Your ERISA Watch – District Court Flags NFL Player Retirement Plan for Unsportsmanlike Conduct

ERISA WATCH

Cloud v. The Bert Bell/Pete Rozelle NFL Player Ret. Plan, No. 3:20-CV-1277-S, 2022 WL 2237451 (N.D. Tex. Jun. 21, 2022) (Judge Karen Gren Scholer)

In most disability benefit cases, the focus is on the beneficiary’s individual claim and whether he or she is entitled to benefits. The litigants spar over the medical evidence and argue about whether the claimant has satisfied the plan’s conditions and limitations. The administration of the plan, and how the plan has handled other claims, is often an afterthought.

However, ERISA practitioners (and readers of Your ERISA Watch) should by now be quite familiar with The Bert Bell/Pete Rozelle NFL Player Retirement Plan and its handling of claims for disability benefits by former professional football players. As the very first sentence of this decision explains, this is not a badge of honor: “The curtain has been pulled back as to the inner workings of Defendant The Bert Bell/Pete Rozelle NFL Player Retirement Plan. And what lies behind it is far from pretty with respect to how it handles disability benefit claims sought by former players, such as Michael Cloud.”

Cloud, like so many former NFL players, sustained severe head trauma during his seven-year career as a running back, and now suffers from disabling neurological, psychiatric, and cognitive conditions which unfortunately are only worsening. Cloud was awarded “Inactive A” total and permanent disability benefits under the Plan, but he contended he was entitled to “Active Football” benefits, which are the highest form of benefits under the Plan. (“Active Football” benefits are awarded “if the disability(ies) results from League football activities, arises while the Player is an Active Player, and causes the Player to be totally and permanently disabled ‘shortly after’ the disability(ies) first arises.”) The Plan’s benefit committee denied Cloud’s claim, and that decision was upheld by the Plan’s board of trustees.

Cloud sued under ERISA. The court allowed significant discovery in the action, and conducted a multi-day bench trial, after which it issued this decision finding fully in favor of Cloud. The court noted at the outset that it was applying the abuse of discretion standard of review because the Plan gives its fiduciaries discretionary authority to determine benefit eligibility. However, even under this deferential standard of review, the court identified numerous problems with the Plan’s handling of Cloud’s claim.

The court ruled that the board in charge of deciding Cloud’s appeal did not give Cloud a full and fair review because “(1) it did not clearly identify the specific reasons for denial of Plaintiff’s appeal, (2) it did not consider all documents and records submitted with Plaintiff’s claim, (3) it afforded deference to the Committee, and (4) it did not consult with an appropriate health care professional despite basing its determination on a medical judgment.”

In doing so, the court critiqued the Plan’s “post hoc rationalizations,” the absence of “any substantive explanation of specific bases for denial,” the admissions by Board members that they had not reviewed the entire administrative record, and the failure to refer Cloud for further medical evaluation despite “the explicit recommendation to do so by a Plan neutral neurologist[.]”

The court also noted several alarming claim-handling practices, including the fact that the Board’s decision was made at a ten-minute-long “pre-meeting” even though the Board had 100 appeals on its docket, with each appeal involving a file of “hundreds or thousands of pages of documents.”

As for the central question of whether Cloud was entitled to Active Football benefits, the court found that the Plan abused its discretion in denying his claim for several reasons. The court found that the board’s decision was “legally incorrect and directly contradicts the plain meaning of the Plan language,” its interpretation of the Plan was “inconsistent with a fair reading of the Plan and entirely lacks support in the administrative record,” and its “interpretation of the Plan as not requiring any medical examination by a neutral physician in connection with Plaintiff’s reclassification appeal constitutes an abuse of discretion.” The court further found that the medical evidence demonstrating that Cloud suffered a disability resulting from his numerous concussions while playing in the NFL was overwhelming.

The court concluded that “The Board’s review process, its interpretation and application of the Plan language, and overall factual context all suggest an intent to deny Plaintiff’s reclassification appeal regardless of the evidence,” which meant the Board “shirked its fiduciary obligations under both ERISA and the Plan itself.” The court thus awarded Cloud Active Football benefits, including pre- and post-judgment interest, and attorneys’ fees and costs.

The court could have stopped there but did not: “Behind the curtain is the troubling but apparent reality that these abuses by the Board are part of a larger strategy engineered to ensure that former NFL players suffering from the devastating effects of severe head trauma are not awarded Active Football benefits.” The court found it “telling that out of the thousands of former players who filed applications for benefits, only 30 players currently receive Active Football benefits.” Citing numerous cases, the court noted that “Plaintiff’s allegations against Defendant and the Board are hardly unique. Dozens of former NFL players have lodged similar challenges, and the Court’s findings echo the concerns already expressed by courts across the country.”

One hopes that this is the decision that finally forces the NFL Plan to reform its ways and take player benefit claims seriously, as required by ERISA. Stay tuned to ERISA Watch to find out.

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

Arbitration

Second Circuit
Trs. of the N.Y. State Nurses Ass’n Pension Plan v. White Oak Glob. Advisors, No. 21-cv-8330 (LAK), 2022 WL 2209349 (S.D.N.Y. Jun. 20, 2022) (Judge Lewis A. Kaplan). If ever a decision could be called insider ERISA, this might be it. Existing at the crossroads of arbitration and preemption, this decision examines whether a recent Supreme Court decision, Badgerow v. Walters, No. 20-1143 (U.S. Mar. 31, 2022), and its rejection of the “look through” approach to subject matter jurisdiction regarding Sections 9 and 10 of the Federal Arbitration Act means there is no independent jurisdictional basis for arbitration disputes under ERISA to be adjudicated in federal court. Defendant White Oak Global Advisors, LLC moved to vacate the court’s earlier decision to confirm an arbitration award in favor of plaintiff Trustees of the New York State Nurses Association Pension Plan, arguing that the Badgerow decision necessarily alters the court’s previous analysis on subject matter jurisdiction. While the court agreed that this case is similar to Badgerow in that “the Court here is confronted with a dispute over ‘legal settlement’ and ‘the contractual rights provided in the arbitration agreement,’” the court held that this case and Badgerow diverge where state law and ERISA govern contractual obligations. Contractual obligations, the court wrote, “like those relating to the resolution of claims under an ERISA plan,” are “never governed by state law.” The court agreed with the Plan that its petition to confirm the arbitration award “squarely invokes federal question jurisdiction under Section 1331” because the arbitration clause is governed by ERISA. Because the Plan Trustees and White Oak are both ERISA fiduciaries and the IMA which contains the arbitration agreement gave rise to White Oak’s fiduciary duties, it was clear to the court that the contractual rights at issue here “relate to” an ERISA plan and are therefore governed exclusively by ERISA. “Accordingly, the Plan’s petition is not a state-law based Section 9 application as was at issue in Badgerow,” and the court denied White Oak’s motion to vacate for lack of subject matter jurisdiction.

Attorneys’ Fees

Ninth Circuit
Sutton v. Metro. Life Insurance Co., No. 2:20-cv-00698-KJM-CKD, 2022 WL 2177123 (E.D. Cal. Jun. 15, 2022) (Judge Kimberly Mueller). Plaintiff Keith Sutton sued Metropolitan Life Insurance Company after his long-term disability benefits were terminated. Shortly before opening briefs were due in the case, Mr. Sutton was awarded Social Security Disability benefits, which affected the amount of the long-term disability benefits he could be awarded under the terms of his plan, and therefore lowered the amount in controversy in this suit. The parties then agreed to try to settle the case. Although settlement negotiations ultimately failed, MetLife unilaterally decided to pay the full value of the benefits, and the court vacated the trial. Mr. Sutton then moved for an award of attorneys’ fees and costs. The court began its discussion by concluding that Mr. Sutton achieved success on the merits by obtaining the full value of the benefits available to him. Additionally, the court stated that MetLife can satisfy a fee award. All other Hummell factors, the court held, were neutral, and weighed together the court was satisfied Mr. Sutton was entitled to an award of fees. To calculate the lodestar, the court first evaluated the requested 140 hours Mr. Sutton’s attorneys spent on the case. These hours, which included reviewing medical records, drafting the complaint, preparing briefing for trial, emailing and communicating with opposing counsel, and drafting the fee motion were, the court held, reasonable and properly documented. The court was not willing to reduce the hours, as MetLife requested, for preparing a trial brief, drafting the attorneys’ fee motion, or for refusing to accept MetLife’s offer to pay a discounted award. As to the latter point, the court wrote that it would “not punish counsel for seeking their full fees, which were in fact reasonable.” Once the court established the hours requested were reasonable, it turned to the requested hourly rates of counsel and again awarded in full the requested amounts. Mr. Sutton was represented by two experienced ERISA practitioners, Mr. Horrow and Mr. Calvert. Each attorney was awarded $700 per hour. Finally, the court, of its own will, increased the lodestar amount by a positive ten percent multiplier “to reduce the effects of inflation, to account for the time value of money, and to recognize the contingency nature of the fee arrangement.” The court thus awarded $102,179.00 in attorneys’ fees. As for the requested $828.40 in costs, these too were awarded in full, as MetLife did not argue for a reduction and the court concluded they represented costs and expenses within the scope of Section 1132(g)(1). The motion for fees and costs was accordingly granted, and Mr. Sutton’s counsel was compensated for their efforts.

Breach of Fiduciary Duty

Sixth Circuit
Smith v. Commonspirit Health, No. 21-5964, __ F. 4th __, 2022 WL 2207557 (6th Cir. Jun. 21, 2022) (Before Circuit Judges Sutton, Kethledge, and Murphy). Plaintiff Yosaun Smith sued CommonSpirit and the administrative committee of the CommonSpirit defined-contribution 401(k) plan for breaches of fiduciary duties under Section 1132(a)(2). Ms. Smith sought to represent a class of similarly situated plan participants, arguing that the fiduciaries breached their duties by offering imprudent actively managed investment funds with high fees when more prudent, cheaper, and better performing passively managed funds existed. This decision, she alleged, caused significant losses to the plan. Like so many participants challenging a plan’s management process, Ms. Smith’s complaint was dismissed at the pleading stage, with the district court concluding that her three-year and five-year comparisons of funds and fees were improper and insufficient benchmarks with which to infer imprudence or improper fiduciary management. On appeal to the Sixth Circuit, Ms. Smith fared no better. The appeals court began its decision saying that ERISA “does not give the federal courts a broad license to second-guess the investment decisions of retirement plans.” The Sixth Circuit honed in on the fact that Ms. Smith’s complaint only compared the performance of the challenged funds over a five-year “snapshot,” which the court stated was an overly short duration to reflect the overall success of a fund which is intended to grow over decades. Reacting to short-term disappointments, the court held, and not retaining funds performing poorly over a short period, would actually be an imprudent action and would “frustrate the long-term growth of a retirement plan.” In the eyes of the court, Ms. Smith alleged no facts “from which a jury could plausibly infer that CommonSpirit breached any (fiduciary) duty.” Hindsight, the court warned, cannot prove imprudence. The answer to what factual allegations could demonstrate imprudence was not given. Having found the allegations within the complaint insufficient to state a claim for relief, the Sixth Circuit affirmed the district court’s dismissal of the complaint.

Eighth Circuit
Riley v. Olin Corp., No. 4:21-cv-01328-SRC, 2022 WL 2208953 (E.D. Mo. Jun. 21, 2022) (Judge Stephen R. Clark). Named plaintiffs in this putative class action are two participants of the Olin Corporation Contributing Employee Ownership Plan, an ERISA-governed defined contribution plan. They sued their employer, the Olin Corp, the plan’s board, and the plan’s investment committee for breaches of fiduciary duties related to their process in managing the plan and their retention of funds with excessive fees and a single under-performing fund. Plaintiffs brought claims for breach of fiduciary duty of prudence and failure to monitor co-fiduciaries. Defendants moved to dismiss under Federal Rules of Civil Procedure 12(b)(6) for failure to state a claim. Defendants argued that plaintiff’s complaint lacked proper benchmarks with which to compare the allegedly excessive fees or the under-performing fund. Without these meaningful benchmarks comparing not only the fees charged but the services provided for the fees, defendants asserted that the complaint could not properly evaluate their fiduciary process. Defendants also argued that plaintiffs’ duty to monitor claim was derivative of their duty of prudence claim and without stating the first the second should likewise fail. The court agreed. None of the comparisons offered by plaintiffs in their complaint were deemed satisfactory to the court, and without proper comparators, the court concurred that plaintiffs failed to state a claim. Accordingly, the court dismissed the complaint, but did so without prejudice, stating that should plaintiffs wish to amend their complaint, they should do so formally.

Disability Benefit Claims

Second Circuit
Wallace v. Grp. Long Term Disability Plan, No. 21-1019, __ F. App’x __, 2022 WL 2207926 (2d Cir. Jun. 21, 2022) (Before Circuit Judges Park, Lee, and Perez). Plaintiff-appellant Pamela Wallace appealed the district court’s decision granting summary judgment in favor of defendant Hartford Life and Accident Insurance Company in this Section 502(a)(1)(B) long-term disability suit. On appeal, Ms. Wallace argued that Hartford failed to afford her a full and fair review during her internal appeal of the initial adverse benefit determination, and that Hartford had abused its discretion in denying her claim for benefits. Ms. Wallace asserted that Hartford’s medical reviewer did not afford her a full and fair review because the reviewer failed to address a report from an independent medical examination she underwent. The court of appeals was not persuaded by this argument, stating that the reviewer “was not required explicitly to discuss” the report from the independent medical examination because the reviewer had listed it among the materials he reviewed when reaching his conclusion that Ms. Wallace was not disabled from performing the duties of her job. The Second Circuit wrote that “at that point, the record contained over thirty documents, including medical reports and notes from more than a dozen doctors. The regulations do not state that (the reviewing physician) was required to address each document in detail before arriving at a determination.” The appeals court was also unconvinced that Hartford had abused its discretion. Although there was conflicting medical reports and evidence within the record, the court held that Hartford was reasonable to conclude that Ms. Wallace was not disabled and there was substantial evidence within the record to support its conclusion. For these reasons, the Second Circuit affirmed the decision of the district court and agreed that Hartford “acted within its discretion in denying Wallace’s claim.”

Fourth Circuit
Penland v. Metro Life. Ins. Co., No. C.A. 8:21-3000-HMH, 2022 WL 2235863 (D.S.C. Jun. 22, 2022) (Judge Henry M. Herlong, Jr.). Plaintiff Tracy W. Penland became disabled in 2015 with a whole slew of musculoskeletal, gastrointestinal, and autoimmune diseases. He commenced this suit against MetLife after the insurer terminated his benefits, citing limitations for neuromuscular, musculoskeletal, and soft tissue disorders. In this order, the court made its final determination with respect to the denial. First, the parties disagreed on which review standard should apply to the case. MetLife argued that the plan conferred it with discretionary language making abuse of discretion review applicable. Mr. Penland argued that the plan’s language, “satisfactory to us,” is insufficient to confer discretionary authority. The court agreed with Mr. Penland and applied de novo review to its analysis of the adverse benefit decision. Under this review, the court examined the medical record and agreed with MetLife’s determination that Mr. Penland’s disabling conditions were governed by the policy's 24-month maximum benefit cap. The court concluded that two of three of Mr. Penland’s own doctors did not give their opinions that his gastrointestinal diseases, diabetes, psoriasis, fatty liver, or migraine headaches rendered him disabled as defined by the plan. This evidence, along with the court’s own examination of the medical record, led the court to conclude that MetLife’s denial was correct. Accordingly, the court affirmed the denial of benefits.

Eighth Circuit
Kampf v. Principal Life Ins. Co., No. 21-CV-580 (NEB/LIB), 2022 WL 2276051 (D. Minn. Jun. 23, 2022) (Judge Nancy E. Brasel). In 2011, plaintiff Matthew Kampf fell into a ravine. This accident would leave him with immediate problems including fractures, cuts, and frostbite, and with even worse long-term problems stemming from a brain hemorrhage which caused a traumatic brain injury. More than six years later, Mr. Kampf filed his disability claim with Principal Life Insurance Company, claiming that cognitive difficulties prevented him from filing earlier. The claim was approved. Principal determined the start date of the benefits to be six months prior to the application. Mr. Kampf argued that the benefits should have been retroactive to 2011, the date of his fall. The second of the parties’ disagreements was with respect to Mr. Kampf’s denied application for Life Coverage During Disability (“LCDD”) benefits. The LCDD policy application was denied, with Principal determining that Mr. Kampf was not “totally disabled” as required and defined by the policy. The parties filed cross-motions for summary judgment under abuse of discretion review. The court decided that both Principal’s disability start date decision and its decision to deny LCDD benefits were reasonable interpretations of the policies. The court concluded that the start date Principal applied was clearly correct under the plan language, and even if the plan language were ambiguous, it would defer to Principal’s interpretation. It also concluded that, given the fact Mr. Kampf had returned to part-time work, it was reasonable for Principal to conclude that he did not meet the definition of totally disabled. Thus, the court granted summary judgment in favor of Principal.

Ninth Circuit
Hall v. AT&T Umbrella Benefit Plan No. 3, No. 20-cv-07076-JD, 2022 WL 2276897 (N.D. Cal. Jun. 23, 2022) (Judge James Donato). Plaintiff Cassandra Hall commenced this Section 502(a)(1)(B) suit after her long-term disability benefits were terminated by the AT&T Umbrella Benefit Plan No. 3. After a diagnosis of an acromioclavicular arthropathy with labral tear of her right shoulder, Ms. Hall became disabled for a period of time and had to undergo two surgeries and rounds of physical therapy to regain motion in her arm and shoulder. Ms. Hall is now back to work, and the parties agreed that she has improved significantly. However, they disagreed over when she improved sufficiently so that she no longer qualified for benefits. This case involves two years’ worth of disability benefits dating from May 2019 when the plan terminated benefits to May 2021 when Ms. Hall returned to work. The parties moved for summary judgment. First, the court held that the abuse of discretion review standard applies, as the plan confers discretion to its administrator. Next, the court examined the medical record, and concluded that the Plan’s decision to terminate benefits when it did was reasonable based on tests which, at the time of the benefits termination, showed that Ms. Hall’s cervical spine was normal. The contents of these tests and other medical records, the court concluded, clearly demonstrated that Ms. Hall’s condition had improved by May 2019. As a result, the court held that the Plan had not abused its discretion and granted summary judgment in its favor.

Discovery

Seventh Circuit
Gubbins v. Life Ins. Co. of N. Am., No. 21 C 2582, 2022 WL 2257181 (N.D. Ill. Jun. 23, 2022) (Magistrate Judge Sheila Finnegan). Plaintiff Sarah Gubbins moved for discovery and production of documents in her long-term disability suit against Life Insurance Company of North America (“LINA”). The court granted in part, denied in part, and denied as moot in part Ms. Gubbins’ motion. The court granted the motion with regard to all communications between the appeal specialist and the vocational counselor concerning her claim application. This communication, the court held, should be part of the administrative record given that it concerns documents that were considered in the course of the benefit determination. Several other requested documents have already been produced by LINA and thus these requests were denied as moot. Ms. Gubbins also requested LINA produce its internal policies and procedures manuals. LINA swore that it has already given Ms. Gubbins its sole policies and procedure manual. Taking LINA at its attested statement the court believed that no further policies exist and thus also denied this request as moot. Finally, Ms. Gubbins requested the templates that LINA uses to create its letters terminating long-term disability benefits and the form letter it uses affirming said terminations on appeal. This request was denied by the court, which decided that these templates necessarily apply to any benefit claim until they have been modified and thus are not part of the administrative record. The court was also unwilling to order LINA to produce these templates as proper documents for conflict discovery. Accordingly, Ms. Gubbins will receive some but not all of the documents she sought in her motion.

Life Insurance & AD&D Benefit Claims

Eleventh Circuit
Waters v. AIG Claims, Inc., No. 2:17-cv-133-RAH (WO), 2022 WL 2252748 (M.D. Ala. Jun. 22, 2022) (Judge R. Austin Huffaker, Jr.). Plaintiffs Lorrie and Keith Waters sued AIG Claims, Inc. and National Union Fire Insurance Company of Pittsburg, PA seeking life-insurance benefits from a policy that insured their son, Cody Waters, who died in a car accident in 2015. The Waters’ claim for benefits was denied due to the policy’s exclusion for intoxication-related deaths. Several motions were before the court. They included competing dispositive motions, competing motions to exclude the opposing party’s toxicologist expert’s opinions, and a spoliation motion filed by the Waters relating to defendants’ destruction of vitreous fluid samples collected during the autopsy. The Waters also filed a motion for summary judgment, and defendants filed a motion for judgment as a matter of law. The Waters’ main argument was that the cardiac blood sample taken from Cody at the time of the autopsy “could not reasonably be used to conclude that Cody was intoxicated at the time of the accident because of the possibility of postmortem fermentation and redistribution/diffusion.” As an initial matter, the court ignored the Daubert motions given that “Daubert standards are inapplicable to a court’s review of the administrative record in an ERISA case.” Rather, the court decided that the reports of the toxicologist experts in this case are part of the administrative record, and its job therefore on de novo review was to decide whether AIG’s decision was wrong. For this reason, the court denied the parties’ cross-objections to one another’s experts, but articulated that it would factor the parties’ criticisms into its analysis. As for the destruction of the vitreous fluid samples and associated paperwork, the court expressed its concerns with AIG’s position that the spoilation issue was “without consequence,” and expressed that AIG “is a sophisticated party, represented by counsel, and was thoroughly familiar with litigation and the need to preserve evidence.” Given that the destroyed evidence was “crucial to both parties” the court decided the appropriate remedy to AIG’s actions was a presumption that the vitreous samples would have revealed an alcohol content less than the results of the cardiac blood. However, the court proceeded under the assumption that not all of the alcohol in Cody’s system was caused by postmortem fermentation, and thus weighed in its de novo review whether the level of alcohol in Cody’s system was high enough to trigger the plan’s exclusion. In the end, the court relied heavily on the official investigation into the crash and the third-party accident investigator who determined that alcohol had contributed to the accident and resulting death. Accordingly, the court held that the invocation of the drug exclusion was not de novo wrong. Thus, despite defendants’ destruction of evidence, their motion for judgment as a matter of law was granted and plaintiffs’ summary judgment motion was denied.

Pleading Issues & Procedure

Fifth Circuit
Corsaro v. Columbia Hosp. at Med. City Dall. Subsidiary, No. 3:21-CV-01748-N, 2022 WL 2209944 (N.D. Tex. Jun. 21, 2022) (Judge David C. Godbey). Plaintiff David Corsaro had his short-term disability benefits, and by extension any future long-term disability benefits, terminated by defendants Prudential Insurance Company of America and Sedgwick Claims Management Services, Inc. after receiving benefits for only six weeks. Mr. Corsaro brought three causes of actions against defendants: a Section 502(a)(1)(B) claim to recover the remaining short-term disability benefits, a Section 502(a)(3) claim for equitable relief to recover the short-term disability benefits, and a Section 502(a)(3) equitable relief claim to recover the long-term disability benefits he did not qualify for because of the termination of the short-term disability benefits. Defendants moved to dismiss both of the Section 502(a)(3) claims, arguing they are impermissibility duplicative of the claim for benefits. The court agreed with defendant regarding the short-term disability benefits, stating that Section 502(a)(1)(B) provides an adequate remedy for those benefits. Accordingly, it granted this part of the motion to dismiss. However, the court diverged from defendants’ position when it came to the long-term disability benefits. In contrast to the short-term disability benefits, the court held that Mr. Corsaro was effectively attempting to use ERISA’s equitable relief provision to ensure “that he is not barred from applying for and receiving LTD benefits” based on his purported failure to exhaust his claim for LTD benefits when he was unable to do so because of the denial of STD benefits. This form of relief, the court expressed, was a proper mechanism to remedy the alleged injury. Thus, the court denied defendants’ motion to dismiss the Section 502(a)(3) claim for long-term disability benefits.

Ninth Circuit
Doe v. The Lincoln Nat’l Life Ins. Co., No. 2:22-cv-00491-RSM, 2022 WL 2237214 (W.D. Wash. Jun. 22, 2022) (Judge Ricardo S. Martinez). The court in this order granted the plaintiff’s unopposed motion to continue under a pseudonym to avoid disclosure of private and sensitive health information relating to her post-traumatic stress disorder from which she seeks disability benefits. Plaintiff wishes to keep the events which triggered her PTSD as well as her healthcare information and treatment information private, especially as she wishes not to harm her career and reputation as a physician. The court took no issue with this desired anonymity, nor did defendant Lincoln National Life Insurance Company, given the sensitive and personal nature of the information at issue in the case. Plaintiff’s interest in privacy, the court concluded, outweighed the public’s interest in knowing her identity. For these reasons, plaintiff will be able to proceed as Jane Doe in the case.

D.C. Circuit
Kifafi v. Hilton Hotels Retirement Plan, No. 21-7025, __ F. App’x __, 2022 WL 2280296 (D.C. Cir. Jun. 24, 2022) (Before Circuit Judges Wilkins, Katsas, and Walker). The events of this case began over 20 years ago when plaintiff/appellant Jamal Kifafi brought suit alleging that the Hilton Hotels Retirement Plan violated ERISA. That case ended in 2011, with the district court entering a permanent injunction to rectify the violations, and the court of appeals affirming the district court’s remedial orders in 2012. Then, in 2015, the district court found that the Hilton Plan was in compliance with its injunction and terminated its “jurisdiction.” However, in 2020, Mr. Kifafi returned to the district court stating that once again the Hilton Plan was in violation of ERISA and requested the court reopen the case and once again order the Hilton Plan to come into compliance, be held in civil contempt for violating the permanent injunction, and order it to provide an accounting of how it has implemented the injunction since the district court stopped its active supervision. The court concluded that its jurisdiction in the case had ended over five years ago, and dismissed. Mr. Kifafi appealed. The court of appeals reversed and remanded. The appeals court held that despite the district court’s use of the word jurisdiction when ending its active supervision of the permanent injunction, “jurisdiction” does not in this instance mean actual subject matter jurisdiction, rather it means the end of active oversight of the remedial order. The practical consideration that a court’s active supervision cannot last forever is not at odds with its ability to step in again should need arise and “the power of a federal court to protect and enforce its judgments is unquestioned.” Thus, the court of appeals concluded that the lower court erred in concluding it did not have the authority to enforce its permanent injunction when it clearly does have such authority. Denying the motion to enforce the injunction thus was an abuse of the district court’s discretion, and the appeals court therefore vacated the district court’s order and remanded for further proceedings.

Provider Claims

Ninth Circuit
Saloojas, Inc. v. Aetna Health of Cal., No. 22-cv-01696-JSC, 2022 WL 2267786 (N.D. Cal. Jun. 23, 2022) (Judge Jacqueline Scott Corley). Plaintiff is a healthcare provider which brought claims against Aetna Health of California for underpaying for COVID testing for patients. Aetna moved to dismiss all of the claims for benefits against it pursuant to Federal Rule Civil Procedure 12(b)(6), on the grounds that the CARES Act does not provide a private right of action to plaintiff. The court agreed that there is neither an express nor an implied right of action for COVID testing reimbursement claims. The court wrote “the text and structure of the CARES Act do not show congressional intent to create a private right of action for COVID-19 test providers like Plaintiff.” Accordingly, the court granted the motion, and dismissed the complaint, but did so without prejudice.

Remedies

Tenth Circuit
M.S. v. Premera Blue Cross, No. 2:19-cv-00199-RJS-CMR, 2022 WL 2208927 (D. Utah Jun. 21, 2022) (Judge Robert J. Shelby). Plaintiffs are the S. family, who sued Premera Blue Cross, the Microsoft Corporation, and its Welfare Plan for improperly denying coverage for residential mental health treatment for plaintiff C.J.S. In a previous order, the court granted in part the S. Family’s motion for summary judgment, holding that defendants had violated the Mental Health Parity and Addiction Equity Act by applying more stringent “nonquantitative treatment limitations to claims for residential mental health treatment than for medical treatment of the same classification-namely impatient hospice care.” Specifically, the court held that defendants use of the “InterQual Criteria” beyond the use of the plan language with regard to mental health care treatment was violative of the Parity Act. However, the court granted summary judgment in favor of defendants on the claim for benefits, holding that under the terms of the plan, regardless of the InterQual Criteria, coverage for C.J.S.’s treatment was not “medically necessary.” Before the court here was the Family’s supplemental briefing on the appropriate remedies for the Parity Act violation, as well as the Family’s motion for award of prejudgment interest, attorneys’ fees and costs. Plaintiffs argued that they were entitled to several forms of relief, including injunctive relief, declaratory relief, surcharge, disgorgement, and/or equitable restitution. Defendants argued that the S. family was not entitled to any remedy for the Parity Act violation, arguing: “(1) Plaintiffs have not demonstrated they face irreparable future harm absent an injunction, (2) reevaluation of C.J.S.’s treatment claims would be futile because his residential treatment was not medically necessary under the Plan terms, and (3) Plaintiffs’ quasi-contract claims (for surcharge, disgorgement, and restitution) are preempted by ERISA.” The court agreed with defendants and their arguments that plaintiffs were not entitled to any remedy for defendants' violation of the Mental Health Parity Act. According to the court, the record and facts of the case showed that plaintiffs suffered no harm and were not put in any worse position by defendants’ violative actions. Plaintiffs were therefore awarded no remedy. Nevertheless, the court did grant plaintiffs’ motion for $69,240 in attorneys’ fees and $400 in costs “considering Defendants’ non-opposition.”

Severance Benefit Claims

Second Circuit
Miranti v. Amalgamated Indus. Toy & Novelty Workers of Am. Local 223, No. 19-CV-7077(JS)(AYS), 2022 WL 2274711 (E.D.N.Y. Jun. 23, 2022) (Judge Joanna Seybert). In 2015, plaintiff Johnnie Miranti was indicted for participating in a kickback scheme related to his role as a trustee and fiduciary of an employee benefit plan. The grand jury in the case indicted Mr. Miranti on three counts; conspiracy to solicit kickbacks to influence the operation of an employee benefit plan, conspiracy to embezzle from an employee benefit plan, and conspiracy to commit theft in connection with a health welfare plan. On August 8, 2016, Mr. Miranti pled guilty and the next week was terminated from his employment as a union plan trustee. In the time between when he was indicted and when he pled guilty, Mr. Miranti attempted to change the language of three plans at issue in this case -- a severance plan, a lifetime medical benefits policy, and a non-qualified deferred compensation plan -- from allowing participants to qualify for benefits “upon termination of office of employment by reasons of death, disability, or resignation,” to include employees who were terminated “for any reason.” As Mr. Miranti put it, the Board “didn’t want to hurt me, with everything I was going through, as far as the indictment,” and they wanted “to make sure I got my severance benefit.” Regardless of whatever internal assurances Mr. Miranti believed he had received, when he attempted to apply for these benefits following his termination, his applications were denied. The denials prompted this suit, in which Mr. Miranti brought claims under ERISA and state law seeking benefits. The parties filed cross-motions for summary judgment. Defendants’ arguments were twofold. First, they argued that the state law claims for breach of contract, promissory estoppel, and unjust enrichment were preempted by ERISA. The court agreed, finding that Mr. Miranti’s state law claims fall within the terms of an ERISA plan, could have been brought under ERISA, and do not raise any independent legal obligations. Defendants also argued that Mr. Miranti’s claim for benefits under ERISA should fail because the denial was not an abuse of discretion. The court agreed with this too. The advisory committee’s denial based both on the plan language providing that only retirees are eligible for benefits under the plans, as well as 29. U.S.C. § 504, which bars members of a labor organization from receiving salaries when they have been barred from an office or position, were found by the court to both be legitimate bases for denial and supported by substantial evidence. Accordingly, the court granted summary judgment in favor of defendants, and denied Mr. Miranti’s summary judgment motion.

Note from the Your ERISA Watch editors:

Your ERISA Watch is written and edited by Elizabeth Hopkins and Peter Sessions, with the assistance of Emily Hopkins. Each week our goal is to provide you with the benefit of the expertise of knowledgeable ERISA litigators who are on the frontline of benefit claim and fiduciary breach litigation. Although our firm represents plaintiffs, we strive to provide objective and balanced summaries, so they are informative for the widest possible audience.

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

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