Your ERISA Watch – Eleventh Circuit Holds Assignments Voidable by Anti-Assignment Clauses

Kantor & Kantor Team

ERISA Attorneys

This week’s notable decision involves a pro se plaintiff whose frequent litigation prompted the Eleventh Circuit to issue a published decision, Griffin v. Coca-Cola Refreshments USA, No. 18-10417, 2021 WL 712419 (11th Cir. Feb. 24, 2021) (Circuit Judges Elizabeth L. Branch and Stanley Marcus and District Judge Ursula Ungaro). Dr. Wakitha Griffin is a dermatologist who has filed many appeals in the Eleventh Circuit, as well as more than two dozen cases in district court or state court, in efforts to receive in-network payments despite being an out-of-network provider. The Court published its decision “in hopes of resolving this recurring litigation.”

The consolidated appeals raise an unsettled issue of whether an ERISA plan administrator or its claims agent may waive its right to rely on an anti-assignment provision in an ERISA plan. However, the Court declined to address that issue, finding that Defendants did not waive their ability to assert the anti-assignment provisions as a defense and that the lawsuit fails to state a claim as United paid Dr. Griffin in full, both under the terms of the patients’ assignments and the provisions of the healthcare plans.

The assignments of plan benefits state the patient has assigned all medical benefits “regardless of such provider’s managed care network participation status.” Dr. Griffin alleges the assignments entitled her to full benefits for her services, as if she were an in-network provider. The plans each contain anti-assignment provisions.

The Court found the anti-assignments enforceable and bar Dr. Griffin’s claims for unpaid benefits. The Court also considered whether the anti-assignment provisions make the assignments void or voidable. The Court found the provisions were not void because they are not illegal, nor do they contravene public policy. However, the provisions are voidable as they are effective unless and until challenged.

Dr. Griffin argued that Defendants waived their right to rely on the anti-assignment provisions because they did not alert her to the existence prior to litigation. The Court found that Defendants did not expressly relinquish their right to assert the anti-assignment clauses in litigation even if Defendants ignored Dr. Griffin’s pre-litigation requests for plan documents and anti-assignment provisions. The Court found Dr. Griffin’s estoppel argument similarly fails. In sum, although the assignments gave Dr. Griffin statutory standing pursuant to ERISA to bring claims for payments for the services she provided, the Plans’ anti-assignment provisions made the assignments voidable.

On the merits of Dr. Griffin’s benefit claims, the Court found, even without regard to the anti-assignment clauses, that Dr. Griffin was not entitled to more compensation than she already received. As the Court stated: “Because the patients have no right to full reimbursement for the charged services, neither does Griffin.” Accordingly, the Eleventh Circuit concluded that the district court correctly dismissed her complaints.

This week’s notable decision summary was prepared by Kantor & Kantor, LLP Partner, Elizabeth Green. Elizabeth is passionate about helping patients obtain health benefits for a range of health conditions and particularly for mental health disorders such as eating disorders, and bipolar disorder. Elizabeth was lead counsel in the matter of Jamie F. v. United Healthcare Ins. Co., No. 19-CV-1111-YGR, __F.Supp.3d__, 2020 WL 4249200 (N.D. Cal. July 23, 2020).

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

Attorneys’ Fees
Tenth Circuit
Raymond M., et al., v. Beacon Health Options, Inc., et al.,No. 218CV00048JNPDAO, 2021 WL 764077 (D. Utah Feb. 26, 2021) (Judge Jill N. Parish). Plaintiff filed suit challenging a denial of her claim for health insurance benefits. On cross-motions for summary judgement. the District Court denied Defendants' motion entirely but granted Plaintiff’s in part. Specifically, the court found that Defendant’s denial of benefits was arbitrary and capricious. As a result, the court reversed and remanded the case back to the administrator.

Plaintiffs subsequently sought attorneys’ fees and prejudgment interest. The court refused the request for prejudgment interest, but did find an award of attorney fees and costs appropriate because Plaintiffs succeeded on the merits in part by showing that the denial was arbitrary and capricious. The Court then asked for Plaintiffs to file a separate petition for fees and costs.

Plaintiffs requested an award of $67,720 in fees reflecting 56.2 hours of Partner Brian King’s time at $600 per hour and 136 hours for his associate at a rate of $250 per hour. Defendants opposed Plaintiffs’ motion, arguing Mr. King's hourly rate was unreasonable, the number of hours billed is excessive, and the overall dollar amount unjustified given Plaintiffs’ limited success. The court refused to approve $600 per hour to Mr. King, finding the rate incongruent with the local market; instead, it concluded that $450 per hour was a more appropriate rate. The court did not reduce the hours billed, finding that Plaintiffs met the burden of proving the reasonableness of all time billed.

Breach of Fiduciary Duty
Second Circuit
Savage v. Sutherland Global Services, Inc., 2021 WL 726788 (W.D.N.Y., 2021) (Judge Elizabeth A. Wolford). In this “battle of the circuits” case involving whether exhaustion of administrative remedies is required for allegations of statutory ERISA violations, the Western District of New York says it is not. The case is a putative class action for breach of fiduciary duty for failing to minimize reasonable expenses and fees of a 401(k) plan. Plaintiffs allege the plan selected and retained retail class mutual funds with 12b-1 fees when identical investor or institutional shares were available without 12b-1 fees. Defendants sought dismissal, arguing that plaintiffs failed to exhaust administrative remedies, the claims are untimely, and plaintiffs failed to state a claim for breach of fiduciary duty. Unlike the recent decision of Fleming v. Rollins, Inc., No. 19-cv-5732 (N.D. Ga. Nov. 23, 2020), where similar statutory claims were dismissed for failure to exhaust, the Court here relied on numerous district courts in the Second Circuit that have routinely not required exhaustion for statutory violations. The Court rejected the Defendants' attempt to distinguish those cases based on their claim that the issue turned on plan interpretation. Additionally, the Court held plaintiffs’ claims were not time barred because plaintiffs were not on notice of any violation where they did not have information on fees for comparable funds. With regard to the duty to monitor, the Court held plaintiffs alleged facts sufficient for the Court to reasonably infer that defendants’ process was flawed and that plaintiffs generally lack the type of inside information necessary to allege more detail until discovery commences.

Class Actions
Third Circuit
Perrone v. Johnson & Johnson et al., No. 19-00923 (FLW), 2021 WL 753887, (D.N.J. Feb. 26, 2021) (Judge Freda L. Wolfson). Plaintiffs filed an amended consolidated class action complaint for breach of fiduciary duty to ERISA plan participants. claiming that Defendants concealed the fact that Johnson & Johnson’s talc products contained asbestos, which resulted in artificial inflation of the company’s stock. Plaintiffs argued that Defendants should have publicly disclosed the truth about the talc products in a corrective SEC disclosure, which would have prevented plan participants from purchasing artificially inflated stock and suffering subsequent losses in value when the truth was later revealed to the market. Despite Plaintiffs’ attempts to characterize the SEC disclosure as both a corporate and fiduciary action, the Court determined that a corrective SEC filing was an action that could only be taken outside of one’s ERISA fiduciary capacity. Plaintiffs also argued that Defendants should have increased the cash buffer in the employee stock ownership plan to avoid having plan participants purchase artificially inflated stock during the period of misrepresentations about the talc products. The court determined that such a cash buffer would have required the company to publicly disclose the truth about the talc products, which would have resulted in a drop in the stock price, an outcome that a fiduciary could have concluded did “more harm than good.” Concluding that it was not clear that an earlier disclosure would have caused less damage than the later disclosure, the Court granted Defendant’s motion and dismissed complaint without prejudice.

Sixth Circuit
Karpik et al. v. Huntington Bancshares, Inc. et al.,No. 2:17-CV-1153 2021 WL 757123 (S.D. Ohio Feb. 18, 2021) (Judge Michael H. Watson). This matter was before the Court for approval of a settlement agreement reached by the parties. Defendants agreed to pay $10.5 million to settle the case brought by former 401(k) plan participants who alleged ERISA violations by plan fiduciaries. Specifically, Plaintiffs alleged that the plan fiduciaries violated their ERISA duties "by selecting and retaining Huntington-managed investment for the plan that were costlier and performed worse than non-proprietary alternatives.” The Court allowed Plaintiffs to proceed to trial under their breach of fiduciary duty allegation. After pre-trial discovery, the parties mediated the case, impassed, but subsequently reached a preliminary agreement, which required Court approval. The Court analyzed 7 factors in order to determine whether to approve the agreement: risk of fraud or collusion; complexity, expense, and likely duration of litigation, amount of discovery engaged in by the parties, likelihood of success on the merits, opinions of class counsel and representatives, reaction of absent class members, and the public interest. The Court found that the facts relevant to each inquiry weighed in favor of approval of the settlement agreement. After its analysis, the Court concluded that the settlement agreement provided a “substantial benefit to the Settlement Class, is fair, reasonable, and adequate.” Accordingly, the Court approved the Settlement Agreement.

Seventh Circuit
Godfrey v. GreatBanc Tr. Co.,No. 18 C 7918, 2021 WL 679068 (N.D. Ill. Feb. 21, 2021)(Judge Matthew Kennelly) The court granted class certification under Rule 23(b)(1) in the ERISA class action where Defendants are alleged to have breached their fiduciary duties to Plaintiffs and facilitated prohibited transactions with Plan assets. Defendants challenged the class definition, arguing it included members who lacked standing because they have left the Plan or did not hold company stock at the time the alleged prohibited transactions took place. The Court rejected this argument because these class members were still plan participants and therefore had standing to bring breach of fiduciary duty claims to recover Plan assets.

Disability Benefit Claims
First Circuit
Willitts, Sr. v. Life Ins. Co. of N. Am., et al., No. 18-CV-11908-ADB, 2021 WL 735784 (D. Mass. Feb. 25, 2021) (Judge Allison D. Burroughs). Plaintiff, a plan participant, filed suit alleging that the employer wrongfully terminated him in retaliation for making a claim for disability benefits, and asserting claims under state law against both his employer and the insurance company. The Court found it well-settled that ERISA plan participants cannot bring suit under Massachusetts General Law Chapter 93A for unfair or deceptive practices against their employers, and the Court dismissed that count of the lawsuit. Further, the court found the Chapter 93A claim against LINA was preempted by ERISA. Finally, the Court found the Plaintiff’s allegations fall short of stating a plausible ERISA retaliation claims and granted the motion to dismiss.

Third Circuit
Hocheiser v. Liberty Mutual Insurance Co., No. 17-06096 (FLW), 2021 WL 672660 (D.N.J. Feb 22, 2021) (Judge Freda L. Wolfson). In this case, the court determined that the denial of Hocheiser’s LTD benefits was not arbitrary and capricious. Liberty had initially denied Hocheiser’s LTD claim and then reversed the denial on appeal, with Liberty’s peer reviewer finding that there was a likely genetic component to Hocheiser’s subjective complaints of pain and stiffness. Liberty later terminated the LTD benefits based on a new medical review, finding there was no evidence supporting a genetic diagnosis and finding the claimant capable of sedentary work. The court determined that Liberty’s decision to afford less weight to the FCE report was not arbitrary and capricious, emphasizing that the FCE lacked robust validity testing. The court also affirmed that Liberty’s surveillance evidence and internet research indicated that Hocheiser had been engaged in business activities during the time he was claiming disability, showing that he was capable of at least some work. Based on the language of the policy and other evidence on file, the court determined that it was not unreasonable for Liberty to forego an IME in making its decision to terminate benefits. The court did not find supporting letters from Plaintiff’s doctors to be persuasive because they were based mostly on subjective reported symptoms rather than objective physical evidence, and other records from treating doctors appeared consistent with Liberty’s determination.

ERISA Preemption
Fourth Circuit
Jeremy Smith v. Michelin Tire Corp.,No. 3:20-CV-02850-JMC, 2021 WL 689079 (D.S.C. Feb. 23, 2021) (Judge J. Michelle Childs). Before the Court was Plaintiff’s motion to remand this matter to state court. Plaintiff is a former employee of Michelin. Before working at Michelin, he “suffered a serious left leg injury” in 2007, leaving him with chronic leg pain. While he worked at Michelin, Plaintiff suffered at least two injuries in the workplace in 2014, the second of which resulted in his “permanent[ ] and total[ ] disab[ility.]” Because of his employment with Michelin, Plaintiff began receiving LTD benefits through Prudential. However, Michelin terminated Plaintiff “for allegedly not disclosing medical information during his pre-employment physical examination.” Plaintiff's LTD benefits through Prudential continued for a time until Michelin informed Prudential that Plaintiff was terminated for cause. Michelin’s actions spurred Plaintiff to bring the instant suit alleging state law claims of fraud, negligence, and unfair and deceptive trade practices against Michelin. Plaintiff filed a Motion to Remand, arguing that ERISA did not preempt his state law claims against Michelin. Plaintiff insisted this case “is not an ERISA lawsuit against Prudential, rather it is a lawsuit against Defendant for its fraud, negligence, and unfair and deceptive trade practices.” The Court disagreed and held that Plaintiff's claims allege misconduct by Michelin in performing its duties under the plan and therefore all of Plaintiff’s state law claims were preempted by ERISA.

Life Insurance & AD&D Benefit Claims
Sixth Circuit
Lee v. United of Omaha Life Insurance Company d/b/a Mutual of Omaha,No. 320CV00026GFVTEBA, 2021 WL 707652 (E.D. Ky. Feb. 23, 2021) (Judge Gregory F. Van Tatenhove). Plaintiff sued Defendant for denying her life insurance claim after her husband suffered a heart attack and died approximately one month after starting a new job with Topy America, Inc. The parties dispute whether United of Omaha owes Mrs. Lee any benefits under the terms of her husband's basic and voluntary life insurance policies. Under the terms of the policies, Mr. Lee was eligible for insurance “on the day following completion of an Eligibility Waiting Period of 30 days.” The eligibility waiting period is defined as “a continuous period of Active Work that an Employee must satisfy before becoming eligible for insurance.” The court held that the language and plain meaning of the policies in question make it clear that Mr. Lee failed to meet the eligibility waiting period requirements of the basic and voluntary life insurance policies. Mr. Lee started working for Topy America, Inc. on September 25, 2019, and filled out an enrollment form for the two life insurance policies on that date. The policies make clear that Mr. Lee's insurance could only become effective after a waiting period of thirty days, during which time Mr. Lee was required to engage in a “continuous period of active work.” According to the plain language of the policies, merely being employed by Topy America, Inc. for thirty days is not enough—Mr. Lee needed to be employed by and engage in a continuous period of active work for thirty days for the policies to become effective. Mr. Lee suffered a heart attack on October 21, 2019, never returned to work after that date, and died on October 26, 2019.

Medical Benefit Claims
Third Circuit
O'Brien v. Aetna, Inc., Civil No. 20-05479 2021 WL 689113 (D.N.J. Feb. 22, 2021) (Judge Robert B. Kugler). Aetna filed a motion to dismiss plaintiff’s complaint, in which plaintiff, a healthcare provider, sought reimbursement for care provided. Aetna administered the self-funded health care plan of the patient, which was provided by her employer Amazon and governed by ERISA. Aetna argued that a third party provider lacks standing to bring suit against an insurer for reimbursement. The plan included an anti-assignment provision, and the court held that the power of attorney granted to plaintiff did not transfer ownership of a claim. Therefore, the plaintiff lacked standing to sue and the complaint was dismissed without prejudice.

Subrogation/Reimbursement Claims
Fifth Circuit
Stevens Transport, Inc. v. Stautihar, No. 3:19-CV-2590-N, 2021 WL 718391 (N.D. Tex. Feb. 24, 2021) (Judge David C. Godbey). Stautihar was injured in a workplace accident while working for Stevens Transport. Following the accident, Stevens Transport’s Accident/Injury Plan paid medical expenses for treatment of Stautihar’s injuries. The Plan has subrogation and reimbursement rights to recover benefits provided to covered persons for claims incurred because of negligence. Stautihar pursued recovery for his injuries in state court. Stevens Transport then brought this ERISA action in federal court, bringing claims of unjust enrichment and breach of contract as to Stautihar, and negligence as to Exel (where the accident occurred). Stevens Transport sought relief in the form of a constructive trust or equitable lien on any potential settlement proceeds that Stautihar would receive from Defendants. Defendants argued that ERISA permitted the Plan to recover from Stautihar and that, because no settlement had been reached, no specifically identifiable funds existed for the purported equitable relief sought by Stevens Transport. Defendants notified the Court of their intent to seek sanctions pursuant to Federal Rule of Civil Procedure 11. While a settlement was subsequently reached, and reimbursement made, the Court denied sanctions because it held that Stevens Transport's action was warranted by existing law, or at a minimum, by a nonfrivolous argument for extending or modifying existing law or for establishing new law. Specifically, Stevens Transport argued that under Sereboff v. Mid Atl. Med. Servs, Inc., the Court could apply a constructive trust on imminent settlement proceeds to enforce Stevens Transport's ERISA plan. While there were compelling responses to this argument, the Court did not find the argument clearly frivolous, legally unreasonable or without legal foundation, or brought for an improper purpose.

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

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