Good morning, ERISA Watchers!  There was an unprecedented number of ERISA decisions decided this past week.  Curious, I did some research and realized that March 31^st is a semiannual deadline under The Civil Justice Reform Act of 1990, which requires the Director of the Administrative Office of the United States Courts, under 28 U.S.C. § 476, to prepare a semiannual report showing all motions pending more than six months and all civil cases pending more than three years. Coincidence?  I think not.  The next reporting deadline is September 30^th.  That seems like a good week for me to be on vacation!

There were just so many notable decisions this past week that it was hard to choose just one to highlight.  So, I decided to highlight a case that has not gotten as much play in the other major case reporting services.  Today’s notable decision is the district court decision in Pike v. Hartford Life and Accident Insurance Company, No. 4:17CV772, __F.Supp.3d__, 2019 WL 1375178 (E.D. Tex. Mar. 27, 2019), a case involving a denial of long-term disability benefits.  What is special about Pike is that it is one of the first comprehensively briefed and tried disability cases under de novo review since the Fifth Circuit issued its decision last year in Ariana M. v. Humana Health Plan of Texas, Inc., 884 F.3d 246 (5th Cir. 2018) (en banc).  In Ariana M., the Fifth Circuit, overruled prior Circuit precedent holding that in de novo review cases, the court would continue to give deference to factual determinations by claims administrators.  In other words, on de novo review, when a beneficiary challenges a plan denial based on a factual determination of ineligibility, the reviewing court will apply de novo review to the administrator’s factual determinations, not just its legal determinations.  What is also special about Pike is that it ends in a win for the disability claimant.  Over the years, my review of the cases from the Fifth Circuit has led me to believe it’s a bit of the Wild Wild West out there for plaintiffs.  And, despite being born in Houston, I’m no Cowgirl.  Hats off to friend-of-ERISA Watch, Lonnie Roach of Bemis Roach & Reed in Austin, TX for representing Pike in this matter and obtaining this excellent judgment.

In Pike, Plaintiff Pike challenged Hartford’s termination of her long-term disability benefits, a claim that Hartford had paid for over eight years for her chronic severe back pain and degenerative disc disease.  The court explained that to be entitled to disability benefits under the “Any Occupation” definition of disability, Pike must demonstrate by the preponderance of the evidence that she cannot perform one or more essential duties of any occupation for which she is qualified.  To do this she can show that she cannot work the number of hours in a regularly scheduled workweek.

Following 151 pages of briefing, review of a 2,266-page record, and a 2-hour oral hearing, Magistrate Judge Caroline M. Craven issued a 60-page Report and Recommendation (“R&R”) on January 31, 2019 finding in favor of Pike.  The district court considered and disposed of Hartford’s five main objections to the R&R.  In so doing, the court concluded that:  (1) the R&R does not misstate the Policy’s definition of “disability” and does not imply that a diagnosis is the same as a “disability;” (2) the R&R does not improperly rely on outdated records for its conclusion of present disability; evidence of permanent limitations and permanent nerve damage from years prior are probative that Plaintiff’s conditions continued to exist when Hartford terminated her claim; (3) the R&R does not apply the “treating physician rule” nor improperly relies on caselaw outside the Fifth Circuit; the court may give appropriate weight to a treating physician’s conclusions upon finding them reliable and probative; (4) the R&R does not wrongly rely on Plaintiff’s subjective complaints as opposed to objective evidence despite Hartford’s claim that Plaintiff’s lengthy and detailed letters undermined Plaintiff’s complaints of cognitive impairment; (5) the R&R does not erroneously use Plaintiff’s attorney’s arguments in briefing as findings concerning the errors in Dr. Jaime Lewis’s report (Hartford’s reviewing doctor); and (6) the R&R does not improperly “cherry-pick” from the administrative record; the Magistrate Judge explained in detail why she found some evidence more probative.

I urge you to read the Magistrate Judge’s R&R which follows the district court’s opinion.  Until next week!

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

Attorneys’ Fees

Second Circuit

Leber v. Citigroup, Inc., No. 07-CV-9329 (SHS), 2019 WL 1331313 (S.D.N.Y. Mar. 25, 2019) (Judge Sidney H. Stein).  In this dispute between co-counsel regarding the proper distribution of $2.3 million in attorneys’ fees, the court found that the dispute must be resolved through the alternative dispute resolution mechanisms set out in the Co-Counsel Agreement.  The court also denied one firm’s motion for pre-arbitration relief seeking distribution of all but $250,000 of the fee award prior to arbitration.  

Sixth Circuit

Simpson v. Metropolitan Life Insurance Corporation, No. 2:18-CV-11724, 2019 WL 1354186 (E.D. Mich. Mar. 26, 2019) (Judge Stephen J. Murphy, III).  After exhausting administrative remedies on his dismemberment benefit claim, Plaintiff hired an attorney on a contingency fee basis.  At some point after the retention but before the attorney filed the lawsuit, MetLife had already approved and paid Plaintiff’s new total and permanent disability claim.  The attorney did not discover this until after he filed the lawsuit.  The court denied Plaintiff’s motion for an award of attorney’s fees of forty percent of the disability benefits that MetLife awarded his client and for a lien on all disability payments from MetLife to Plaintiff. The court found that state court is the proper venue for the state-law breach of contract and tortious interference claims against his client and MetLife, respectively. 

Ninth Circuit

Smith v. Aetna Life Insurance Company, No. 18-CV-1463-JLS-WVG, 2019 WL 1330926 (S.D. Cal. Mar. 25, 2019) (Judge William V. Gallo).  In this dispute over disability benefits, the court denied Aetna’s motion to compel production of Plaintiff’s fee agreement with her attorney.  Though the court found the agreement to be relevant to the fee dispute and that it would be reasonable for Plaintiff’s counsel’s fees obtained out of Plaintiff’s benefits to be used as an offset to any amount the district court ultimately determines to be fair and reasonable for the services rendered, “[t]his Court is constrained by well-settled Ninth Circuit law that in ERISA cases, contingency fee retainer agreements can neither be used to enhance nor diminish a prevailing party’s reasonable attorney’s fees.”

Breach of Fiduciary Duty

Second Circuit

Mohr-Lercara v. Oxford Health Insurance, Inc., No. 18 CV 1427 (VB), 2019 WL 1409479 (S.D.N.Y. Mar. 28, 2019) (Judge Vincent L. Briccetti).  The court concluded that “collateral estoppel bars plaintiff from rearguing that defendants acted as plan fiduciaries when they required pharmacies to (i) remit overcharges to defendants, or (ii) misrepresent patients’ proper cost-sharing amounts. Collateral estoppel also bars plaintiff from rearguing that defendants acted as plan fiduciaries when they prevented pharmacies from disclosing to patients (i) proper cost-sharing amounts, (ii) the existence of the overcharges, (iii) how pharmacies charged patients for covered prescription drugs, or (iv) that patients’ covered prescription drugs could cost less if purchased without using insurance.  Finally, plaintiff is also precluded from rearguing that she need not exhaust administrative remedies, or that exhausting administrative remedies by appealing the denial of her grievance would be futile.”

Haley v. Teachers Insurance and Annuity Association of America, No. 17-CV-855 (JPO), 2019 WL 1382648 (S.D.N.Y. Mar. 27, 2019) (Judge J. Paul Oetken).  Plaintiff alleges that TIAA is liable as a non-fiduciary for engaging in prohibited transactions through the administration of its participant loan program, in violation of § 406(a)(1)(B), (C), and (D).  At the motion to dismiss stage, the non-fiduciary defendants bear the burden of demonstrating the applicability of a § 408 exemption affirmative defense.  At the motion to dismiss stage, a Plaintiff “must plausibly allege the following elements of a § 406(a) knowing participation claim against a non-fiduciary transferee to survive a motion to dismiss:  1) the fiduciary caused the plan to engage in a prohibited transaction as defined by § 406(a)(1); 2) the factual circumstances of the transaction, which are such that a § 408 exemption does not clearly apply; 3) in causing the transaction, the fiduciary knew or should have known the factual circumstances underlying the transaction that satisfied § 406(a)(1); 4) the non-fiduciary knew that the transferor is an ERISA fiduciary; 5) the non-fiduciary knew that the fiduciary caused the transaction with the knowledge of the underlying facts that bring the transaction within § 406(a)(1); and 6) the non-fiduciary knew or should have known the factual circumstances underlying the transaction that satisfied § 406(a)(1).”  The court determined that Plaintiff has sufficiently alleged facts to establish these elements in the Amended Complaint, for each of the three claims asserted under § 406(a)(1).  Motion to dismiss denied.

Sixth Circuit

Secretary of The Department of Labor v. United Transportation Union, et al., No. 1:17 CV 923, 2019 WL 1382290 (N.D. Ohio Mar. 27, 2019) (Judge Solomon Oliver, Jr.).  The Secretary alleges that Defendants breached their fiduciary duties by not engaging in due diligence with respect to the reasonableness of the administrative fee for the Voluntary Short Term Disability Plan withheld from Union members’ wages.  The court determined that “the Administrative Fees are plan assets, pursuant to the Plan Asset Regulation, 29 U.S.C. § 2510.3–102, on the basis that the amounts withheld from employee wages included the Administrative Fees.”  The court also determined that there are genuine disputes of material fact regarding whether Defendants are fiduciaries under ERISA.

Ninth Circuit

Terraza v. Safeway Inc., et al., No. 16-CV-03994-JST, 2019 WL 1332721 (N.D. Cal. Mar. 25, 2019) (Judge Jon S. Tigar).  Noting that the court typically does not need motions in limine for bench trials, the court denied Defendants’ motion to exclude the testimony of Martin Dirks, who Plaintiff’s counsel retained “to provide an opinion on the selection and monitoring of investment managers for [Safeway’s 401(k)] Plan and to calculate the economic damages sustained by the Plan and its participants.”

Tenth Circuit

Bryant v. Matrix Trust Company, LLC, No. 18-CV-00749-PAB-NYW, 2019 WL 1331954 (D. Colo. Mar. 25, 2019) (Judge Philip A. Brimmer).  Defendant Matrix Trust Company is not a fiduciary under ERISA because the Custodial Agreement is clear that Matrix serves as a “non-discretionary, directed custodian.”  Its role was merely to hold Retirement Security Plan and Trust’s accounts in custody.  The DOL-issued guidance regarding directed trustees does not apply; a directed trustee is a fiduciary.  However, neither the Plan Agreement nor the Custodial Agreement provides that Matrix is a trustee.  Motion to dismiss on ERISA claims is granted.

Myers v. Administrative Committee, Seventy Seven Energy, Inc. Retirement & Savings Plan; et al., No. CIV-17-200-D, 2019 WL 1320064 (W.D. Okla. Mar. 22, 2019) (Judge Timothy D. Degiusti).  The court agreed with Plaintiff that the Chesapeake stock was an employer security, but it found that the Amended Complaint fails to state a plausible claim that the Committee Defendants breached a fiduciary duty by holding Chesapeake Stock, or allowing it to be held, in the ESOP component of the Plan.  The court also found that Principal, as a directed trustee, did not owe a duty to divest the Plan of Chesapeake stock or diversify assets of the Plan.  There was no breach of the duty of prudence since the Dudenhoeffer standard, which applies equally to risk-based and value-based claims, is not satisfied in this case.  Because the court found that the Chesapeake stock was not part of the ESOP component of the Plan nor held in the ESOP fund, Plaintiffs do not state a breach of any general duty to disclose.  Lastly, there is no breach of a co-fiduciary duty against Principal.

Teets v. Great-W. Life & Annuity Ins. Co., No. 18-1019, __F.3d__, 2019 WL 1372319 (10th Cir. Mar. 27, 2019) (Before MATHESON, BACHARACH, and McHUGH, Circuit Judges).  In this certified class action alleging that Great-West, which manages an investment fund offered to employers as an investment option for their employees’ retirement savings plan, breached a fiduciary duty to participants in the fund or that Great-West was a non-fiduciary party in interest that benefitted from prohibited transactions with his plan’s assets, the Tenth Circuit affirmed the district court’s grant of summary judgment to Great-West on the basis that it was not a fiduciary and Plaintiff had not demonstrated that Great-West was liable as a non-fiduciary.  Specifically, the court concluded that “[b]ecause Mr. Teets has not provided evidence that contractual restrictions on withdrawal from the [Key Guaranteed Portfolio Fund (“KGPF”)] actually constrained plans or participants, Great-West does not act as an ERISA fiduciary when it sets the KGPF’s Credited Rate each quarter. As a result, it also lacks sufficient authority or control over its compensation to render it a fiduciary.” 

Class Actions

Ninth Circuit

D.T. v. NECA/IBEW Family Medical Care Plan, No. C17-00004 RAJ, 2019 WL 1354091 (W.D. Wash. Mar. 26, 2019) (Judge Richard A. Jones).  The court found the following proposed class certifiable under Rule 23(b)(1), and alternatively, under Rule 23(b)(2), “where the Court need only determine the requirements of the Parity Act as applied to the Plan as a whole.”  

All individuals who:  1) Have been, are or will be participants or beneficiaries under the NECA-IBEW Family Medical Care Plan at any time on or after January 4, 2011; and 2) Require neurodevelopmental therapy (speech, occupational or physical therapy) or applied behavior analysis therapy to treat a qualified mental health condition.

Definition: The term “qualified mental health condition” shall mean a condition listed in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders published by the American Psychiatric Association to which defendants applied and/or currently apply the Plan’s Developmental Delay Exclusion.

Disability Benefit Claims

First Circuit

Santana-Diaz v. Metropolitan Life Insurance Company, No. 17-1428, __F.3d__, 2019 WL 1416623 (1st Cir. Mar. 29, 2019) (Before Howard, Chief Judge, Thompson and Barron, Circuit Judges).  The court affirmed the district court’s order granting judgment to MetLife.  MetLife’s decision to deny Plaintiff further long-term disability benefits based on a physical disability was reasonable and substantially supported.  Because MetLife has discretion, it could require objective evidence that it sought, including evidence that Plaintiff had a non-limited condition such as radiculopathies, and that the condition caused him to be disabled.  The court also found that MetLife did not act arbitrarily or capriciously by considering the “functional limitations” of Plaintiff’s condition.

Second Circuit

Hughes v. Hartford Life & Accident Ins. Co., No. 3:17-CV-1561 (JAM), __F.Supp.3d__, 2019 WL 1324947 (D. Conn. Mar. 25, 2019) (Judge Jeffrey Alker Meyer).  The court determined that Hartford denied Plaintiff a full and fair review of her disability claim when it denied her the right to see and respond to the report of a neurologist, who conducted an independent medical evaluation, prior to denying her administrative appeal.  The court analyzed and rejected the line of cases holding otherwise.  The court found that the report was relevant to her claim and Hartford relied on it extensively as part of its reasoning to not pay benefits.  Hartford’s failure to provide a full and fair review was neither inadvertent nor harmless and thus de novo review applies.  However, rather than decide Plaintiff’s eligibility for benefits, the court determined that “the best course of action is to remand the case to Hartford for a speedy full and fair reconsideration.”

Third Circuit

Daniels v. Metropolitan Life Insurance Company, No. CV 17-1335-CFC, 2019 WL 1369611 (D. Del. Mar. 26, 2019) (Judge Colm F. Connolly).  MetLife’s denial of the pro se plaintiff’s short-term disability claim based on anxiety and depression was not arbitrary and capricious where Plaintiff’s treating doctor was unavailable for consultation due to criminal charges he was facing, Plaintiff declined an IME, and Defendant relied on the opinions of its board certified medical consultants.

Fourth Circuit

Jones v. Charter Communications Short Term Disability Plan, No. 1:17CV863, 2019 WL 1409308 (M.D.N.C. Mar. 28, 2019) (Judge William L. Osteen, Jr.).  The court found that Sedgwick’s denial of short-term disability benefits was not an abuse of discretion.  It found that Sedgwick, as a third-party claims fiduciary is free of any conflict of interest and neither it nor any doctor it retained had any direct financial stake in the determination of the claimant’s eligibility for benefits.  The decision was based on substantial evidence and an independent medical examination was not required.

Popov v. Univ. Physicians & Surgeons, Inc., No. CV 3:18-0296, 2019 WL 1386401 (S.D.W. Va. Mar. 27, 2019) (Judge Robert C. Chambers).  The court found that Defendant did not need to consider injuries Plaintiff sustained from a fall on vacation (while on FMLA leave) because the Plan did not cover her at that time since she had stopped working the required minimum number of hours.  The Plan’s exception for continued coverage “During a leave of absence if continuation of your insurance under the Policy is required by the state mandated family or medical leave act or law,” does not apply here because the West Virginia Parental Leave Act does not apply to private employers.  The court also found that the Plan did not abuse its discretion in not finding Plaintiff disabled as a result of carpel tunnel syndrome, neck pain, and back pain.  It was not unreasonable for the Plan’s reviewing doctors to not review an MRI from a decade before Plaintiff stopped working.

Hines v. The E.I. Dupont De Nemours and Company Long Term Disability Plan, No. 6:18-CV-00007-DCC, 2019 WL 1364915 (D.S.C. Mar. 26, 2019) (Judge Donald C. Coggins, Jr.).  The Plan’s decision to uphold the denial of long-term disability benefits was not an abuse of discretion where Plaintiff’s treating physicians opined that Plaintiff is capable of working; objective medical testing consistently found that Plaintiff’s neurological, cardiovascular, and other systems were operating normally; Plaintiff’s alleged disabling condition (POTS) was never decisively diagnosed and was ultimately refuted by objective evidence; and two board-certified physicians performed thorough peer reviews.  The court found the decision was not influenced by a conflict of interest where DuPont delegated the initial determination and first-level appeal to Aetna, and by relying on third-party peer review physicians who attested they had no conflicts of interest.

Irving v. The Unum Life Insurance Company of America, No. CV PJM 17-3206, 2019 WL 1331237 (D. Md. Mar. 25, 2019) (Judge Peter J. Messitte).  “Unum’s determination to terminate Irving’s long-term disability benefits was reasonable and supported by substantial evidence, especially in light of opinions from several of Irving’s own treating physicians who opined that she could perform fully sedentary work.”  The court found that Plaintiff’s social security disability determination is not critical to the disposition of this case.  Unum found Plaintiff disabled during the same period she obtained her SSDI award and only found her no longer disabled after the plan’s definition of disability changed. 

Fifth Circuit

Pike v. Hartford Life and Accident Insurance Company, No. 4:17CV772, __F.Supp.3d__, 2019 WL 1375178 (E.D. Tex. Mar. 27, 2019) (Judge Amos L. Mazzant).  See Notable Decision summary above.

Seventh Circuit

Miller v. The Hartford Life and Accident Insurance Co., No. 116CV00166JRSDLP, 2019 WL 1330433 (S.D. Ind. Mar. 25, 2019) (Judge James R. Sweeney, II).  In this dispute over long-term disability benefits, the court found in favor of Hartford.  The court found it reasonable for Hartford to discredit Plaintiff’s treating doctor where his opinions lacked support or were contradicted by examining specialists, and where there was evidence that the doctor was acting “more as an advocate” than a doctor rendering an objective opinion.  Further, Hartford did consider the SSA’s findings and disagreed with them on a principled basis.  The court rejected Plaintiff’s other arguments including that Hartford’s record reviewers focused on normal findings, did not consider Plaintiff’s complaints of pain, the record lacked evidence of improvement, and Harford relied on evidence not cited in denial letters. 

Discovery

Sixth Circuit

Krzysiak, et al v. Navistar International Corporation and Navistar, Inc., et al., No. 3:16-CV-443, 2019 WL 1368862 (S.D. Ohio Mar. 26, 2019) (Judge Walter H. Rice).  Following trial on Defendant’s statute of limitations defense to Plaintiff’s breach of fiduciary duty claim, the court granted Plaintiffs’ motion for sanctions pursuant to Rule 37 for Defendant’s failure to provide correct and complete information to Plaintiff during the discovery process.  The court ordered Defendant to respond to Plaintiffs’ written discovery requests, to make certain witnesses available for depositions concerning the statute of limitations defense, and to pay all reasonable legal fees and costs incurred by Plaintiffs for preparing and filing the motion and for the discovery deemed necessary as a result.  

ERISA Preemption

Third Circuit

Gadsby v. United of Omaha Life Insurance Company, No. CV 18-2214, 2019 WL 1405845 (E.D. Pa. Mar. 28, 2019) (Judge John R. Padova).  In this dispute over voluntary life insurance benefits offered through an employer-sponsored plan, the court found that Plaintiff’s common law causes of action for declaratory relief, breach of contract, and breach of fiduciary duty are conflict preempted by ERISA and dismissed with prejudice.

Exhaustion of Administrative Remedies

Third Circuit

Gadsby v. United of Omaha Life Insurance Company, No. CV 18-2214, 2019 WL 1405845 (E.D. Pa. Mar. 28, 2019) (Judge John R. Padova).  “For the purposes of 12(b)(6) review, we find that Plaintiff has plausibly alleged futility. While Plaintiff’s allegations of futility are sparse, they nevertheless reasonably suggest that United had a fixed and unwavering policy of denying benefits when [Evidence of Insurability] had not been submitted as required by the Policy, irrespective of whether United had been collecting premiums without notifying the plan participant of the EOI requirement.”  Whether exhaustion would have been futile cannot be decided at this time.

Ninth Circuit

Sides v. Cisco Systems, Inc., et al., No. 15-CV-03893-HSG, 2019 WL 1385896 (N.D. Cal. Mar. 27, 2019) (Judge Haywood S. Gilliam, Jr.).  The court found that UHIC’s determinations as to the pro se plaintiff’s medical claims are final and binding since Plaintiff did not exhaust his administrative remedies under the Plan, which required two levels of review before pursing legal action.  Even if Plaintiff did exhaust, he has not demonstrated that UHIC abused its discretion.  The court granted Defendants’ motion for judgment under FRCP 52(a).

Life Insurance & AD&D Benefit Claims

First Circuit

McGuiggin v. Zurich American Insurance Company, No. CV 17-11523-LTS, 2019 WL 1333268 (D. Mass. Mar. 25, 2019) (Judge Leo T. Sorokin).  Because the record did not establish that Zurich provided the insured with notice of its discretionary authority, the court resolved the pending cross-motions for summary judgment using the default de novo review standard.  The relevant accidental death exclusion applies to any loss “caused by … being under the influence of any prescription drug” or any “narcotic” or any “hallucinogen,” unless a valid prescription from a physician authorized use of the relevant substance in the manner it was used.  The court found that this exclusion was properly applied to Plaintiff’s son who died from acute fentanyl intoxication.

Third Circuit

Gadsby v. United of Omaha Life Insurance Company, No. CV 18-2214, 2019 WL 1405845 (E.D. Pa. Mar. 28, 2019) (Judge John R. Padova).  The court found that the Complaint fails to allege that the employer exercised sufficient control over the life insurance policy to be a defendant in a claim for benefits under § 502(a)(1)(B), where the “Complaint alleges only that FSG (1) deducted Decedent’s premiums from his paycheck and remitted them to United and (2) refunded Decedent’s premiums once United determined that Decedent was not insured under the Policy.”  With respect to the claim against United, the court found that Plaintiff stated a claim for benefits based on the allegation that United essentially waived the Evidence of Insurability requirement by failing to enforce it.  

Medical Benefit Claims

D.C. Circuit

New York v. United States Dep’t of Labor, No. CV 18-1747 (JDB), __F.Supp.3d__, 2019 WL 1410370 (D.D.C. Mar. 28, 2019) (Judge John D. Bates).  The court determined that the Department of Labor’s interpretation of the term “employer,” found at Definition of “Employer” Under Section 3(5) of ERISA—Association Health Plans, 83 Fed. Reg. 28,912 (June 21, 2018) (“Final Rule”) is unlawful and must be set aside.  “The Final Rule scraps ERISA’s careful statutory scheme and its focus on employee benefit plans arising from employment relationships. It purports to extend ERISA to cover what are essentially commercial insurance transactions between unrelated parties. In short, the Final Rule exceeds the statutory authority delegated by Congress in ERISA.”

Pension Benefit Claims

Fourth Circuit

Shepherd, Jr. v. Cmty. First Bank, No. 8:15-CV-04337-DCC, 2019 WL 1405849 (D.S.C. Mar. 28, 2019) (Judge Donald C. Coggins, Jr.).  Plaintiff worked as Bank President until age 71 as required under the top hat plan in order to receive benefits.  Despite investigations into his misconduct surrounding some loans, he was not terminated for cause prior to his retirement.  He received benefits until a new CEO decided to investigate matters of misconduct and stop paying his benefits.  The court reviewed the Plan Administrator’s termination of plan benefits under the applicable “reasonableness” standard of review.  The Plan Administrator’s weighing evidence of misconduct was improper under the terms of the Plan.  The Administrator could only deny benefits after the Bank finalized a “for cause” termination under the Employment Agreement, which was never done.  “It is clear from the Record that no documents supported the Bank’s initial decision to terminate benefits. That decision was made with the strategy to develop—through litigation counsel—an investigation to justify the termination of benefits.”  The court determined that the Plaintiff is entitled to benefits and attorneys’ fees.

Sixth Circuit

Black v. Pension Benefit Guarantee Corp., No. 09-13616, 2019 WL 1315275 (E.D. Mich. Mar. 22, 2019) (Judge Arthur J. Tarnow).  The court determined that the PBGC acted in accordance with 29 U.S.C. § 1342(c) when it executed an agreement with Delphi to terminate the Delphi Corporation’s Retirement Program for Salaried Employees (“Salaried Plan”) because it could not continue without a sponsor and the PBGC had no choice but to terminate.  The court also determined that the PBGC owed no fiduciary duty to the Salaried Plan participants, the termination did not deprive Plaintiffs of due process, and Plaintiffs failed to demonstrate that termination of the Salaried Plan was arbitrary and capricious.  The court granted summary judgment to the PBGC.

Plan Status

Seventh Circuit

Cappello, et al. v. Franciscan Alliance, Inc., et al., No. 3:16-CV-290 RLM-MGG, 2019 WL 1382909 (N.D. Ind. Mar. 27, 2019) (Judge Robert L. Miller, Jr.).  In this putative class action on behalf of participants or beneficiaries of the Franciscan Alliance Pension Security Plan, the court denied Defendant’s motion to dismiss.  The court explained that “[w]hether an organization meets the statutory requirements for the church plan exemption is a fact intensive inquiry that can’t be decided on a motion to dismiss when, as here, the parties disagree on key facts, including:  which organization – Franciscan Alliance, the Committee, or both – “maintains” the Plan, within the meaning of § 1002(33)(C); whether that organization is controlled by or associated with the Catholic Church, as required under 1002(33)(C); and whether ‘substantially all of the individuals included in the plan’ are ‘employee[s] of a church’, as required under 1002(33)(B)(ii) and (C)(ii)(II).”  The court declined to reach the merits of Plaintiffs’ constitutional challenge to the Church Plan exemption since it has not decided whether the Franciscan Alliance Plan qualifies as a church plan.

Tenth Circuit

Francisco S. v. Aetna Life Insurance Company & World Bank Group Medical Insurance Plan, No. 2:18-CV-00010-EJF, 2019 WL 1358858 (D. Utah Mar. 26, 2019) (Magistrate Judge Evelyn J. Furse).  The court determined that the claimant’s ERISA claim seeking payment for residential treatment is subject to dismissal because the World Bank Group Medical Insurance Plan qualifies as a governmental plan exempt from ERISA.  “The United States recognizes the World Bank, also known as the International Bank for Reconstruction and Development, as an international organization entitled to the protections and privileges under the Immunities Act.  The Immunities Act exempts the World Bank, as an international organization, and its employees and officers from taxation.” (internal citations omitted).  

Pleading Issues & Procedure

Sixth Circuit

Int’l Longshoremen’s Ass’n, Local Union No. 1982 v. Midwest Terminals of Toledo Int’l, Inc., No. 3:17-CV-1688, 2019 WL 1331566 (N.D. Ohio Mar. 25, 2019) (Judge Jeffrey J. Helmick).  In this long-standing dispute concerning the ERISA-compliance of Midwest’s welfare-and-pension trust fund, the court remanded this matter and ordered the parties proceed with the grievance and arbitration procedure set forth in Article 25 of the CBA.

Provider Claims

Second Circuit

The Medical Society of The State of New York v. Unitedhealth Group Inc., et al., No. 16-CV-5265 (JPO), 2019 WL 1409806 (S.D.N.Y. Mar. 28, 2019) (Judge J. Paul Oetken).  “Plaintiffs allege that United has a policy of violating the health insurance plans it operates or administers by refusing to pay the facility fees charged by out-of-network office-based surgery practices.”  The court determined that the anti-assignment clauses in the plans at issue are not rendered ambiguous or nugatory by the existence of direct payment provisions.  The court also concluded that no reasonable jury could find that United clearly manifested an intention to relinquish its right to enforce the anti-assignment clauses.

Fourth Circuit

Kearney, MD, PLLC v. Blue Cross and Blue Shield of North Carolina, No. 1:16CV191, 2019 WL 1359239 (M.D.N.C. Mar. 26, 2019) (Judge Loretta C. Biggs).  The court concluded “that the anti-assignment provision in BCBSNC’s health benefit plans precludes a finding that Plaintiff has derivative standing to sue under ERISA” and granted BCBSNC’s motion to dismiss the Second Amended Complaint.

Retaliation Claims

Tenth Circuit

Dahlin v. Wells Fargo Bank, N.A., No. 18-CV-00554-PAB-GPG, 2019 WL 1358845 (D. Colo. Mar. 25, 2019) (Judge Philip A. Brimmer).  The court determined that Plaintiff’s allegations are sufficient to show a specific intent to interfere with her benefits under the Wells Fargo & Company Salary Continuation Pay Plan and denied dismissal of her § 510 claim.  The court found that the facts alleged support a reasonable inference that Wells Fargo intended to deprive Plaintiff, then a twenty-nine-year employee, of Plan benefits by designated her termination as one for “poor performance.”  Among other circumstantial evidence, after Plaintiff was terminated, Wells Fargo “eliminated the sales goals it required plaintiff to meet, conceding they were unreasonable and could not be achieved.”  The court found that Plaintiff did not plausibly allege a § 502(a)(1)(B) claim for benefits since the Plan Administrator just applied the Plan terms to Wells Fargo’s stated reason for plaintiff’s discharge.  The Plan precludes benefits for termination due to poor performance.  It was not required to look at whether the reason for termination was proper or justified.

Severance Benefit Claims

Fourth Circuit

Jones v. Canal Wood, LLC, No. 5:18-CV-274-FL, 2019 WL 1370847 (E.D.N.C. Mar. 26, 2019) (Judge Louise W. Flanagan).  The court found that Plaintiffs are not entitled to severance benefits because the facts in the complaint fall within the “Sale of the Employer” exclusion of benefits.  Plaintiffs cannot circumvent the language of this exclusion by relying on representations made to employees about the nature of the restructuring.  A plaintiff cannot bring an equitable estoppel claim that would result in payment of benefits inconsistent with the written plan.  Plaintiffs have also failed to allege sufficient facts to give rise to a plausible inference of alter ego liability to award benefits under the Plan.

Ninth Circuit

Berman, et al., v. Microchip Technology Incorporated, et al., No. 17-CV-01864-HSG, 2019 WL 1318550 (N.D. Cal. Mar. 22, 2019) (Judge Haywood S. Gilliam, Jr.).  The court determined that the clear and unequivocal language of the Amtel Plan dictates that the agreement that ultimately results in a Change of Control is not the agreement that constitutes the Initial Triggering Event entitling employees to severance.  The Initial Triggering Event only requires a “Definitive Agreement” “that will result in a Change of Control of the Company.”  Amtel did enter into a Definitive Agreement with Dialog prior to the deadline stated in the Plan.  Plaintiffs are entitled to severance benefits under Section 502(a)(1)(B) regardless of what standard of review applies.  The court also found liability for breach of fiduciary duty under Section 502(a)(3) because the Plan Administrator breached her duties when she misrepresented the terms of the Plan by denying Plaintiff’s benefits.  The court denied Defendants’ Rule 56(d) motion since the court did not consider the deposition testimony to which Defendants object since it was not contained in the Administrative Record.

Statute of Limitations

Sixth Circuit

Simpson v. Metropolitan Life Insurance Corporation, No. 2:18-CV-11724, 2019 WL 1354186 (E.D. Mich. Mar. 26, 2019) (Judge Stephen J. Murphy, III).  Applying Michigan’s six-year statute of limitations for breach-of-contract actions, the court determined that Plaintiff’s lawsuit for dismemberment benefits is untimely where MetLife denied Plaintiff’s appeal on April 11, 2011 and the complaint was filed on May 31, 2018.

Seventh Circuit

Emerick v. Anthem Insurance Companies, Inc., No. 3:17-CV-895 JD, 2019 WL 1382911 (N.D. Ind. Mar. 27, 2019) (Judge Jon E. Deguilio).  The court determined that the pro se plaintiff’s lawsuit for payment of medical expenses for his late wife are barred by the contractual limitations period.  Beneficiaries have one year and 90 days from the date of covered services to submit their claims to Anthem.  The policy provides that beneficiaries “may not take legal action against [Anthem] to receive benefits … [l]ater than three years after the date the claim is required to be furnished to [Anthem].”  The court found that Emerick had a total of four years and 90 days from when his wife received services to file the instant lawsuit but he did not file it for more than a year and a half after the deadline.  The court found no basis to toll the limitations period.  “The doctrines of equitable tolling and estoppel can be applied to the ‘rare cases’ in which internal review prevents beneficiaries from bringing ERISA actions within the contractual period.”  Here, Plaintiff did not follow Anthem’s appeal procedures.

Tenth Circuit

AGI Consulting L.L.C. v. American National Insurance Company, No. CIV-18-252-G, 2019 WL 1413761 (W.D. Okla. Mar. 28, 2019) (Judge Charles B. Goodwin).  Plaintiff alleges that it negotiated and entered into a contract with Defendant to purchase a Defined Benefit Plan that was to be administered according to a document which Defendant replaced without its knowledge and which changed certain material terms in the Plan.  On Plaintiff’s motion for a new trial, the court found that its previous “reliance on a state-law statute of limitations may be deemed a manifest error of law or a misapprehension of the controlling law that required revisitation.”  However, reexamining Plaintiff’s proposed ERISA claims under § 1113, the court determined that amending the complaint would be futile because those claims would be time-barred.  Plaintiff had a copy of the altered document as early as March 14, 2012.  Plaintiff had until March 14, 2018 to assert causes of action under § 1109 for breach of fiduciary duty.  Plaintiff did not file its initial lawsuit until March 21, 2018.  With respect to the allegation that Defendant breached its fiduciary duty by failing to resolve a census issue on September 12, 2013, after Plaintiff complained that date about the increase in funding, the court also found this claim time-barred.  “[O]nly knowledge of the essential facts constituting the alleged violation or breach is required to trigger § 1113(2)’s three-year limitations period.”  Plaintiff had actual knowledge of the increased funding as early as August 22, 2013.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Trustees of The Northeast Carpenters Health, Pension, Annuity, Apprenticeship, And Labor Management Cooperation Funds v. Patriot Field Services, Inc., No. 18CV5825PKCRML, 2019 WL 1333256 (E.D.N.Y. Mar. 25, 2019) (Judge Pamela K. Chen).  The court granted Petitioner’s motion for default judgment against Respondent. “The Court orders that Petitioner be awarded $6,735.33 as provided by the Arbitrator’s Award, $1,242.50 in attorneys’ fees, and $477.72 for other costs. Petitioner is thus entitled to $8,455.55 from Respondent in total. The Clerk of Court is respectfully directed to enter judgment in Petitioner’s favor and close this case.”

Third Circuit

Board of Trustees of Cement Masons’ Local 526 Combined Funds, Inc. v. R & B Contracting & Excavation, Inc., et al., No. CV 17-1432, 2019 WL 1359160 (W.D. Pa. Mar. 26, 2019) (Magistrate Judge Robert C. Mitchell).  In this case where Plaintiff alleges that individual Defendants Roscoe and Amato filled in during an extended leave of absence of R & B’s owner (Rogers), and thereby became ERISA plan fiduciaries personally liable for R & B’s delinquent fringe benefits, the court found that they were ERISA fiduciaries who failed to make fringe benefit payments and granted Plaintiff summary judgment as to this count.  It denied summary judgment on the conversion claim.

Fourth Circuit

Trustees of The National Automatic Sprinkler Industry Welfare Fund, et al. v. Degree Fire Protection, Inc., No. GJH-18-1150, 2019 WL 1384269 (D. Md. Mar. 27, 2019) (Judge George J. Hazel).  The court granted default judgment to Plaintiff to recover amounts owed to the funds under the terms of a Collective Bargaining Agreement.

United Food and Commercial Workers Unions and Participating Employers Pension Fund and Its Trustees v. Magruder Holdings, Inc., et al., No. GJH-16-2903, 2019 WL 1409725 (D. Md. Mar. 27, 2019) (Judge George J. Hazel).  In this action seeking to recover withdrawal liability against two companies that Plaintiff alleges share ownership interests with Magruder Holdings, Inc., a grocery chain that went out of business, the court denied the parties’ cross-motions for summary judgment.  

Eighth Circuit

National Roofing Industry Pension Plan, et al., v. Taylor Roofing Solutions, Inc., et al., No. 4:18CV1862 JCH, 2019 WL 1327045 (E.D. Mo. Mar. 25, 2019) (Judge Jean C. Hamilton).  “[I]n Count II of their First Amended Complaint Plaintiffs seek to hold Defendants Capitol Roofing Solutions and Beltran Contractors liable for damages, claiming they either have operated as a single enterprise and single employer with Taylor Roofing Solutions, and/or each is the alter ego of the other.”  The court agreed with Defendants that “Count II is subject to dismissal as it improperly intertwines two distinct legal theories, single employer and alter ego relationship, in a single count.”

Ninth Circuit

Kropke v. Dunbar, No. 17-56479, __F.App’x__, 2019 WL 1375176 (9th Cir. Mar. 25, 2019) (Before: FERNANDEZ and OWENS, Circuit Judges, and DONATO, District Judge).  The court affirmed the district court’s order denying the Trustees of the Southern California IBEW-NECA Pension Trust Fund’s (the “SoCal Fund”) motion to vacate an arbitration award in favor of the Trustees of the Electrical Workers’ Pension Trust Fund of Local Union No. 58, IBEW Detroit, Michigan, and the Michigan Electrical Employees’ Pension Fund.  The court also affirmed the district court’s order denying the Michigan Funds’ motion for attorney’s fees against the SoCal Fund.

Board of Trustees of The Painters and Floorcoverers Joint Committee, et al. v. Super Structures Inc., et al., No. 218CV01364GMNGWF, 2019 WL 1317711 (D. Nev. Mar. 22, 2019) (Judge Gloria M. Navarro).  “In conclusion, Defendants’ assertion that SS1 properly terminated the CBA fails to account for Plaintiffs’ contrary allegations that the attempted termination violated the Duration Clause and that SS1 never rescinded its delegation of bargaining power to PDCA. Moreover, the Court rejects Defendants’ contention that Nevada’s protective posture with respect to corporate entities shields SS2 from a potential alter ego claim. Accordingly, Defendants’ Motion to Dismiss is denied.”