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Your ERISA Watch

Your ERISA Watch

No case of the week this week, but keep reading for a number of interesting decisions, including a decision finding that that Ed Asner and other participants in the SAG-AFTRA healthcare plan whose benefits were cut stated a claim against the plan's trustees, and a decision finding that the administrative record is whatever the administrator says it is.

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

Attorneys’ Fees

Ninth Circuit
Hoffman v. Screen Actors Guild-Producers Health Plan, No. 2:10-CV-06913-CJC-E, 2021 WL 3888251 (C.D. Cal. Aug. 23, 2021) (Judge Cormac J. Carney). Plaintiff filed suit in 2010. Two prior fee decisions awarded $185,670 and $246,890 in attorneys’ fees. In the current motion, following a Ninth Circuit decision vitiating several prior rulings from the district court, the reopening of the case, and a settlement, plaintiff sought an additional $69,150 in fees for 92.2 hours of work at a rate of $750 per hour. The court found that $750 per hour was reasonable for an attorney admitted in 1970, who had handled over 200 ERISA cases, and been named a “Southern California Super Lawyer” in the field of ERISA every year since 2006. The court also found time was appropriately expended on prior unsuccessful motions that had advanced arguments subsequently adopted by the Ninth Circuit. It also awarded fees based on time spent on preparing the fee motion and time for a motion that was withdrawn but became the foundation for a Ninth Circuit brief. However, the court denied fees for time spent on prior unsuccessful motions it deemed completely devoid of any legal authority. In the end, the court awarded 60.3 hours, at a rate of $750 per hour, for a total award of $45,225 in additional attorneys’ fees (bringing the total fees awarded in the case to $477,785). Plaintiff has appealed the decision, continuing the more than decade-long saga.

Breach of Fiduciary Duty

Ninth Circuit
Asner v. The SAG-AFTRA Health Fund, No. 2:20CV10914CAS(JEMX), 2021 WL 3913173 (C.D. Cal. Aug. 30, 2021) (Judge Christina A. Snyder). This case is a putative class action asserting four breach of ERISA-imposed fiduciary duty claims. Defendants, a collectively-bargained healthcare plan and plan trustees, moved to dismiss on the pleadings. The claims have their genesis in the January 1, 2017 merger of the SAG Health Plan with the AFTRA Health Plan. The plaintiffs are members of SAG who believe their health insurance system has been financially crippled by taking on the AFTRA health system—something they claim was known to the trustees, but not disclosed when SAG entered into collective bargaining negotiations (where they would have had an opportunity to bargain for terms addressing the financial problems with the health insurance system). Two counts focus on the trustees’ failure to conduct a diligent pre-merger investigation and analysis to assess the impact of the merger on the SAG Health Plan and its participants. The other two counts focus on an allegedly age-discriminatory benefits amendment and a failure to disclose the SAG-AFTRA Health Plan’s precarious financial structure during the Union’s collective bargaining process in 2019 and 2020. The court recognized that decisions about plan form and structure were not fiduciary acts. However, it determined, on the pleadings, that the gravamen of plaintiffs' claims was not the decision to amend the plan, but the alleged inadequate pre-merger evaluation process, and the allegedly materially misleading communications that pre-date and post-date the merger of the two healthcare plans (communications that represented the soundness of merging the plans). The court viewed these as fiduciary acts and thus denied defendants' motion to dismiss.

Eleventh Circuit
Drake v. BBVA USA Bancshares, Inc., et. al, No. 2:20-CV-02076-ACA, 2021 WL 3851974 (N.D. Ala. Aug. 27, 2021) (Judge Annemarie Carney Axon). Plaintiff is a participant in an ERISA defined contribution plan sponsored by her employer, BBVA USA Bancshares, Inc. BBVA contracted with Envestnet Asset Managements (“EAM”) to provide consulting, investment research and recommendation assistance, and monitoring and reporting services. Ms. Drake filed suit against BBVA, EAM, and various individual members of BBVA's Retirement Committee. The only claim she asserts against EAM is breach of fiduciary duty, on the theory that EAM was an investment advice fiduciary under ERISA. EAM argued that Ms. Drake did not have standing to bring claims relating to BBVA's investment in two of funds: JPMorgan MidCap Growth Fund and the Principal MidCap Value Fund. Ms. Drake admitted that she did not invest in either of these funds. Instead, she argued that Envestnet's standing argument amounts to “yet another attempt to divert the Court's attention to something other than the merits of this case.” The court granted EAM’s motion to dismiss, with prejudice, concluding that plaintiff lacked standing to challenge any advice EAM provided about funds she did not invest in.

Disability Benefit Claims

Second Circuit
Pellegrino v. Unum Life Ins. Co., No. 1:20-CV-484, 2021 WL 3912238, (N.D.N.Y. September 1, 2021) (Judge David N. Hurd). The court upheld Unum’s decision to terminate plaintiff’s long-term disability (“LTD”) benefits, finding that the termination of benefits was not arbitrary and capricious. Plaintiff had previously been approved and had been receiving LTD benefits for spine and hip pain conditions for several years. Although plaintiff was under ongoing treatment for his conditions and his doctors continued to support disability, Unum terminated plaintiff’s benefits based on conclusions by independent medical evaluators that the medical evidence no longer supported disability. The court acknowledged that the Second Circuit had explained that it was arbitrary and capricious to disregard evidence simply because it is subjective, but the court went on to state that plan administrators also did not have to accept without question the degree to which subjective pain limited a claimant’s objective functional capacity. The court found that Unum had considered plaintiff’s treating doctor’s opinion, and it was not arbitrary and capricious for Unum to choose to rely on the independent medical evaluators’ opinions instead, one of which was based on a physical exam, even though the other one was based solely on review of the claim file.

Ninth Circuit
Sorger v. Novartis Corp. Death Benefit & Disability Plan, No. 20-12224, __ F. App’x __, 2021 WL 3758280 (9th Cir. Aug. 25, 2021) (Before Circuit Judges Nguyen and Collins, and District Judge Timothy M. Burgess). Plaintiff appealed from a judgment of the district court in favor of defendants finding that they did not abuse their discretion in denying voluntary, supplemental long-term disability (“LTD”) benefits to Plaintiff. The plan is self-funded, governed by ERISA and grants discretion to MetLife, the claims and plan administrator. Plaintiff purchased voluntary, supplemental LTD coverage the funding for which is held in a Voluntary Employee Benefit Association Trust (“VEBA”). Plaintiff made a disability claim and MetLife denied the supplemental portion on the grounds of the pre-existing condition exclusion (“Pre-X Excl.”). On appeal, plaintiff asserted that MetLife’s decision should be reviewed de novo rather than under an abuse of discretion standard because the VEBA is a plan separate from the Plan and no discretion was granted in the VEBA documents. The court of appeals concluded, however, that the district court did not commit clear error when it found that the VEBA Trust was only used as a funding source for the benefits. The predecessor to the VEBA was implemented to pay for certain employee benefits on a tax-advantaged basis, however, at the time plaintiff joined it was used only as a funding source. Therefore, the Plan documents granting discretionary authority, and not the VEBA documents, governed. Next, plaintiff argued that the Pre-X Excl. was invalid because the Plan states that MetLife will create the Pre-X Excl. but, in fact, the Pre-X Excl. was prepared by Novartis and set forth in the SPD. The court of appeals rejected this argument reasoning that the Plan grants MetLife discretion to interpret the SPD, which included the Pre-X Excl., and the SPD was incorporated into the Plan. Plaintiff also argued that MetLife abused its discretion in its interpretation and application of the Pre-X Excl. for several reasons, none of which the court found to be persuasive.

Amoroso v. Sun Life Assurance Company of Canada, No. C20-5887 BHS, 2021 WL 3930608 (W.D. Wash. Sept. 2, 2021) (Judge Benjamin H. Settle). Amoroso was employed as a Physician Executive with MultiCare Health System, overseeing a large group of medical researchers. He suffered from mental health conditions including depression, anxiety, and attention and task-completion disorders. He first took FMLA leave and eventually applied for long-term disability (LTD) benefits. Sun Life denied Amoroso’s claim and the appeal, saying that he had not satisfied the 90-day elimination period. The court agreed with Sun Life and held that Amoroso could not meet his burden of proof to establish that he was disabled while he was insured and that he lost income while he was covered under the policy.

ERISA Preemption

Eighth Circuit
Emergency Servs. of Oklahoma, PC v. Aetna Health, Inc., No. CIV-17-600-J, 2021 WL 3914255 (W.D. Okla. Aug. 24, 2021) (Judge Bernard M. Jones). Plaintiffs, a number of medical providers who provided emergency medical services to patients under Aetna health plans claimed that they were reimbursed at impermissibly low rates under Oklahoma law. Defendants sought summary judgment arguing that ERISA preempted the state-law claims. The court disagreed, finding that the Oklahoma common law doctrines under which plaintiffs bring their claims operate akin to rate regulations and, accordingly, are not preempted. The court reasoned that the state laws did not have an impermissible connection with ERISA plans and are nothing more than cost regulation. The court denied defendant’s motion for summary judgment.

Life Insurance & AD&D Benefit Claims

Second Circuit
Haby v. Time Warner Cable Pension Plan, No. 20-CV-4119 (JPO), 2021 WL 3913529 (S.D.N.Y. Sept. 1, 2021) (Judge J. Paul Oetken). Plaintiff filed this action seeking life insurance benefits under an ERISA-governed employee benefit plan after the death of her brother. The plan denied her claim, contending that the prior version of the plan, which was in effect when her brother retired, governed her claim, and not the new version of the plan, which went into effect after he retired. The parties filed cross-motions for summary judgment. The court agreed with plaintiff that the plan might be ambiguous, and that her reading of the plan might even be plausible, but under the abuse of discretion standard of review the court could not say that the administrator’s interpretation was unreasonable. The court further noted that the plan stated that “benefits shall be determined based on ‘the provisions of the Plan as in effect on such Participant’s Termination of Employment,’” which supported the plan’s interpretation. The court thus denied plaintiff’s motion for summary judgment and granted the plan’s cross-motion.

Eleventh Circuit
Baptiste v. Securian Fin. Grp., 20-60888-CIV-ALTMAN/Hunt WL 3883707 (S.D. Fla. August 31, 2021) (Judge Roy K. Altman). Plaintiff’s brother, a nurse anesthetist who had been self-treating insomnia for years with IV medications, died of what plaintiff contended was an accidental overdose. Defendant denied plaintiff’s claim for benefits an accidental death and dismemberment policy (“AD&D”) that specifically excluded death caused, resulting from, or contributed to by alcohol, prescription, nonprescription, and illegal drugs, medications, intoxication, and/or narcotics. In reviewing the denial, the court used the Eleventh Circuit’s multi-step framework for analyzing a benefit administrator’s benefits determination under the abuse of discretion standard. Accordingly, the court reviewed the decision to determine if it was arbitrary and capricious, noting that an administrator’s decision is reasonable if it is supported by some reliable evidence in the record and that this applies even if the claimant’s position is also reasonable. Under this approach, the court held that defendant’s decision was not arbitrary and capricious, and concluded that Plaintiff’s brother’s death was not covered under the policy and second, that his overdose was excluded by the plain terms of the policy. Accordingly, the court granted defendant’s motion for summary judgment.

Pension Benefit Claims

First Circuit
Lipshires v. Behan Bros, Inc. Ret. Plan, No. CV 20-252-JJM-PAS, 2021 WL 3856632, at *1 (D.R.I. Aug. 30, 2021) (Judge John J. McConnell, Jr.). Plaintiffs filed this case seeking to have their 401(k) profit sharing accounts distributed using a valuation date of December 31, 2019, rather than the special valuation date of April 30, 2020, that was performed as a result of a market drop resulting from COVID-19. The court ruled in favor of defendants, finding that the plan administrator had authority and discretion to interpret the plan, including to declare that a special valuation was needed. Applying an arbitrary and capricious standard of review, the court determined that the administrator’s decision to get a special valuation was reasonable due to the drastic market fluctuation during the relevant period. Defendants also moved for summary judgment on plaintiffs’ breach of fiduciary duty claim arguing that plaintiffs only sought money damages in the form of benefits and that the claim fails because the administrator acted reasonably. The court agreed and granted defendants’ motion.

Sixth Circuit
Johnny Toaster v. General Motors, Inc., et al., No. 18-10971, 2021 WL 3847762, (E.D. Mich. August 27, 2021) (Judge Mark A. Goldsmith). Plaintiff alleges that General Motors, Inc.(“GM”), his former employer, and Fidelity Workplace Services LLC (“Fidelity”), miscalculated his credited service for the years 1983-1985, 1997 and 2008-2009, resulting in an underpayment of retirement benefits under GM’s pension plan (“the Plan”). Defendants filed a motion for judgment on the record and plaintiff filed a motion for summary judgment. The Plan provided for a review procedure for pension credit, among other things, and vested the Board of Administration with discretionary authority. As a result, the court applied the arbitrary and capricious standard of review. Defendants sought judgment on the following grounds: (1) plaintiff’s claims were waived pursuant to a 2009 release of liability and a 2011 Special Attrition Program agreement; (2) The statute of limitations bars plaintiff’s claims; and (3) Plaintiff’s claims fail on the merits. The court determined when each of the claims accrued to evaluate whether plaintiff’s claims were waived and/or barred by the statute of limitations. Claims that had accrued at the time the release and agreement were executed were waived. The court dismissed plaintiff’s claims for the years 1983-1985 and 1997 as waived under the release, which also rendered them untimely. The court, however, concluded that plaintiff’s claims for 2008-2009 credited service were neither waived, nor untimely. Nevertheless, the court determined that defendants’ decision on the merits denying service credit for these years constituted a rational application of the plan’s provisions. The court therefore granted defendants’ motion for judgment and denied plaintiff’s summary judgment.

Seventh Circuit
Albert v. Oshkosh Corp., No. 20-C-901, 2021 WL 3932029 (E.D. Wis. Sept. 2, 2021) (Judge William Griesbach). In this ERISA defined contribution pension plan class-action, plaintiffs alleged that the Oshkosh Corporation’s fiduciaries breached their fiduciary duties by: (1) allowing the plan to pay excessive record-keeping and administrative fees; (2) offering investment options that were a more expensive share class to plan participants when equivalent less expensive share classes were available; and (3) paying excessive fees to advisors. The court dismissed all of plaintiffs’ claims because simply alleging that the fees were expensive, were more expensive than alternative options, or that other share-classes would have been preferred was not enough. Plaintiffs did not provide enough allegations to infer that the fiduciaries decision making process was imprudent and therefore that they had breached their fiduciary duties.

Pleading Issues & Procedure

Third Circuit
Williams v. Reliance Standard Life Ins. Co., No. CV 20-5036, 2021 WL 3852105 (E.D. Pa. Aug. 27, 2021) (Judge Petrese B. Tucker). Plaintiff, a Texas resident, filed suit seeking life insurance benefits under an ERISA-governed employee benefit plan against Reliance, whose headquarters are in Pennsylvania, and the plan’s sponsor, Team Management & Consulting (“TMC”), which is located in Louisiana. TMC filed a motion to dismiss for lack of personal jurisdiction and improper venue. The court chose to apply the “minimal contacts” standard in determining whether personal jurisdiction existed, not the “national contacts” standard. Under that standard, the court noted that TMC was registered in Louisiana, its principal place of business was in Louisiana, and its employees all resided in Louisiana. Furthermore, TMC did not maintain any offices in Pennsylvania and did not purposefully direct any conduct in Pennsylvania. As a result, the court dismissed plaintiff’s claims against TMC with prejudice for lack of jurisdiction.

Genomind, Inc. v. UnitedHealth Group, Inc., et al., No. CV 21-373, 2021 WL 3929723 (E.D. Pa. Sept. 1, 2021) (Judge Wendy Beetlestone). Plaintiff brought suit under both ERISA and state law, alleging that defendants failed to pay for genetic tests plaintiff performed for patients with United insurance plans when it had an implied contract with United that it would cover the tests. Defendants moved to dismiss. The court deferred addressing ERISA preemption with regard to several of the state claims because it determined that the issues would be aided by a further development of the record. The court also denied defendants’ motion to dismiss plaintiff’s unjust enrichment and quantum meruit claims, concluding that these claims did not depend on the existence of an ERISA plan, nor was it tied to benefits under such a plan. The court found the complaint adequately alleged that the parties agreed on a method for determining the price of genetic tests and United agreed to pay pursuant to the pricing method. Regarding the ERISA claims, the court found that plaintiff pled sufficient facts demonstrating benefits are due under the terms of ERISA plans. The court also found sufficient allegations regarding exhaustion of administrative remedies. The court found that it was unclear whether plaintiff would be entitled to adequate monetary relief and therefore it was not yet established that there would be no need for further equitable relief.

Ninth Circuit
Case v. Generac Power Systems, Inc., No. C21-752 RSM, 2021 WL 4033299 (W.D. Wash. Sept. 3, 2021) (Judge Ricardo S. Martinez). Plaintiff brought this putative class action against his former employer, Generac, and its 401(k) savings plan, alleging that they violated ERISA by authorizing the plan to pay unreasonably high fees for services, failing to prudently monitor the plan’s investment portfolio, and maintaining higher-cost, lower-performance funds in the plan. Defendants filed a motion to transfer venue, contending that the action should be heard in the Eastern District of Wisconsin due to a forum selection clause in the plan, and because Generac is headquartered in Wisconsin and the plan is administered there. The court granted the motion, finding that the action “falls within the scope of the agreed forum selection clause,” and even if the clause did not apply, transfer would be appropriate to Wisconsin under federal forum non conveniens law (28 U.S.C. § 1404).

Tenth Circuit

Kirsten W. v. Cal. Phys. Serv. d/b/a/ Blue Shield of CA. et al., 2:19-CV-00710-DBB-JCB WL 3931357 (D. Utah Sept. 2, 2021) (Judge David Barlow). Plaintiff sued for medical benefits for her minor child. Plaintiff filed a motion to supplement the administrative record based on the failure of the defendants to have considered her appeal because they provided her with the wrong address in the initial denial letter. Plaintiff did not learn the appeal had never been received until seeing the administrative record produced at trial. One week after full briefing on the motion to supplement, plaintiff filed a notice withdrawing her motion. The next day, plaintiff re-filed her motion to supplement, even though this was 60 days past the deadline for filing such motions under the scheduling order. Her “late-filed” motion did not seek leave to amend the scheduling order and it did not state reasons why the original deadline could not be met. Instead, the motion made the same arguments as the first filing but included additional authentication to the evidence filed in support of the initial motion. On these facts, the court found first, that plaintiff’s motion to supplement the record was untimely and second, that even had it been timely, it was not the proper remedy for her problem – the unreviewed appeal that was missing from the administrative record. In one of the more circular, plan-friendly decisions of late, the court held that, “The ‘administrative record’ in this action consists of ‘the materials compiled by the [plan] administrator in the course of making [the] decision’ that is under appeal. The parties do not dispute that BSC never considered Kirsten W.'s appeal because it was sent to the wrong address. Because BSC never considered Kirsten W.'s appeal, it cannot be part of the administrative record as presently constituted.” Quoting an Australian poet, the court noted that “[w]hoever said the small things don't matter has never seen a match start a wildfire.” Kirsten W. might be thinking that a quote from Billy Joel would be more apt: “[w]e didn’t start this fire.”

Cruz v. Reliance Standard Life Ins. Co., No. 21-2018, __ F. App’x __, 2021 WL 3889924 (10th Cir. Sept. 1, 2021) (Before Circuit Judges McHugh, Baldock, and Moritz). Plaintiff Cruz, proceeding pro se, appealed the district court’s decision upholding the denial of his claim for long-term disability benefits under an ERISA-governed benefit plan insured by defendant Reliance. On appeal, Cruz stated, “The only argument I want to make is that I feel like the 7th amendment of the U.S. Constitution doesn’t include me after what has happened in this case.” He argued that “medical records are frequently wrong,” and believed he “should have had an opportunity to demonstrate as much to a jury[.]” The panel affirmed, noting that the Tenth Circuit had already held that actions for benefits under ERISA seek equitable, not legal, relief and thus do “not fall within the Seventh Amendment’s civil jury trial guarantee.” The panel stated that it was not sitting en banc, and thus absent superseding Supreme Court authority it could not overrule Tenth Circuit precedent.

Retaliation Claims

Eleventh Circuit
Hawthorn v. Georgia-Pac. Brewton, LLC, No. 21-10142, 2021 WL 3852231 (11th Cir. Aug. 30, 2021) (Before Circuit Judges Newsom, Brasher, and Anderson). The district court granted summary judgment to Georgia-Pacific in this case where plaintiff sued his former employer, alleging it had terminated him to prevent him from obtaining severance benefits. The Eleventh Circuit affirmed, agreeing with the district court that plaintiff had proven he was entitled to ERISA’s protection as an employee, that he was qualified for the position he had held, and that he was discharged under circumstances that would lead to an inference of discrimination. However, defendant had responded that plaintiff was terminated for cause when he made payroll processing errors – whether purposeful or not. Plaintiff had not rebutted the employer’s explanation, so summary judgment in favor of the employer was proper.


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.

Note from the Your ERISA Watch editors:

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.

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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