BlueCross BlueShield of Tennessee v. Nicolopoulos, No. 24-5307, __ F. 4th __, 2025 WL 1338242 (6th Cir. May 8, 2025) (Before Circuit Judges Kethledge, Larsen, and Mathis)

Fertility rates have been declining in the United States for decades and have reached historic lows in the past several years. It is no wonder that state insurance regimes have begun to address fertility treatment, although, as with most state insurance matters, far from uniformly. This case presents the intersection of two such state regimes with federal preemption under ERISA.

BlueCross BlueShield of Tennessee is both the insurer and claims fiduciary for an ERISA-governed group health plan sponsored by PhyNet Dermatology, a Tennessee-based company with employers in many states. In 2020 and 2021, B.C., a PhyNet employee and plan participant, submitted claims for fertility treatment, which BlueCross denied because the plan expressly excluded such treatment.

This exclusion was allowed under Tennessee law, but not under New Hampshire law, which mandates insurance coverage for fertility treatment. Because of this mandate, the Insurance Commissioner for New Hampshire reached out to BlueCross to inform it that, as the issuer of a group policy that covers employees in New Hampshire, it must follow New Hampshire mandates with respect to such employees. BlueCross nevertheless persisted in its refusal to cover B.C.’s fertility treatments. 

In response, the Commissioner issued a show cause and hearing order. This order also requested that BlueCross be ordered to pay a penalty of $52,500 and cease and desist from offering health insurance to people in New Hampshire. BlueCross then filed suit in federal court in Tennessee. BlueCross argued that ERISA’s broad preemption provision, Section 514, barred the New Hampshire proceeding.

Eventually, after the parties agreed to stay the state administrative proceedings, the district court denied BlueCross’ motion for summary judgment and granted summary judgment in favor of the Commissioner, concluding that its state-law proceeding was saved from ERISA preemption under the insurance savings clause in Section 514(b)(2)(A).

On appeal, the Sixth Circuit viewed the “crux” of the matter to be “whether the Commissioner brought the Show-Cause Order against BlueCross in BlueCross’s capacity as an ERISA fiduciary or as an insurer.” The Court agreed with the Commissioner that it was the latter.

As an initial matter, however, the court disagreed with the Commissioner that BlueCross waived the argument. The court noted that, to the contrary, Blue Cross had “consistently framed the Show-Cause Order as one targeting BlueCross for actions it took as a fiduciary.”

Turning to the merits, the court pointed out that the “capacity question matters because ERISA’s saving clause permits states to enforce their insurance laws against insurers.” The Court relied on the provisions of ERISA itself to help it “discern the nature of the New Hampshire proceeding against BlueCross,” noting that, because the Commissioner was not a participant or beneficiary of the Plan, “he cannot challenge BlueCross’s fiduciary-capacity determination of B.C.’s benefits.” But again, pointing to ERISA’s insurance savings clause, the court noted that the Commissioner was permitted to “enforce New Hampshire’s insurance laws against insurers.” And the show cause order itself underscored that the Commissioner was doing so, expressly “directing BlueCross to cease and desist from providing health insurance in New Hampshire,” and assessing a penalty for violation of New Hampshire insurance law.

The court conceded that the administrative proceeding was initiated as a reaction to BlueCross’s denial of B.C.’s claims. But the court was persuaded that the claims denial was not the basis for the state administrative proceeding, but instead merely provided evidence to the Insurance Commissioner that BlueCross was violating New Hampshire insurance law.

The court found confirmation of its conclusion that the proceeding was directed at BlueCross as an insurer in Supreme Court case law, which “establishes that fiduciary duties created by the terms of an ERISA-governed employee benefit plan are not an escape hatch from valid state insurance regulations.”

Nor was the court persuaded by BlueCross’s contention that the real question in the case was which state law was saved from preemption: Tennessee law, which did not require fertility coverage, or New Hampshire law, which mandated such coverage. “That framing,” the court insisted, “relies on adopting BlueCross’s factual position – that the Commissioner seeks to regulate BlueCross as a fiduciary,” which the court had already rejected.

The court next rejected BlueCross’ argument that it should prevail because ERISA Section 502(a)(3) provides a viable remedy by allowing plan fiduciaries to seek declaratory and injunctive relief. The court found this true but irrelevant, concluding that Section 502(a)(3) does not allow relief with respect to “state enforcement actions brought against insurers.”

Nor was the court persuaded by the argument that allowing actions such as this will undermine ERISA’s goal of minimizing the administrative and financial burden of potentially having to comply with the laws of 50 states. The court was satisfied that this potential for disuniformity was a natural consequence of the insurance savings clause itself.   

Finally, the court rejected BlueCross’ belated attempt to raise due process concerns, noting that it admittedly had not done so in the district court. The court of appeals thus took “no position on whether [BlueCross] has actually engaged in the practice of insurance in New Hampshire or whether [BlueCross’s] contacts with New Hampshire are enough to subject it to New Hampshire’s jurisdiction,” pointing out that BlueCross could presumably raise these issues as part of the state administrative proceeding.   

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

Breach of Fiduciary Duty

Sixth Circuit

England v. DENSO International Am., Inc., No. 24-1360, __ F. 4th __, 2025 WL 1300923 (6th Cir. May 6, 2025) (Before Circuit Judges McKeague, Griffin, and Larsen). In this putative class action current and former employees of the automotive part maker DENSO International America, Inc. who participate in the DENSO Retirement Savings Plan allege that the plan’s fiduciaries breached their duties of prudence and monitoring under ERISA by failing to control recordkeeping and administrative costs. Crucially, the plaintiff-appellants contend that the plan paid its recordkeeper, Empower, approximately $71 per participant for its services, more than double what they assert the costs should have been for the standard and fungible bundled recordkeeping and administrative services they received. Relying on the Sixth Circuit’s pleading standards in Smith v. CommonSpirit Health, 37 F.4th 1160 (6th Cir. 2022), the district court dismissed plaintiffs’ complaint for failing to set forth “context specific” facts about the type and quality of services provided to render their allegations of overpayment for recordkeeping services plausible under ERISA. (Your ERISA Watch covered that decision in our August 9, 2023 edition). Plaintiffs appealed. In this published decision the Sixth Circuit not only affirmed the district court’s dismissal and upheld the pleading standards it announced in Smith, but expanded upon them in some subtle but significant ways. To begin, the Sixth Circuit doubled down on its stance that assessing the plausibility of allegations like those alleged here “requires identifying the alleged problematic financial metric and then comparing it to a ‘meaningful benchmark.’” Measured against that standard, the court of appeals was adamant that plaintiffs failed to allege the fees were excessive relative to the services rendered. The appeals court noted that the complaint not only lacks specifics about the type or quality of the administrative and recordkeeping services received relative to the comparator plans to which paid less, but indeed acknowledges that there are variations in the level and quality in recordkeeping and administrative services provided to mega plans like DENSO’s. The Sixth Circuit was unwilling to accept plaintiffs’ allegations that these differences are immaterial and that mega plans have the obligation to negotiate favorable rates based on their economies of scale. The appeals court summed up its holding by stating, “there is a distinction between generally alleging that bundled recordkeeping and administrative services provided to mega plans all offer essentially the same thing and alleging that the services offered to and utilized by the Plan here did not justify the cost difference in fees; here, plaintiffs alleged the former, and under Smith, they needed to sufficiently allege the latter.” Plaintiffs attempted to distinguish their action from Smith by asserting that the Smith complaint was dismissed because those plaintiffs compared their plan to averages from industry publications while they compared the DENSO plan to other similar mega 401(k) plans. But the Sixth Circuit was not receptive to this attempted distinction. If there was any ambiguity before, the court of appeals made it explicitly clear here that Smith should not be interpreted to mean that anything other than industry publications is enough. Doing so, the court said, “would limit Smith’s rule to its factual application. That we will not do.” Recognizing that its ruling was in tension with other Circuit Courts and recent decisions out of the Supreme Court, the Sixth Circuit tiptoed around the Supreme Court’s and the Seventh Circuit’s holdings in Hughes v. Northwestern Univ., and attempted to distinguish the Hughes case by stressing that that lawsuit involved two recordkeepers, not one. “And even were we to accept Hughes’s premise as consistent with our caselaw, lacking here is a specific allegation that Empower’s competitors could have stood in its shoes for less money.” Rather than focus too heavily on Hughes, or on an unpublished decision out of the Third Circuit, Mator v. Wesco Distrib., Inc., the Sixth Circuit instead stated that its pleading standard for these types of excessive fee allegations is in “good company” with “many of our sister circuits,” including the Second Circuit, the Eighth Circuit, and the Tenth Circuit. For these reasons, the Sixth Circuit remained resolute in its pleading standards and affirmed the district court’s dismissal of the case.

Ninth Circuit

Madrigal v. Kaiser Foundation Health Plan, Inc., No. 2:24-cv-05191-MRA-JC, 2025 WL 1299002 (C.D. Cal. May 2, 2025) (Judge Monica Ramirez Almadani). Plaintiff Stacey M. Madrigal filed this putative class action against the Kaiser Foundation Health Plan, Inc. (“KFHP”), Southern California Permanente Medical Group, the Kaiser Permanente Administrative Committee, and ten Doe defendants alleging they violated their fiduciary duties and ERISA’s anti-inurement provision, and engaged in prohibited transactions under Section 1106, by utilizing forfeited nonvested employer contributions to reduce their own costs towards future contributions rather than to defray the 401(k) plan’s expenses. Defendants moved to dismiss the complaint. The court granted the motion to dismiss, with leave to amend, in this order. As an initial matter, the court granted plaintiffs’ request that it take judicial notice of the plan’s Form 5500s, as they are a matter of public record and their accuracy cannot be questioned. The court then turned to defendants’ arguments for dismissal. At the outset, the court agreed with defendants that KFHP and Southern California Permanente Medical Group were not carrying out any fiduciary functions with respect to the forfeitures – the basis of Ms. Madrigal’s claims. The court held, “the language of the Plan does not imbue KFHP with the power to allocate the Plan’s assets. This power to allocate assets, which is central to the basis of Plaintiff’s claims, appears to be restricted to the Administrative Committee (as is logical, given that Plaintiff admits the Defendants created the Administrative Committee for exactly this purpose). Although the Plan makes clear that KFHP had some control over the administration of the Plan, KFHP’s status as an administrator is not enough to support Plaintiff’s claims.” Having found that the complaint fails to allege these two defendants acted as a fiduciary of the plan with respect to the conduct at issue, the court dismissed the fiduciary breach claims asserted against them. However, there was no dispute that the Administrative Committee was a fiduciary, managing the assets of the plan. Thus, the court considered whether the complaint stated a claim that the Committee breached its duties of prudence and loyalty by spending the forfeitures in a way that benefited the employer. It found that the complaint failed to do so. Not only did the court view Ms. Madrigal’s central thesis as “a significant departure from previously well-settled law,” a reference to the governing U.S. Treasury regulations, but the court also emphasized that the Committee’s actions and defendants’ use of the forfeitures was in keeping with the language of the plan. “Here, as Defendants point out, there are no allegations in the FAC that Plaintiff failed to receive any benefits that she was contractually owed.” Accordingly, the court granted the motion to dismiss the breach of fiduciary duty claims asserted against the Administrative Committee. Moreover, absent an underlying fiduciary breach claim, the court agreed with defendants that the derivative failure to monitor claim must also be dismissed. Next, the court dismissed the anti-inurement claim, determining that it was not viable because the complaint fails to allege that any of the forfeited assets at issue ever left the plan. “Plaintiff’s failure to allege that any assets left the Plan is sufficient to foreclose her claim.” Ms. Madrigal’s prohibited transaction claim did not hold up any better. The court concluded that the “the reallocation of assets within the Plan is not enough to trigger § 1106.” Because the court found that Ms. Madrigal failed to identify a transaction that falls under the scope of the prohibited transaction rules, the court agreed with defendants that she failed to state a claim for relief. For these reasons, the court granted defendants’ motion to dismiss the complaint in its entirety, leaving only the issue of leave to amend. In the end, the court decided that granting leave to amend would not be futile and therefore permitted Ms. Madrigal leave to amend her pleading to correct the deficiencies identified herein.

Class Actions

Ninth Circuit

Coppel v. SeaWorld Parks & Entertainment, Inc., No. 21-cv-1430-RSH-DDL, 2025 WL 1346873 (S.D. Cal. May 8, 2025) (Judge Robert S. Huie). Five former employees of SeaWorld Parks and Entertainment, Inc. brought this action under ERISA on behalf of SeaWorld’s 401(k) retirement savings plan, individually and as representatives of the participants and beneficiaries of the plan, against the plan’s fiduciaries, alleging they breached their duties by failing to control plan costs, by selecting and maintain underperforming investments, and by incurring losses when they switched the plan’s recordkeeper from Mass Mutual to Prudential. On November 1, 2023, plaintiffs moved for class certification. The court granted their motion and certified a class of all participants and beneficiaries of the plan through the class period, as well as three subclasses: (1) the Mass Mutual subclass; (2) the Prudential subclass; and (3) the injunctive relief subclass of current plan participants. After discovery concluded, the parties engaged in mediation with “a mediator experienced in ERISA class actions lawsuits involving 401(k) plans.” On September 6, 2024, the parties notified the court they had reached a settlement agreement wherein the SeaWorld defendants agreed to pay a gross settlement amount of $1,250,000. “The following will be deducted from the gross settlement amount: (1) attorneys’ fees, not to exceed 35% of the gross settlement amount, or $437,500; (2) Class Counsel costs, not to exceed $273,000; (3) a Class Representative Service Award of up to $7,500 to Plaintiffs; (4) Settlement Administrative Expenses, not to exceed $17,500; and (5) recordkeeper costs.” After these deductions, the net settlement amount will be $483,000, from which each class member will be paid a pro rata share calculated based on the sum of each individual’s account balances. Before the court here was plaintiffs’ unopposed motion for preliminary approval of the settlement. The court granted plaintiffs’ motion. To make its preliminary fairness determination the court assessed the adequacy of representation, whether the negotiation took place at arm’s length, the adequacy of relief compared with the maximum potential recovery, the effectiveness of the proposed method of distribution, and the proposed means and content of the class notice. To begin, the court adopted its conclusions from when it certified the classes to conclude that the adequacy of representation requirement factor is satisfied. Next, the court agreed with plaintiffs that the settlement was the result of an informed, arm’s length negotiation. In evaluating the adequacy of the settlement, the court compared the $1.25 million amount to the potential recovery of approximately $10.8 million. It concluded that 11.5% of the maximum recovery falls within the range that other courts have accepted in similar ERISA class action settlements and appropriately discounts the risks and costs of continued litigation. The court also concluded that the plan of allocation provides for equitable treatment of all class members. Finally, the court determined that ILYM Group Inc. is reasonably suited to administer plaintiffs’ proposed class notice plan, the content of the notice is satisfactory, and that the plan of sending class notice is reasonable, sufficient, and adequate. The court did briefly note its skepticism about the proposed 35% of the common fund allocated for the payment of attorneys’ fees, and the $7,500 class representative service awards to each of the five class representatives, but stated that it would not closely scrutinize them at this time as preliminary approval of the settlement does not hinge on the court’s approval of either of these award amounts. Accordingly, the court granted plaintiffs’ motion for preliminary approval of class action settlement, set in motion the notice plan, and set the date of the upcoming fairness hearing.

Disability Benefit Claims

Ninth Circuit

LaLonde v. Metro. Life Ins. Co., No. 2:24-cv-01781-DSF-MBK, 2025 WL 1324139 (C.D. Cal. May 7, 2025) (Judge Dale S. Fischer). Plaintiff Rick LaLonde filed this action against Metropolitan Life Insurance Company (“MetLife”) seeking a judicial order reinstating his terminated long-term disability benefits. Before he was injured in a hit-and-run accident in 2017, Mr. LaLonde was an employee of Providence Health & Services, managing a sterile processing department for medical supplies and equipment. On February 22, 2017, Mr. LaLonde’s life changed drastically after he was badly injured in the accident. His spine was damaged, requiring surgery, and he was left with chronic pain and long-term psychiatric and neurological issues. In a letter dated August 31, 2017, MetLife informed Mr. LaLonde that it was approving his claim for benefits under Providence’s group disability policy. Then, in April of 2019, MetLife learned that Mr. LaLonde had been arrested and charged with attempted murder. He was later convicted and incarcerated. After this, MetLife terminated Mr. LaLonde’s benefits. Its medical reviewers determined that Mr. LaLonde did not have any functional limitations from a physical or psychological perspective and therefore did not qualify for continued benefits. After he was released from jail, Mr. LaLonde appealed MetLife’s decision. He was ultimately unsuccessful with his administrative appeal, which led him to filing the present action. In this order the court made its findings of fact and conclusions of law, conducting a de novo review of the record. Ultimately, the court determined that a preponderance of the evidence showed that Mr. LaLonde’s medical symptoms related to his spinal conditions and chronic pain rendered him disabled under the terms of the policy. The court noted that during his incarceration, the record reflected that Mr. LaLonde continued to suffer from pain and continued mobility deficits, including multiple falls and the use of a walker and wheelchair. Moreover, the court stressed that Mr. LaLonde’s treating providers have consistently reported that he faces functional limitations from his physical conditions which render him disabled. “Against the background of his lengthy treatment history, the Court finds it appropriate to give greater weight to the opinions of LaLonde’s treating physicians, each of whom had a ‘greater opportunity to know and observe’ LaLonde than the MetLife-retained physicians who based their opinions solely on a paper review of LaLonde’s file.” Furthermore, the court expressed its view that MetLife’s consulting doctors failed to meaningfully engage with the totality of Mr. LaLonde’s medical records and selectively focused on certain bits and pieces to suit a certain framework. The court added that it also found it problematic that MetLife failed to discuss why it reached a different conclusion from the Social Security Administration. The court said MetLife’s “decision to completely disregard the SSA’s contrary disability determination is particularly problematic here, where the basis for MetLife’s termination of benefits was its determination that LaLonde did not have any functional limitations from a physical or psychological perspective. Even without the SSDI claim file, it is patently obvious that MetLife’s determination that LaLonde has no functional limitations whatsoever cannot be reconciled with the SSA’s determination that LaLonde satisfies the stringent federal standard for SSDI claims.” For these reasons, the court found that Mr. LaLonde met his policy’s definition of disabled on the basis of his physical conditions, and therefore did not consider the parties’ arguments related to his psychiatric conditions. The court thus found in favor of Mr. LaLonde, and directed him to submit a proposed judgment and meet and confer with MetLife to discuss an award of attorneys’ fees and costs.

Discovery

Sixth Circuit

The W. & S. Life Ins. Co. v. Sagasser, No. 1:23-cv-742, 2025 WL 1311270 (S.D. Ohio May 6, 2025) (Magistrate Judge Stephanie K. Bowman). The Western and Southern Life Insurance Company, Western & Southern Agency Group Long Term Incentive and Retention Plan, and The Western and Southern Life Insurance Company Executive Committee imitated this lawsuit under both ERISA and federal common law to recoup nearly $300,000 in forfeited benefits and taxes paid to or on behalf of defendant Ronald Sagasser, a former employee of Western and Southern who was terminated for violating the company’s policies. After the lawsuit was filed, two intervenor plaintiffs filed an intervenor complaint against both Mr. Sagasser and Western and Southern alleging that while serving as their Western and Southern Financial Representative, Mr. Sagasser misappropriated $185,000 of their funds. The intervenor plaintiffs seek recovery for conversion, embezzlement, misappropriation, theft, fraud, breach of a promissory note, and intentional infliction of emotional distress. All discovery-related motions have been assigned to Magistrate Judge Stephanie K. Bowman. Both the Western and Southern plaintiffs and the intervening plaintiffs have repeatedly sought discovery from Mr. Sagasser to no avail. “Despite repeated promises by defense counsel to provide responses, none have been provided.” Mr. Sagasser’s failure to participate in discovery even resulted in the cancellation of his previously scheduled deposition. Furthermore, his counsel did not appear when the presiding judge held a discovery hearing on February 26, 2025. As a result, the court permitted the parties to file formal motions to compel. The plaintiffs and the intervening plaintiffs promptly did so. Mr. Sagasser failed to respond to these motions. Only when the undersigned Magistrate held a telephonic discovery conference on May 6 did counsel for Mr. Sagasser finally make an appearance. Given this history, the Magistrate not only granted both plaintiffs’ and intervenor plaintiffs’ motions to compel Mr. Sagasser to provide responses to all outstanding written discovery requests, but also agreed with them that sanctions against Mr. Sagasser were appropriate given his “wholly unjustified” failure to provide the requested discovery in a timely manner. Judge Bowman additionally warned Mr. Sagasser and his counsel that it would not hesitate to impose further sanctions should his behavior continue. As a result, Mr. Sagasser was ordered to produce all outstanding discovery, and plaintiffs and intervening plaintiffs will be paid attorneys’ fees and costs for their time preparing for and appearing at the two telephonic conferences and for their time spent preparing and filing the motions to compel.

Exhaustion of Administrative Remedies

Seventh Circuit

Brickler v. Building Trades United Pension Trust, No. 24-CV-491-SCD, 2025 WL 1358554 (E.D. Wis. May 9, 2025) (Judge Stephen C. Dries). Plaintiff Robbin Brickler sued the Building Trades United Pension Trust and its eligibility committee under ERISA alleging they wrongfully suspended his early retirement benefits under the pension plan. The gravamen of Mr. Brickler’s action is that a pension fund trustee advised him, during a telephone call he made to inquire about benefits, that working as a dump truck driver for his then-current employer would not violate union rules and that he would be eligible for early retirement benefits under the plan. Mr. Brickler added that the plan’s website directed all inquiries to this phone number. At first, it seemed the assurances from the phone call were well-founded. The pension fund’s trustees approved Mr. Brickler’s application for early retirement benefits, and paid him for approximately two years. However, defendants ultimately terminated his benefits after they determined that his work as a dump truck driver constituted disqualifying “Plan Related Employment” such that he was subject to the plan’s benefit suspension rules. Mr. Brickler appealed to the eligibility committee, which upheld its previous determination and advised Mr. Brickler that he could appeal its decision to the executive committee, and after that, to bring a civil action. But Mr. Brickler did not file a second-level appeal to the executive committee, and instead went straight to federal court. He filed this action alleging that defendants improperly suspended his pension payments in violation of 29 C.F.R. § 2530.203.3, that they made an arbitrary and capricious decision to suspend his benefits, they breached their fiduciary duties, as a result of their oral assurances they should be estopped from suspending the benefits, and they breached their duty of fair representation. Defendants filed a motion for summary judgment under Federal Rule of Civil Procedure 56. They argued that Mr. Brickler failed to exhaust his administrative remedies, and in any event, his five claims each fail as a matter of law. Because the court agreed with defendants on the issue of administrative exhaustion it granted their motion for judgment. In fact, Mr. Brickler did not contest that he failed to file a second-level appeal, as required by the plan. Nor did he argue that the court should excuse his failure to exhaust for any reason. The court thus found that there was no dispute that Mr. Brickler failed to exhaust his administrative remedies prior to filing suit, and he had not argued that he was excused from doing so. “Accordingly, I find that Brickler’s failure to exhaust his administrative remedies bars this lawsuit in its entirety.” Despite this holding, the court continued and discussed the merits of each of Mr. Brickler’s claims. First, the court held that under the Seventh Circuit’s controlling precedent Mr. Brickler could not sustain his claim for improper suspension of his pension payments pursuant to 29 C.F.R. § 2530.203.3, because the Circuit has read the regulation to exclude claimants who have not attained normal retirement age from its protection. Perhaps the most interesting part of the decision was its discussion of the merits of Mr. Brickler’s claim that defendants made an arbitrary and capricious decision to suspend his early retirement benefits. Under the language of the plan post-retirement employment is disqualifying if three conditions are met: (1) the participants must work in the same industry involving the same business activities as employees covered by the plan; (2) the participant must work in the same trade or craft as is covered under a collective bargaining agreement requiring the employer to contribute to the pension fund; and (3) the work must be performed in Wisconsin. Although the court held that the work Mr. Brickler was performing was unquestionably done in Wisconsin in the same industry as employees who could be qualified by the plan, it held that defendants failed to meet their evidentiary burden to prove the latter portions of the first and second elements, namely that “employees covered by the Plan were employed when benefits commenced’ and that the trade or craft was ‘covered under a collective bargaining agreement requiring the employer to contribute to the Pension Fund.’” The court said the fact that the plan includes such industries does not mean that it had any active collective bargaining agreement within that trade or craft, and that it would not make this “leap in logic.” Therefore, had Mr. Brickler exhausted his administrative remedies, the court was clear that it would deny the defendants’ motion for summary judgment on this claim. However, the same was not true for the remainder of Mr. Brickler’s causes of action. The court agreed with defendants that (1) the fiduciary breach claim was duplicative of the claim for recovery of benefits; (2) the estoppel claim was not viable because the oral misrepresentation could not be grounds for such a claim given the fact the plan language was unambiguous; and (3) federal labor law does not impose a duty of fair representation on defendants because they are not employee representatives. For these reasons, the court concluded that if Mr. Brickler had successfully countered defendants’ exhaustion argument, four of his five claims would fail on the merits. But because he did not mount an exhaustion defense, this was ultimately a moot point. Summary judgment was therefore entered in favor of defendants and the action was dismissed with prejudice.

Plan Status

Sixth Circuit

Shakespeare v. MetLife Legal Plans, Inc., No. 2:25-cv-02250-TLP-atc, 2025 WL 1341897 (W.D. Tenn. Apr. 30, 2025) (Magistrate Judge Annie T. Christoff). Pro se plaintiff Tan Yvette Shakespeare sued MetLife Legal Plans, Inc. and Prime Therapeutics LLC asserting claims of breach of contract, bad faith, negligence, and discrimination in connection with the legal representation she received under MetLife’s prepaid legal services plan throughout her divorce proceedings. Defendants moved to dismiss. They argued that Ms. Shakespeare’s state law claims are preempted by ERISA and that she failed to state a claim upon which relief may be granted for all of her causes of action. Magistrate Judge Annie T. Christoff issued this report and recommendation recommending the court deny the motion to dismiss as to ERISA preemption and failure to state claims of breach of contract, bad faith, and negligence. As for the discrimination claim, the Magistrate found the allegations as currently pled to be entirely conclusory and lacking in factual support, and therefore subject to dismissal. However, rather than recommend dismissal, the court permitted Ms. Shakespeare an opportunity to amend her complaint to remedy these deficiencies, and held the discrimination claims in abeyance pending further action of this court. Regarding ERISA preemption, the court agreed with Ms. Shakespeare that the current record does not support the conclusion that the prepaid legal services plan was endorsed by her employer. Absent clear evidence showing that the legal services plan is governed by ERISA, the court found that ruling on the applicability of the safe-harbor exemption is premature and more appropriately presented for the summary judgment stage. And because the court cannot determine at this juncture whether the plan is governed by ERISA, it also could not comment on whether the state law claims “relate to” the plan for the purpose of judging ERISA preemption.

Pleading Issues & Procedure

Ninth Circuit

Pessano v. Blue Cross of Cal., No. 1:24-cv-01189-JLT-EPG, 2025 WL 1342690 (E.D. Cal. May 8, 2025) (Judge Jennifer L. Thurston). Plaintiff Emily Pessano brought this ERISA action on behalf of her minor daughter seeking to compel Blue Cross of California to pay the costs for air ambulance transportation services. Before the court here was Ms. Pessano’s motion to file under seal, or redact, various documents that contain communications between her and her counsel regarding the case and information that reveals, at least potentially, the settlement amount. In this straightforward decision the court granted Ms. Pessano’s motion, agreeing that the communications at issue fall within the attorney-client privilege and should therefore be filed under seal. As for the settlement amount information, the court agreed that it too should be redacted or sealed and permitted the same for any information in the subject filings.

Eleventh Circuit

McKinney v. Principal Financial Services Inc., No. 5:23-cv-01578-HNJ, 2025 WL 1347480 (N.D. Ala. May 8, 2025) (Magistrate Judge Herman N. Johnson, Jr.). Dr. Julian Davidson was a participant in an ERISA-governed 401(k) plan associated with his employment by Davidson Technologies, Inc. When Dr. Davidson died, the funds in his retirement account passed to his wife, Dorothy Carolyn Smith Davidson, and were deposited in a beneficiary account under her name. Mrs. Davidson was also a participant in the 401(k) plan with her own separate participant retirement account. Mrs. Davidson designated her three nieces as the beneficiaries of her own participant account. However, she did not designate a beneficiary for the account derived from her husband, and therefore, under the terms of the plan, Mrs. Davidson’s Estate was the default beneficiary. Mrs. Davidson died on May 11, 2021. Following her death Davidson Tech and Principal Life Insurance Company paid the funds from both the participant account and the beneficiary account to the three nieces. In this action plaintiff Rebekah Keith McKinney, in her capacity as personal representation of Mrs. Davidson’s Estate, alleges that under the terms of the plan the funds in the beneficiary account were improperly paid to the nieces and should have been paid to the Estate. She contests the distribution of those funds to the nieces and seeks payment of funds from Davidson Technologies and Principal Life. Ms. McKinney asserts claims for benefits under Section 502(a)(1)(B) and for breach of fiduciary duty under Section 502(a)(3). More than five months after defendant Davidson Tech answered Ms. McKinney’s complaint, it filed a motion for leave to file a third-party complaint. The proposed third-party complaint asserts a claim for restitution and unjust enrichment pursuant to Section 502(a)(3) against the nieces. Davidson Tech maintains that the nieces “cannot fairly and equitably retain those funds.” It requests the court impose an equitable lien and/or constructive trust on the funds the nieces received. Principal Life supports Davidson Tech’s motion, but Ms. McKinney opposes it. In this decision the court granted the motion and allowed the filing of the third-party complaint. The court held that the third-party complaint against the nieces both satisfies the requirements of Federal Rule of Civil Procedure 14 and the relevant discretionary factors. In particular, the court agreed with Davidson Tech that the nieces “may bear liability for all or part of Plaintiff’s claims against” Davidson Tech because it may have wrongfully distributed the beneficiary account funds to them. The court thus agreed with Davidson Tech that if Ms. McKinney’s claims are viable, the nieces’ liability to the company will “derive from and be conditional upon the outcome of Plaintiff’s claims against [Davidson Tech].” The court was also confident that at least Davidson Tech’s request for an equitable lien or constructive trust amounted to appropriate forms of equitable relief under Section 502(a)(3), even if its request for a “return of funds” is not. The court further stressed that allowing the proposed third-party complaint will promote judicial efficiency as it will allow the court to resolve all the issues at once. Ms. McKinney argued that she would suffer prejudice through the addition of the third-party complaint and the third-party defendants because this would further delay the proceedings, but the court did not agree. Instead, it viewed Davidson Tech’s proposed third-party complaint as aligning rather than conflicting with the interests of Ms. McKinney’s complaint. For these reasons, the court granted the motion and Davidson Tech was permitted to file its third-party complaint against the nieces.

Remedies

Tenth Circuit

Watson v. EMC Corp., No. 1:19-cv-02667-RMR-STV, 2025 WL 1333806 (D. Colo. May 7, 2025) (Judge Regina M. Rodriguez). Plaintiff Marie Watson sued her late husband’s former employer, EMC Corporation, after she was denied $633,000 in life insurance benefits under his ERISA-governed welfare benefit plan. Ms. Watson asserted a breach of fiduciary duty claim against EMC Corp., seeking equitable relief under ERISA Section 502(a)(3)(B). She maintained that EMC breached its fiduciary obligations when it responded to Mr. Watson’s written inquiry about the status of his employment benefits when he was leaving his position under a voluntary separation program. EMC replied that if he continued to pay for his benefits they would remain active during the transition, but neglected to mention that his life insurance coverage under the group policy had already ended and that he needed to convert his coverage to an individual policy, and to do so soon. If EMC had informed Mr. Watson that he needed to convert his life insurance coverage and given him instructions on how to do so, Ms. Watson argued that he would have, and that she would have then been eligible for benefits following her husband’s death. Because EMC did not, the family lost out on those benefits. On summary judgment, the court ruled that even assuming EMC had breached its fiduciary duty to Mr. Watson under ERISA, Ms. Watson was not entitled to equitable relief. Ms. Watson appealed that decision to the Tenth Circuit. The Tenth Circuit reversed the district court’s ruling. It held that the court erred by treating Ms. Watson’s Section 502(a)(3) claim for fiduciary breach as if it were a claim for recovery of plan benefits under Section 502(a)(1)(B). The court of appeals remanded to the district court to decide two key issues: (1) whether, under the circumstances, EMC had breached its fiduciary duty to Mr. Watson in response to his benefit inquiry; and (2) whether Ms. Watson is entitled to equitable relief in the form of surcharge pursuant to 29 U.S.C. § 1132(a)(3). (Your ERISA Watch featured the Tenth Circuit’s decision as our case of the week in our February 14, 2024 edition.) In this decision the court resolved those two issues. To begin, the court held that EMC had breached its fiduciary duty to provide complete and accurate information in response to Mr. Watson’s benefit inquiry. “As an ERISA fiduciary, EMC had an obligation to respond to his inquiry with complete and accurate information regarding all benefits, including the information that his life insurance policy would need to be converted in order for him to maintain those benefits.” The court noted that other courts have found a breach of fiduciary duty under similar circumstances, and although Mr. Watson did not specifically inquire about his life insurance benefits, EMC, as the administrator of the plan, nevertheless was aware of his status and the fact that he needed to convert his life insurance benefits or lose coverage. While the inquiry was made after the group life insurance policy coverage had ended, it was still within the eligibility window for converting the coverage to an individual life insurance policy. As a result, the court concluded that a prudent fiduciary would have responded to Mr. Watson’s inquiry with information about how to continue both his health insurance and life insurance coverage. Instead, EMC directed him to simply continue paying his bills. Although Mr. Watson was in possession of documents that explained the end date of his life insurance coverage and the need to convert to an individual policy, the court found that this fact could not relieve EMC of its fiduciary obligation to respond accurately and fully to Mr. Watson’s written inquiry. For these reasons, the court concluded that EMC committed a fiduciary breach. Having so found, the court then considered the appropriate remedy. Relying on the Supreme Court’s decision in Cigna v. Amara, the court stated that Ms. Watson was entitled to surcharge because she demonstrated actual harm from EMC’s breach, namely the failure to convert the life insurance coverage which resulted in Ms. Watson losing out on benefits. The court then found that surcharge in the amount of the lost benefits – $633,000 – was appropriate equitable relief under Amara. The court did not find that interest was appropriate equitable relief, although it agreed with Ms. Watson that the surcharge amount should be reduced by the amount of any premiums that would have been required in order to maintain the coverage in order to avoid a windfall. Accordingly, Ms. Watson’s request for equitable relief in the form of surcharge was granted in part, and Ms. Watson was ordered to submit a proposed judgment and a separate motion for attorneys’ fees and costs. (On appeal and on remand Ms. Watson was represented by Kantor & Kantor attorneys Glenn R. Kantor and Your ERISA Watch co-editor Peter S. Sessions.)

Board of Trustees of Bakery Drivers Loc. 550 & Indus. Pension Fund v. Pension Benefit Guar. Corp., No. 23-7868, __ F.4th __, 2025 WL 1226844 (2d Cir. Apr. 29, 2025) (Before Circuit Judges Robinson, Pérez, and Nathan)

On March 11, 2021, President Biden signed into law The American Rescue Plan Act (ARPA). This mammoth stimulus bill authorized $1.9 trillion in spending to help Americans recover from the hardships of the COVID-19 pandemic.

Many individuals and businesses were able to stay afloat because of ARPA funds, and the same was true for employee benefit plans, which were allowed under ARPA to file applications for “Special Financial Assistance” (SFA) with the federal Pension Benefit Guaranty Corporation (PBGC). By January of 2025, the PBGC had approved $70 billion in SFA for 108 pension funds, covering more than 1.2 million beneficiaries.

The plaintiff in this week’s notable decision, the Board of Trustees of Bakery Drivers Local 550 and Industry Pension Fund, wanted to join these plans. The Fund was created in 1955 and is a multiemployer plan benefiting unionized bakery drivers in New York City.

Unfortunately, the Fund has been in financial hot water ever since its largest contributing employer, Hostess Brands Inc., declared bankruptcy in 2012. In 2016, the Fund “reached an agreement with its four remaining employers to transfer some of their members to a newly created pension plan. Those employers were then relieved of their obligations to continue contributing to the Fund, triggering the Fund’s termination by mass withdrawal under ERISA.”

At this point you may be wondering how a plan that terminated in 2016 has any relevance to legislation passed in 2021. However, ERISA aficionados know that it can be very difficult to truly kill a benefit plan. Indeed, the Fund continued well past 2016. More than 1,100 beneficiaries remained on the books, and the Fund “continued to perform audits, conduct valuations, file annual reports, and make payments.”

In September of 2022, Bimbo Bakeries USA agreed to rejoin the Fund and resume contributions on behalf of its employees. The idea was that Bimbo’s participation would assist the Fund in applying for relief under the SFA program. Indeed, shortly after Bimbo jumped aboard, the Fund submitted its SFA application to the PBGC, contending that it was eligible for assistance because it was in “critical and declining status.”

However, the PBGC rejected the Fund’s application, ruling that the Fund could not be in “critical and declining status” because it “has had no zone status since plan year 2016, when the Plan terminated by mass withdrawal.” The PBGC was unimpressed by the fact that Bimbo had rejoined the Fund, stating, “ERISA contains no provision allowing a multiemployer plan that terminated by mass withdrawal under section 4041A to be restored.”

The Fund filed suit against the PBGC in the Eastern District of New York, and the parties filed cross-motions for summary judgment. The district court addressed two issues: (1) is a multiemployer plan which was previously terminated by mass withdrawal eligible for SFA funding; and (2) does ERISA allow such a plan to be “restored.” The court answered both questions “no” and thus granted the PBGC summary judgment. (Your ERISA Watch reported on this decision in our November 1, 2023 edition.)

The Fund appealed. To resolve the dispute, the Second Circuit examined the SFA statute, which provides that the PBGC must grant assistance to a multiemployer plan that “is in critical and declining status (within the meaning of section 1085(b)(6) of this title) in any plan year beginning in 2020 through 2022.”

In support of its position, the PBGC pointed to 29 U.S.C. § 1081(c), which provides that “Part 3 of Subchapter I of ERISA,” which includes the “critical and declining status” definition in Section 1085, “‘applies, with respect to a terminated multiemployer plan,’ only ‘until the last day of the plan year in which the plan terminates.’” As a result, “because the Fund terminated in 2016…it could not have a ‘status’ under § 1085 in the 2020, 2021, or 2022 plan years, making it ineligible” for SFA funding.

The Second Circuit disagreed, ruling that Section 1081 did not control. “Section 1081(c) does not apply to the SFA statute, which is located in a different part of a different subchapter. Nor does it apply by virtue of its application to § 1085.” The court ruled that while the SFA statute may have incorporated by reference Section 1085’s definition of “critical and declining status,” “[i]t does not incorporate external limitations on § 1085’s operation, such as the limitation contained in § 1081(c).”

In essence, the court ruled that the PBGC was simply borrowing too much from ERISA in its reading of the SFA statute. Quoting a practice guide on statutory construction, the court stated, “[W]here a statute refers specifically to another statute by title or section number, there is no reason to think its drafters meant to incorporate more than the provision specifically referred to.”

Furthermore, the court explained that if Congress had wanted to import all of ERISA’s other limitations on Section 1085 into the SFA statute, it could have, but it did not. Indeed, the court noted that in other parts of the SFA statute Congress had used different phrasing when referring to Section 1085, thus indicating that Congress wanted Section 1085 to apply in different ways to different situations. Moreover, “Congress also knew how to exclude terminated plans expressly – which it did in one of the other SFA eligibility provisions… The fact that Congress chose not to include a similar limitation in subparagraph (A), the provision at issue here, is telling.”

The PBGC attempted to buttress its interpretation with a public policy argument, contending that “permitting terminated plans to apply for SFA funding ‘would severely challenge PBGC’s ability to process the applications of all eligible plans within the tight statutory deadlines.’” The court stated it was “sympathetic” to this concern, but its hands were tied by the statutory language, which “do[es] not support a per se exclusion of terminated plans[.]”

As a result, the Second Circuit reversed and remanded to the district court with instructions to enter summary judgment for the Fund, vacate the PBGC’s denial of the Fund’s application for SFA relief, and remand to the PBGC for further action. The court noted that because it agreed that the SFA statute did not categorically exclude terminated plans, it did not need to reach the second issue decided by the district court, i.e., whether ERISA allows a terminated multiemployer plan to be “restored.”

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

Attorneys’ Fees

Sixth Circuit

House-Forshee v. Benefits Comm. of W. & S. Fin. Grp. Co. Flex. Benefits Plan, No. 1:24-cv-110, 2025 WL 1235076 (S.D. Ohio Apr. 29, 2025) (Magistrate Judge Stephanie K. Bowman). Plaintiff Roberta House-Forshee filed this action against the Benefits Committee of Western & Southern Financial Group Co. Flexible Benefits Plan and Western & Southern Financial Group, Inc., alleging they wrongfully denied her claim for short-term disability benefits under the company’s ERISA-governed welfare plan. Seven months after the suit was filed, defendants reversed the adverse benefits decision and determined that Ms. House-Forshee was unable to perform the normal duties of her regular occupation for any employer for the whole length of the claim period, from July 8, 2023 through October 30, 2023. Defendants then moved to dismiss Ms. House-Forshee’s action based on their post-litigation reversal. All pretrial motions in the case were referred to Magistrate Judge Stephanie Bowman for initial review. In this decision Judge Bowman recommended that the court grant defendants’ motion to dismiss, but without prejudice to Ms. House-Forshee’s ability to move for a post-judgment award of attorneys’ fees and costs under ERISA Section 502(g)(1). Judge Bowman agreed with defendants that their reversal of their prior decision and their award of full short-term disability benefits to Ms. House-Forshee rendered her substantive claim for those benefits moot. Nevertheless, Judge Bowman agreed with Ms. House-Forshee that the dismissal of an underlying substantive ERISA claim that has become moot does not defeat the court’s ability to exercise continuing jurisdiction over an ancillary claim such as her claim for attorneys’ fees and costs. Where, as here, a plan participant sues to recover benefits under ERISA and the plan pays the benefit claim in full after the lawsuit was filed, courts have consistently held that they retain equitable jurisdiction to adjudicate any fee claims under Section 502(g). Should they lack such jurisdiction “opportunistic plans could routinely delay deciding whether to pay benefit claims until participants and beneficiaries file suit, effectively requiring them to incur legal costs unrecoverable under ERISA § 502(g) in order to receive benefits to which they are legally entitled. In this case, if plans routinely pay benefit claims in full shortly after participants and beneficiaries file suit, seeking, perhaps, to avoid having to pay the plaintiff’s costs for bringing the ERISA suit, plans could significantly blunt ERISA § 502(g).” Moreover, Judge Bowman was confident that Ms. Bowman demonstrated some degree of success on the merits as she persuasively argued that the filing of her lawsuit was the catalyst for defendants’ change of heart. That being said, Ms. House-Forshee has yet to file a formal motion for attorneys’ fees or argue why she believes she is entitled to fees under the five-factor test set out in Secretary of Dep’t of Labor v. King, 775 F.2d 666 (6th Cir. 1985). Thus, Judge Bowman instructed Ms. House-Forshee to file a post-judgment motion for an award of fees and costs under ERISA. 

Breach of Fiduciary Duty

Fifth Circuit

LeBoeuf v. Entergy Corp., No. 24-30583, __ F. App’x __, 2025 WL 1262414 (5th Cir. May 1, 2025) (Before Circuit Judges Dennis, Oldham, and Douglas). Alvin Martinez was an employee for Entergy Corporation until he retired in 2003. While employed at Entergy Mr. Martinez participated in its defined contribution savings plan. Entergy Corporation is the plan’s sponsor, the Entergy Corporation Employee Benefits Committee is the plan administrator and named fiduciary, and T. Rowe Price Trust Company is the plan’s trustee. In 2010, Mr. Martinez named his four children as his designated beneficiaries under the savings plan. Per ERISA, the beneficiary form informed Mr. Martinez that were he to remarry after submitting it, his beneficiary designation would be revoked unless he updated the designation form after remarriage and his new spouse signed a spousal waiver form relinquishing her beneficiary status under the plan. In 2014, Mr. Martinez did remarry. Both before and after his second marriage Mr. Martinez received quarterly plan statements from T. Rowe Price which listed the four children as the beneficiaries. These statements did not reference the changed status of the beneficiary designation following his marriage with his new wife. In 2021, Mr. Martinez died from a car accident. He was survived by his wife, Kathleen Mire, and his four adult children, the plaintiff-appellants in this litigation. The committee subsequently directed T. Rowe Price to distribute Mr. Martinez’s three-million-dollar account balance to Ms. Mire, his surviving spouse. The four children sued the corporation, the committee, and T. Rowe Price. They alleged that all three entities functioned as fiduciaries and that they breached their fiduciary duties by misrepresenting plan provisions by sending quarterly statements that wrongly informed Mr. Martinez that his four children were his designated beneficiaries without informing him that his second marriage invalidated that designation. Defendants responded by filing a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). The district court granted defendants’ motions to dismiss. It concluded that Entergy and T. Rowe Price could not be liable for breach of fiduciary duty because neither party exercised discretionary authority over the management of the savings plan, and were therefore not fiduciaries. Additionally, the court reasoned that the committee had not breached its fiduciary duty as a matter of law because it accurately relayed the plan’s provisions regarding beneficiary elections and spousal waivers in the plan document, the beneficiary designation form, and the summary plan descriptions, and as such, complied with its fiduciary duties under ERISA. The four children appealed the district court’s dismissal of their claims. In this unpublished per curiam decision the Fifth Circuit affirmed the district court’s dismissal. The court of appeals first discussed the threshold issue of the district court’s conclusion that Entergy and T. Rowe Price were not fiduciaries under ERISA. As neither entity is a named fiduciary in the savings plan, the appellate court considered appellants’ arguments that Entergy and T. Rowe Price functioned as fiduciaries by exercising some form of discretionary control over the plan. Far from concrete and specific factual allegations detailing how these two entities performed discretionary authority over the plan, the Fifth Circuit found the allegations in the complaint to be “conclusory and factually unsupported.” Moreover, the court of appeals agreed with the district court that T. Rowe Price was performing a purely ministerial function when it prepared and issued the quarterly reports sent to Mr. Martinez at the center of this litigation. Accordingly, the court of appeals determined that the district court did not err by dismissing Entergy and T. Rowe Price from the suit based on its finding that neither party was a fiduciary under ERISA. That left only the issue of whether the district court erred by rejecting appellants’ claim that the committee breached its fiduciary duty. In short, the Fifth Circuit agreed with the lower court that Mr. Martinez could not reasonably rely on the information contained in the quarterly statements in the face of unambiguous terms outlined in the official instruments of the plan. The court added that the committee had no affirmative duty to inform Mr. Martinez that his remarriage nullified his beneficiary designation until he made an inquiry about the matter. Because appellants did not allege that their father ever did so, the court of appeals held that the complaint failed to sufficiently allege the committee conveyed a material misrepresentation or failed to provide adequate plan information. Thus, the Fifth Circuit concluded the district court did not err in dismissing the breach of fiduciary duty claim against the committee. For these reasons, the appeals court affirmed the district court’s dismissal in its entirety.

Ninth Circuit

Sievert v. Knight-Swift Trans. Holdings, Inc., No. CV-24-02443-PHX-SPL, 2025 WL 1248922 (D. Ariz. Apr. 30, 2025) (Judge Steven P. Logan). In the past couple of years there has been a deluge of litigation over the use of forfeited employer contributions in defined contribution retirement plans. Plaintiffs in this action are current and former participants of Knight-Swift Transportation Holdings, Inc.’s retirement plan. They allege that the fiduciaries of the plan are breaching their duties of prudence, loyalty, and monitoring, engaging in prohibited transactions with plan assets, and violating ERISA’s anti-inurement provision by using forfeited nonvested employer contributions to offset their obligations towards future matching contributions rather than spending the forfeited plan assets to pay the plan’s administrative expenses. In annual Form 5500 disclosures for the plan, defendants have stated that forfeitures of nonvested contributions and earnings on those contributions would be used to pay plan expenses and to the extent any remain, to reduce the company’s matching contributions. Contrary to this statement, defendants have not first used forfeitures to pay plan administrative expenses, but used those forfeited assets solely to reduce the company’s own future employer contributions. Because of this decision, plaintiffs allege that defendants acted in their own self-interest and harmed the plan and its participants by forcing them to cover plan expenses that would otherwise have been paid for by utilizing forfeited funds as the company represented to the Department of Labor. Defendants moved to dismiss plaintiffs’ lawsuit. In this decision the court granted the motion to dismiss, and dismissed the action with prejudice. The court agreed with Knight-Swift that its only fiduciary duty was to ensure that the participants received their promised benefits as outlined by the terms of the plan. Notwithstanding the statement on the Form 5500s, the court held that defendants were complying with the terms of the plan as written when they elected to use the forfeited assets to offset future employer contribution costs. “Ultimately, Plaintiffs simply have not shown that the Form 5500s created any binding legal obligation for Knight-Swift to use forfeitures to pay administrative expenses.” Without more, the court ruled that defendants’ decision to allocate forfeitures toward reducing the Knight-Swift contributions was insufficient to state a claim for breach of fiduciary duty of loyalty or prudence under ERISA. Moreover, absent an underlying fiduciary breach, the court dismissed plaintiffs’ claim for failure to monitor. Additionally, the court found that the anti-inurement claim failed for the same reason as the fiduciary duty claims: “as the law currently stands, ERISA does not create any duty for a plan sponsor to maximize pecuniary benefits, only to ensure that participants have received the benefits promised to them – and as this Court has determined, the Form 5500 reports simply do not establish that Defendant ever promised, in a legally binding manner, that it would allocate forfeitures toward the Plan’s administrative costs.” Further, the court agreed with defendants that the reallocation of plan assets to provide employees matching contributions is not a prohibited transaction under § 1106. For these reasons the court dismissed the entirety of plaintiffs’ complaint. Finally, the court denied plaintiffs leave to amend their complaint, determining that amendment would be futile as it could not possibly cure the deficiencies identified. The case was accordingly dismissed with prejudice.

Disability Benefit Claims

Third Circuit

Hall v. Reliance Standard Ins. Co., No. 23-20761 (ZNQ) (RLS), 2025 WL 1233203 (D.N.J. Apr. 29, 2025) (Judge Zahid N. Quraishi). Plaintiff Lisa Hall brought this action against defendant Reliance Standard Insurance Company seeking to recover terminated long-term disability benefits under ERISA Section 502(a)(1)(B). The parties filed competing motions for summary judgment under an arbitrary and capricious standard of review. The central question was whether Reliance had arbitrarily decided that Ms. Hall’s disabling cognitive symptoms were caused or contributed to by mental disorders – somatic symptom disorder and post-traumatic stress disorder – as opposed to post-concussive syndrome, as her treating providers attested. The court determined that it had not. The court held it was not an abuse of discretion for Reliance to conclude that Ms. Hall did not suffer from a non-psychiatric related condition. “Here, the Court finds that Defendant has fully articulated its reasoning in making its determination that Plaintiff did not have restrictions or limitations from a non-psychiatric condition that rendered her totally disabled from any occupation.” The court pointed out that Reliance relied on the opinions of three of its own medical consultants, including a neuropsychologist, a neurologist, and an orthopedic surgeon. It stressed that Reliance was not required to give any special weight to Ms. Hall’s treating providers, and was only obligated to consider their views and explain the points of disagreement between any conflicting medical opinions. Given the positions of the three reviewing doctors, one of whom examined Ms. Hall in person, the court was confident that Reliance’s decision to terminate her disability coverage was not unreasonable, unsupported by the evidence, or erroneous as a matter of law. Accordingly, the court held that Reliance had not abused its discretion in terminating Ms. Hall’s benefits pursuant to the plan’s 24-month “Mental or Nervous Disorders” limitation, and entered summary judgment in its favor.

ERISA Preemption

Second Circuit

Finkel v. Structure Tone, LLC, No. 23-CV-1269 (VSB), 2025 WL 1237411 (S.D.N.Y. Apr. 29, 2025) (Judge Vernon S. Broderick). Plaintiff Dr. Gerald R. Finkel is the chairman of the Joint Industry Board of the Electrical Industry. The Board administers several multiemployer benefit plans pursuant to collective bargaining agreements with employers and employer organizations. On behalf of these benefit funds, Dr. Finkel filed a lawsuit in state court against Structure Tone, LLC, the general contractor on three skyscraper construction projects in Manhattan, alleging that is liable for a subcontractor’s unpaid contributions, after that subcontractor failed to remit over $1.4 million in contributions to the employee benefit funds. Defendant removed the action to federal court based on federal question jurisdiction, arguing that ERISA and the Labor Management Relations Act (“LMRA”) preempt the state law causes of action. Dr. Finkel moved to remand the case to state court, while Structure Tone, LLC moved for judgment on the pleadings. In response to defendants’ motion, Dr. Finkel conditionally moved to amend his original complaint in the event the court agreed with the contractor that the state law claims are preempted by federal law. The court did agree. “As a matter of first impression, I conclude that when a collective bargaining agreement establishes an employer’s obligation to contribute to a benefit fund, ERISA and the LMRA each preempt an action asserted under Section 198-e of New York’s Labor Law to collect a subcontractor’s delinquent fund contributions from a general contractor.” The court agreed with defendant that Dr. Finkel, as a fiduciary of the plans, was the type of party that can bring a claim under ERISA to enforce the plans’ contribution requirements, and that his claims seeking to recover delinquent contributions pursuant to the terms of the collective bargaining agreement could be asserted under the statute. Dr. Finkel argued that he could not in fact bring a colorable claim under ERISA Section 502(a) because the statute only allows fiduciaries to bring delinquent contribution claims against the employer and here Structure Tone was not a party to the collective bargaining agreement. The court did not find this argument convincing, stating that it ignored the animating purposes of ERISA’s expansive preemption provision. The court stated, “the fact that Section 502 permits plan fiduciaries to sue employers and cofiduciaries for delinquent contributions – and does not provide for contribution enforcement lawsuits against other parties – weighs in favor, rather than against, a finding that Plaintiff’s claim falls within the scope of Section 502.” In sum, the court held the claim under New York law depends on ERISA to create the contribution obligation, and that it was not independent of ERISA, but rather preempted by it. Because of this holding and the court’s concurrent conclusion that LMRA also preempts the state law claims, the court denied Dr. Finkel’s motion to remand. As for his motion to amend, the court permitted Dr. Finkel to assert ERISA and LMRA claims against the subcontractor, as a party to the collective bargaining agreement, but denied his motion for leave to amend the complaint as to the proposed ERISA and LMRA claims against defendant Structure Tone, as it is not a contributing employer pursuant to the collective bargaining agreement. Finally, the court denied Structure Tone’s motion for judgment on the pleadings as moot.

Life Insurance & AD&D Benefit Claims

Fifth Circuit

Sewell v. The Lincoln Nat. Life Ins. Co., No. 2:23-CV-00317, 2025 WL 1276005 (S.D. Tex. May 2, 2025) (Judge Nelva Gonzales Ramos). Plaintiff Timothy Sewell brought this action against The Lincoln National Life Insurance Company to challenge its denial of his claim for accidental death and dismemberment insurance benefits under an alcohol intoxication exclusion. On March 4, 2025, Magistrate Judge Jason B. Libby issued a report and recommendation on the parties’ cross-motions for summary judgment, recommending the court grant summary judgment in favor of Mr. Sewell. Broadly, Judge Libby held that Lincoln abused its discretion by relying entirely on an isolated blood alcohol test, the results of which were in direct conflict with accounts of eyewitnesses and corroborating facts. Because Lincoln offered no other support for its application of the intoxication exclusion, and because it disregarded the direct evidence out-of-hand, the Magistrate held that Lincoln’s conflict of interest led the claims process to become adversarial. As a result, his report recommended the court deny Lincoln’s motion for summary judgment and grant Mr. Sewell’s cross-motion. Lincoln timely objected to Magistrate Libby’s report. In this order the court addressed Lincoln’s objections and overruled them, finding no error in the Magistrate’s analysis. Like the Magistrate Judge, the court agreed that Lincoln completely disregarded the evidence provided by Mr. Sewell, and instead treated the blood alcohol test result as dispositive. The court added that the shallow dive that Mr. Sewell performed which caused the injury to his cervical spine could not have injured him in the manner it did absent for his unexpected contact with a sand bar from which the water had dropped off. “Even if Sewell still had some alcohol in his system, credible evidence demonstrated that his injury was caused by an unanticipated geographical under-water drop-off that was not visible prior to his dive. According to all of the surrounding evidence, the mechanism of his injury was not caused by any impairment.” Not only did the blood alcohol test come with a disclaimer on its results, but it showed intoxication levels so extreme that if it were true Mr. Sewell would have been so impaired as to be inconsistent with all of the competing evidence in the record. Given this fact, the court agreed with the Magistrate Judge that Lincoln did not fairly or impartially read the test results with skepticism, but relied on them wholesale in order to apply the intoxication exclusion to deny the claim for benefits. Lincoln’s arguments to the contrary were wholly unconvincing to the court. The court therefore overruled Lincoln’s objections and adopted the findings and conclusions of the Magistrate. It ordered Lincoln to pay Mr. Sewell the $764,000 in accidental death and dismemberment benefits, plus interests and court costs, and directed Mr. Sewell to file a motion addressing his request for attorneys’ fees.

Pension Benefit Claims

Seventh Circuit

Hoffman v. United Airlines, Inc., No. 21-cv-06395, 2025 WL 1262504 (N.D. Ill. May 1, 2025) (Judge John J. Tharp, Jr.). In The Mirror & The Light Hilary Mantel writes about the point of a promise. Mantel’s protagonist, Thomas Cromwell, thinks a promise “wouldn’t have any value, if you could see what it would cost you when you made it.” This lawsuit brought by retirees of United Airlines alleges that United made them a promise in 2017, which it would later break in 2021 at the height of the COVID-19 pandemic, once they knew the true cost of that promise. The 2017 promise at issue came from the CEO of United, Oscar Munoz. Mr. Munoz announced to all United employees that he knew that many of them were hesitant to retire for fear that the airline would offer a generous “early out” program in the near future with benefits they would miss out on. To allay those fears, and presumably incentivize a steady flow of voluntary retirement, Mr. Munoz promised the workers that beginning on August 17, 2017, if United offered an early out program within 36 months from the date of an employee’s retirement that employee would be eligible for the financial benefits of the program even after retiring. Then came COVID, which upended global travel, grounding all aircraft. In the summer of 2020, United introduced its Voluntary Separation Program 2, a program which offered various severance benefits to incentivize workers to leave. United said that it did not consider the Voluntary Separation Program 2 to be an early out program and expressly specified that it was not covered by the 2017 policy. In October 2020, United announced it was sunsetting the 2017 policy as of January 1, 2021. In the announcement United told its employees that in 2017 it had not anticipated the situation it now found itself in, and thus “the August 2017 early out policy no longer makes sense.” It added that this change did not signal that it was planning on offering an early out program in early 2021. Yet in early 2021, that was exactly what plaintiffs alleged happened. On January 21, 2021, United announced the Voluntary Separation Leave Program. Like the Voluntary Separation Program 2, the Voluntary Separation Leave Program was a company-wide separation program offering retirees benefits. But these benefits were far better and more generous. Once again, the airline stated that it did not consider the program to be an early out program and that these benefits offered were excluded from the 2017 program, which was updated in 2020. The plaintiffs in this action are United retirees who believe that despite United’s assertions to the contrary, the voluntary separation programs at issue were indeed early out programs, covered by the 2017 promise and policy. They allege that by retiring within three years of the programs they were entitled to those generation benefits under it, and they seek those benefits in this action. Plaintiffs bring this action individually and on behalf of a putative class of similarly situated former United employees who were likewise harmed by United reneging on its promise. Plaintiffs assert claims for those benefits, as well as injunctive and equitable relief, under ERISA, and, in the alternative, claim entitlement to relief under a state law theory of breach of contract. The United defendants moved to dismiss the complaint for failure to state a claim. In this decision the court granted their motion to dismiss, without prejudice. The court began with plaintiffs’ claim for wrongful denial of benefits under Section 502(a)(1)(B). Plaintiffs assert that both the Voluntary Separation Program 2 and the Voluntary Separation Leave Program are ERISA-governed plans in which the retirees are participants by virtue of the 2017 policy, which is itself an ERISA-governed plan in which they are participants. The court did not agree. Relying on the Supreme Court’s ruling in Fort Halifax, the court found that the 2017 policy “lacks the ongoing administrative oversight and discretion which would signify an ‘employee welfare benefit plan’ under ERISA.” Though the court acknowledged the contingent payment of benefits under the 2017 policy, it stressed that the payments being made under it were a one-time, lump-sum payment which imposed only the obligation that United issue a check. It added that even if it accepted plaintiffs’ argument that the Voluntary Separation Program 2 and the Voluntary Separation Leave Program “were early out programs that merely paid financial benefits over the course of a pre-separation period rather than in a single lump payment, that arrangement would not transform the 2017 Policy into an ERISA plan because it would still not impose ‘periodic demands on [United’s] assets that create a need for financial coordination and control.’” The court further rejected plaintiffs’ argument that the 2017 policy required an ongoing administrative scheme by requiring United to administer any benefits the company might later offer and to keep track of the eligible retirees. Again, the court said, “those tasks amount to no more than cutting checks to eligible employees – burdens which are certainly no greater than those imposed on the employers in Fort Halifax.” Ultimately, the court’s conclusion that the 2017 policy does not constitute an ERISA-governed employee welfare benefit plan doomed all of the plaintiffs’ claims under ERISA – not only their claim for benefits under Section 502(a)(1)(B), but also their claims for equitable relief for United’s alleged fiduciary breaches in violation of Section 404(a) and for interference with benefits under Section 510. In addition to dismissing plaintiffs’ claims under ERISA, the court also dismissed their alternative state law breach of contract claim. The court disagreed with plaintiffs that the 2017 promise made by Mr. Munoz and the written 2017 policy United issued formalizing it were enforceable contracts which United breached by failing to pay benefits under the separation programs. The court held that, “although the plaintiffs maintain that the differences between an early out program and a pre-separation program like [Voluntary Separation Program 2] or [Voluntary Separation Leave Program] were semantic, in fact they were materially different. Early out programs, which paid cash upon separation, did not alter an employee’s relationship with the company – they ended it. As evidenced by [Voluntary Separation Program 2] and [Voluntary Separation Leave Program], however, pre-separation program participants maintained their status as employees of the company for the duration of the program.” Accordingly, the court found that plaintiffs failed to state an alternative claim for breach of contract. For these reasons, the court dismissed plaintiffs’ complaint, although it did so without prejudice, granting plaintiffs leave to amend their complaint to attempt to cure the problems it identified. (Plaintiffs in this action are represented by Your ERISA Watch co-editor Elizabeth Hopkins, as well as Susan L. Meter and Samantha Brener of Kantor & Kantor, among other law firms.)

Packaging Corp. of Am. Thrift Plan for Hourly Employees v. Langdon, No. 23-cv-663-jdp, 2025 WL 1258241 (W.D. Wis. Apr. 30, 2025) (Judge James D. Peterson). This interpleader action was brought by plaintiff Packaging Corporation of America Thrift Plan for Hourly Employees seeking judicial intervention to resolve the dispute over the proper beneficiary of a 401(k) account belonging to decedent Carl Kleinfeldt. Defendants are the three potential beneficiaries: (1) Kleinfeldt’s estate; (2) his former spouse, Dena Langdon; and (3) the estate of Terry Scholz, Mr. Kleinfeldt’s sister. In this order the court denied Langdon’s and Kleinfeldt’s estate’s motions for summary judgment, and granted summary judgment to Scholz’s estate, determining that the undisputed facts show the estate of Terry Scholz is the proper beneficiary. The court stated, “[a]t the time of Kleinfeldt’s death, plan documents listed Langdon as the primary beneficiary of the 401k and Scholz as the contingent beneficiary. But before he died, Kleinfeldt sent a fax to Packaging Corporation asking it to remove Langdon as the primary beneficiary. Kleinfeldt did not comply with the plan requirements when he tried to change his beneficiary by fax, but the court concludes that the fax was a valid change of beneficiary under the federal common law rule of substantial compliance. Scholz was still alive when Kleinfeldt died, so as the contingent beneficiary, she was the proper recipient of the 401k after Langdon’s removal.”

Pleading Issues & Procedure

Seventh Circuit

Frick v. Empower Retirement, LLC, No. 25-cv-284-wmc, 2025 WL 1235627 (W.D. Wis. Apr. 29, 2025) (Judge William M. Conley). This action stems from withdrawals pro se plaintiff Tyler Frick made from his 401(k) account at a time when he was suffering from mental illness. Mr. Frick alleges that his friend, Coty Mayfield, coerced him to withdraw this money even though he was unable to consent to the withdrawals at the time. Mr. Mayfield then allegedly took the money that Mr. Frick withdrew. Traumatized by this theft and betrayal, Mr. Frick sued his friend and the company that manages his 401(k) plan, Empower Retirement, LLC, under state law, the Americans with Disabilities Act (“ADA”), and ERISA. Because Mr. Frick seeks to proceed without prepaying the filing fee, the court screened his complaint to assess the sufficiency of his stated claims. In this decision the court concluded that the complaint fails to state its federal claims under the ADA or ERISA, and declined to exercise supplemental jurisdiction over the state law claims. First, the court dismissed the claims under Title III of the ADA against Empower Retirement. “The problem with plaintiff’s ADA claim is that neither an employee benefit plan, nor its administrator, qualify as a ‘public accommodation’ because such plans are not ‘offered to the public.’” Because Empower Retirement does not provide a public accommodation, the court held that Mr. Frick could not proceed with a Title III ADA claim against it. This claim was dismissed with prejudice, as any amendment would be futile. Next, the court scrutinized the ERISA claim against Empower Retirement. Although the court acknowledged that Mr. Frick is correct that some courts have recognized potential ERISA claims against plan administrators for permitting a fraudulent withdrawal or paying benefits to the wrong person, and then refusing to reimburse the beneficiary’s account after the mistake is uncovered, the court noted that those cases involve allegations that the plan administrator failed to follow plan policies and procedures in approving the withdrawal request. There were no allegations like that in the complaint here. As currently alleged, there are no facts in the complaint which show that Empower Retirement knew or could have known about Mr. Frick’s mental illness or about Mr. Mayfield’s involvement coercing him to withdraw the money. The court therefore held that the allegations currently in the complaint do not permit an inference that the administrator abused its discretion or acted arbitrarily or capriciously. Accordingly, the court concluded that Mr. Frick failed to state an ERISA claim, including any claim for reimbursement after Empower Retirement learned that the withdrawals had been coerced due to Mr. Frick’s mental state. Nevertheless, the court noted that these shortcomings could potentially be addressed through amendment. Thus, the court gave Mr. Frick an opportunity to file an amended complaint to include additional factual allegations about why he believes the plan administrator abused its discretion in authorizing the withdrawals from his retirement account. Finally, the court dismissed the state law causes of action alleged against Mr. Mayfield. Although these claims share some common facts with the federal ERISA claim against Empower Retirement, as they stem from the same allegations that Mr. Mayfield manipulated Mr. Frick into requesting the withdrawals, the court concluded it did not make sense to keep them together in the same lawsuit as they “are conceptually and practically distinct.” The court thus dismissed the state law claims without prejudice to Mr. Frick refiling them in state court.

Retaliation Claims

Ninth Circuit

Berland v. X Corp., No. 24-cv-07589-JSC, 2025 WL 1223547 (N.D. Cal. Apr. 28, 2025) (Judge Jacqueline Scott Corley). From February 2016 through November 1, 2022, plaintiff Leslie Berland was the Chief Marketing Officer of Twitter. Her employment ended when Elon Musk took over the company and swiftly enacted mass changes. Ms. Berland seeks to recover employee benefits she alleges that Musk and Twitter (now the X Corporation) withheld under the company’s Change of Control Severance and Involuntary Termination Protection Policy. Ms. Berland alleges four causes of action: (1) a claim for plan benefits under ERISA Section 502(a)(1)(B); (2) a claim for unlawful discharge to interfere with her right to plan benefits under Section 510; (3) a claim for breach of contract; and (4) a claim for breach of the implied covenant of good faith and fair dealing. Defendants moved to dismiss Ms. Berland’s Section 510 claim, arguing primarily that the complaint fails to plausibly plead Ms. Berland is entitled to any equitable relief because the severance plan at issue is a top hat plan. Before the court tackled this issue, it addressed the parties’ requests that it take judicial notice of five documents outside of the complaint. These documents were the plan, two filings with the Securities and Exchange Commission, the Department of Labor’s online material on top hat plans, and a letter from Twitter which forms part of the basis of Ms. Berland’s claims because it is the original denial of her claim under the plan. The court agreed to consider all five documents because no party offered any opposition and because they were either incorporated by reference in the complaint, otherwise integral to it, or publicly available materials. With that preliminary matter settled the court discussed whether equitable relief was recoverable as a matter of law. The court concluded that at least one form of equitable relief, surcharge, is plausibly available to Ms. Berland. The court agreed with her that defendants failed to persuasively argue that the change of control severance plan is a top hat plan as a matter of law because they failed to establish that the plan was maintained primarily for the purpose of providing deferred compensation. Indeed, the plan provides for a lump sum payment of cash and immediate vesting of certain shares on the 61st day following an employee’s termination. Additionally, the court noted that the plan itself states that the administrator is the “named fiduciary” of the policy for the purposes of ERISA and that the administrator is subject to the fiduciary standards of ERISA when acting in that capacity. The court stated that this fact cuts against a finding that the plan is a top hat plan. Drawing all reasonable inferences in Ms. Berland’s favor, the court found the plan is not a top hat plan, and because defendants did not challenge her Section 510 claim on any other grounds, the court concluded that the complaint pleads the availability of a surcharge remedy. As a result, the court denied defendants’ motion seeking to dismiss Ms. Berland’s interference claim.

Statute of Limitations

Second Circuit

Cooper v. International Business Machines Corp., No. 3:24-cv-656 (VAB), 2025 WL 1275880 (D. Conn. May 2, 2025) (Judge Victor A. Bolden). Pro se plaintiff Simon J. Cooper sued his former employer, International Business Machines Corporation (“IBM”), challenging its pension crediting decisions under its cash balance plan. Mr. Cooper asserted claims under ERISA, as well as a claim under the European Union’s privacy laws. Notably, Mr. Cooper filed his lawsuit nearly four years after he submitted his claim for pension benefits to IBM. Because of the timing of his lawsuit, as well as the fact that he did not exhaust administrative claims processes prior to filing it, the court granted IBM’s motion to dismiss Mr. Cooper’s lawsuit on December 6, 2024. (The court also dismissed the EU general data protection claim as neither party is a EU citizen.) In response to the court’s dismissal Mr. Cooper moved for reconsideration. The court denied that motion in this decision. As before, the court determined that Mr. Cooper’s ERISA claims for benefits, statutory penalties, and fiduciary breaches were all untimely under the applicable and analogous statutes of limitations. Mr. Cooper argued that the court’s order dismissing his complaint failed to toll the statutes of limitations on bringing his ERISA claims during the pendency of the administrative proceedings. He maintained that the complaint should be reconsidered because the court failed to consider that IBM committed fraud by failing to provide his benefit calculation when they stated they would do so. The court disagreed. It held that Mr. Cooper was made aware of the potential claim arising from no production of the calculation in October of 2020, meaning that by filing this lawsuit on March 14, 2024, the three-year statute of limitations period had already lapsed. Moreover, because he knew of the alleged violation of not providing the calculation since that time, the concealment exception extending the statute of limitations for a breach of fiduciary duty claim to six years is inapplicable, because the alleged breach was not concealed in any way. In addition, Mr. Cooper argued that the court erred in its earlier decision because it did not include the timeline to complete administrative remedies per the plan documents and that he was still trying to complete the administrative remedy but could not do so because IBM did not complete its pension valuation. The court did not agree. It noted that Mr. Cooper failed to plead exhaustion of administrative remedies in his original complaint, and there was no basis for equitable tolling because Mr. Cooper was aware of the alleged violations for years before he commenced his legal action. “Accordingly, because Mr. Cooper’s argument about tolling and seeking administrative remedies was already considered in this Court’s original decision, reconsideration on these grounds would be inappropriate.” Thus, the court reached the same conclusion as in its earlier decision – that Mr. Cooper’s claims under ERISA are time-barred. Finally, Mr. Cooper argued that the court erred in dismissing his data privacy protection claim because the relevant EU provisions were codified in United Kingdom Law, meaning as a citizen of Great Britain his claim should stand. The court stated that while Mr. Cooper was correct that EU data protection laws have been incorporated into the UK’s laws, court enforcement of the UK’s data privacy law is restricted to enforcement in courts within England, Wales, Scotland, and Northern Ireland. Therefore, as a court in Connecticut, this court determined that it had no power to enforce Mr. Cooper’s rights under the UK Data Protection Act, and was therefore correct to dismiss this cause of action. Accordingly, the court denied Mr. Cooper’s motion for reconsideration of its order dismissing his complaint.

It was a slow week for ERISA cases in the federal courts last week, with no standout decision. However, the courts did touch on some interesting topics, including whether a health insurance plan has a fiduciary duty to negotiate with providers (Mejia v. Credence Management Solutions), whether a potential beneficiary under a life insurance plan is required to exhaust administrative remedies if they are sued in interpleader (Morgan v. Barrera), whether an arbitration provision in a profit sharing plan can be enforced against an employee who retired and was fully vested before the provision was added to the plan (Parrott v. International Bank of Commerce), and how a court should organize a lawsuit by a medical provider alleging underpayment of 1,000 claims for 366 patients under 100 different plans totaling over $10 million (DaSilva v. Empire).

The courts also addressed the issue of whether it’s okay for plan fiduciaries to loot plans, commingle plan funds with general assets, and fail to make contributions on behalf of plan participants (Chavez-DeRemer v. Christy and Micone v. iProcess Online). You will be shocked to learn that this is not allowed under ERISA, and that you don’t get to be a fiduciary anymore if you do these things.

We’ll be back next week with more ERISA goodness!

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

Arbitration

Fifth Circuit

Parrott v. International Bank of Commerce, No. 5:24-cv-1263-DAE, __ F. Supp. 3d __, 2025 WL 1176523 (W.D. Tex. Apr. 16, 2025) (Judge David Alan Ezra). Plaintiff Paul Parrott brings this putative class action under ERISA against International Bank of Commerce, International Bancshares Corporation, and the International Bancshares Corporation Profit Sharing Plan Committee, alleging they breached their fiduciary duties pertaining to the International Bancshares Corporation Employees’ Profit Sharing Plan and Trust by failing to prudently invest plan assets for the exclusive benefit of plan participants. Defendants responded to Mr. Parrott’s class action by filing a motion to compel individual arbitration pursuant to the plan’s 2024 arbitration provision. Mr. Parrott opposed. He argued that the arbitration provision was not valid for two reasons. First, he maintained that he did not consent to arbitrate as he had already separated from the company and ceased participation in the plan at the time of the arbitration agreement, and never assented to the agreement through continued employment or plan participation. Second, Mr. Parrott argued that the arbitration amendment is invalid because it prevents the effective vindication of statutory rights under ERISA by barring plan-wide relief and claims brought in a representative capacity on behalf of the plan. He further argued that the arbitration amendment “waters down the standard by which fiduciaries will be evaluated.” Because the court agreed with Mr. Parrott’s first argument, it did not even get to his second. Mr. Parrott relied on Casey v. Reliance Tr. Co., No. 4:18-CV-424, 2019 WL 7403931 (E.D. Tex. Nov. 13, 2019), to support his position that he did not consent to the 2024 amendment to the plan which added the arbitration provision. In Casey the plaintiffs had similarly already left their employment and were fully vested in their plan benefits prior to the addition of the arbitration amendment. The court held that there was no valid arbitration agreement because neither the employer nor the plan gave the plaintiffs anything in exchange for the amended arbitration clause. As a result, the court concluded that the retroactive arbitration agreement did not bind individuals who had ceased participation in the plan and whose cause of action accrued prior to the amendment. The court agreed with Mr. Parrott that Casey was on point. “As alleged, Plaintiff is a ‘former’ Participant in the Plan and already received his full distribution from the Plan. Therefore, as in Casey, the Court finds that there was no consideration under Texas law for the Amended Arbitration agreement because this was not a situation where an at-will employee received notice of an employer’s arbitration policy and continued working with knowledge of the policy.” Accordingly, the court found that defendants failed to meet their burden to establish that the arbitration agreement was valid and enforceable. Given this holding, the court did not reach the issue of the application of the effective vindication doctrine. The court therefore concluded that it could not compel arbitration and denied defendants’ motion.

Breach of Fiduciary Duty

Sixth Circuit

Parker v. Tenneco Inc., No. 23-cv-10816, 2025 WL 1173011 (E.D. Mich. Apr. 22, 2025) (Judge Judith E. Levy). Participants of the DRiV 401(k) Retirement Savings Plan and the Tenneco 401(k) Investment Plan bring this putative class action against the plans’ fiduciaries for violations under ERISA. This lawsuit already has quite the procedural history, including, most notably, a decision denying defendants’ motion to compel individual arbitration, which was affirmed in the Sixth Circuit. Defendants petitioned the Supreme Court to take up the arbitration issue, but the Supreme Court denied their writ of certiorari. Presently before the court was plaintiffs’ motion for leave to file a second amended complaint and defendants’ motion to dismiss. The court granted in part and denied in part plaintiffs’ motion for leave to amend and denied as moot defendants’ motion to dismiss. Plaintiffs seek leave to amend “to bring the factual allegations and claims up to date and amend and expand upon them based on new information learned since Plaintiffs filed their last pleading in a different court over two years ago, and to provide additional and more-specific allegations to address alleged technical deficiencies.” Defendants opposed and argued that amendment would be futile because the proposed second amended complaint violates the pleading requirements of Rule 8 and 10 and rests on formulaic recitations and conclusory allegations in violation of the pleading standards of Twombly and Iqbal. Additionally, defendants contend that certain claims are time-barred. As an initial matter, the court disagreed with defendants that the proposed amended complaint fails to satisfy Rule 8 and Rule 10. The court found defendants had adequate notice of the claims against them and the grounds upon which the claims rest, satisfying Rule 8, and the presentation of the claims does not create any clarity issues under Rule 10 that render amendment futile. Defendants found more success with their assertion that the proposed complaint fails to comply with the pleading requirements in Twombly and Iqbal. Their objection broke down into four parts: (1) the complaint does not provide the factual basis for plaintiffs’ claim that all defendants were fiduciaries of both plans; (2) the claims for relief in the amended complaint recite the elements of co-fiduciary liability without explaining how each defendant is liable as a co-fiduciary; (3) the claims for breach of the fiduciary duty to monitor likewise fail to identify which defendant failed to monitor which other defendants; and (4) the new claims related to forfeited employer contributions are not supported by factual allegations related to each defendant. The court agreed, at least in part, with the first three arguments. The court held that plaintiffs could not rely on the assertion that two defendants, Lynette Vollink and Jeff Bowen, have fiduciary status solely because they signed Form 5500s. However, as a general matter, the court was satisfied that the complaint alleges far more with regard to the fiduciary status of all other defendants and thus mostly disagreed with defendants on this point. That being said, the court stipulated that not all defendants are alleged to be fiduciaries of both plans, and the court took issue with the proposed second amended complaint to the extent that it relies on the assertion that certain fiduciaries are defendants with respect to plans they did not administer or oversee. The court also agreed with defendants that the proposed amended complaint does not meet the pleading requirements of Twombly and Iqbal with regard to the co-fiduciary and failure to monitor claims, as it found plaintiffs fail to state a claim for relief based on co-fiduciary liability and failure to monitor beyond reciting the elements of such claims. Accordingly, plaintiffs’ motion for leave to amend was denied with respect to these claims. Beyond these holdings, however, the court disagreed with defendants that plaintiffs’ proposed amendments would be futile. With respect to their forfeited employer contribution claims, the court stated that other district courts have found similar allegations sufficient to survive challenges at the pleadings and therefore disagreed with defendants that adding such claims would be futile. Moreover, because plaintiffs allege that defendants’ actions relating to employer contributions are ongoing, the court declined to deny leave to amend them based on arguments that they are time-barred. Accordingly, the court granted plaintiffs’ motion for leave to file their second amended complaint, with certain exclusions explained above, and in light of that decision, denied defendants’ motion to dismiss as moot.

Ninth Circuit

Mejia v. Credence Management Solutions, No. 2:23-cv-02028-MEMF-MRW, 2025 WL 1167349 (C.D. Cal. Apr. 21, 2025) (Judge Maame Ewusi-Mensah Frimpong). Plaintiff Clarisol Mejia sued her ERISA-governed health care plan and its administrator seeking the vast difference between the costs they paid for two surgeries, $1,606.60, and the total amounts billed, $101,046.00. In her operative complaint Ms. Mejia alleges claims for failure to pay plan benefits under Section 502(a)(1)(B) and breach of fiduciary duty under Section 502(a)(3). Defendants moved for judgment on the pleadings as to the fiduciary breach claim. They also filed a request for judicial notice. The court addressed this first. Defendants requested the court judicially notice two documents: a declaration and the health benefits plan. The court took judicial notice of both, concluding that the declaration is public record, and that the plan is incorporated by reference in Ms. Mejia’s complaint, and she did not oppose defendants’ request for judicial notice. Accordingly, the court granted defendants’ request for judicial notice in its entirety. It then discussed the motion for judgment on the pleadings. Defendants argued that Ms. Mejia failed to state her claim for two reasons. First, they argued that a failure to negotiate with medical providers cannot give rise to a claim for fiduciary breach. Second, defendants maintained that Ms. Mejia seeks inappropriate, duplicative relief. The court was not persuaded by either argument. Ms. Mejia’s counsel argued that there is a fiduciary duty to attempt to negotiate. The court agreed, “insofar as Defendants owe fiduciary duties to act in the best interest of Plan participants and beneficiaries—including Mejia—and reading the allegations and drawing reasonable inferences in the light most favorable to Mejia, Defendants have a fiduciary duty to attempt to negotiate with the Medical Providers.” The court therefore denied defendants’ motion as to the first ground. Regarding the second ground for the motion, the court found that Ms. Mejia may pursue both monetary relief, i.e.,the payment of her bill under the plan, and equitable relief, i.e., an order compelling defendants to attempt a negotiation with the providers. The court disagreed with defendants’ argument about a potential windfall. They asserted that paying the full cost of services is not a benefit that is provided to Ms. Mejia under the plan. The court replied that although defendants are correct that the plan provision Ms. Mejia cites does not necessarily provide that they must pay the full amount sought, the court stated that the language does not preclude such a remedy either. Moreover, the court emphasized that Ms. Mejia’s requested relief under Section 502(a)(1)(B) and Section 502(a)(3) are alternative theories, and not duplicative of one another. For these reasons, the court denied defendants’ motion with respect to Ms. Mejia’s requests for monetary and equitable relief under her fiduciary breach claim, and, by extension, denied their motion for judgment on the pleadings.

Class Actions

Third Circuit

Cockerill v. Corteva, Inc., No. 21-3966, 2025 WL 1159519 (E.D. Pa. Apr. 21, 2025) (Judge Michael M. Baylson). This class action lawsuit stems from the 2019 spinoff by chemical company DuPont into three separate business organizations: DuPont de Nemours Inc., Dow Inc., and Corteva, which disrupted the retirement benefits of many DuPont employees. The workers sued under ERISA seeking the early and optional retirement benefits they lost the ability to apply for and obtain following this corporate restructuring. After a bench trial which took place in the summer and fall of 2024, the court issued a liability decision finding in favor of the plaintiffs. (Your ERISA Watch covered that decision in our January 1st edition of this year). The case has since proceeded to its remedies phase. Before the court here was defendants’ motion to dismiss the optional retirement class breach of fiduciary duty claim, as well as the claims of one of the named plaintiffs, for lack of subject matter jurisdiction based on a purported lack of Article III standing. Additionally, defendants moved to decertify the optional retirement class. The court denied both motions in this order, stating that defendants were improperly attempting to relitigate liability issues already decided in favor of plaintiffs. The decision discussed standing first. As an initial matter, the court rejected defendants’ assertion that plaintiffs’ injury was premised on “subjective confusion.” On the contrary, the court explained that the optional retirement class members were concretely injured by the breach of fiduciary duties because defendants’ failure to provide clear and accurate information prevented the class members from knowing where they stood with respect to their pensions and prevented them from taking any action to prevent or mitigate this loss of benefits. Moreover, the court held that plaintiffs’ injuries were concrete, not merely statutory violations, as defendants argued. By way of example of a bare statutory violation, the court offered the hypothetical of an incorrect zip code. “But, in no way can the harms experienced by Plaintiffs be conceptualized as equivalent to an incorrect zip code.” Rather, the court agreed with plaintiffs that the incomplete, inconsistent, and contradictory information communicated (and not communicated) to them by defendants went far beyond a mere technical violation of the statute. “The injury to the Early and Optional Retirement Class Members is one of the very specific injuries that ERISA was enacted to prevent—the inability to know where exactly one stands with respect to his pension benefits and Plan resulting from the miscommunication or omission of material information.” As a result, the court was confident that the optional retirement class plaintiffs satisfied the injury-in-fact requirement for Article III standing. And the court was also confident that plaintiffs’ injuries were traceable to defendants’ actions as those actions directly deprived them of the opportunity to pressure defendants or challenge defendants’ erroneous interpretation of the plan. The court then spoke to defendants’ motion to decertify the optional retirement class. The court declined to adopt defendants’ position that this case is not appropriately treated as a class action, stating that to do so “would defeat the purpose of class actions entirely.” The court further rejected the idea that even to the extent that resolution of the optional retirement class claims requires determining individualized financial harm evaluations, the case could not proceed as a class action. Next, the court maintained that the optional retirement class satisfies Rule 23(a)’s typicality and adequacy retirements. The court found that one of the named plaintiffs was an adequate class representative regardless of the release he signed, and that another named plaintiff was an adequate representative despite being laid off after the spin-off and testifying that he planned for an unreduced retirement benefit. For these reasons, the court denied defendants’ partial motion to dismiss and their motion to decertify. The decision ended with a discussion of why the court was deciding that it could and should award the optional retirement class retroactive recovery as of the date of the spin-off, should class members elect such recovery. The court distinguished the present action from Cottillion v. United Ref. Co., 781 F.3d 47 (3d Cir. 2015), a case in which the Third Circuit found retroactive relief too speculative because the plan participants knew of their eligibility to elect benefits but chose not to because of misleading plan communications about actuarial reductions. The court stated that the optional retirement class members’ denial of benefits was materially different from the Cottillion plaintiffs because they failed to apply for optional retirement benefits due to defendants’ silence about those benefits being cancelled and because of the lack of information necessary to assert those rights in the first place. “Cottillion does not foreclose this type of relief. Rather, Cottillion underscores the distinction between participants who were given the option to elect benefits and chose not to, and those who were deprived of the option altogether. Accordingly, the Court finds that retroactive recovery is appropriate for the Optional Retirement Class under Count II. This remedy is permissible… and necessary to place class members in the position they would have been in had the Plan been administered in accordance with its terms and ERISA’s requirements.” Thus, the court ended its order by formalizing its decision that it would permit the optional retirement class members to elect retroactive benefits under the fiduciary breach claim.

Disability Benefit Claims

Second Circuit

Rappaport v. Guardian Life Ins. Co. of Am., No. 1:22-cv-08100 (JLR), 2025 WL 1156760 (S.D.N.Y. Apr. 21, 2025) (Judge Jennifer L. Rochon). In 1994 plaintiff Jason Rappaport co-founded a mortgage banking company, Industrial Credit of Canada Mortgage Services (“ICC”). In addition to being a mortgage broker, Mr. Rappaport was also a 50% owner of  ICC. In about 2004 or 2005, ICC applied for a group disability insurance policy from Guardian Life Insurance Company of America through ICC’s insurance broker. There was some confusion about whether the policy included or excluded bonuses and commissions in its earnings definition, though it was clear that the parties discussed this, and that ICC wished to include them. Notwithstanding that communicated desire, Guardian ultimately issued the long-term disability policy with an earnings definition that excluded bonuses and commissions. Cut ahead ten years to 2015 and Mr. Rappaport was diagnosed with a severe form of leukemia. On August 17, 2015, Mr. Rappaport informed Guardian that he was unable to continue working, and on September 15, 2015, he applied for long-term disability benefits. Since he applied for disability benefits, Guardian has had questions regarding how Mr. Rappaport was paid, including whether he was paid by ICC on a W-2 or as a shareholder, and whether he had a set salary or was paid based on the company’s earnings and profits through K-1 earnings. To clear up this confusion Mr. Rappaport’s attorney confirmed that prior to his disability Mr. Rappaport’s salary was calculated based on both salary and profits, including his K-1 earnings. It took a bit of back and forth, but ultimately Guardian approved Mr. Rappaport’s claim and began paying him the maximum long-term disability benefit of $10,000 per month effective October 13, 2015. Guardian paid these benefits through August 2020. This litigation arises from Guardian’s termination of Mr. Rappaport’s long-term disability benefits. At first, Guardian informed Mr. Rappaport that it was terminating his monthly benefits because it had not received ongoing proof of claim from his medical providers. But this was during the height of the COVID-19 pandemic and Mr. Rappaport convincingly argued that he had difficulty acquiring outstanding medical information from his providers given the epidemic. On December 21, 2020, he successfully submitted the outstanding medical records to Guardian. Nevertheless, Guardian maintained that he no longer qualified for disability payments, but for a different reason – he was capable of earning more than the maximum allowed while disabled (more than 80% of his indexed insured earnings). Moreover, Guardian claimed that it had overpaid him hundreds of thousands of dollars based on its recalculation of his earnings while disabled, and requested reimbursement of $326,889.05 by March of 2021. This action followed. Mr. Rappaport asserted a claim for wrongful denial of benefits under Section 502(a)(1)(B) as well as a claim for an alternative equitable remedy of reformation of the plan so that insured earnings would include bonuses and commissions, as ICC had always intended. Mr. Rappaport also sought attorneys’ fees and costs under Section 502(g)(1). Guardian meanwhile asserted counterclaims against Mr. Rappaport for restitution and set-off. In a previous order the court held that a de novo standard of review applied to the benefits claim and that Mr. Rappaport’s reformation claim was not time barred. The court also entered summary judgment in favor of Mr. Rappaport as to Guardian’s counterclaim for restitution. The parties subsequently consented to a bench trial on the stipulated record. Both parties agree that the central question before the court is whether the term “insured earnings,” as used in the plan, includes Mr. Rappaport’s K-1 earnings from his position at ICC. In this decision, the court found it does and that Guardian’s benefit denial was erroneous because it did not apply this more inclusive insured earnings definition. The court thus entered judgment for Mr. Rappaport. First, the court determined that K-1 earnings are not bonuses or commissions because this income was not discretionary, like a bonus, or dependent on a particular sale, as a commission would be. The court said that K-1 earnings were not extra compensation, but regular income. Thus, it concluded that “based on the Plan’s plain language… Rappaport’s K-1 income unambiguously falls within the ambit of the Plan’s insured-earnings definition.” However, the court added that even if the plan language was ambiguous on this point, extrinsic evidence also supported Mr. Rappaport’s position that both ICC and Guardian intended insured earnings to encompass his K-1 income from the company, including Guardian’s own documents and Mr. Rappaport’s financial submissions when he applied for benefits. The court therefore held that the plan’s definition of insured-earnings encompasses Mr. Rappaport’s K-1 earnings in addition to his W-2 salary earnings. Second, the court agreed with Mr. Rappaport that even though the K-1 earnings were not bonuses, commissions, or any other form of extra earnings, those earnings should still be included in the plan’s definition of insured earnings and the policy should be reformed to reflect the most expansive definition of insured earnings, as the parties intended all along. “Other than pointing to the ultimate policy language that mistakenly does not contain ‘including bonuses and commissions,’ Guardian has not identified any evidence in the record, despite searching, where the parties agreed to a definition that excluded bonuses and commissions. Rather, all the evidence in the record demonstrates that ICC consistently expressed its intent to procure an earnings definition that included bonuses and commissions and that Guardian knew and confirmed that election. Reformation of the Plan’s language, which did not ultimately reflect that mutual agreement, is therefore appropriate.” This left only the issue of the appropriate remedy. The parties agreed, and the court did too, that if it were to find K-1 earnings included in insured earnings it should remand to Guardian to engage in a benefit determination based on an income and medical assessment and to determine if any potential set-off is appropriate. Finally, the court allowed Mr. Rappaport time to file a motion for attorneys’ fees and costs.

ERISA Preemption

Ninth Circuit

Sagebrush LLC v. Cigna Health and Life Ins. Co., No. 8:24-cv-00353-MEMF-JDE, 2025 WL 1180696 (C.D. Cal. Apr. 23, 2025) (Judge Maame Ewusi-Mensah Frimpong). Plaintiff Sagebrush LLC is a healthcare provider that delivers medically necessary behavioral health services to its patients. In this action Sagebrush alleges that Cigna Health and Life Insurance Company has not properly reimbursed it for the care it has provided to Cigna policyholders. Sagebrush asserts state law causes of action for breach of implied-in-fact contract, unfair business practices under the California Unfair Competition Law, unjust enrichment, quantum meruit, and account stated. Cigna moved for judgment on the pleadings. It argued that Sagebrush failed to state its claim and that to the extent any claim for reimbursement is governed by a self-funded ERISA-governed employee benefit plan those claims are preempted by ERISA. The court granted in part Cigna’s motion, with leave to amend. It concluded that Sagebrush either sufficiently pleaded its state law claims or that the proposed amendments would be sufficient. The court refrained from reaching the issue of preemption at this time stating that the pleadings do not indicate that there are any ERISA plans at issue. Should the existence of an ERISA plan be later revealed by the pleadings, the court stipulated that Cigna may raise the issue again at the summary judgment stage.

Life Insurance & AD&D Benefit Claims

Second Circuit

Daus v. Janover LLC Cafeteria Plan, No. 19-CV-6341, 2025 WL 1167816 (E.D.N.Y. Apr. 22, 2025) (Judge Frederic Block). Plaintiff Paul Daus has been a public accountant since 1996. From 2011 until 2016 Mr. Daus worked for Janover, LLC as a senior tax manager. He lost that position after he became disabled from a medical condition and was terminated. Following his termination from Janover Mr. Daus filed a charge with the Equal Employment Opportunity Commission (“EEOC”) alleging disability discrimination and retaliation by his employer. On January 9, 2018, Mr. Daus, along with his counsel, participated in an EEOC mediation session with Janover during which the parties signed a settlement agreement wherein Janover paid Mr. Daus $35,000 in exchange for a general release. That release expressly provided that Mr. Daus was executing the release on his own behalf and behalf of his heirs, executors, successors and beneficiaries, and that he waived all claims for alleged lost wages and benefits, including claims under ERISA. The settlement agreement also provided that Mr. Daus could consider the agreement for 21 days and that he had 7 days to revoke it after signing. Mr. Daus did not do so. Then Mr. Daus lost his life insurance coverage under Janover’s group policy. He alleges that Janover failed to notify him that he had the right to convert his coverage under the group policy to an individual policy, for which no premiums would be due because he was totally disabled. Mr. Daus, along with his wife, Traci Daus, then initiated this litigation against Janover asserting breach of fiduciary claims under ERISA in connection with the lost life insurance benefits. Janover and the Dauses cross-moved for summary judgment. The central question before the court was whether plaintiffs’ claims under ERISA were waived in the EEOC settlement agreement. The court found they were. Accordingly, the court granted Janover’s motion for summary judgment and denied plaintiffs’ motion. To get there, the court considered the Second Circuit’s six Laniok-Bormann factors to determine the knowledge and voluntariness of the waiver. First, the court concluded that Mr. Daus, a savvy senior tax manager, had the requisite sophistication and business experience to enter into the contract knowingly. Second, the court found that the amount of time he had to review the agreement, coupled with the period he had after the agreement to revoke it, meant that Mr. Daus signed the agreement only after giving it due consideration. Third, the court agreed with Janover that Mr. Daus and his counsel played at least some role in negotiation and deciding the terms of the agreement. Fourth, the court concluded that the terms of the agreement were clear and specific, and that these terms expressly announced that Mr. Daus agreed to waive claims under ERISA. Fifth, there was no question that Mr. Daus was represented by legal counsel. The only factor that complicated the picture somewhat was the sixth and final one – whether the consideration given in exchange for the waiver exceeded employee benefits to which the employee was already entitled by contract or law. Here, there was no question that the $35,000 settlement payment was meager relative to the right of the couple to $500,000 in life insurance benefits at no premium cost. Nevertheless, the court determined that this factor did not strongly disfavor enforcement when considered in tandem with the others. Thus, the court held that Mr. Daus knowingly and voluntarily waived ERISA claims against Janover. The court then took a moment to consider Mr. Daus’s most substantial argument against enforcement – that on the day of the mediation he was in serious pain, recovering from spinal surgeries, and that his doctor had changed his prescription medication just one day before. Though the court acknowledged that Mr. Daus recounted serious pain, stress, and discomfort on the day of the settlement, even accepting this account, it simply felt that the proffered evidence was insufficient to overcome the presumption of his competency because the symptoms he described are “not of the sort that suggests he was unable to willingly and voluntarily enter into the Settlement Agreement.” Finally, the court agreed with Janover that Traci Daus’s claims would ultimately fail too as they were encompassed by the waiver. For these reasons, the court found that all of the couple’s ERISA claims were validly encompassed by the EEOC settlement agreement provisions that released Janover from liability from all claims under ERISA in connection with Mr. Daus’s termination. Thus, the court entered judgment in favor of Janover.

Fifth Circuit

Morgan v. Barrera, No. 21-20497, __ F. App’x __, 2025 WL 1157549 (5th Cir. Apr. 21, 2025) (Before Circuit Judges Richman and Ho). This case involves a dispute over the life insurance benefits of Janie Barrera, and whether she had properly designated Christine and Denise Morgan as her beneficiaries before she died or if the proceeds should instead pass to her sisters under the plan’s default provisions. Prudential sought interpleader relief, stating it couldn’t determine the proper beneficiary to the death benefit. The district court ruled in favor of the Morgans. The sisters appealed that decision to the Fifth Circuit. In this order the Fifth Circuit affirmed. Appellants argued that the district court erred in granting the Morgans’ summary judgment motion for two reasons: (1) they lack standing under ERISA and (2) they did not substantially comply with the change of beneficiary requirements. The court of appeals did not agree. The Barrera sisters’ standing argument was two-fold. First, they contended that the Morgans failed to exhaust administrative remedies. Although the Fifth Circuit requires exhaustion, the appeals court held that this requirement is not applicable in the interpleader context because the concerns addressed by the exhaustion requirement are simply not present in these types of cases. Thus, it found that non-exhaustion does not defeat standing in the present matter. Next, the court of appeals disagreed with the sisters that the Morgans are not beneficiaries with the ability to sue under ERISA. “As our sister circuit has emphasized, in cases in which the insurance company has properly asserted an interpleader action, ‘it does not matter whether [claimants themselves] have standing to assert an ERISA cause of action.’ The Morgans have standing as potential beneficiaries and as claimants in the interpleader action.” The Fifth Circuit then addressed the Barreras’ second argument that their sister Janie did not substantially comply with the policy requirements to change her beneficiary. Here, it was clear that Janie intended to change her beneficiary designation and that she took active steps to effectuate that change. In fact, Prudential even appeared to have accepted the attempted change as evidenced by the fact it sent a letter to the Morgans after Janie’s death confirming the change of beneficiary and inviting them to begin the claim process. For these reasons, the court of appeals determined that the district court did not err in rendering judgment for the Morgans and thus affirmed.

Medical Benefit Claims

Seventh Circuit

Leo K. v. Anthem Blue Cross Blue Shield, No. 24-CV-1625, 2025 WL 1169054 (E.D. Wis. Apr. 22, 2025) (Magistrate Judge Nancy Joseph). Plaintiffs Leo and Donna K. sued their ERISA health benefits plan and its administrator, Anthem Blue Cross Blue Shield, after the plan denied coverage for their minor child’s mental health treatment at a residential facility which resulted in them paying over $40,000 in out-of-pocket costs. Plaintiffs sued for recovery of benefits under Section 502(a)(1)(B) and for equitable relief under Section 502(a)(3) for violation of the Mental Health Parity and Addiction Equity Act. Defendants moved to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The court denied the motion to dismiss in this decision. The court addressed each cause of action in turn. First, it held that plaintiffs asserted a viable claim under Section 502(a)(1)(B) for recovery of benefits because they were able to point to plan language which potentially provides coverage for the facility’s services: “Plaintiffs assert that M.L.K.’s treatment at Blue Ridge met all of the requirements of a ‘covered service’” as that term is defined in the plan. The crux of defendants’ argument was that the plan contains language specifically excluding certain forms of wilderness therapy treatment from coverage. But the court noted that plaintiffs contest this and argue that the version of the plan document they had and used when making treatment decisions for their child contained no such exclusion. Given this dispute, and plaintiffs’ allegations in the complaint that the operative plan document does not contain the language on which defendants rely, the court declined to dismiss the claim for benefits. Next, the court discussed the Parity Act allegations. Plaintiffs alleged that the plan offered comparable benefits for medical and surgical treatments that were analogous to the benefits it excluded at Blue Ridge for their child’s residential inpatient treatments. Moreover, they alleged that the plan does not exclude coverage for medically necessary medical or surgical care based on the location, facility type, provider specialty, or other criteria in the manner that it excludes the mental health treatment at Blue Ridge. “Plaintiffs further allege that the Plan contains exclusions for behavioral and mental health disorders and substance abuse that are not imposed on medical/surgical benefits and thus imposes more restrictive treatment limitations on mental health conditions.” Based on these allegations, the court found that the complaint sufficiently alleges that the plan applies separate and more restrictive treatment limitations to mental health services versus other types of medical and surgical services and therefore it properly alleges a claim under the Mental Health Parity Act. Accordingly, the court denied defendants’ motion to dismiss plaintiffs’ complaint, leaving plaintiffs with both of their causes of action.

Pleading Issues & Procedure

Fifth Circuit

The Expo Group LLC v. Purdy, No. 3:23-CV-2043-X, 2025 WL 1170319 (N.D. Tex. Apr. 22, 2025) (Judge Brantley Starr). This case concerns benefits under two plans: an ERISA-governed plan, the Expo Group’s Leadership Equity Incentive Plan, and a non-ERISA plan, the Long-Term Incentive Plan. Plaintiff Torbejorne Purdy disputes benefit calculations under both plans. The case is set for a jury trial on the state law claims under the long-term plan, followed by a bench trial on the ERISA claims under the equity plan. Mr. Purdy moved to exclude expert testimony of two of the Expo Group’s designated experts: Terese Connerton, designated to testify as the applicable Top Hat classification under ERISA of both plans, and rebuttal expert Robert Cavazos, designated to testify regarding damages calculations under both plans, including the Expo Group’s valuation as of Purdy’s termination date. In this brief order the court granted in part and denied in part the motion to exclude. To begin, the court granted the motion to exclude Ms. Connerton’s testimony as to the claims brought under the long-term plan because Expo Group has since stipulated that the long-term plan is not subject to ERISA, making her testimony no longer relevant as to that plan. However, the court denied the motion to exclude the expert testimony of Ms. Connerton as to the claims under the ERISA-governed equity plan. The court also denied Mr. Purdy’s motion to exclude the expert testimony of Mr. Cavazos. The court stated that Mr. Purdy’s disputes about the valuation and benefit calculation dates go to the weight of the evidence, not the relevance of the expert’s opinion. The court added that Mr. Purdy will have the opportunity to cross-examine Mr. Cavazos before the jury and to present his own expert, as well as advance his arguments on issues of fact before the court with regard to the ERISA claims. The court thus held that Mr. Cavazos’s testimony is relevant and admissible.

Ninth Circuit

Chavez-DeRemer v. Christy, No. CV-24-02640-PHX-DWL, 2025 WL 1169163 (D. Ariz. Apr. 22, 2025) (Judge Dominic W. Lanza). United States Secretary of Labor Lori Chavez-DeRemer filed this action against the trustees and fiduciaries of the Han Robert Christy, D.D.S., P.C. Profit Sharing Plan, alleging they attempted to loot assets from the plan and otherwise failed to properly administer it or distribute retirement funds to eligible employee participants. Before the court here was the Secretary’s motion for a preliminary injunction. Defendants did not file a response to the Secretary’s motion, which, as the court noted, is a sufficient reason alone to grant the motion. However, the court stated it was independently inclined to support the motion on the merits. “[T]he Court agrees with and adopts the Secretary’s arguments as to why the Secretary has established a likelihood of success on the merits, why irreparable harm will result in the absence of preliminary injunctive relief, why the balance of equities favors issuing a preliminary injunction, and why a preliminary injunction is in the public interest. The Court also notes that other courts have granted similar requests for preliminary injunctive relief in analogous cases.” The court broadly agreed that the fiduciaries must be removed from their positions so as not to risk further harm to the plan and its participants during the pendency of this litigation. Thus, the court removed defendants from their roles as trustees, fiduciaries, and administrators of the plan, appointed AMI Benefit Plan Administrators as the independent fiduciary of the plan, and placed the retirement plan assets into an account at Charles Schwab subject to AMI’s exclusive control.

Provider Claims

Second Circuit

DaSilva Plastic and Reconstructive Surgery, P.C. v. Empire HealthChoice HMO, Inc., No. 22-cv-07121 (NCM) (JMW), 2025 WL 1181588 (E.D.N.Y. Apr. 23, 2025) (Judge Natasha C. Merle). Da Silva Plastic & Reconstructive Surgery, P.C. is an emergency plastic surgery practice that provides medically necessary reconstructive surgery to patients in hospitals. It sued Empire HealthChoice HMO, Inc., alleging that the insurer systematically reimbursed it at rates lower than it was required to pay. Da Silva originally asserted claims under both state law and ERISA, seeking over $10 million in reimbursement relating to over 1,000 medical claims for services provided to 366 patients. On January 17, 2025 the court issued an order dismissing plaintiff’s second amended complaint and granting defendants’ motion to sever plaintiff’s claims should the provider file a third amended complaint. The court concluded that the claims had been improperly joined. It concluded that it was implausible that a majority of more than 1,000 claims on behalf of 366 individual patients, subject to more than 100 different plans issued by different plan sponsors, “arose out of the same transaction or occurrence.” Moreover, the court observed that in its opinion no single overarching legal question could resolve all of these diverse claims. Accordingly, the court determined that severance was justified due to the immense record and the vast makeup of the provider’s claims, and would serve the goals of Rule 21, especially judicial efficiency. Da Silva and Empire HealthChoice each filed competing proposals as to how to sever plaintiff’s claims. In this decision the court adopted defendant’s proposal and granted Da Silva leave to file a third amended complaint for medical reimbursement claims under a single ERISA-governed healthcare plan for a single year. The court agreed with Empire HealthChoice that its proposal takes into consideration the fact that the terms of various health plans vary year to year, as do the relevant claims administrators. The court was convinced that narrowing the subset in this way best serves the interests of judicial economy and ensures that the claims that will continue forward are logically related to one another. The court disagreed with Da Silva’s argument that fewer lawsuits necessarily promote judicial efficiency. It stated that it was not clear how plaintiff’s convoluted proposed grouping of claims, severing its medical reimbursement claims into at least six separate lawsuits, “yields the efficiencies contemplated,” because plaintiff’s proposal would not fundamentally answer questions which turn on the provisions of the specific health plans each claim was brought under. “A more tailored grouping – such as grouping together reimbursement claims whose timeliness or recoverability can be determined by reference to the same health plan terms – would better serve judicial efficiency and permit plaintiff’s claims to be resolved by ‘overarching’ legal or factual questions.” Circling back to its observation that the medical claims in plaintiff’s original complaint have no common nucleus, the court stated that each claim for reimbursement “arose out of a distinct factual scenario, including the specific services a patient received, when they received treatment, the specific health plan they received benefits under, and what administrative remedies were pursued.” Thus, the court concluded that only defendant’s proposal adequately factors in this reality. The court therefore adopted that proposal and required plaintiff to file a third amended complaint solely for those claims involving one single ERISA healthcare plan in a single year.

Remedies

Fourth Circuit

Micone v. iProcess Online, Inc., No. 24-61-BAH, 2025 WL 1158885 (D. Md. Apr. 21, 2025) (Judge Brendan A. Hurson). Acting Secretary of Labor Vincent Micone brought this action against a Baltimore payroll processing company, iProcess Online, Inc., the company’s ERISA-governed 401(k) Plan, and the head of day-to-day operations of the plan, Michelle Leach-Bard, for breaches of their fiduciary duties and prohibited transactions under ERISA. The Secretary alleged that from approximately 2014 to 2021, the fiduciary defendants consistently withheld employee contributions from their paychecks for the purpose of remitting the money into their plan accounts but failed to do so, and instead allowed the money to remain unsegregated in the company’s general operating account and commingled it with the company’s assets. Moreover, plaintiff maintains that the fiduciary defendants failed to ensure that all employer matching contributions for employees were made to the plan. In a memorandum order issued on December 2, 2024, the court held that plaintiff established liability and violations of §§ 1103, 1104, and 1106, but failed to adequately support the damages request. Plaintiff supplemented the record and provided additional documentation to support the damages request shortly after that decision. In light of the updated record, the court found it could now determine damages and accordingly amended its order and awarded plaintiff the requested relief. As a preliminary matter, the court sealed the exhibits plaintiff filed relating to the calculation of damages which included employee paystubs and documentation of the 401(k) plan accounts provided by the workers which contained sensitive details including financial account numbers, home addresses, and pay and savings information. Then, relying on this information in the relevant exhibits, as well as the submitted declaration of a labor department investigation, the court concluded that plaintiffs’ requested monetary relief was at this point well documented. The court thus awarded plaintiff the $100,239.54 in monetary damages sought and ordered defendants to pay this amount to the plan. Additionally, the court granted the Secretary’s request that it remove defendants as fiduciaries of the plan and enjoin them from any future service as a fiduciary for an ERISA-governed plan. Finally, the court appointed AMI Benefit Plan Administrators, Inc. to serve as an independent fiduciary of the plan.

Statute of Limitations

Second Circuit

Robinson v. Guardian Life Ins. Co. Grp. Long Term Disability Claim, No. 3:24-cv-994 (BKS/MJK), 2025 WL 1191317 (N.D.N.Y. Apr. 24, 2025) (Judge Brenda K. Sannes). Pro se plaintiff Michelle Robinson filed this action against Guardian Life Insurance Company Group Long Term Disability Claim to challenge Guardian’s denial of her claim for long-term disability benefits. Guardian moved to dismiss the complaint under Rule 12(b)(6). As an initial matter, Guardian asked the court to consider two documents outside the complaint: the certificate of coverage for the group long-term disability policy and a letter dated July 7, 2021 upholding the denial of Ms. Robinson’s claim for long-term disability benefits. The court concluded that it may consider the former but not the latter, as only the certificate of coverage was incorporated by reference and integral to the complaint. The court then discussed Guardian’s principal argument – that Ms. Robinson’s claim for benefits is time-barred under the terms of the plan. The certificate of coverage states that no legal action may be brought against the plan after three years from the date of final benefit determination. The court found this time period reasonable, and agreed with Guardian that Ms. Robinson’s action was filed two days too late. “However, given Plaintiff’s pro se status, and her statement in her response that she ‘was corresponding with Guardian Life up until July 3, 2024,’ the Court grants her leave to amend her complaint to give her an opportunity to allege equitable tolling.” Accordingly, the court granted Guardian’s motion to dismiss, but dismissed the complaint without prejudice and with leave for Ms. Robinson to amend.