemented record.”
 
Ms. Jette, who was represented by ERISA Watch subscriber Jonathan Feigenbaum, thus achieved a significant victory for herself and other disability claimants in the First Circuit.

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
 
Attorneys’ Fees

Ninth Circuit
Cherry v. Prudential Ins. Co. of Am., No. C21-27-MJP, 2021 WL 5205614 (W.D. Wash. Nov. 9, 2021) (Judge Marsha J. Pechman). Plaintiff Andrew Cherry sued The Prudential Insurance Company of America for breach of fiduciary duty and wrongful denial of disability benefits. After granting Mr. Cherry’s motion for discovery on his claim for breach of fiduciary duty, the court ordered reciprocal discovery in the form of depositions, interrogations, and ten requests for admission. On the date set as the discovery deadline, Prudential filed a motion to compel, arguing that Mr. Cherry’s responses to its interrogations were deficient. The court agreed and wrote, “the fact that discovery was ongoing did not relieve Plaintiff of his obligation to ‘serve his answers and any objections within 30 days after being served’ … even worse, plaintiff did not provide any facts in his response … (falling) short of a party’s responsibility to respond to each interrogatory ‘separately and fully.’” The court granted Prudential’s motion and ordered Mr. Cherry to pay costs. In addition, Prudential sought $8,716.50 in attorney’s fees associated with the motion to compel, which the court awarded. Defendant’s counsel worked for 24.1 hours at an average hourly rate of $361.68, which was found reasonable given the scope of the work and the 6,300 page administrative record in the case. Mr. Cherry’s tardiness and nondisclosures with regards to the interrogation responses were unjustified. Thus, the court granted defendant’s motion for attorney’s fees, finding the fee award just given the circumstances.

Breach of Fiduciary Duty

Ninth Circuit
Gleason v. Unum Group, No.  21-cv-02776-AGT, 2021 WL 5233240 (N.D. Cal. Nov. 10, 2021) (Magistrate Judge Alex G. Tse). Plaintiff Teresa A. Gleason filed suit against Unum Group seeking to reinstate her long-term disability benefits. Ms. Gleason alleged that Unum violated its fiduciary duties by terminating her benefits to meet monthly claim-closure targets. Following chemotherapy treatment, Ms. Gleason suffered from lingering cognitive impairments which prohibited her from performing the duties of her job. Unum moved to dismiss Ms. Gleason’s breach of fiduciary duty claim arguing that it duplicated her claim for relief under Section 1132(a)(1)(B) and transformed a straightforward benefit dispute into a “costly bad faith action.” The court was not persuaded by these arguments. Rather, the court concluded that the Section 1132(a)(3) claim did not duplicate the Section 1132(a)(1)(B) claim, and these claims could proceed simultaneously as they pled distinct remedies. For the 1132(a)(3) claim, Ms. Gleason sought to permanently enjoin Unum from serving as a plan fiduciary, whereas under 1132(a)(1)(B) Ms. Gleason sought to recover the benefits due to her under the plan. These remedies were not found to “overlap.” Nor did the court believe that permitting Ms. Gleason to seek relief under Section 1132(a)(3) would provide, “a blueprint whereby the plaintiff in any ERISA benefits case can do the same simply by alleging that ‘she thinks the insurer is bad company.’” Ultimately, whether Unum is a “bad company” was not up for decision. What was decided was that Ms. Gleason sufficiently pled her fiduciary breach claim to survive the motion to dismiss. Therefore, Unum’s motion was denied.

Horan v. Goal Structured Solutions, Inc. Emp. Stock Ownership Plan, No. 20-cv-02290-AJB-MSB, 2021 WL 5177459 (S.D. Cal. Nov. 2, 2021) (Judge Anthony J. Battaglia). Plaintiffs are former employees of Goal Structured Solutions, Inc. and former participants in Goal’s ESOP plan. After plaintiffs left their employment with Goal in 2019, the plan sent each of them an “election form” allowing them to elect to either receive a distribution of the dollar value of their shares or not to take a distribution. The form did not inform them of any changes to either the plan terms or the organization. Plaintiffs chose not to receive distribution of benefits. Soon after, the plan involuntarily terminated plaintiffs’ participation in the ESOP and distributed the dollar value of each member’s shares into individual IRA accounts in each plaintiff’s name. Then, Goal amended the plan terms, resulting in an increase value of vested ESOP shares for the remaining plan participants, which would have benefitted plaintiffs had the plan not involuntarily ended their participation. Instead, their money in the IRA accounts lost significant value. Plaintiffs sued, alleging that defendants, various plan fiduciaries, as well as the ESOP itself, improperly deprived them of benefits, violated plan terms, and breached their fiduciary duties of loyalty and prudence, and the fiduciary duty to act in accordance with requirements of plan documents. Defendants moved to dismiss for lack of standing, failure to state a claim upon which relief can be granted, and failure to administratively exhaust their claims for benefits. The court first denied the motion to dismiss for failure to exhaust as the plan document discussing the appeal procedure used the term “may,” suggesting exhaustion was not a mandatory prerequisite. Next, the court dismissed plaintiffs’ Section 1132(a)(1)(B) claim without prejudice. The court found plaintiffs failed to state a provision in the plan which provided the benefit of continued participation in the plan they asserted they were entitled to. Next, the court denied the motion to dismiss the breach of fiduciary duty claims pursuant to Sections 1104 and 1132(a)(3), as plaintiffs were found to have sufficiently pled fiduciary breaches and appropriate equitable relief for these claims. Also, the court found that because the complaint alleged that the action challenged by plaintiffs directly resulted in their injuries, plaintiffs sufficiently pled causation to establish Article III standing. Finally, the court granted the motion to dismiss of one of the plaintiffs, Argent, with prejudice. The court agreed with Argent that, as a directed trustee, it could not be held liable for the harms alleged in the complaint. The court determined plaintiffs failed to state how Argent carried out any direction that was imprudent or to identify any direction that Argent should not have followed. As it was not pled how Argent knew or should have known it was directed to violate the plan document or ERISA, the claim against Argent was dismissed.

Disability Benefit Claims

Sixth Circuit
Laake v. The Benefits Comm., W. & S. Fin. Grp. Co. Flexible Benefits Plan, No. 1:17-CV-611 (WOB-SKB), 2021 WL 5166377 (S.D. Ohio Nov. 5, 2021) (Judge William O. Bertelsman). This case was reopened following a denial of long-term disability benefits on remand. In 2019, the court found defendants’ prior decision denying benefits to be arbitrary and capricious and remanded to the claims administrator for further consideration. The second time around, the court granted plaintiff Sherry Laake’s motions for judgment on the administrative record pursuant to Rule 52(a), finding Ms. Laake entitled to reinstatement of benefits and back pay, and also granted her claim for statutory penalties under ERISA Section 502(c) for failure to produce requested plan documents, as well as her motion for attorneys’ fees and costs. In reaching these conclusions, the court covered a lot of ground. First, the court decided that de novo review was appropriate because defendants were found to have impermissibly delegated the benefits committee’s discretionary authority by having individuals who were not members of the benefits committee vote to deny benefits. The court also noted that defendants had blown the deadline for making a new benefits determination by waiting over 270 days after the remand to issue an initial decision again denying the claim and that plaintiff could have filed suit at that point. Next, the court rejected defendants’ attempts to deny the claim under an exclusion in the plan for “chronic pain syndrome,” finding that there was little or no evidence that Ms. Laake even suffered from chronic pain syndrome much less that it caused her disability. In this regard, the court refused to consider as part of the administrative record a doctor’s opinion that defendants “curated” as a “post-litigation rationalization” after the litigation had commenced. The court also criticized defendants for rewriting witness testimony through their errata sheets to deposition transcripts. Instead of relying on defendants’ questionable evidence, the court accepted the opinions of Ms. Laake’s treating physicians that Ms. Laake was unable to perform sedentary job functions and was thus disabled under the terms of the plan. As for what the court termed the defendants’ “severe negligence” in providing Ms. Laake with requested documents, the court found the defendants’ 50-day delay in providing some of the documents, and failure to ever provide other requested documents, to be “inexcusable and egregious.” The court therefore awarded the maximum statutory penalty of $110 a day, for a total of $40,370 in penalties. Finally, the court evaluated Ms. Laake’s motion for attorneys’ fees and costs. Ms. Laake requested $400 in filing fee costs and a total of $107,100 in attorneys’ fees, representing 357 hours at a billed rate of $300 per hour. The court was satisfied that the requested fees and costs were reasonable and warranted given plaintiff’s success on the merits, defendants’ egregious conduct throughout the litigation, the purposes of deterrence, the ability to pay, and defendants’ high degree of culpability. Although it took many years to reach its conclusion, this case represents a big plaintiff-side disability win.

Eighth Circuit
Nauss v. Sedgwick Claims Mgmt. Servs., No. 4:20-CV-00304-JAR, 2021 WL 5195797 (E.D. Mo. Nov. 9, 2021) (Judge John A. Ross). Plaintiff Kevin Nauss brought suit against Sedgwick Claims Management Services, Inc., the plan’s claims administrator, seeking to overturn a denial of short-term disability benefits under an ERISA welfare benefit plan. Sedgwick moved for summary judgment. Mr. Nauss sought disability benefits for his irritable bowel syndrome with abdominal pain and gastric erosion, as well as for PTSD. Sedgwick denied the claim for benefits, determining that Mr. Nauss was not “totally disabled” as defined by the plan. In this very typical disability benefits case, Mr. Nauss’ treating physicians found him to be unable to perform the essential duties of his job, while the insurance company’s doctors concluded the opposite. The court was clearly irritated by plaintiff’s argument that Sedgwick used its own “hired gun” doctors, disregarding the opinions of his treating gastroenterologist and psychiatrist. The court instead referred to the physicians working for Sedgwick as “two neutral, independent doctors.” Applying abuse of discretion review, the court was satisfied that the benefits determination was proper and supported by substantial evidence. The court therefore granted defendant’s motion for summary judgment.

Ninth Circuit
Dioquino v. United of Omaha Life Ins. Co., No. 20-cv-00167-BAS-RBB, 2021 WL 5178664 (S.D. Cal. Nov. 5, 2021) (Judge Cynthia A. Bashant). Plaintiff Joni Dioquino brought suit seeking short-term and long-term disability benefits under employee welfare benefit plans covered by defendant United of Omaha Life Insurance Company. After a bench trial in the case and reviewing the denial de novo, the court issued findings of fact and conclusions of law in favor of defendant United of Omaha. Ms. Dioquino suffered from arthritis, an antalgic gait, and left knee and heel pain not caused by trauma or injury. Ms. Dioquino complained that the pain prevented her from sitting without elevating her leg. However, when her doctors recommended cortisone shots, a walker boot, and physical therapy sessions, Ms. Dioquino declined all of the treatments. Additionally, many of the x-rays and MRIs that Ms. Dioquino submitted with her benefits claim predated her application for benefits by several years. Accordingly, United of Omaha’s reviewing doctors concluded that Ms. Dioquino was not disabled under the terms of the plan. At trial, the issue was whether Ms. Dioquino was disabled as defined by the plan, and thus entitled to long-term disability benefits. Overall, the court was not satisfied that Ms. Dioquino met her burden to show that she was unable to perform her sedentary job as a financial analyst-accountant due to her knee and heel conditions. The court found the objective medical evidence did not support Ms. Dioquino’s claims. Furthermore, the “lynchpin opinion” in the case from Ms. Dioquino’s treating physician was discounted as the doctor only saw her twice and based his assessment on Ms. Dioquino’s self-reported symptoms. On top of that, the court found the doctor’s failure to respond to United of Omaha’s follow-up inquiries further undercut the strength of his opinion. Although the court gave less weight to United’s reviewing physicians, who never treated Ms. Dioquino in person, the court was satisfied that these doctors conducted a fair review of the medical record, and their reports were reasonable. Finally, the court was not swayed by Ms. Dioquino’s California State Disability Insurance Benefit award, as it was based off of the opinion of the same treating doctor the court assessed above. In sum, the court was not persuaded that the administrative record demonstrated Ms. Dioquino was unable to perform the material acts of her job. 

Dykman v. Life Ins. Co. of N. Am., No. 3:20-cv-01547-IM, 2021 WL 5206666 (D. Or. Nov. 8, 2021) (Judge Karin J. Immergut). Plaintiff Nathan Dykman suffers from relapsing remitting multiple sclerosis and related visual, cognitive, and fatigue symptoms. Mr. Dykman brought this suit challenging the long-term disability benefit denial made by defendant Life Insurance Company of North America (“LINA”). LINA denied the benefits claim after its doctors concluded that Mr. Dykman’s medical evidence did not establish disability under the plan or functionally limit him from performing the duties of his job during the applicable period. The parties filed cross-motions for summary judgment. The court found that LINA’s reviewing doctors misread and cherry-picked from the medical records, failed to examine Mr. Dykman in person or consult his many treating physicians, all of whom supported the disability claim, and that LINA overlooked relevant medical information regarding MS. Additionally weakening LINA’s benefits determination was the fact that at no point did LINA address Mr. Dykman’s own complaints of disability documenting how MS was affecting his ability to work. The court therefore found Mr. Dykman proved by a preponderance of evidence that he was disabled from his regular occupation and entitled to long-term disability benefits from March 2019 to March 2021. Nevertheless, the court remanded back to LINA to determine eligibility for continuing benefits beyond March 7, 2021, into the “any occupation” period. Because most of the evidence and briefing in the case revolved around the question of whether Mr. Dykman was able to perform his own occupation, the court was unwilling to make “the inferential leap required to find that Dykman is disabled under the ‘any occupation’ standard and will be for the duration of the plan.” Plaintiff and defendant’s cross-motions for summary judgment were accordingly each granted in part and denied in part.

ERISA Preemption

Sixth Circuit
Healthcare Venture Partners, LLC v. Anthem Blue Cross, No. 1:21-cv-29, 2021 WL 5194662 (S.D. Ohio Nov. 8, 2021) (Judge Douglas R. Cole). In this medical provider case, plaintiff Healthcare Venture Partners (“the Ridge”) filed an eight-count lawsuit in the Court of Common Pleas of Clermont County, Ohio relating to defendant Anthem Blue Cross Blue Shield’s failure to pay claims of members of healthcare plans that Blue Cross issued and administered. The Ridge is an out-of-network provider that received assignment of patients’ rights to receive benefits. Instead of billing Blue Cross directly after treating one of its members, the Ridge sent Blue Cross a spreadsheet containing a list of benefit claims that had not been paid, including patients covered by ERISA and Federal Employee Health Plans, and non-ERISA plan participants. In January 2021, Blue Cross removed the case to the federal district court on the grounds of ERISA preemption and the Federal Employees Health Benefits Act, acknowledging that some of the unpaid claims at issue were assigned by participants under plans not governed by either ERISA or by FEHBA. The Ridge moved to remand the case to state court arguing that neither statute provided for removal on the facts here. The Ridge argued that its complaint specially excluded any unpaid claims under ERISA plans at least five separate times, stating it has the right “to define what claims it is litigating and what claims it is not litigating… ERISA claims are not involved in the State Complaint.” The court agreed and found ERISA preemption not applicable. The judge was also satisfied that FEHBA would not be implicated going forward. As the case is in its relative infancy, and the factors of comity, fairness, and judicial economy weighed in favor of remand, the court granted the Ridge’s motion to remand the case back to state court. However, as Blue Cross had a reasonable basis for its position on removal, the court denied the Ridge’s request for attorney’s fees.

Lautermilch v. RHBA Acquisitions, LLC, No. 1:20-CV-2357, 2021 WL 5206556 (N.D. Ohio Nov. 9, 2021) (Judge Pamela A. Barker). Plaintiff Timothy Lautermilch was fired. That’s one fact all parties agree on in these many related suits. Whether he was fired with or without cause, whether state or federal court has jurisdiction, whether unrestricted incentive units and restrictive incentive units of company stock owned by Mr. Lautermilch were really valued at $0 are all points that are fiercely disputed. This is a fascinating case that only peripherally touches on ERISA and COBRA following Mr. Lautermilch’s termination. Mr. Lautermilch served as President and CEO of two related LLCs, RHB Acquisition and RHBA Acquisitions. In June 2020 RHBA sent Mr. Lautermilch a “notice of termination for cause” which claimed gross misconduct and performance problems of failing to meet operating goals as the grounds for termination. Mr. Lautermilch asserts that “RHBA purposefully manufactured certain false claims and accusations … with malice and in an effort to improperly manufacture grounds for a termination ‘with cause,’ while having actual knowledge that there was no possible legal or factual basis for such a termination.” Not only was Mr. Lautermilch fired, but in October 2020 RHBA sent a written demand to Mr. Lautermilch to repurchase his common and incentive stock units for zero dollars. Mr. Lautermilch repeatedly attempted to have the LLCs cease and desist the allegedly “unlawful, untimely, and improper repurchase of his ownership interest.” During this same time period, Mr. Lautermilch brought suit in state court alleging many state law claims and a violation of COBRA/ERISA for failure to provide written notice to the plan administrator regarding qualification for benefits under COBRA. On the basis of federal question jurisdiction over the federal claim and supplemental jurisdiction over the state law claims, RHBA removed the case to the district court. Defendants moved to dismiss for lack of jurisdiction. The court concluded that the only claim over which it has original jurisdiction was the COBRA/ERISA claim, and the state law claims were not part of the same case or controversy as the federal claim. Additionally, the state law claims were found to substantially predominate over the lone federal claim. Therefore, the court declined to exercise supplemental jurisdiction over plaintiff’s state law claims and remanded those claims to state court. The court did retain jurisdiction over the COBRA/ERISA claim and stayed proceedings relating to that claim until after the state court proceedings relating to the claims between Mr. Lautermilch, RHB, and RHBA were complete.

Life Insurance & AD&D Benefit Claims

Seventh Circuit
Futterman v. United Emp. Benefit Fund, No. 20-cv-6722, 2021 WL 5163302 (N.D. Ill. Nov. 5, 2021) (Judge Mary M. Rowland). Plaintiff Ronald Futterman brought suit against the United Employee Benefit Fund, the fund’s trustees, and the fund’s plan administrator alleging breach of fiduciary duty claims for the reduction of Mr. Futterman’s life insurance benefit and for failure to administer the fund in accordance with governing documents. Mr. Futterman also brought claims for failure to provide requested plan documents, and for failure to terminate the trust in accordance with the trust agreement, as there are no longer any employers contributing to the fund. After receiving a letter in May 2020 from the plan’s trustees informing him that “participants 65 and over (will see) a 30% reduction of their life insurance death benefit,” Mr. Futterman wrote to defendants asking for plan documents and requesting an explanation for this unexpected reduction in benefits. Additionally, Mr. Futterman learned that a 2020 annual statement of his life insurance policy reflected a loan balance in the amount of $2,769.61, despite having never requested a loan. Defendants moved to dismiss. First, defendants argued the case should be dismissed for failure to exhaust administrative remedies. The court disagreed, as Mr. Futterman submitted a written dispute about the trustees’ decision and sufficiently exhausted the appeals process. Defendants also argued that Mr. Futterman’s breach of fiduciary duty claims impermissibly requested relief under both Section 502(a)(3) and Section 502(a)(1)(B). The court declined to dismiss these claims as plaintiffs are allowed to plead claims under both subsections as alternative theories of relief. Next, defendants argued that Mr. Futterman could not bring his claims as the benefits contested are only payable upon death, and Mr. Futterman was still alive. The court concluded that this argument was without merit as ERISA allows a plan participant to bring suits “to clarify any of his rights to future benefits.” Defendants finally argued that Mr. Futterman’s claim for failure to provide plan documents should be dismissed because emails cannot be considered “written requests,” and that the lack of documents did not prejudice Mr. Futterman. The court concluded emails qualify as written requests, and that 29 U.S.C. § 1024(b)(4) does not require a plaintiff to plead prejudice or detrimental reliance. For these reasons, the motion to dismiss was denied.

Pleading Issues & Procedure

First Circuit
MacNaughton v. The Paul Revere Life Ins. Co., No. 4:19-40016-TSH, 2021 WL 5180238 (D. Mass. Nov. 8, 2021) (Judge Timothy S. Hillman). Plaintiff Mary MacNaughton brought suit against defendants Unum Group and The Paul Revere Life Insurance Company after Ms. MacNaughton’s long-term disability benefits were terminated. Following an eye injury in 2007, Ms. MacNaughton became unable to continue her work as a radiologist. Defendants offered to buy out Ms. MacNaughton’s claim in 2015. She rejected that offer. Then in 2017, defendants required Ms. MacNaughton to go from her home in Kansas to a doctor of their choosing in Chicago for an examination. This doctor opined that Ms. MacNaughton could resume full-time work as a radiologist. Following an unsuccessful appeals process, Ms. MacNaughton brought suit under ERISA seeking to reinstate her benefits. In pretrial motions, she moved to exclude some documents from the administrative record because they had not been given to her during the administrative process, and to take a Rule 30(b)(6) deposition. The magistrate judge denied both requests and the court upheld these rulings. The court agreed with the magistrate judge that pre-suit disclosure of the documents at issue was not mandated by federal regulations, and therefore the documents need not be excluded from the administrative record. The court was also satisfied by the magistrate judge’s conclusion that plaintiff failed to show the defendants’ decision to terminate benefits was influenced by structural conflict. Consequently, Ms. MacNaughton’s objections to the magistrate judge’s order were overruled.

Fourth Circuit
HMS Holdings, LLC v. Ted A. Greve & Assocs., P.A., No. 3:21-cv-460-MOC-DSC, 2021 WL 5163308 (W.D.N.C. Nov. 5, 2021) (Judge Max O. Cogburn Jr.). Plaintiff HMS Holdings, LLC requested a temporary restraining order against defendant and plan participant Britt Nicklaus Caulder to restrain him from “wasting, disbursing, spending, converting, or comingling any proceeds of any personal injury claims arising out of injuries sustained by defendant Caulder as a result of (an automobile) accident occurring on or about October 12, 2020.” Plaintiff alleges that Mr. Caulder obtained a double recovery from the car accident after he received $104,985.60 from the HMS Holdings Limited Partnership Employee Health Plan, and an additional $100,000 for injuries from a third-party lawsuit. Essentially, plaintiff argued that a temporary restraining order is necessary as ERISA allows only for equitable relief limited to specifically identifiable proceeds from the lawsuit, and if defendants dissipated the settlement proceeds in the interim, it will be deprived of its right to recovery. Applying the factors of the Winter test, the court was not satisfied that plaintiff demonstrated the need for the restraining order to prevent irreparable harm. Primarily, the court determined that plaintiff’s non-ERISA alternative causes of action are not limited to the same equitable relief as the ERISA claims. Thus, even if the proceeds from the personal injury lawsuit are rendered nonidentifiable, plaintiff will be still able to recover damages through the typical course of litigation should it succeed on the merits. Additionally, plaintiff’s nine-month delay in bringing suit supported the conclusion that irreparable harm will not be suffered in lieu of a temporary restraining order. Therefore, plaintiff’s motion was denied.

Ninth Circuit
McCluer v. Sun Life Assurance Co. of Can., No. 21-cv-0008-GPC-WVG, 2021 WL 5203298 (S.D. Cal. Nov. 9, 2021) (Judge Gonzalo P. Curiel). Plaintiff Michele McCluer’s husband Neil McCluer died suddenly while on a cruise with his wife and two children. Following the death, Ms. McCluer submitted claims for life insurance benefits and Accidental Death (AD&D) Benefits. The life insurance benefits were paid by defendant Sun Life Assurance Company of Canada. The AD&D benefits, however, were denied. Sun Life informed Ms. McCluer that upon review of the toxicology report it determined Mr. McCluer’s death was not the result of an “Accidental Bodily Injury” as defined by the policy. After an unsuccessful appeals process, Ms. McCluer initiated this suit, and pertinent to this decision, moved to augment the administrative record. The court denied the motion without prejudice. The court took issue with the unspecified and open-ended request by Ms. McCluer for “additional evidence.” As Ms. McCluer failed to illustrate what information she sought to add to record, why that information was necessary for review, or why that information was not part of the record to at the outset, the court denied the motion, but signaled it would be willing to entertain a request to augment the record with specifically identified evidence at trial.

Eleventh Circuit
Gamage v. John F. Hogue, Jr., No. 1:19-CV-21 (LAG), 2021 WL 5177455 (M.D. Ga. Nov. 1, 2021) (Judge Leslie A. Gardner). Plaintiff Nelson Gamage brought suit alleging defendants engaged in prohibited transactions surrounding an ERISA plan refinance that occurred in 2011, and that defendants breached their fiduciary duties by failing to remedy that prohibited transaction. During a discovery conference in the case on October 6, 2021, defendants proposed the bifurcation of any forthcoming motion for summary judgment to first address defendants’ statute of repose and statute of limitations arguments. The court requested briefing from the parties as to whether defendants’ asserted defenses could dispose of all claims in this case without addressing the underlying merits of the claims. Having reviewed the parties’ briefs, the court found bifurcation of any motion for summary judgment not to be appropriate. Even if the counts alleging defendants engaged in prohibited transactions were found to be time-barred, plaintiffs’ remaining counts would not necessarily fail as those counts were determined to certainly be timely. For this reason, the court concluded that bifurcation was not warranted and advised the parties that any motion for summary judgment filed should include all issues the parties wish the court to consider when deciding the motion.

Statute of Limitations
Sixth Circuit
Select Specialty Hosp. Akron v. Cmty. Ins. Co., No. 5:20-CV-02557-CEH, 2021 WL 5206558 (N.D. Ohio Nov. 9, 2021) (Judge Carmen E. Henderson). Provider and plaintiff Select Specialty Hospital Akron sought payment from defendants Community Insurance Company, Blue Cross and Blue Shield of Massachusetts, Inc., and Homesite Group Inc. totaling $537,043.48 for services it provided to a plan participant. Defendants moved to dismiss arguing the claims are time-barred. The court agreed. The plan at issue specifically stated that claims must be brought within two years after the cause of action arises. The medical services at issue were provided in 2016. Select did not bring its claims until 2020, long after the two-year limitation period had passed. Select provided no discernable reason why defendant’s denial prevented it from filing suit within the two-year limitation period, nor any other compelling reason to toll the limitations period. Finding the claims time-barred, the court granted defendants’ motions to dismiss.

Withdrawal Liability & Unpaid Contributions
Seventh Circuit
Wis. Elec. Emps. Health & Welfare Plan v. Lewins Elec., No. 18-cv-0561-bhl, 2021 WL 5206904 (E.D. Wis. Nov. 8, 2021) (Judge Brett H. Ludwig). Under a collective bargaining agreement, Defendant Lewins Electric LLC was bound to pay contributions to the Wisconsin Electrical Employees Health and Welfare Plan and well as six other union retirement, trust, vacation, and holiday pay funds for each employee it hired and engaged in electrical work. In a colorfully-written decision, the court describes defendant’s argument that it was not required to make ERISA plan contributions for temporary or part-time employees as evidencing a “lack of imagination” and “(inspiring) no reverence.” Displeased with the attempt to skirt ERISA the court wrote, “assuming Lewins Electric’s interpretation of ‘covered employee’ is correct, its breach of Section 13.07 would allow it to maintain a non-covered workforce indefinitely and thereby refrain from making insurance fund contributions that would otherwise be required. Public policy suggests that one party to a contract should not be permitted to profit by flagrantly defrauding the other.” Unsurprisingly, the court granted plaintiffs’ motion for summary judgment.

Eighth Circuit
Carpenters Pension Tr. Fund of Kan. City v. Lankford Enters., No. 20-00603-CV-W-SRB, 2021 WL 5166150 (W.D. Mo. Nov. 5, 2021) (Judge Stephen R. Bough). Plaintiffs, trustees, trust funds, and the St. Louis-Kansas City Carpenters Regional Council Union, brought this ERISA collection action to recover delinquent contribution payments allegedly owed by defendant Lankford Enterprises, Inc. Lankford and the Union had entered into several agreements requiring Lankford to contribute to the funds, employee benefit plans, including two collective bargaining agreements and a Carpenters Joint Agreement. Under these agreements, Lankford is obligated to contribute to the funds “for each hour worked… by each employee covered by the Agreement.” Lankford is additionally required to maintain records to determine the amount of contributions due. After an audit conducted in May 2019, Lankford was found to have failed to contribute $351,248.37 to the funds, which represented contributions Lankford was required to make to the funds for its non-union employees as per the agreements. Plaintiffs brought suit seeking to collect a total of $437,394.87 in delinquent contributions, dues, audit costs, liquidated damages, interest, and attorney’s fees. Both parties moved for summary judgment. Lankford argued that it was only required to contribute to the funds for its union employees and was not liable for contributions on behalf of non-union employees. The court disagreed, finding that the agreements unambiguously required Lankford to contribute to the funds on behalf of all employees, regardless of union affiliation. Lankford’s windfall argument was equally unpersuasive. The court was not convinced that contributions to the union for non-union employees would have been improper because the non-union employees wouldn’t benefit from the funds. As Lankford didn’t present evidence showing each non-union employee had no colorable claim to obtain benefits accruing during the relevant audit period, the court found that plaintiffs were entitled to summary judgment. Accordingly, Lankford’s motion was denied, and plaintiffs’ motion was granted. The court awarded plaintiffs $437,394.49 made up of: $244,910.82 in unpaid contributions, $23,654.87 in dues, $48,982.17 in liquidated damages, $29,490.70 in interest, $54,145.00 in audit costs, and $36,210.93 in attorney’s fees.

Note from the Your ERISA Watch editors:
 

Your ERISA Watch is written and edited by Elizabeth Hopkins and Peter Sessions, with the assistance of Emily Hopkins. 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.

We include recent cases that have been picked up by Westlaw or sent to us by one of our readers. If you have a decision you'd like to see included in Your ERISA Watch, please send it to Elizabeth Hopkins at ehopkins@kantorlaw.net.

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