Your ERISA Watch – UNUM Unsuccessfully Attempts to Evade Minnesota's Ban on Discretionary Clauses

Kantor & Kantor Attorneys

In this week’s notable decision, Kaminski v. UNUM Life Ins. Co. of Am., No. 19-CV-1997-SRN-DTS, 2021 WL 411438 (D. Minn. Feb. 5, 2021) (Judge Susan Richard Nelson), a district court in Minnesota examines whether UNUM can evade the state’s ban on discretionary language in disability policies issued or renewed in the state after January 1, 2016, by the insurer’s practice of amending and replacing its disability policies rather than renewing them. The court’s answer: nice try UNUM, but de novo review applies.

In the summer of 2008, Peter Kaminski was paralyzed in a diving accident. After surgery and physical therapy, Kaminski was able to regain most of his strength but was plagued by chronic pain. In 2016, Kaminski made a claim for short-term disability (“STD”) benefits with UNUM under his employer’s STD plan. Kaminski’s STD claim was approved, and UNUM paid him STD benefits for the maximum time allowed under the plan. When his STD benefits were exhausted, Kaminski made a claim for long-term disability (“LTD”) benefits in April of 2017.

Although UNUM had performed a thorough investigation of Kaminski’s STD claim, including reviewing his medical records, consulting his attending physician, scouring his social media profiles, and conducting roundtable discussions with medical and vocational staff about his entitlement to benefits, and had approved his STD claim and paid the maximum amount of STD benefits, it nonetheless denied Kaminski’s claim for LTD benefits based on the same information provided for his STD claim. Kaminski appealed UNUM’s LTD claim denial but was unsuccessful in convincing UNUM to reverse its decision.

A central question before the court in this case was what standard of review should apply to UNUM’s decision. The LTD policy (“the Policy”) contained language conferring discretion upon UNUM to determine eligibility for benefits and interpret the plan language. However, in 2015, Minnesota passed legislation prohibiting disability insurers from granting themselves discretionary authority in their policies. This statute made discretion-granting language void in disability policies “issued or renewed” after January 1, 2016. Minn. Stat. § 60A.42 (2015). The Policy was first issued on January 1, 2013. On May 1, 2016, the Policy was amended to “replace” it with a new one identical to the old one. Kaminski argued the amendment was effectively a renewal of the Policy. UNUM argued the amendment was neither a renewal of the old policy, nor the issuance of a new policy, and therefore the Minnesota discretionary language ban did not apply.

The court was unconvinced by UNUM’s argument. It sided with other courts from around the country which examined UNUM’s practice of amending and replacing policies rather than renewing them to avoid states’ discretionary language bans, finding that this practice was likely engineered to avoid de novo review. UNUM’s “amendment” was not really an amendment, but a renewal of the Policy, bringing the Policy within the scope of the Minnesota discretionary language ban. The court voided the discretion-granting language in the Policy and applied de novo review.

Applying that standard of review, the court granted Kaminski’s motion for summary judgment. The court found it persuasive that UNUM had approved and paid Kaminski’s STD claim, and there had been no change in Kaminski’s condition or the information available to UNUM since STD benefits were exhausted. It chided UNUM for relying on the opinions of medical record reviewers when those opinions were not consistent with the medical records. Finally, the court awarded Kaminski 24 months of own-occupation benefits and remanded the claim back to UNUM to decide Kaminski’s entitlement to further benefits under the any-occupation definition of disability in the Policy.

This week’s notable decision summary was prepared by Kantor & Kantor LLP Associate Sarah Demers. Sarah has devoted her law practice to representing individuals in disputes over life insurance, disability income, and retirement benefits, and is passionate about fighting for people who have been wrongfully denied employee benefits.

Summaries of this past week’s notable ERISA decisions.

Attorneys’ Fees
Fourth Circuit
Thomas v. Saber Healthcare Group, LLC, No. 3:18-CV-344-GCM, 2021 WL 467206 (W.D.N.C. Feb. 9, 2021) (Judge Graham C. Mullen). In a prior order, the court overruled the magistrate judge’s memorandum and recommendation, granted summary judgment in favor of Plaintiff, and awarded Plaintiff $4,736.00 in damages. In doing so, the court resolved a significant legal question of whether Plaintiff could recover his consequential damages under ERISA based on the Supreme Court decision in Cigna Corp. v. Amara. Plaintiff then made a motion for attorney’s fees in the amount of $16,300.00 for 65.2 hours spent on the litigation. Plaintiff’s counsel had been in practice since 2000 and charged a rate of $250 per hour. This was well within the range deemed reasonable by another court in the district – $250 to $300 for associates and $400 for partners. With no objection by Defendant to the time or rate, the court awarded the amount requested. It also awarded costs incurred, which included mediation, mail, and PACER fees.
Breach of Fiduciary Duty
Second Circuit
Varga v. General Elec. Co., Case No. 20-1144-cv, __ F.Appx. __, 2021 WL 391602 (2d Cir. Feb. 4, 2021) (Kearse, Pooler and Lynch, Circuit Judges). Plaintiff appealed the district court’s dismissal of her putative class action complaint against defendants General Electric (“GE”) and Jeffrey Immelt for failure to exercise their fiduciary duty of prudence to the GE Plan participants whose plan was invested in GE stock. In January 2018, GE announced two of its insurance subsidiaries were under-reserved by $15 billion and that it would need to contribute billions more to shore up those reserves. As a result, GE’s stock price decreased. Plaintiff alleged that GE should have known that these insurance subsidiaries did not have adequate reserves by 2009 and that GE failed to take alternative actions by closing the fund to future participants and/or publicly disclosing the underfunding by 2009. The Second Circuit noted that plaintiff must allege that a fiduciary in GE’s position would not have concluded that the proposed alternative actions would do more harm than good. The Second Circuit held that plaintiff failed to adequately plead alternative actions that the fiduciaries could have taken. As a result, it affirmed the district court’s decision.

Fourth Circuit
Feinberg v. T. Rowe Price Grp., Case No. JKB-17-427, 2021 WL 488631 (D. Md. Feb. 10, 2021) (James K. Bredar, Chief Judge). Plaintiff, plan participants, filed a lawsuit against T. Rowe Price U.S. Retirement Program (the “Plan”), challenging the common practice by financial services organizations of offering their own proprietary investment vehicles as investment options under their 401(k) plans. Plaintiff brought a motion for partial summary judgment. Defendants filed a cross-motion for summary judgment. Plaintiffs argued that the fiduciaries violated ERISA by favoring their proprietary funds over unaffiliated alternatives. The court found that although Defendants showed preference for in-house funds, those funds had generally performed well, as underscored by the fact that the Plan’s assets had more than tripled in value during the relevant time period. Accordingly, the court found that the evidence did not conform with Plaintiffs’ allegations of shocking and pervasive mismanagement. Nevertheless, the court found that Plaintiffs generally cleared the low bar of avoiding summary judgment in favor of defendants and therefore were entitled to proceed with trial. The court found that the facts presented were subject to multiple interpretations and denied summary judgment to Defendants on all claims except for Count III – Plaintiffs’ claim that the T. Rowe Price Investment Affiliates breached their fiduciary duties by providing “self-interested and imprudent investment advice” to the Trustees. Because Plaintiffs failed to contest or otherwise address this argument, the court granted summary judgment in Defendants’ favor with respect to Count III only.

Seventh Circuit
Bartnett v. Abbott Labs., Case No. 20-CV-2127, 2021 WL 428820 (N.D. Ill. Feb. 8, 2021) (Judge Thomas M. Durkin). This case involved a motion to dismiss of a participant’s claim for breach of fiduciary duty against Abbot Laboratories and Marlon Sullivan (“Abbott defendants”). The Abbott defendants hired Alright Solutions (“Alright”) as plan administrator for their employee retirement plan account. Plaintiff is a retired, former employee of Abbott. An identify thief accessed Plaintiff’s retirement benefits online and added direct deposit information. Subsequently, after two telephone calls with the customer service department of Alright, the identity thief stole $245,000 from Plaintiff’s account, of which Plaintiff was able to recoup $108,485.02. In analyzing the Abbott defendants’ motion to dismiss, the court discussed the two duties raised in Plaintiff’s amended complaint – the duty of prudence and duty to monitor. As to the duty of prudence, the court noted that Plaintiff’s claim that Abbott was imprudent for hiring Alright was not supported because Plaintiff could point to only two incidents, limited in size and scope, which did not involve significant lapses in security protocol. As to the duty to monitor, Plaintiff provided numerous allegations of Alright’s performance compared to other plans. The court explained that Alright’s performance with respect to other plans had no bearing as to the Abbott defendants’ duty to monitor Alright because the Abbott defendants were only required to monitor how Alright performed for their plan. The court granted the Abbott defendants’ motion to dismiss, but did so without prejudice, noting that the parties were engaged in limited discovery that might allow Plaintiff to cure the deficiencies outlined by the court.

Eighth Circuit
Parmer v. Land O’Lakes, Inc., No. 20-1253(DSD/HB) 2021 WL 464382 (D. Minn. Feb. 9, 2021) (David S. Doty). This case involved numerous claims that Defendants breached their fiduciary duties by not acting in the best interests of pension plan participants with respect to plan investments. Among other things, Plaintiffs asserted that Defendants breached their fiduciary duties by (1) failing to investigate and select lower cost alternative funds, (2) failing to monitor or control the Plan’s recordkeeping expenses, and (3) allowing their recordkeeping affiliates to directly benefit from the Plan at the expense of participants. Defendants moved to dismiss for lack of subject matter jurisdiction and failure to state a plausible claim. Regarding failure to investigate, the court analyzed four theories offered by Plaintiffs: excessive fees, failure to select lower fee share classes, failure to investigate the availability of lower cost collective trusts, and failure to select lower cost passively managed and lower cost actively managed funds. On excessive fees, the Court agreed with Defendants and found that Plaintiffs’ allegations of lower-priced alternatives were not “meaningful benchmarks” and thus Plaintiffs’ allegations were insufficient to plausibly allege imprudence. On failure to select lower fee share classes, the Court found that Plaintiffs adequately pleaded that Defendants were imprudent and that the complaint provided a meaningful benchmark for comparison. On failure to investigate the availability of lower cost collective trusts, the Court found that Plaintiffs did not adequately plead that collective trusts are a meaningful benchmark in comparison to mutual fund “equivalents” and thus did not adequately plead a breach of fiduciary duty. As for failure to select lower cost passively and actively managed funds, the Court found the alternative funds identified in the complaint were not meaningful benchmarks. Accordingly, the Court held that Plaintiffs could proceed on their fiduciary breach claim premised on the availability of lower cost institutional share classes available to the Plan, but they could not proceed on the other theories alleged in the complaint. Next, the court analyzed Plaintiffs’ allegation that defendants failed to prudently manage and control the Plan’s recordkeeping costs, finding that Plaintiffs sufficiently alleged such a claim. The court then turned to Plaintiffs’ duty of loyalty claim, finding that Plaintiffs did not sufficiently plead a breach of loyalty. Finally, the court addressed the failure to monitor claim and found the pleading sufficient to state such a claim.

Ninth Circuit
Wehner v. Genentech, Inc., No. 20-CV-06894-WHO, 2021 WL 507599 (N.D. Cal. Feb. 9, 2021) (Judge William H. Orrick). This case involves a putative class action brought by a plan pension plan participant alleging that his employer and the fiduciary committee for the plan breached their fiduciary duties in three ways: (1) imposing recordkeeping and administrative fees that were too high; (2) imposing investment management fees that were too high; and (3) retaining investment funds that allegedly underperformed. The court held that the facts alleged in the complaint did not raise a plausible inference that Defendants breached their fiduciary duties of prudence and loyalty because district courts in California have held that an ERISA plaintiff must plead administrative fees that are excessive in relation to the specific services the recordkeeper provided to the specific plan at issue. The court reasoned that imprudence could not be reasonably inferred from Plaintiff’s apples-to-oranges comparisons regarding the plan's fees and funds. The court also concluded that Plaintiff’s alternative, non-fiduciary liability claim was not plausible because Plaintiff did not allege that Defendants participated in a “prohibited transaction.” For these reasons, the court granted Defendants’ motion to dismiss with leave to amend.

Class Actions
Eighth Circuit
Lechner v. Mut. of Omaha Ins. Co., No. 8:18CV22, 2021 WL 424421 (D. Neb. Feb. 8, 2021) (Judge Joseph F. Bataillon). In this order, the court certified a non-opt-out class settlement. In addition, the court reviewed and approved Plaintiffs’ counsel’s request for fees and expenses of $2,223,333, or one-third of the settlement fund. The court reviewed both the lodestar method and the percentage of benefit approach in reaching its decision that the fees were reasonable. The court affirmed attorney rates ranging from $535 to $970 per hour stating that this represented the range of market rates for attorneys of Plaintiffs’ counsel’s experience and expertise.

Disability Benefit Claims
Third Circuit
Joyce v. Life Ins. Co. of N. Am., No. 2:18-CV-1293, 2021 WL 493262 (W.D. Pa. Feb. 10, 2021) (Judge William S. Stickman, IV). In this case, the district court reversed a denial of a claim for long-term disability (“LTD”) benefits under an ERISA-governed plan and remanded to the insurer for further evaluation. Waste Management employed Joyce as a Garbage-Collection Supervisor or Route Manager. His duties included supervising and coordinating the activities of workers, assigning routes and trucks to workers, and other supervisory roles. Following an incident in which Plaintiff was knocked unconscious when a tree fell during a storm and hit him in the back of the head, Plaintiff applied for LTD benefits under the plan. LINA, which insured and administered the plan, denied Plaintiff’s claim. The court found the process by which LINA decided the claim to be deficient. LINA had an inherent conflict of interest as both the insurer and the administrator of the policy, its record review was selective and incomplete, it failed to consider Joyce’s Social Security disability benefits and it based its occupational analysis on an inaccurate description of Joyce’s “Regular Occupation” under the policy. The court based its determination that the process was flawed not on any one factor alone but “on the totality of [the insurer’s] actions.” On that basis, the court granted Plaintiff’s motion for summary judgment and remanded to LINA for further consideration.

Eighth Circuit
Zimmer v. Delta Family-Care Disability & Survivorship Plan, No. 19-CV-1693 (PJS/DTS), 2021 WL 411238 (D. Minn. Feb. 5, 2021) (Judge Patrick J. Schiltz). On cross-motions for summary judgment, the court found that the decision to deny Zimmer’s claim for continued long term disability benefits was supported by substantial evidence. The court found that Sedgwick’s conclusion that Zimmer was unable to perform her job because of a lack of training, support, and feedback – rather than because of a mental impairment – was reasonable and supported by substantial evidence. The court also found that the consensus of the four independent medical experts (two psychiatrists and two psychologists) who examined Zimmer, her medical records, or both, was that although Zimmer was accurately diagnosed with anxiety, panic disorder, and depression, there was no indication that Zimmer’s condition was debilitating. The court found no clear evidence of either a substantial decline in Zimmer’s condition or an escalation in her treatment. The court further found that the four independent experts agreed that Zimmer was not functionally impaired. The court also rejected Zimmer’s argument that she was entitled to damages under 29 U.S.C. § 1132(c)(1) because the Plan failed to produce the administrative record within the statutory time frame. The court found that Zimmer’s complaint did not allege that the Plan failed to timely produce the administrative record, nor did it allege entitlement to damages based on that failure. The court denied Plaintiff’s motion, granted Defendants’ motion, and dismissed with prejudice.
Ninth Circuit
Romanchuk v. Board of Trustees of the Southern California United Food and Commercial Workers Unions and Food Employers Joint Pension Trust FundNo. 17-56069, __Fed. Appx. __, 2021 WL 488296 (9th Cir. Feb. 10, 2021) (Rawlinson, Bennett, and Bade, Circuit Judges). The district court’s remand order instructed the Trustees to construe a grandfather clause in a disability retirement plan in accordance with the district court’s interpretation (which would likely make Plaintiff eligible for benefits and resolve the claim against the Trustees). However, because the abuse of discretion standard of review applied, the Ninth Circuit found the district court erred in construing the clause based on the litigation posture of the Trustee’s counsel. The issue had not come up prior to litigation and thus the Trustees had not yet interpreted the clause. In such a case, the Court held the appropriate course was to remand the claim without a mandate on interpretation as “we should not allow ourselves to be seduced into making a decision which belongs to the plan administrator in the first instance.” Thus, the district court’s order, which instructed the Trustees to apply the clause according to the court’s construction, improperly limited the Trustees’ power to make the initial decision on the issue. In dicta, given the case had already proceeded for many years, depriving Plaintiff of potentially critical benefits, the Ninth Circuit did observe that the district court’s reasoning was sound as to the interpretation – meaning a different interpretation would likely not survive future scrutiny.
Luzzi v. Unum Life Ins. Co. of Am., No. 20-55293, 2021 WL 531298, __ Fed. Appx. __ (9th Cir. Feb. 12, 2021) (M. Smith, Murguia, and Owens, Circuit Judges). Plaintiff brought this action under ERISA against the insurer of his employer’s long term disability benefit plan, alleging that it had erroneously denied his claim for benefits. In a brief memorandum, the Ninth Circuit affirmed. The court ruled that the district court was not required to remand the case to the insurer to apply the correct occupational standard (of “light work”) because the district court conducted a de novo review in which it had the authority to apply that standard. Furthermore, the district court’s finding that Plaintiff failed to satisfy his burden of proving that he was disabled was not clearly erroneous. The court upheld the district court’s findings that Plaintiff’s doctor had provided “inconsistent medical conclusions” regarding his back condition and thus “lacked credibility.” The court also dismissed a contrary Social Security finding because it was partly based on a knee condition excluded under the policy, as well as another medical opinion because it was issued one year before the denial decision.

Tenth Circuit
Jane Doe v. Intermountain Health Care, Inc., No. 2:18-CV- 807-RJS-JCB, 2021 WL 425117 (D. Utah Feb. 8, 2021) (Judge Robert J. Shelby). This order compelled production of documents under the fiduciary exception to the attorney-client privilege. The case involves allegations against Intermountain Health Care, Inc. and SelectHealth, Inc. for denial of health insurance benefits under ERISA and the Mental Health Parity and Addition Equity Act. Plaintiff sought discovery of email communications withheld on the basis of attorney-client and work-product privileges. Plaintiff argued the emails sought were purely factual and not legal advice. Defendants argued the emails were requests and receipt of legal advice from their in-house counsel and outside counsel. The court established that defendants bear the burden of establishing that each email string is privileged and must also establish privilege for each attachment to the emails that, independent of being sent to or from an attorney, would not be privileged. The court said that a document does not magically become privileged simply by sending it to or receiving it from an attorney. The court undertook an in camera review of the alleged privileged documents and ruled that some of the emails were subject to privilege and some of them were not. In doing so, the court noted that portions of emails that do not seek or contain legal advice such as “thank you” or “sounds good” were not privileged and certain content and attachments involving policy documents were also not privileged.

ERISA Preemption
Fifth Circuit
Juanopulos v. Salus Claims Mgmt. LLC, No. 4:20-cv-01394, 2021 WL 520453 (S.D. Tex. Mar. 9, 2021) (Judge Charles Eskridge). A sole proprietor and employee of a company purchased an occupational injury policy for his business. After he accidentally shot himself in the stomach at work, he made a claim for disability and medical benefits, which was denied.  He filed a state-law bad faith claim challenging the denial and the claims administrator removed the case to federal court. The district court remanded the case back to state court, concluding that the benefit plan was not subject to ERISA, and thus was not completely preempted, because ERISA does not govern plans that apply only to a sole proprietor who has no other covered employees.

Life Insurance & AD&D Benefit Claims
First Circuit
Stahl v. Extenet Systems, Inc., No. 20-CV-0557-JL, 2021 WL 493426 (D. N.H. Feb. 10, 2021) (Judge Joseph N. Laplante). Gary Stahl, an employee of Extenet, purchased supplemental life insurance in 2018 under a policy issued by Guardian. Mr. Stahl paid the premiums for supplemental insurance and passed away at the end of 2018. Guardian denied beneficiary Donna Stahl’s claim for benefits, stating that the policy was not effective because Mr. Stahl had failed to provide evidence of insurability as required by the plan. Neither Guardian nor Extenet had requested evidence of insurability or notified Mr. Stahl that his supplemental policy was not effective. After exhausting administrative remedies, Plaintiff filed suit, bringing multiple claims including breach of fiduciary duty, wrongful denial of benefits, and claims for equitable relief. The court granted Defendants’ motions to dismiss claims of breach of fiduciary duty under ERISA § 502(a)(2) for failure to state a claim upon which relief could be granted because Plaintiff did not bring her § 502(a)(2) claims on behalf of the plan and did not seek a remedy that inures to the plan as required by that section. Guardian also sought dismissal of the claim for wrongful denial of benefits under § 502(a)(1)(B), arguing that plaintiff did not allege that she satisfied the evidence of insurability requirement and therefore could not state a claim for benefits under the terms of the Plan. The court denied Guardian’s motion without prejudice as to the § 502(a)(1)(B) claim.

Ministeri v. Reliance Standard Life Ins. Co., No. 18-10611-LTS, 2021 WL 495151 (D. Mass Feb. 10, 2021) (Judge Leo T. Sorokin). In this case involving a denial of life insurance benefits, the court granted Plaintiff’s motion for summary judgment and denied Defendant’s cross-motion for summary judgment. Plaintiff Ministeri had purchased basic and supplementary insurance under his employer-sponsored plan. In May 2014, he was diagnosed with a brain tumor and underwent medical treatments for the next two months, during which time he continued to work part-time for his employer, working from home. By the end of July 2014, Mr. Ministeri felt better and planned to return to more active work. Unexpectedly, he suffered a massive pulmonary embolism a week later and was left severely disabled. He took long term disability leave starting in August 2014 and passed away about a year later. Reliance denied Mrs. Ministeri’s claim for life insurance benefits on the basis that no insurance was in force at the time of Mr. Ministeri’s death. Reliance argued that while undergoing treatment and working part-time from home, he no longer met the eligibility criteria of the plan and his insurance terminated. Reliance argued that an employee must work a minimum of 20 hours every week to satisfy the requirement to be an “Active … Fixed and part-time” employee. The court analyzed the language of the plan and case law precedent to determine that an employee was required to regularly work 20 hours a week, but not necessarily 20 hours every single week. The court explained the term “active” was ambiguous and found that Reliance’s narrow interpretation of “part-time” could lead to the absurd result that an employee could lose their eligibility for insurance simply by missing a day or even a few hours of work. In addition, the court barred Reliance’s argument regarding its alleged failure to provide certain notice because Reliance had failed to raise this in its denial letters. The court also determined that Reliance’s arguments regarding a portability cap failed on the merits.

Fifth Circuit
Harvey v. United of Omaha Life Ins. Co., Case No. 6:20-cv-120-JDK (E.D. Tex. February 9, 2021) (Judge Jeremy D. Kernodle). Plaintiff sued United of Omaha Life Insurance Company (“United”) arising out of United’s denial of benefits under Plaintiff’s deceased husband’s life insurance policy. Plaintiff brought four causes of action:  (1) a 29 U.S.C. 1132(a)(1)(B) claim; (2) a breach of contract claim; (3) a claim for violating the terms of the ERISA plan; and (4) a claim for breach of fiduciary duty under 29 U.S.C. 1132(a)(3). On a motion to dismiss, the court dismissed the breach of contract claim, holding that ERISA preempted Plaintiff’s breach of contract claim. The court further held that Plaintiff’s claim for “violation of the terms of the ERISA plan” was duplicative of her statutory claim under Section 1132(a)(1)(B). The court found that Plaintiff’s claim for ERISA-plan violations either arose out of Section 1132 or not at all. Finally, the court dismissed Plaintiff’s breach of fiduciary duty claim under Section 1132(a)(3). The court found that Plaintiff’s Section 1132(a)(1)(B) claim precluded a cause of action under Section 1132(a)(3), such that the court did not need to reach the question of fiduciary status. The court cited Manuel v. Turner Indus. Grp., L.L.C., 905 F.3d 859, 865 (5th Cir. 2018), for the proposition that a “claimant whose injury creates a cause of action under ERISA § 502(a)(1)(B) may not proceed with a claim under ERISA § 502(a)(3).” Accordingly, the court granted United’s motion for partial dismissal, limiting Plaintiff’s claim to a single claim arising under 29 U.S.C. 1132(a)(1)(B).

Sixth Circuit
Duncan v. Minnesota Life Ins. Co., No. 20-3512, 2021 WL 494709, __ Fed. Appx. __ (6th Cir. Feb. 10, 2021) (Cole, Siler and Gibbons, Circuit Judges). The decedent in this case, who was suffering from leukemia, died after falling from his wheelchair and hitting his head. The Defendant insurer denied his estate’s and beneficiary’s claim for life insurance benefits under an exclusion for “bodily injury” caused “directly or indirectly” by illness or disease. The district court upheld the denial under an arbitrary and capricious standard of review, concluding that the policy language requiring “due proof” of accidental death conferred discretion on the claim administrator. On appeal, the Sixth Circuit upheld the district court’s decision, concluding that the estate had waived the argument that de novo review applied and substantial evidence supported Defendant’s conclusion that decedent’s leukemia was a substantial factor contributing to his death.

Ninth Circuit
Estate of Foster v. American Marine SVS Grp. Benefit Plan, No. 20-35023, 2021 WL 461938, __ Fed. Appx. __ (9th Cir. Feb. 9, 2021) (Gould and Friedland, Circuit Judges, and District Judge Jill Otake). Plaintiff brought this action under ERISA against her deceased husband’s employer’s life insurance plan and its insurer, United of Omaha, alleging that they wrongfully denied her claim for benefits after her husband died of cancer. Omaha denied Plaintiff’s claim because the employer had stopped paying premiums for the husband’s coverage. Plaintiff argued that she and her husband had received insufficient notice that the husband’s coverage would end unless he converted to an individual policy. The district court either dismissed or granted summary judgment to Defendants on all of Plaintiff’s claims. On appeal, the Ninth Circuit affirmed the judgment as to Omaha because Omaha’s duties were limited to claim administration and policy interpretation, which it had performed correctly. However, the court reversed as to the employer. The employer contended that it had fulfilled its duties under ERISA by providing the husband with the summary plan description, which described his conversion rights. The Ninth Circuit disagreed, finding that the employer “was required to provide further explanation under the circumstances.” Specifically, it was unclear when the husband’s coverage had actually ended, because he continued to perform duties for the employer even after he was laid off, and the employer had continued his life insurance coverage for a time after that date as well. In short, the SPD “provided incomplete information” as to when benefits would end, and thus the employer “had an obligation to paint a more complete picture” for the husband.

Tenth Circuit
Pentland v. Metropolitan Life Ins. Co., No. 18-CV-00409-RBJ, 2021 WL 463629 (D. Colo. Feb. 9, 2021) (Judge R. Brooke Jackson). Plaintiff sought life insurance benefits pursuant to a conversion life insurance policy insuring her late husband. Plaintiff filed a motion for judgment. The benefit plan provided for discretionary authority to the Defendant MetLife. Plaintiff argued that procedural irregularities and Texas law prohibiting discretionary clauses warranted a de novo review. The court found the procedural irregularity – the first denial letter did not contain a specific policy provision – did not require the court to temper its deference. The court found that there was no governing law provision in the record stating that Texas law applied, and thus the arbitrary and capricious standard applied. MetLife argued that Plaintiff’s husband was never eligible for the individual conversion policy (with higher value) because his group coverage never ended; he was disabled and remained covered under the group policy. The court agreed, although it acknowledged the determination was “plagued by mistakes” by MetLife. The court found that MetLife did not act timely as it did not review the validity of the individual policy until after Plaintiff’s husband died. The court described MetLife’s handling as “exactly the type of slipshod conduct that can give the insurance industry a bad rap” and further stated, “If I could rule the other way, I would.” However, the court denied Plaintiff’s motion for judgment.

Pension Benefit Claims
Eighth Circuit
Rust v. Board of Trustees of the Boilermaker-Blacksmith Nat’l Pension Trust, No. 1:20-CV-195-SNLJ, 2021 WL 463517 (E.D. Mo. Feb. 9, 2021) (Judge Stephen N. Limbaugh, Jr.). Defendant moved to dismiss Plaintiff’s lawsuit seeking disability pension benefits. Defendant claimed Plaintiff failed to meet necessary deadlines for his application. The court found that the Plan provided an appeal procedure which Plaintiff timely followed, and Plaintiff’s claim for benefits was proper. Plaintiff further requested equitable relief, alleging that Defendant never suggested that Plaintiff was required to file a new application for benefits. The court found that Plaintiff had not explained how his reliance on the alleged misrepresentations was to his detriment and dismissed the claim for equitable relief.

Pleading Issues & Procedure
D.C. Circuit
Wilcox v. Georgetown Univ., No. 19-7065, 2021 WL 446126, __ F.3d __ (D.C. Cir. Feb. 9, 2021) (Roger, Rao, and Randolph, Circuit Judges). Plaintiffs brought suit against Georgetown alleging breach of fiduciary duty under ERISA. The district court granted a motion to dismiss without prejudice. Plaintiffs moved to amend, but the district court denied the motion, stating that its order was final and appealable. Plaintiffs then appealed. Over a dissent, the D.C. Circuit ruled that the district court erred in making its dismissal of the complaint final and appealable, and remanded with instructions to the district court to consider the proposed amended complaint.
Provider Claims
Third Circuit
Personal Image, PC v. Tech Briefs Media Group Medical PlanNo. CV-203747-JMV-MF, 2021 WL 486905 (D.N.J. Feb. 10, 2021) (Judge John Michael Vazquez). Personal Image, a plastic surgery provider, alleged that Defendants failed to properly reimburse it for providing “medically necessary, reasonable, and valuable surgical services” to T.R., one of its patients, in 2014 for procedures described as “emergency plastic[] surgery services.”  Defendants moved to dismiss on the ground that Personal Image did not have standing to pursue T.R.’s claims for denied benefits. Defendants argued that Plaintiff lacked independent standing to bring its ERISA claim because Plaintiff was not a beneficiary of the Plan. Defendants further argued that although Plaintiff claimed to be the “Attorney in Fact for T.R.,” this assertion failed because (1) the power of attorney is invalid as a matter of law; (2) even if valid, the power of attorney does not appoint Plaintiff as the attorney-in-fact; and (3) under New Jersey law, a medical practice cannot be an attorney-in-fact. Defendants added that Plaintiff “does not have, and cannot obtain, standing through assignment” because the Plan contained an enforceable anti-assignment provision. The Court granted Defendants’ motion to dismiss but gave Plaintiff leave to amend.

Statute of Limitations
Second Circuit
Conn. Gen. Life Ins. Co. v. Biohealth Labs., Inc., No. 20-2312-CV, __F.3d__, 2021 WL 476111 (2d Cir. Feb. 10, 2021) (Before Jacobs and Sullivan, Circuit Judges, and Brown, District Judge). At issue before the court in this case, among other state law matters, was what state law claim is most analogous to Plaintiff’s ERISA claims. (Plaintiff, an insurer, claimed that various laboratory testing company Defendants violated ERISA and Connecticut law by submitting fraudulent or overstated claims for medical services purportedly provided to Plaintiff’s plan members.) The court addressed whether, in order to determine the appropriate statute of limitations under Connecticut law, equitable claims are subject to the same statutes of limitations that govern analogous legal claims asserted on the same facts. The court also discussed whether the limitations period applicable to Plaintiff’s claims was tolled during the pendency of a prior federal action between the parties as the current claims were all compulsory counterclaims in the prior case. The court held that a state law unjust enrichment claim was the most analogous based on the claims at issue. The court then held that under Connecticut law, unjust enrichment claims are not subject to any statute of limitations; they are only subject to the doctrine of laches. Finally, the court held that the applicable limitation period was not tolled during the pendency of the parties’ prior action because those were legal claims and under Connecticut law tolling does not apply.

Tenth Circuit
Weiss v. Banner Health, No. 19-1384, 2021 WL 461561, __ Fed. Appx. __ (10th Cir. Feb. 9, 2021) (Before Hartz, Kelly and Phillips, Circuit Judges). A plan participant challenged the denial of her request for preauthorization of knee surgery under her ERISA-covered healthcare plan. In affirming the district court, the Tenth Circuit held that the insurance company waived its ability to rely on the plan’s one-year contractual limitations period because it failed to give Plaintiff notice of that limitation. Instead, the court held that Colorado’s six-year statute of limitations applied and thus Plaintiff’s claim was timely. The court nevertheless affirmed the district court’s decision upholding the denial of benefits, concluding that, even considering the insurer’s conflict of interest, the participant failed to show that there was no reasonable basis for the denial.

Withdrawal Liability & Unpaid Contributions
Sixth Circuit
Wilson v. DM Excavating LLC, No. 20-3171, 2021 WL 446044, __ Fed. Appx. __ (6th Cir. Feb. 9, 2021) (Before Moore, Rogers, and Readler, Circuit Judges). The trustees of an employer-provided pension fund sued an employer for unpaid benefit contributions under ERISA. The district court entered summary judgment in favor of the trustees, finding that the collective bargaining agreement required contribution based on all hours worked. The Sixth Circuit affirmed the decision, holding that the employer failed to keep adequate records to prove its contention that the employees at issue had not performed their work within the geographic jurisdiction of the union. 
Eighth Circuit
Raines v. Steve Junge Installations, LLC, No. 20-1291 (JRT/TNL), 2021 WL 533691 (D. Minn. Feb. 12, 2021) (Judge John R. Tunheim). Plaintiffs, trustees of several ERISA-covered multiemployer benefit plans, brought this suit against Defendant, an employer who had signed a collective bargaining agreement obliging them to contribute to the plans. Plaintiffs sought the right to audit Defendant for non-compliance with the CBA. In response, Defendant filed a third-party complaint against one of the unions aligned with the CBA, alleging that the union procured Defendant’s agreement to the CBA through fraud, and therefore the CBA was void and unenforceable as to Defendant. Plaintiffs filed a motion to strike the third-party complaint, which the court denied. The court found that Defendant had satisfied Federal Rule of Civil Procedure 14(a) because it had “stated a theory of derivative liability sufficient for interpleader.” The court further found that the third-party complaint was viable even though Plaintiffs argued that a “heightened standard” was necessary in order to protect the viability of collection actions under ERISA. Finally, the court exercised its discretion to allow the complaint because it was filed early in the case, the facts overlapped with Defendant’s affirmative defenses, and it prevented duplicative litigation.
Ninth Circuit
 Board of Trs. of the Painters & Floorcoverers Joint Comm. v. Olympus & Assocs., No. 2:19-CV-00252-JAD-VCF, 2021 WL 495853 (D. Nev. Feb. 10, 2021) (Judge Jennifer Dorsey). Employer Defendant Olympus entered into two separate agreements with two Plaintiff union districts to hire union employees. Olympus sent letters to one union district office attempting to end its contract with the union. The court determined Olympus’ letter had terminated its relationship with the district that received its letter, but not its relationship with the other district that was not sent a letter. The court was unable to rule on Olympus’ equitable estoppel defense on summary judgment, finding that there was a factual dispute about what was said in conversations between Olympus representatives and union representatives. The court ordered the remaining issues of equitable estoppel and damages to be decided at trial.
Board of Trs. for Laborers Health & Welfare Tr. Fund For N. Cal. v. Turner Grp. Constr., No. 20-CV-01244-DMR, 2021 WL 516039 (N.D. Cal. Feb. 11, 2021) (Mag. J. Donna M. Ryu). Plaintiffs, trustees for several related multi-employer benefit plans, sued the Defendant employer under ERISA and LMRA, alleging that Defendant breached the terms of a collective bargaining agreement by failing to make contributions to the plans. Defendant contended that it should not have to make the contributions demanded by Plaintiffs because Plaintiffs failed to adequately communicate with Defendant over several years and their audit was “riddled with errors.” Plaintiffs brought a motion for summary judgment. The court found that the statute of limitations had not expired on Plaintiffs’ claims because the CBA and trust agreements did not limit the time period covered by an audit, and there were possible unpaid contributions about which Plaintiffs did not know which had not yet triggered the statute. However, the court found that disputed issues of material fact existed as to Defendant’s unclean hands defense. Specifically, Defendant had alleged that Plaintiffs made numerous and repeated errors in their audits, failed to correct those errors, repeatedly revised their calculations, did not respond to requests for clarification, dropped the issue for years at a time, and continued to bill after telling Defendant they were no longer pursuing the matter. The court ruled that a factfinder could conclude that these actions were inequitable, and therefore denied Plaintiffs’ motion.

Your ERISA Watch is made possible by the collaboration of the following Kantor & Kantor attorneys:  Brent Dorian BrehmJaclyn ConoverBeth DavisSarah DemersElizabeth GreenElizabeth HopkinsAndrew Kantor, Monica Lienke, Anna MartinSusan MeterTim RozellePeter SessionsStacy 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.

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