I love it when I can report a righteous outcome in an ERISA disability case.  I remember when I first read the district court decision in Wagner v. Am. United Life Ins. Co., 2017 WL 4099216 (S.D. Ohio Sept. 15, 2017), I said to myself “are you kidding me?!”  As I previously reported, Wagner was rendered paraplegic in a motorcycle accident as a teenager and went to school and worked for much of his adult life.  In his fifties, he was involved in another motorcycle accident and broke his right femur. 

He stopped working and received long term disability benefits after that time but American United Life Insurance Company (“AUL”), a la its claims administrator, Disability Reinsurance Management Services (“DRMS”), terminated his claim in reliance on surveillance video showing Wagner active and not in pain as well as medical reviewers’ opinions of non-disability.  This happened on month 34 of his claim, just two months before a change in the policy’s definition of disability was to take place.  On de novo review, the district court found in favor of AUL.  The court determined that despite Wagner’s subjective complaints, the surveillance video showed a different reality.  The district court also rejected Wagner’s argument that AUL must prove that he can do the thinking required for his job.

Wagner appealed.  In an unpublished decision, Wagner v. American United Life Insurance Company, No. 17-4072, __F.App’x__, 2018 WL 2065076 (6th Cir. May 3, 2018), the Sixth Circuit Court of Appeals reversed the decision and ordered AUL to pay Plaintiff his rightfully owed long-term disability benefits.  The Court found significant that “[e]very professional who met Wagner agreed that he should not return to work. DRMS’s own vocational rehabilitation counselor said that Wagner was ‘not capable of full time employment’ a year before his benefits ended, due to the ‘pain flashes’ and grogginess from lack of sleep.”  The court found that Wagner never recovered from his initial disability when his benefits ended.  

In addressing AUL’s arguments, the court noted that DRMS’s medical reviewer concluded that Wagner was lying based on 20 minutes of surveillance video.  “That type of credibility opinion is entitled to little weight when based on a paper review—especially when the insurer can order an in-person examination.”  The court found that the surveillance was “weak evidence” since Wagner and his doctors explained that his pain would come and go.  Just because Wagner could live alone and engage in sporadic activities does not mean he can work.  And my favorite line:  “He need not be bedridden to receive benefits.”   

The opinion gets better.  On the issue of the remedy, the court rejected AUL’s argument that it should only have to pay him two months of benefits since the stricter “total disability” standard applies beyond then.  The court explained that DRMS could have made that decision at month 36 but it chose to forgo that opportunity when it wrongly decided that Wagner was no longer entitled to benefits at month 34.  The court ordered that Defendant must pay Wagner the three years of benefits that he has missed.

On that awesome note, enjoy the rest of this past week’s case summaries!

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

Breach of Fiduciary Duty

Third Circuit

Galante v. Financial Industry Regulatory Authority, Inc., et al., No. CV 16-5198, 2018 WL 2063748 (E.D. Pa. May 2, 2018) (Judge Nitza I. Quinones Alehandro).  In this dispute alleging breach of fiduciary duty for failing to inform the insured of his right to convert the group disability and life insurance coverage prior to his death, the court found that:  (1) ERISA preempts any duty Sun Life may have otherwise had to comply with the Maryland Insurance Code § 17-308 certificate requirement so Sun Life’s alleged non-compliance with § 17-308 cannot be the basis for a breach of fiduciary duty claim; (2) Maryland Insurance Code § 17-309, requiring written notice of conversion, is also preempted by ERISA and cannot be the basis for a breach of fiduciary duty claim; (3) Sun Life is not estopped from declaring the decedent ineligible for benefits because it accepted the premiums forwarded by the employer; (4) there is no violation of the ADEA because the policy links the termination of group insurance coverage to the age the employee ceases working; (5) any claim for breach of fiduciary duty cannot be premised on the terms of the agreement between the employer and Sun Life; (6) there is no breach of fiduciary duty for not timely producing the claim file; and (7) Sun Life did not breach its fiduciary duties by failing to apply an amendment of the policy retroactively in order to pay the decedent’s benefits.  The court granted Sun Life’s motion for summary judgment.

Fourth Circuit

Acosta v. Beverly, Sr., No. 5:18-CV-00125-BR, 2018 WL 2050140 (E.D.N.C. May 2, 2018) (Judge W. Earl Britt).  The court ordered Defendant Beverly permanently enjoined and restrained from violating the provisions of Title I of ERISA and permanently enjoined from acting as a fiduciary, trustee, agent, or representative in any capacity to any employee benefit plan, as defined by ERISA.  Defendant shall make a restitution payment of $1,639, 983.24 to the House of Lights, Inc. Pension Plan & Trust, and House of Lights Inc. Profit Sharing Plan. 

Eighth Circuit

Erickson, et al. v. AmeriCold Logistics, LLC, et al., No. CV 17-1176(DSD/DTS), 2018 WL 2048883 (D. Minn. May 2, 2018) (Judge David S. Doty).  Plaintiffs alleged that SuperValu unilaterally removed the sitting Employer Trustees and appointed new Employer Trustees contrary to the terms of the Trust Agreement.  The court granted Defendants’ motion to dismiss because Plaintiffs do not “allege any actual injury – to themselves, the Plan, or its participants or beneficiaries – caused by the alleged breach.”  Their status as trustees does not alter the standing analysis, which requires a concrete or particularized injury.

Class Actions

Third Circuit

Pfeifer v. Wawa, Inc., et al., No. CV 16-497, 2018 WL 2057466 (E.D. Pa. May 1, 2018) (Judge Paul S. Diamond, J.).  In this matter alleging that an amendment to the Defendant’s ESOP forced Plaintiffs to sell their shares at an unfair price, the court granted preliminary approval of a settlement class defined as”  All persons who were Terminated Employee Participants in the [ESOP] as of January 1, 2015 with account balances greater than $5,000.00 and the beneficiaries of such participants and any Alternate Payees whose stock in the Wawa ESOP was liquidated pursuant to 2015 Plan Amendment (i.e. Plan Amendment No. 4).

D.C. Circuit

Abraha v. Colonial Parking, Inc., No. CV 16-680 (CKK), __F.Supp.3d__, 2018 WL 2016507 (D.D.C. Apr. 30, 2018) (Judge Colleen Kollar-Kotelly).  In what was apparently an uncontested motion for class certification, the court denied Plaintiffs’ motion without prejudice and ordered the parties to provide additional information if it is to properly assess whether class certification is warranted and to appropriately define the scope of that class.

Disability Benefit Claims

Fifth Circuit

Keaton v. Sedgwick Claims Mgmt. Servs., Inc., No. SA-17-CV-223-XR, 2018 WL 2027747 (W.D. Tex. Apr. 30, 2018) (Judge Xavier Rodriguez).  The court found that Sedgwick did not abuse its discretion in denying Plaintiff’s claim for short-term disability benefits.  Sedgwick did not abuse its discretion by not seeking additional medical records that Plaintiff did not submit or by finding that there was no objective evidence supporting the claim when the Plan has to requirement for objective medical evidence.  Even though Defendants labeled Plaintiff’s job as “sedentary” when it allegedly should have been labeled as “light” work, Sedgwick based its decision to deny benefits after finding that the medical records did not support Plaintiff’s inability to perform the essential duties of his position.  

Sixth Circuit

Wagner v. American United Life Insurance Company, No. 17-4072, __F.App’x__, 2018 WL 2065076 (6th Cir. May 3, 2018) (Before: MOORE, CLAY, and KETHLEDGE, Circuit Judges).  See Notable Decision summary above.

Seventh Circuit

Dorris v. Unum Life Insurance Company of America, No. 16-CV-508-SMY-DGW, 2018 WL 1993186 (S.D. Ill. Apr. 27, 2018) (Judge Staci M. Yandle).  On de novo review of the “administrative record,” the court determined that Plaintiff did not satisfy her burden of demonstrating her inability to perform any gainful occupation.  Plaintiff made unsupported claims that her past positions for which she is reasonably fitted requires working 55-70 hours a week.  Though Unum never conducted a vocational analysis and paid her claim for 12 years, the court faulted plaintiff for not providing a vocational analysis “or other information showing that the physical and other demands of relevant gainful occupations are prohibitive for her, she produced no such evidence in either her appeal process or here.”  The court denied Unum an award of attorneys’ fees.

Ninth Circuit

Do v. Metro. Life Ins. Co., No. 16-CV-05097-CW, 2018 WL 2021685 (N.D. Cal. May 1, 2018) (Judge Claudia Wilken).  The court held that Plaintiff bears the burden of showing he has radiculopathy, an exemption to the “Neuromuscular, Musculoskeletal or Soft Tissue Disorder” limitation, just as he would bear the burden of proving that he is eligible for coverage.  Plaintiff’s support included EMGs, an MRI report, and a doctor’s report which documented the results of a clinical examination supporting radiculopathy.  The court found that this evidence outweighed the opinions of MetLife’s doctors (Drs. McPhee and Madireddi).  The court rejected MetLife’s argument that this evidence, which was obtained well before and after the date of the benefit termination, does not show that Plaintiff had radiculopathy at the time his benefits were terminated.  “Defendant submits no evidence showing that Plaintiff’s radiculopathy could disappear and reappear within a matter of months.”

ERISA Preemption

Ninth Circuit

Hoeft v. Time Warner Cable, Inc., et al., No. LACV1800293JAKMRWX, 2018 WL 2078814 (C.D. Cal. May 2, 2018) (Judge John A. Kronstadt).  Plaintiff’s lawsuit alleges disability discrimination and retaliation under FEHA, wrongful termination in violation of public policy, wage and hour claims under the California Labor Code, violations of the UCL based on the alleged discrimination and retaliatory conduct, and intentional infliction of emotional distress.  After two years, Defendant removed the matter to federal court on the basis of ERISA preemption.  It claimed that although the first amended complaint does not seek an award of disability benefits under an ERISA plan, Plaintiff’s deposition testimony clarified certain allegations in the FAC about the delay in certain benefits to her.  The court explained that the testimony provides support for the view that the claim for infliction of emotional distress claim is based, in part, on the alleged delay in making such payments from the applicable short term and long term disability plans.  The court found that the removal was not timely because Defendant was already put on notice based on the complaint’s allegations, but also that there is no complete preemption because there is no basis to conclude that any of the state law claims could have been brought under ERISA.  The state law claims are not based on an obligation under an ERISA plan.  The court granted Plaintiff’s motion to remand to state court.

Exhaustion of Administrative Remedies

Fourth Circuit

Deas v. Prudential Ins. of Am., No. 2:17-CV-03016-DCN, 2018 WL 1993869 (D.S.C. Apr. 26, 2018) (Judge David C. Norton).  The court determined that Plaintiff was required to submit her disability claim within one year and 237 days after her disability began.  Because Plaintiff did not submit her claim within the deadlines set by the Plan, the court found that her current suit should be dismissed.  Plaintiff can re-file her claim to allege facts regarding her argument that the deadline should be equitably tolled for her employer’s failure to provide her with information about the disability plan.

Medical Benefit Claims

Seventh Circuit

University of Wisconsin Hospital and Clinics, Inc., et al. v. Air Products and Chemicals, Inc., No. 14-CV-803-WMC, 2018 WL 2025658 (W.D. Wis. May 1, 2018) (Judge William M. Conley).  The administrator’s interpretation of the alcohol exclusion in the health and welfare plan is not arbitrary and capricious where it determined that alcohol use need not be the “but for” cause of Plaintiff’s injury but concluded that Plaintiff’s alcohol use was “the direct cause” of his fall and resulting injuries; and “the accident would not have occurred in the absence of alcohol.”  It was not “downright unreasonable” for the administrator to rely on an expert report that supposedly misinterpreted one of the medical studies and where the expert’s qualifications are not in the record.  It was also not unreasonable for the administrator to not credit the expert engineering report about the condition of the stairway that may have contributed to Plaintiff’s fall accident.  

Pension Benefit Claims

Sixth Circuit

Adams v. Ford Motor Co., No. 17-13042, 2018 WL 2020781 (E.D. Mich. May 1, 2018) (Judge Denise Page Hood).  Plaintiff claimed that Defendant violated the CBA by wrongfully terminating his employment and that the UAW breached the duty of fair representation by failing to represent his interests.  The court granted Defendant’s motion for judgment on the pleadings.  It found that Plaintiff’s claim is a hybrid claim under Section 301 of the LMRA and is time-barred by the six-month statute of limitations.  The court also stated that “[a] plaintiff’s loss of pension benefits as a byproduct of his termination for reasons unrelated to eligibility to receive a pension does not give rise to an ERISA claim.” 

Ninth Circuit

Cross v. Winz, No. C17-695-BAT, 2018 WL 2010573 (W.D. Wash. Apr. 30, 2018) (Judge Brian A. Tsuchida).  The court ordered payment of the interpleaded funds pursuant to the most recent beneficiary designations governing a pension equity plan (“PEP”) and 401(k) savings plan.  The decedent’s ex-spouse claimed entitlement to the PEP benefits on the basis that the decedent did not disclose it in their divorce proceedings and she claimed entitlement to the 401(k) benefits since the decedent committed suicide and she is now saddled with the full financial responsibility for their children.  The court rejected these claims on the basis that these benefits are ERISA-governed assets and must be distributed according to their beneficiary designations.

Plan Status

Third Circuit

Girardot v. The Chemours Company, No. 17-1894, __F.App’x__, 2018 WL 2017914 (3d Cir. Apr. 30, 2018) (Before: CHAGARES, SCIRICA, and RENDELL, Circuit Judges).  The court affirmed the district court’s decision dismissing the employee severance plan claim on the basis that the Voluntary Separation Program (VSP), a voluntary reduction-in-force program, was not subject to ERISA.  Here, participants in the VSP were entitled to a lump sum severance payment based on years of service and the cost of three months of COBRA.  The court concluded that the VSP is generally akin to a Fort Halifax plan and does not involve a new or ongoing administrative scheme. 

Pleading Issues & Procedure

First Circuit

McAnarney v. Absolute Envtl., Inc., No. 15-12985-NMG, __F.Supp.3d__, 2018 WL 2023515 (D. Mass. Apr. 30, 2018) (Judge Nathaniel M. Gorton).  In this case seeking unpaid benefit plan contributions, the court denied Defendant’s motion to dismiss because Plaintiffs have pled facts sufficient to state a claim for relief under the alter ego theory.  The court declined to consider Plaintiffs’ alternative single employer theory.

Third Circuit

Laborers’ Combind Funds of Western Pennsylvania v. Macson Corp., No. 2:16-CV-01506, 2018 WL 2009090 (W.D. Pa. Apr. 30, 2018) (Magistrate Judge Lisa Pupo Lenihan).  The court denied Defendant’s motion to compel arbitration because it found that there was not a valid and enforceable agreement to arbitrate between Plaintiff and Defendant Macson.  The West Jefferson Hills School District Project Labor Agreement does not govern Plaintiff’s claim against Macson.  The agreement explicitly incorporates the trust agreement provisions governing employer/contractor contributions to trust funds.  There is no provision in the agreement making the arbitration procedure applicable to non-party trust funds and there is no evidence to establish that Plaintiff was the agent of the unions for any purpose other than collecting employers’ contributions to various fringe benefit funds.

Statute of Limitations

Eighth Circuit

Hofland v. Schlumberger Tech. Corp., No. 1:17-CV-119, 2018 WL 2011916 (D.N.D. Apr. 30, 2018) (Judge Daniel L. Hovland).  The court granted Defendant’s motion to dismiss Plaintiff’s ERISA action asserting fraud and breach of the retiree medical plan on the basis that the “suit is time barred: (1) The six-year ERISA limitation period governing claims concerning fiduciary duties does not apply to Hofland’s suit; (2) Hofland’s suit is most analogous to a contract action; (3) Texas’s four-year statute of limitations for contract actions applies; (4) Hofland’s suit is untimely under the Texas limitation period; and (5) equitable tolling of the limitation period is unwarranted.”

Statutory Penalties

Fifth Circuit

Keaton v. Sedgwick Claims Mgmt. Servs., Inc., No. SA-17-CV-223-XR, 2018 WL 2027747 (W.D. Tex. Apr. 30, 2018) (Judge Xavier Rodriguez).  The court declined to award statutory penalties under 29 U.S.C. § 1332(c) because Plaintiff has not shown that he was prejudiced by Charter’s alleged failure to respond to the one request for Plan documents on May 12, 2016, nor that Charter acted with bad faith. 


Fifth Circuit

Phillips v. Charter Commc’ns, Inc., No. 1:18-CV-117-RP, 2018 WL 2015829 (W.D. Tex. Apr. 30, 2018) (Judge Robert Pitman).  In this dispute over denied short-term disability benefits, the court granted Defendant’s motion to transfer this action to the District Court for the Eastern District of Missouri based on the Plan’s forum-selection clause.  Though the SPD states “you have the right to file suit in federal or state court,” the court found that it is unambiguously not a forum-selection clause and does not supersede the forum-selection clause in the Plan.

Tenth Circuit

Med Flight Air Ambulance, Inc. v. MGM Resorts International, et al., No. 17-CV-0246 WJ/KRS, 2018 WL 1997292 (D.N.M. Apr. 27, 2018).  Plaintiff moved for an order modifying the court’s previous order dismissing MGM for lack of personal jurisdiction and instead transfer the case to Nevada, MGM’s home state of operations. The court concluded that its previous order shall be modified under the court’s inherent jurisdiction and under Rule 54(b) to transfer this case to the District of Nevada under § 1631.  Defendant MGM remains dismissed from this case for lack of personal jurisdiction.

Your ERISA Watch authored by Michelle L. Roberts, Esq., Partner