Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Breach of Fiduciary Duty
Forman v. TriHealth Inc. No. 1:19-cv-613, 2021 WL 4346764 (S.D. Ohio Sept. 24, 2021) (Judge Matthew W. McFarland). Plan participants brought suit against defendants TriHealth Inc and the TriHealth 401(k) Retirement Savings Plan Retirement Committee for breach of fiduciary duties of prudence and loyalty in administering the plaintiffs’ defined contribution retirement plan. The plan is large with over 10,000 participants and assets exceeding $457 million. The plaintiffs claim the defendants breached their fiduciary duties by permitting the plan to incur high administrative fees and by offering, and failing to remove, underperforming funds with higher fees when there were similar funds that charged lower fees and had higher returns. Through this mismanagement, plaintiffs claim, they lost millions of dollars. Defendants argued that the plaintiffs’ claims are barred by ERISA three-year statute of limitations. The judge disagreed and found that the plaintiffs had no “actual knowledge” of the information allegedly disclosed to them. The defendants also argued that the plaintiffs failed to adequately plead their breach of fiduciary duty claims. The judge agreed, finding that the plaintiffs simply did not provide the court with sufficient factual allegations to presume that the plan’s administrative fees were unjustifiably high, and that they also failed to sufficiently provide comparable benchmarks to allege actionable underperformance. The stock underperformance plaintiffs pointed to was less than 1% and the fee variances were likewise small, with all but one fund having a variance of less than 0.5%. The judge also found that the three-year period the plaintiffs relied on was too short to support claims that the stocks performed poorly. Finally, the judge said the plaintiffs did not assert any allegations of self-dealing, or proof that the defendants’ actions were for their own benefit or for the benefit of anyone other than the beneficiaries. The judge thought that a “prudent man” could not infer that the defendants’ process was flawed or imprudent. The judge therefore granted defendants’ motion to dismiss.
Medical Society of New York v. UnitedHealth Group, No. 1:2016-cv-05265, 2021 WL 4263717 (S.D.N.Y. Sept. 20, 2021) (Judge James Paul Oetken). On September 11, 2019, the court granted in part plaintiff Medical Society of New York’s motion for class certification pursuant of Federal Rule of Civil Procedure 23. Defendant UnitedHealth moved for reconsideration of the class certification. The judge denied the motion, writing that a motion for reconsideration “is an extraordinary remedy to be employed sparingly in interests of finality and conservation of sacred judicial resources” and the standard for granting one is strict and should be denied unless the moving party can point to controlling decisions or data the court originally overlooked that might reasonably be expected to alter the conclusion already reached by the court. United claimed the plaintiffs lack Article III standing and could not be a part of a class. United also argued that the court must engage in an individualized determination of assignment validity, which defeats commonality. The judge found both arguments unavailing and said that United was trying to relitigate issues that had already been decided. The court had previously addressed the issues of whether the assignment of claims implicated Article III and found that it did not. United claimed the class includes patients that have assigned their claim to a provider, but the court pointed out that the class is composed only of patients who have not assigned their claims to a provider and of providers that have been assigned claims by a patient. Therefore, the class certification remained valid. With respect to commonality, the court previously found United’s arguments more relevant to the predominance injury under Rule 23(b)(3). The question of whether United had a uniform policy of denying office-based surgery facility fee claims without interpreting plan language constituted the common question, and that “same injury” simply means that the claims depend upon the common question. For these reasons the defendant’s motion for reconsideration was denied.
Koch v. Desert States Employers, No. CV-20-02187-PHX-DJH, 2021 WL 4318477 (D. Ariz. Sept. 23, 2021) (Judge Diane J. Humetewa). A class action ERISA suit nears its end, as plaintiffs moved for certification of the settlement class. Under the settlement, the defendant has agreed to pay nearly $8 million (with no reversion) to a settlement fund from which 339 retiree or beneficiary class members will receive individual settlement awards. Under Federal Rule of Civil Procedure 23(a), the judge evaluated the numerosity, commonality, typicality, and adequacy of representation requirements for class certification. With 339 individuals the numerosity requirement was met. The common questions of law with respect to the proper interpretation of the plan fulfilled the commonality requirement. As the named plaintiff alleges that he was harmed in precisely the same way the other class members were harmed, the typicality requirement was met. For the adequacy of representation, the judge determined that the plaintiff’s interests and their course of legal redress were not at odds with those of the class members, and that the plaintiff’s counsel has overseen many class action cases and settlements and was therefore sufficiently qualified. The court then turned to the requirements of Rule 23(b), looking into the balance between individual and common issues and whether class resolution is superior to other available methods for fair and efficient adjudication of the controversy. The relief to the class will be calculated under uniform formulas and criteria, and the court therefore found that common issues predominate for all class members. In addition, with hundreds of class members, the court found that a class settlement was superior to hundreds of individual adjudications to resolve these claims. Thus, the court preliminarily certified the matter as a class action. Next, the judge moved on to the issue of whether to preliminarily approve the settlement agreement. Here, under Federal Rule of Civil Procedure 23(e)(2), the court found that the parties and their experts exchanged extremely detailed analysis of methodology and calculations and based those numbers off of the actuarial calculations of experts. The settlement also provides a recovery to all of the class members. With no evidence to suggest that the settlement was negotiated in haste the court was preliminarily satisfied that the agreement was the product of “serious, informed, and non-collusive negations,” and the settlement was thus preliminarily approved. Finally, under Federal Rule of Civil Procedure 23(c)(2)(b) the judge felt satisfied that the class notice and administration requirements were properly addressed and met.
Disability Benefit Claims
Hoffman v. Nationwide Mutual Insurance, No. 2:19-cv-4360, 2021 WL 4304576 (S.D. Ohio Sept. 22, 2021) (Judge Sarah D. Morrison). Shortly before plaintiff Lynne Hoffman began working for Nationwide Mutual Insurance company in 2015, she was injured in car accident. After that accident, Ms. Hoffman suffered from right shoulder pain and was diagnosed with significant edema, fraying and thinning of the tendons of her rotator cuff and with neurogenic thoracic outlet syndrome. After trying numerous treatment protocols to no avail and an unsuccessful attempt to return to work, Ms. Hoffman applied for and was awarded short term disability benefits in August of 2017. Then in October of 2017, those benefits were unceremoniously discontinued. After several appeals to the plan, Ms. Hoffman brought this lawsuit under Section 502 of ERISA. Both the plaintiff and the defendant moved for judgment on the sealed administrative record. The defendant, in its motion for judgment on the pleadings argued that termination and denial of Ms. Hoffman’s benefits was supported by substantial evidence and must stand. Relying on the doctors who actually treated Ms. Hoffman in person and not the doctor the plan utilized to deny her claim, the judge found that Ms. Hoffman’s benefits were arbitrarily and capriciously terminated. Not only did the judge grant Ms. Hoffman’s motion for judgment on the administrative record and deny the plan’s motion, the judge also declined to send the case back to the administrator and instead ordered the plan to pay Ms. Hoffman an amount equal to the short-term disability benefits she would have been paid for the period of October 2, 2017, through February 28, 2018.
Morgan v. Hitachi Vantara Corp., No. 2:19-cv-2982, 2021 WL 4355544 (S.D. Ohio Sept. 24, 2021) (Judge Edmund A. Sargus Jr.). Plaintiff Gerald Morgan filed suit against defendants Liberty Life Assurance Company of Boston, his employer, and its plan for disability benefits pursuant to 29 U.S.C. § 1132(a)(1)(B). In addition, he brought a promissory estoppel claim against Hitachi under 29 U.S.C. § 1132(a)(3)(b). On cross-motions for summary judgment and judgment on the administrative record, the court found for the defendants. Mr. Morgan worked for Hitachi as a specialist sales account representative. In 2015, Mr. Morgan ceased active employment with Hitachi and began receiving first short-term disability benefits, and then in 2016, long-term disability benefits at 60% of his basic monthly earnings. In 2015, Mr. Morgan made a total of $230,000 through base pay and a short-term incentive target. Rather than paying disability benefits of 60% of this amount for a total of $11,500 per month, Liberty paid 60% of Mr. Morgan’s benefit target compensation, which was a lower amount ($175,000), for a total monthly benefit of $8,750. Under the terms of the policy, earnings were defined as “either, base pay and the short-term incentive target at 100% or as a benefit target compensation amount.” Hitachi selected the latter definition and informed Liberty that Mr. Morgan’s benefit target compensation was $175,000. The judge found that Liberty acted in accordance with the plan language and its decision was not arbitrary or capricious. Pertaining to Mr. Morgan’s promissory estoppel claim against Hitachi, the judge found that the either/or language of the plan was unambiguous and that the principles of estoppel cannot be applied to unambiguous plan provisions. As such, the judge denied the plaintiff’s motion for summary judgment, and granted Liberty and Hitachi’s motions for summary judgment.
Luna v. UNUM Life Insurance, No. 20-202 JCH-JHR, 2021 WL 4307294 (D.N.M. Sept. 22, 2021) (Judge Judith C. Herrera). Veteran Mateo Luna filed suit in state court seeking the reinstatement of his long-term disability benefits under ERISA after first administratively appealing his denial by defendant UNUM Life Insurance. The plaintiff was a principal systems engineer for Alion Science and Technology Co. since 2008. After first receiving short-term disability benefits, in June of 2016 he filed a claim for long-term disability benefits, which UNUM paid for two years and then terminated. Among other problems, Mr. Luna was diagnosed with osteoarthritis, rheumatoid arthritis, bursitis, a rotator cuff rupture, fibromyalgia, PMR (a type of arthritis to do with cell enlargement), pulmonary hypertension, nausea, PTSD, sleep apnea, migraine, anxiety, and thoracic back pain. He was awarded Social Security disability insurance. Mr. Luna reported to UNUM’s disability benefits specialist that he suffered from “pain all over his body” that the “pain is anywhere from 8-9 and sometimes is a 10/10”. He also told UNUM that he needed assistance from his wife and son to drive, bathe, and otherwise assist him with daily living. Finally, he informed UNUM that he was unable to work because he was in a fog. In its attempt to prove that Mr. Luna was not disabled UNUM engaged in surveillance, both in person and by tracking Mr. Luna’s social media posts. They argued that Mr. Luna took trips, an RV trip and a vacation to Hawaii, and that they had photographed him “walking unassisted, going into a restaurant, and shopping while holding a bag.” Mr. Luna countered that he had gone on a “window tour” vacation in his wheelchair accessible RV: that his son and wife drove while he was strapped into his seat looking out the window. In Hawaii, at Christmas, he had used a wheelchair. Facebook, Mr. Luna told UNUM, “is not real; it is a place where you document the happy things.” The judge, it seems, did not believe Mr. Luna or his many doctors and specialists. The judge found that Mr. Luna failed to show that he was not capable of any occupation to which he was reasonably fitted by education, training, or experience. The judge also rejected Mr. Luna’s contention that UNUM was required to continue paying his long-term disability benefits because he was receiving social security benefits. Upon the court’s de novo review of the record, it concluded Mr. Luna had not shown by a preponderance of evidence that he remained disabled within the meaning of the plan. Therefore, the court granted the defendant’s motion for decision on the administrative record, found the defendant entitled to summary judgment on the plaintiff’s claim for breach of fiduciary duty, and dismissed the case with prejudice.
Lopez v. Life Ins. Co. of N. America, No. 20-25259-CIV, 2021 WL 4307049 (S.D. Fla. Sept. 22, 2021) (Judge Cecilia M. Altonaga). Plaintiff Eunice Lopez filed an ERISA lawsuit seeking to overturn the decision of Life Insurance Company of North America (“LINA”) to deny her long-term disability benefits. While employed as a personal account manager for Brown & Brown Inc. Ms. Lopez began to experience severe anxiety, depression and migraines. Despite her neurologist and phycologist attesting that Ms. Lopez was unable to work with her conditions, defendant relied on its own team of doctors to evaluate Ms. Lopez’s eligibility. In its denial letter, LINA requested Ms. Lopez submit additional medical records if she wished to appeal the denial. Although Ms. Lopez did appeal her denial, she failed to submit any new records during the appeals process. In her lawsuit, Ms. Lopez argued that the defendant did not fully investigate her claim because they did not seek further records from her psychologist. The judge found this argument unavailing because the plan unambiguously places the burden on the plaintiff to provide records proving disability. Ms. Lopez next argued that the defendants relied on their own doctors and didn’t give enough weight to the opinions of her treating doctors. The judge found that the defendant may give more weight to its own doctors than the treating physicians without acting arbitrarily and capriciously. Finally, Ms. Lopez argued that the defendant had an inherent conflict of interest in determining benefits that they also insure. The judge stated that conflict of interest is merely a factor for the court to consider, and, in this case, didn’t give it much weight. The judge found that the denial was in no way arbitrary or capricious and granted the defendant’s motion for summary judgment.
Wilson v. Unum, No. 20-122-DLB, 2021 WL 4268046 (E.D. Ky. Sept. 20, 2021) (Judge David L. Bunning). Plaintiff Pamela Wilson sued Unum group and Appalachia Regional Healthcare in 2020 for breach of contract, fraud, and intentional infliction of emotional distress after being kicked off her long-term disability benefits. Defendant Appalachia Regional Healthcare moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6) claiming ERISA preemption of her state lawsuit. Unum has already removed the suit to federal court citing complete preemption. The judge wrote, “notorious for its frustratingly perplex nature, ERISA preemption is ‘a doctrine only a judge could love.’” Weeding his way through the muck that is ERISA preemption, the judge emphasized Ms. Wilson's case turns on the extent to which her claim is based on laws of general applicability weighed against the extent to which the relief she seeks relates to the ERISA governed pension plan. With regard to all three of Ms. Wilson's state law claims – breach of contract, fraud, and intentional infliction of emotional distress – the judge found that the laws have no general applicability and that what Ms. Wilson was seeking was the reinstatement of her long-term disability benefits. Any state law case that grants that relief would duplicate, supplement, or supplant the ERISA civil remedies and the judge therefore found that all three were expressly preempted. For these reasons, Appalachia Regional Healthcare’s motion to dismiss was granted with prejudice. In a game of rock, paper, scissors, ERISA preemption trumps all three.
Liberty Mutual Ins. Co. v. United Healthcare, No. 2:19-CV-13811-TGB, 2021 WL 4310680 (E.D. Mich. Sept. 22, 2021) (Judge Terrence G. Berg). Plaintiff Liberty Mutual Life Insurance Co. filed a state law action against defendant United Healthcare for benefits it paid to non-party, Raymond Eckert, after he was injured in a car accident. United argues that this action was preempted by ERISA and that Liberty did not have standing under ERISA to sue for a payment. United moved for summary judgment on this issue. Liberty Mutual answered that the dispute is in fact governed by Michigan state law, M.C.L. § 500.3109a, which allows a no-fault auto insurance provider to apply deductibles and exclusions from any other health insurance coverage a claimant has to its coverage of claims arising from automobile accidents. Liberty Mutual argued that Michigan and federal courts have consistently found that this state law is not preempted by ERISA and can be applied where there is a conflict between a no-fault auto insurance plan and an ERISA covered health insurance plan. The court found that a key fact needed to determine preemption is whether the defendant’s ERISA plan is self-funded or insured, a fact neither party included in their briefing. The judge found that because the plaintiff raised a genuine issue of material fact that prevented the court from conclusively deciding the issue of ERISA preemption at this stage, the defendant’s arguments forming the basis for its motion for summary judgment could not be ruled on as a matter of law. The defendant’s motion was consequently denied and the question of state law versus federal law remains at this time unanswered.
Clarke v. DPWN Holdings, No. 20 C 05130, 2021 WL 4318073 (N.D. Ill. Sept. 23, 2021) (Judge Martha M. Pacold). Bryan Clarke, the administer of his wife’s estate, filed this lawsuit against defendant DPWN Holdings (“DHL”) alleging that DHL wrongfully terminated his wife, Tracie Clarke, when she was ill, and defrauded her to avoid paying her life insurance benefits. The complaint includes four counts: wrongful termination; violation of the Illinois Consumer Fraud and Deceptive Business Practices Act; fraud; and unjust enrichment. Ms. Clarke was covered under a life insurance policy through her employer, DHL. In 2016 she applied for a Premium Waiver, due to serious health issues, and then in 2017 applied for Accelerated Death Benefits under the policy. DHL informed her that her employment had to be administratively terminated for her to receive benefits. Instead, DHL ended her employment immediately purportedly to prevent Ms. Clarke becoming eligible in the benefits programs she had sought. She died shortly thereafter, and her estate never received her life insurance benefits. DHL moved to dismiss the complaint in a three-pronged argument asserting ERISA preemption, failure to exhaust administrative remedies, and failure to state a claim for wrongful termination under Illinois law because it does not allege Clarke’s termination violated Illinois public policy. Because neither party disputes that the policy is an ERISA plan, the question the judge addressed with respect to preemption was whether the estate’s claims for wrongful termination relate to the policy. The judge concluded that they do, and that the estate could have brought its state law claims under Section 510 of ERISA. DHL next argues that the estate’s claims should be dismissed with prejudice because the estate failed to exhaust administrative remedies and that all such appeals are now time-barred. The judge found that it was premature to decide this issue because it is a defense only for ERISA cases, and the case was not currently pled as such. The judge further found that the wrongful termination arguments presented by the estate were not persuasive. For all of these reasons the motion to dismiss was granted, without prejudice, and the estate was granted leave to file an amended complaint.
Exhaustion of Administrative Remedies
Clements v. Southern National Life Ins., No. 6:20-CV-01205, 2021 WL 4304275 (W.D. La.) (Judge Robert R. Summerhays). On August 15, 2019, while performing his job with M.C. Electric, Shawn Anthony Clements was fatally electrocuted. At the time of his death, there was in full force and effect a basic life insurance policy and an AD&D policy provided to Mr. Clements by his employer and issued by the defendant Southern National Life Insurance. Mr. Clements' son, TC, was the beneficiary of these policies. TC received the basic life insurance payment, but the claim for the AD&D benefits was denied on the grounds that the injury and death occurred while Mr. Clements was under the influence of narcotics not administered by a physician. Plaintiff filed a lawsuit seeking recovery of the AD&D benefits. Southern National Life filed a motion for partial summary judgment on three bases. First, defendant asserted that ERISA preempts the state law claims and remedies. Second, defendant argued that it should prevail because the plan grants the defendant full discretionary authority to determine eligibility for benefits. Finally, defendant argued that the plaintiff failed to exhaust all administrative remedies. Plaintiff stipulated to the first two issues but disputed the third. Southern National argued that it sent the denial letter to the plaintiff, which she failed to appeal. Plaintiff, on the other hand, argued that the letter did not comply with the ERISA notification requirements in 29 U.S.C. § 1133, because it failed to fully explain the reason for the denial and failed to advise the plaintiff of the appeals process. Because neither party addressed the issue of substantial compliance, the judge denied the defendant’s motion for summary judgment with respect to the exhaustion.
Robinson v. AT&T Services, No. 2:21-CV-309-RDP, 2021 WL 4290804 (N.D. Ala. Sept. 21, 2021) (Judge Robert David Proctor). Plaintiff Roy Thomas Robinson is a former technical sales consultant at AT&T Services Inc. In early 2020 AT&T began to offer early retirement programs to reduce operating costs. Under these programs, any terminated employee who had worked at the company for twenty-three years (rather than the typical twenty-five years) was eligible to voluntarily retire under the severance pay plan and the management transition program. Mr. Robinson opted not to volunteer to participate in the surplus program after learning that he was two months shy of the twenty-three-year mark required for benefits eligibility. He then informed his supervisors that he was not volunteering and the reasoning behind his decision. AT&T Services then terminated Mr. Robinson. When Mr. Robinson asked his supervisors for any short-term program to continue his employment for the time needed to become eligible for benefits under the programs, his supervisors told him it was the policy of AT&T to deny any such requests for special projects, supporting Mr. Robinson’s claims that AT&T terminated him for the purpose of interfering with his attainments of benefits in violation of ERISA Section 510. Defendants moved dismiss these claims under Federal Rule of Civil Procedure 12(b)(6) because Mr. Robinson failed to timely exhaust an available administrative remedy before filing his complaint. However, the judge reasoned that because he was terminated before qualifying for benefits under the programs, he had no administrative remedy available for him to contest and his only option was filing a Section 510 lawsuit. Thus, defendant’s motion to dismiss for failure to exhaust was therefore denied.
Life Insurance & AD&D Benefit Claims
Hartford Life & Acc. Ins. Co. v. Jones-Atchison, No. 20-6135, __ F. App’x__, 2021 WL 4258761 (10th Cir. Sept. 20, 2021) (Before Circuit Judges Tymkovich, Kelly, and Holmes). This appeal arose from an interpleader action brought by Hartford Life and Accident Insurance Company to determine the proper beneficiary of insurance benefits of David Atchison II. David Atchison was shot to death by an unknown person. Shortly after his death, both of his parents and his ex-wife submitted claims for his basic life insurance policy. Mr. Atchison had named his ex-wife as the beneficiary of his basic life insurance policy, but the police were investigating her as a suspect in Mr. Atchison’s death. Along with their claims for the basic life insurance, the decedent’s parents had simultaneously submitted claims for their sons’ supplemental life insurance and his AD&D insurance. Faced with the conflicting claims for the same benefits from the non-designated parents and the designated ex-wife, who may have been prohibited from receiving the benefits, Hartford Life filed the interpleader action to ascertain the correct beneficiary of the basic life insurance policy. As for the supplemental life insurance and the AD&D benefits, neither of which had named beneficiaries, Hartford paid the parents, after decedent’s father submitted a Preference Beneficiary Affidavit stating the decedent had no children. The father’s affidavit affirmed “under penalty of false statement, that the information provided was true and complete to the best of his knowledge and belief.” However, it would seem the life of David Atchison II was as complicated as his death. Despite the fact that neither his obituary nor his father’s affidavit indicated that Mr. Atchison had any children, it turns out he had three. After the time limits prescribed by the plan and ERISA for adjudicating and paying claims for benefits had passed, the children submitted a claim for the supplemental life and AD&D benefits. Hartford denied the claim because it had already awarded those benefits to the parents. The children then moved to intervene in the interpleader action, to be added as defendants with a claim to the basic life insurance benefits, and to broaden the scope of the action by asserting a counterclaim against Hartford to recover the supplemental life and AD&D benefits that had been paid to the parents. The district court granted their motion to intervene. The children alleged that Hartford failed to conduct a reasonable search of beneficiaries before distributing the benefits to the parents and asserted a claim for failure to pay benefits under ERISA. The district court dismissed the counterclaims under Federal Rule of Civil Procedure 12(b)(6), concluding the children failed to state a plausible ERISA claim because Hartford investigated the existence of beneficiaries according to the policy provisions and plan documents, and had no reason to believe that the affidavit signed by Mr. Atchison’s father was untrue. The children also asserted counterclaims against the parents. After the children, the ex-wife, and the parents all reached a settlement regarding the distribution of the basic life insurance proceeds, the court dismissed the interpleader claims. Left only with the children’s state-law crossclaims against the parents, the court dismissed them without prejudice and entered a final judgment. The Tenth Circuit reviewed de novo the dismissal of the children’s counterclaims under Rule 12(b)(6) for failure to state a claim, applying the same prudent-man standards that the district court applied. Affirming the lower court’s decision, the Tenth Circuit agreed that the children failed to state a plausible ERISA claim against Hartford because Hartford had no way to know their grandfather was lying.
Medical Benefit Claims
Sibley v. Priority Health, No. 1:19-cv-704, 2021 WL 4304715 (W.D. Mich. Sept. 22, 2021) (Judge Paul L. Maloney). Plaintiff Sibley is the mother of J.S., a 22-year-old woman who has autism, Obsessive Compulsive Disorder, anxiety disorders, and an intellectual disability. J.S. is also non-verbal and unable to care for herself and suffers from self-harming behaviors. In March 2018 she began receiving inpatient treatment at the Kennedy Krieger Institute Neurobehavioral Unit. Defendant Priority Health initially covered her treatment there for a five-month period before determining that it was no longer medically necessary for her to be receiving inpatient treatment. After exhausting her administrative remedies, Ms. Sibley filed this action with the hope that J.S. could continue receiving inpatient treatment and that Priority Health would continue to cover the cost of that treatment. The case was referred to Magistrate Judge Phillip Green who issued a Report & Recommendation concluding that the defendant’s decision denying coverage was improper and that the matter should be remanded to the defendant for a new coverage determination. Priority Health objected to the Report & Recommendation, arguing first that the standard to determine benefit eligibility is “Medically/Clinically necessary” and that the Magistrate did not apply this standard. The judge overruled this first objection because the Magistrate did apply the medically necessary standard and concluded J.S.’s treatment was medically necessary. Next, the defendant objected on the ground that the Magistrate didn’t properly review opinions from their own medical reviewers. The judge once again found that the Magistrate did sufficiently review and discuss those documents at length and overruled this objection. Finally, Priority Health objected that the Magistrate did not identify any record evidence to contradict their medical reviewers’ report. The judge found this “plainly incorrect” and discussed how the Magistrate carefully consulted the record and explained why he disagreed with the reviewers’ and defendant’s conclusion that inpatient treatment was not medically necessary. Agreeing entirely with the Magistrate report, the judge accepted the recommendation to deny the defendant’s motion to affirm the administrator’s decision and granted in part and denied in part the plaintiff’s motion for entry of judgment.
L.P. v. Blue Cross Blue Shield, No. 18–124, 2021 WL 4291092 (D. Minn. Sept. 21, 2021) (Judge Michael J. Davis). In a tangled series of motions and cross motions, plaintiff L.P. and defendant Blue Cross Blue Shield of Minnesota disputed whether Blue Cross was in violation of the Mental Health Parity Act, and how much, if anything, Blue Cross owed to the plaintiff after her extended stay in a treatment facility. This case has a complicated factual history revolving around L.P.’s inpatient treatment at Change Academy, a Missouri residential treatment center, from June 2016 to November 2017 for her mental health disorders including depression, suicidal ideation, self-harming behaviors, and reactive attachment disorder. During this time, she was covered under a self-funded employee benefits plan sponsored by her father’s employer and administered by defendant Blue Cross Blue Shield of Minnesota. Change Academy was an out-of-network, non-participating provider under the plan, so L.P.’s father, J.P., paid the bills directly and then sought reimbursement from Blue Cross. At first, Blue Cross did reimburse J.P. and paid him $83,554.44, but it later decided that none of the claims were covered and demanded that the money it paid “in error” be returned. Blue Cross denied the benefits on the grounds that Change Academy was not a qualified residential behavioral health treatment facility as defined by the plan, because the facility provided substantial recreational services, there was a lack of required physician oversight, and the charges were submitted under an all-inclusive room and board code which identified the services as hospital based, even though they were not based in a hospital. L.P. appealed the denial, and when that failed filed her complaint against Blue Cross seeking benefits as well as a clarification of her rights to future benefits pursuant to 29 U.S.C. §1132(a)(1)(b) and asserting breach of fiduciary duties pursuant to 29 U.S.C. §1132(a)(3). Magistrate Judge Schultz recommended that Blue Cross’s motion for summary judgment be denied and that plaintiff’s motion for summary judgment be granted in part and denied in part. The Magistrate found Blue Cross was in violation of the Mental Health Parity Act, but that L.P. needed to submit more precise and specific billing documentation for the insurance company to be able to properly calculate what was owed. The court adopted the Magistrate’s report and remanded the matter to the plan administrator. Blue Cross’s position on remand was that it could not pay the benefits at all because L.P. had not provided them with the necessary information it requires to accurately calculate benefits. Blue Cross said that it “completed our review and determined that no benefits can be allowed at this time.” Back in the district court, L.P. requested that the court order Blue Cross to pay her a total of $150,192.98, consisting of her costs, attorneys’ fees, and prejudgment interest. Blue Cross meanwhile asked the court to reconsider adopting the Report and Recommendation of the Magistrate and contested that its denial violated federal mental health parity. The judge denied both the defendant’s counterclaim and its request to file a motion for reconsideration. Under abuse of discretion review, the judge in part granted and in part denied the plaintiff’s motions. The judge denied her request for an injunction because now that she is an adult she would never again need or seek treatment at a residential behavioral treatment facility for high school students. The judge also found her request for attorney’s fees and prejudgment interest premature because the value of those should reflect her ultimate success of the merits. The remainder of L.P.’s motions were granted.
Vanusanik v. PricewaterhouseCoopers, No. 8:20-cv-2839-CEH-TGW, 2021 WL 4244244 (M.D. Fla. Sept. 17, 2021) (Judge Charlene Edwards Honeywell). Plan participant Vitalij Vanusanik, who suffers from severe hemophilia, sued defendants Express Scripts Inc. and Pricewaterhouse Coopers alleging wrongful denial of benefits, breach of fiduciary duty, failure to monitor the plan, and federal disability discrimination. Defendants moved to dismiss for failure to state a claim, arguing that Mr. Vanusanik failed to identify a benefit under the employee medical benefit plan to which he was entitled. This case revolved around an ever-worsening problem for Mr. Vanusanik to receive his hemophilia medication. His policy required him to obtain his specialty medications through the pharmacy Accredo. Over more than two years, however, Accredo repeatedly failed to provide the medication on time or in the correct dosage, including several times when the pharmacy did not have his medication in stock at all, which lead to several bleeds, hospitalizations, unbearable pain, emotional distress, and a period of time where Mr. Vanusanik suffered an inability to walk, properly work, eat or sleep. There were also two times when Accredo sent Mr. Vanusanik a $100,000 bill for his medications, despite the fact they were fully covered under the plan. In response to these recurring problems, Mr. Vanusanik requested that his medications be provided by another pharmacy, InfuCare, which always provided Mr. Vanusanik’s drugs in a timely manner. However Express Scripts began to again insist that Mr. Vanusanik receive his medication through Accredo per the plan’s policy. Refills at InfuCare were permitted only when they offered his drugs at a lower cost than Accredo, ignoring that the plan also assured that prescriptions be covered and timely filled, something Accredo was unable to do. Defendants primarily argued plaintiff could not prevail on his claims because he was seeking to enforce benefits not provided under the terms of the plan. As fiduciaries, however, the court concluded that they were required to put the plan participant’s interests above their own cost saving interests. The court therefore refused to dismiss the plaintiffs’ denial of benefit and breach of fiduciary duty claims, and request for declaratory judgement. Plaintiff’s federal disability discrimination claims, on the other hand, were dismissed because the judge found insufficient factual allegations to support that he was discriminated against because of his hemophilia. On that issue the judge granted the plaintiff leave to file a second amended complaint within 14 days of the decision.
Pension Benefit Claims
Steward v. LSC Communications Pension Plan, No. 20-cv-3166, 2021 WL 4244752 (N.D. Ill. Sept. 17, 2021) (Judge Steven C. Seeger). When offered a lump-sum payment of his pension plan benefits, retiree Thomas Birchfield, who was already receiving monthly benefits, jumped at the opportunity and returned his completed form. The lump-sum payment option was scheduled to be paid April 1, 2016. However, Mr. Birchfield died March 12, 2016. Not knowing of Mr. Birchfield’s death, the pension plan, defendant LSC Communications Pension Plan, issued the lump-sum check. In May 2016, upon learning of Mr. Birchfield’s death, the plan cancelled the check. The estate of Mr. Birchfield responded by filing suit. Defendants moved for summary judgement. Because the plan “clearly and unequivocally states that it grants discretionary authority to the administrator” the court lowered its level of judicial review from de novo to arbitrary and capricious. Under arbitrary and capricious review, the judge determined that LSC’s decision to deny the benefit was not “downright unreasonable.” LSC argued that, under the Plan, a participant has no right to monthly benefits after death. The lump-sum payment accelerated future payments, but Mr. Birchfield was not entitled to any payments past his March monthly payment, which he received. In essence, the judge decided that LSC’s argument that “to receive everything, he needed to be entitled to receive something” holds water. Accordingly, the judge granted LSC’s motion for summary judgement.
Pleading Issues & Procedure
Cay-Montanez v. AXA Equitable Life Ins. Co., No. 19-1124, 2021 WL 4251338 (D. P.R. Sept. 17, 2021) (Judge Silvia Carreño-Coll). Plaintiff Julio M. Cay-Montañez brought a lawsuit against AXA Equitable Life Insurance Company, Disability Management Services Inc., and Unum Group under ERISA for denial of disability insurance benefits, breach of fiduciary duty, along with several Puerto Rican state tort law claims and breach of contract. Defendants moved to dismiss plaintiff’s claims pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6) on the grounds that the policies in question were not ERISA plans because they were not established or maintained by his employer, Metro Tech, but were purchased by Mr. Cay-Montañez as an individual. The judge agreed, concluding that because she had no jurisdiction over the federal-law claims, she also had no jurisdiction over the plaintiff’s pendant state-law claims. The judge therefore dismissed the plaintiff’s state-law claims without prejudice.
Davis v. Sedgwick Claims Management Services, No. 21-CV-7090, 2021 WL 4252009 (S.D.N.Y. Sept. 17, 2021) (Judge Laura Taylor Swain). Plaintiff Laura Davis brought her case pro se under 29 U.S.C. §§ 1133, 1135, 42 U.S.C. § 1981, and state law. On August 24, 2021, the court granted Ms. Davis’ request to proceed in forma pauperis. Davis filed her complaint against defendant Sedgwick Claims Management Services for racial discrimination, denial of disability and retirement benefits under her Delta Airlines ERISA plan, and for defamation. For each of her claims, the judge found that Ms. Davis lacked important substantive information and facts to support her accusations. Ms. Davis also asserted that her case was related to another case, Azzarmi v. Neubauer, a pending pro se cased filed by another Delta Airlines employee against a number of defendants, including Sedgwick, and moved to have her case reassigned to the judge in that case. Judge Swain denied this motion, finding that the two cases were not related. The judge also concluded that Ms. Davis did not state a claim. Because she did not have the benefit of an attorney, the judge granted her 60 days’ leave to amend her complaint to include additional facts to state a valid claim.
Dearing v. IQVIA Inc., No. 1:20-CV-574, 2021 WL 4291171 (M.D. N.C. Sept. 21, 2021) (Judge William L. Osteen Jr.). Defendants IQVIA Inc., IQVIA board of directors, and IQVIA benefits investment committee moved to dismiss the plaintiff’s amended complaint. Defendants are fiduciaries who sponsor a 401(k) plan, one of the largest in the nation with over 21,000 participants and total assets over $1.6 billion. The plaintiffs are participants, both past and present, in the plan. Plaintiffs allege the defendants breached their fiduciary duties of loyalty and prudence, failed to properly monitor the funds, and knowingly breached their trust. In essence, they assert that the default “Active Suite” investments of the plan are high risk, low reward. With exorbitant fees, risky stocks, and low stock diversification the court found that, as alleged by the plaintiffs, the Active Suite which makes up 54% of the 401(k), is a rather lousy default retirement set up for the plan participants. Plaintiffs argue that IQVIA should have lowered the plan’s expense ratio by replacing a fund with a cheaper alternative investment vehicle comprised of cheaper but otherwise identical underlying investments and replacing a fund’s unnecessarily expensive share class with the least expensive class, again identical other than price. Taking plaintiff’s allegations as true, the judge found the plaintiffs sufficiently stated claims to all counts, and therefore denied defendants' Rule 12(b)(6) motion to dismiss.
Rose v. PSA Airlines, No. 3:19-CV-695-GCM-DCK, 2021 WL 4314459 (W.D.N.C. Sept. 22, 2021) (Judge Graham C. Mullen). Plaintiff Jody Rose brought suit alleging defendant PSA Airlines breached its fiduciary duties after the tragic death of Kyree Holman, who died awaiting a heart transplant. The plaintiff sought equitable relief equaling the full value of the heart transplant. The judge in this case conducted de novo review of the Memorandum and Recommendation of Magistrate Judge David C. Keesler, to which both the plaintiff and the defendant objected. The judge found that the plaintiff was not asking the court to put her in the same position she would have been in had the benefits been paid, because even if Mr. Holman’s claims had been approved and he had received the heart transplant, the payment would have gone to the medical providers for their services not to Mr. Holman himself, and that awarding the plaintiff the value of the transplant that Mr. Holman never received and can never receive, is not the type of make-whole relief authorized under the equitable remedy of surcharge. Although the judge found the facts of case “undoubtedly tragic” he also found that, “it is not for the court to fashion a remedy under ERISA for these circumstances, rather that is the job of Congress.” The judge affirmed the Memorandum & Recommendation to grant the defendant’s motion to dismiss the plaintiff’s wrongful denial of benefits claim. However, the judge disagreed with the Memorandum & Recommendation’s denial of the defendant’s motion to dismiss the plaintiff’s section 502(a)(3) claim and rejected that recommendation, thus dismissing the entire complaint.
Cambra v. Universal Weather & Aviation, No. CV-20-02234-PHX-DJH, 2021 WL 4319212 (D. Ariz. Sept. 22, 2021) (Judge Diane J. Humetewa). Plaintiff Monica Cambra filed a lawsuit alleging ERISA and state law breach of contract claims against her former employer, defendant Universal Weather & Aviation, claiming they failed to abide by the terms of her severance plan after she was terminated. The defendant moved to transfer venue from Arizona, where Ms. Cambra worked, to the Southern District of Texas, where the defendant is headquartered, under 28 U.S.C. § 1404(a). In their argument in favor of transfer, defendants claimed many of the events which gave rise to this dispute occurred in Texas, including the formation and administration of the severance plan at issue. They also claimed that many potential discovery witnesses live in Texas, and it would thus be less expensive overall to move venues. Universal Weather & Aviation also argued that Texas would be better suited at addressing issues arising under Texas law. Lastly, the defendant argued that Texas’ dockets are less congested than Arizona’s and public policy would thus favor transferring the case to the less crowded venue. In opposition to the transfer, Ms. Cambra argued that the severance plan was offered to her in Arizona. She also argues that with the convenience of modern technology, neither document sharing, nor depositions would be difficult or expensive. She also noted that the defendant had not cited any Texas law issues, which makes the possibility of one arising mere speculation. Finally, she argued that although by some metrics Texas courts are less congested than courts in Arizona, this court has been able to efficiently process its cases. The judge found the plaintiff’s arguments compelling and the defendant’s arguments unavailing, and therefore found “that it is not in the interest of justice to transfer this matter.”