Happy Sunday, ERISA Watchers!  This week I want to highlight two unpublished decisions from the Fourth Circuit Court of Appeals, both of which are plan participant friendly.  The first case, Odle v. UMWA 1974 Pension Plan, No. 18-1398, __F.App’x__, 2019 WL 2539260 (4th Cir. June 20, 2019), involves a dispute over the amount of a survivor’s annuity benefit award under the United Mine Workers of America 1974 Pension Plan.  The court reversed the grant of summary judgment for the Plan and remanded for further proceedings.  The court found that the Plan erred by denying Plaintiff the opportunity to review the Dale Coal audit during the administrative process because it prejudiced her ability to pursue further investigation and argument in support of her claim.  The audit documented potentially fraudulent underreporting of classified hours and Plaintiff must be given the opportunity to contest the Plan’s denial based on a full disclosure of documents relevant to her claim.  The court explained that “procedural guidelines including the right to a full and fair review ‘are at the foundation of ERISA.’”  

The second case, Smith v. Reliance Standard Life Insurance Company, No. 18-2225, __F.App’x__, 2019 WL 2539289 (4th Cir. June 20, 2019), involves a dispute over long-term disability benefits.  The court affirmed the grant of summary judgment to Plaintiff.  Plaintiff had a triple bypass surgery, diabetes, nerve damage, narrowed and hardened arteries, multiple strokes, and multiple stents.  The SSA and all his doctors concluded that he could not work.  Reliance relied on stray and typographical errors in his medical records.  “Doctors, like everyone else, make statements relative to a baseline, and Smith perhaps was better or ‘doing well’ for someone with many serious underlying health problems.”  Plaintiff could not return to work because the stress of working would risk undoing the progress that he made.  

The court rejected Reliance’s argument about the standard for disability:  “At argument, Reliance came close to asserting that Smith needed to prove that he could not perform sedentary work due to a physical limitation on, for example, sitting, typing, or speaking. This is quite a high standard. Such a rule would erase disability eligibility for all but the bedridden. Some serious diseases are debilitating because of their effect on the mind or because they worsen with stress. This is a place for medical judgment, not per se rules: ‘The rule is one of reason.’” (quoting Harrison v. Wells Fargo Bank, N.A., 773 F.3d 15, 22 (4th Cir. 2014)). 

There were several other notable decisions this past week.  Read on and see you again next week!

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

Attorneys’ Fees

Sixth Circuit

Miller v. Deloitte Services LP, No. 3:18-CV-00581, 2019 WL 2543526 (M.D. Tenn. June 19, 2019) (Judge Aleta A. Trauger).  This case involved a confidential settlement of ERISA claims involving a plaintiff whose intellectual disability required appointment of a guardian ad litem.  The court granted Plaintiff’s unopposed sealed motion to set attorneys’ fees but awarded an amount less than the 35% of the total recovery sought by counsel.  The court evaluated counsel’s entitlement to fees under Tennessee law (rather than ERISA’s fee-shifting provision) and found that a contingency fee above lodestar was warranted but only an amount that equals about 28% of the total recovery.  “The court finds that a contingency fee in the amount of $ would be unreasonably high in light of the fact that the law firm essentially took on the case without regard to the risk, assigned the vast majority of the work to a relatively inexperienced associate, and the actual settlement figure amounted to something of a windfall that no one anticipated at the outset of the litigation.”

Directors of The Ohio Conference of Plasterers & Cement Masons Combined Funds, Inc. v. Akron Insulation and Supply, Inc., No. 5:16-CV-1674, 2019 WL 2513819 (N.D. Ohio June 18, 2019) (Judge Sara Lioi).  The court previously granted default judgment requiring Defendant to submit to a financial audit to determine the amount of unpaid contributions owed to the funds.  Though the audit revealed no delinquencies, Plaintiffs incurred costs that would have been avoided had Defendant submitted to an audit that it was bound to do.  The court awarded Plaintiffs attorneys’ fees of $10,800.50, audit fees of $4,920.00, and $609.50 in court fees.  The fees award was based upon a reasonable hourly rate of $200 for partners, $185 for associates, and $85 for paralegals for 61.9 hours of collective time (15.2 partner hours, 37.9 associate attorney hours, and 8.8 paralegal hours).

Breach of Fiduciary Duty

Eighth Circuit

Muri v. National Indemnity Company, No. 8:17-CV-178, 2019 WL 2513695 (D. Neb. June 18, 2019) (Judge John M. Gerrard). The court granted Defendant’s motion for summary judgment on Plaintiff’s duty of prudence and duty of loyalty claims related to the Sequoia Fund and its alleged conflicts of interest in choosing investment options for its defined contribution plan.  The court found that Defendant regularly monitored Valeant’s performance and its impact on the Sequoia Fund and the Committee reviewed relevant and reliable valuation information.  The court also found that there was no evidence from which a reasonable fact finder could conclude that the Committee’s decision to keep the Sequoia Fund was to further the interests of Berkshire Hathaway (its parent company) rather than plan participants.

Ninth Circuit

Wilson v. Bank Of America Pension Plan For Legacy Companies, et al., No. 18-CV-07755-TSH, 2019 WL 2552192 (N.D. Cal. June 20, 2019) (Magistrate Judge Thomas S. Hixson).  The court dismissed Plaintiff’s breach of fiduciary duty claim against Fidelity because the complaint does not plausibly allege that Fidelity was a fiduciary with respect to the allegations against it.  Fidelity manages Bank of America’s NetBenefits website which provides pension statements to plan participants to satisfy B of A’s obligation under ERISA § 105(a).  Plaintiff’s statements were in error, showing he was entitled to a benefit that he was allegedly not.  The court explained that “ministerial functions that do not give rise to fiduciary status include preparation of employee communication material, calculation of benefits, application of rules to determine benefits, advising participants of their options under the plan, preparation of reports concerning participants’ benefits, and processing of claims.”  Providing Plaintiff with an estimate of his future benefits is not a fiduciary task.   

Wilson v. Bank of America Pension Plan For Legacy Companies, et al., No. 18-CV-07755-TSH, 2019 WL 2549044 (N.D. Cal. June 20, 2019) (Magistrate Judge Thomas S. Hixson).  Plaintiff alleges that B of A breached their fiduciary duty to Plaintiff by failing to ensure that their delegees provided Plaintiff with complete and accurate information about his plan benefits.    The court found that providing a pension estimate is not a fiduciary function.  Additionally, Plaintiff does not allege a failure to monitor that would amount to a breach of fiduciary duty.  The court dismissed the claim with leave to amend.  

Class Actions

Fourth Circuit

Pennington v. Fluor Corp., No. 0:17-CV-02094-JMC, 2019 WL 2537674 (D.S.C. June 20, 2019) (Judge J. Michelle Childs).  The court granted, in part, Plaintiff’s motion for a supplemental order approving the sending of notice of class certification of this Warn Act lawsuit seeking 60 days’ wages and ERISA benefits.  The court, sua sponte, revised Pennington Plaintiffs’ class notice to conform with FRCP 23(c)(2)(B)(v).  The court also ordered Defendants to provide Plaintiffs with the class members’ telephone numbers “so that they can receive proper notice of the action if needed and be afforded the opportunity to opt out of the action if they so wish.”  The court declined to order Plaintiffs to include a pre-paid, pre-stamped envelope with the class notice.

Disability Benefit Claims

Fourth Circuit

Smith v. Reliance Standard Life Insurance Company, No. 18-2225, __F.App’x__, 2019 WL 2539289 (4th Cir. June 20, 2019) (Before GREGORY, Chief Judge, and WILKINSON and KEENAN, Circuit Judges).  See Notable Decision summary above.

Sixth Circuit

Carson v. Unum Life Insurance Company of America, No. 1:18CV1225, 2019 WL 2511077 (N.D. Ohio June 18, 2019) (Judge Christopher A. Boyko).  In this dispute involving a corporate attorney disabled by various mental disorders, the court granted Unum’s Motion to Uphold Plan Administrator’s Claim Denial.  The court found little evidence of conflict of interest.  It compared this case to Demer v. IBM Corp. LTD Plan, where “the court discussed how the plan administrator hired the same doctors to provide all their file reviews and paid them hundreds of thousands of dollars to do so. 835 F.3d 892 (9th Cir. 2016). There is no such evidence here.”  The court rejected the argument that it was arbitrary and capricious to rely on file-only reviews for a mental health and chronic pain-based disability.  The court relied on Sixth Circuit precedent ruling that there is nothing inherently objectionable about a file-only review that is performed by a qualified physician.  Unum conducted three rounds of reviews by four separate doctors.  The court also noted that there were multiple months where Plaintiff did not receive mental health or physical treatment.  The court also rejected Plaintiff’s breach of fiduciary duty claim and sub claims seeking prejudgment interest, his retirement savings used for support during the wrongful denial of benefits, and disgorgement of profits because they all stem from the same denial-of-benefits injury under Section 502(a)(1)(B).

Eighth Circuit

Hounihan v. The Proctor & Gamble Disability Committee, et al., No. 1:18-CV-00010-AGF, 2019 WL 2549437 (E.D. Mo. June 20, 2019) (Judge Audrey G. Fleissig).  The Court concluded that the Disability Committee’s determination that Plaintiff was partially disabled as of June 21, 2016 is reasonable and supported by substantial evidence.  This evidence includes Plaintiff’s medical records, an independent medical exam which concluded that Plaintiff could return to work with restrictions, an independent medical review which determined that Plaintiff could work in some capacity and incorporated many of the restrictions indicated by Plaintiff’s doctor, and a functional capacity evaluation which documented Plaintiff’s ability to do work related activities.  The court granted summary judgment in favor of P&G on Plaintiff’s benefit claim and breach of fiduciary duty claim.  Respecting the latter, the court found that there was no evidence that P&G’s reviewing experts were simply a “rubber stamp” for decisions favorable to P&G.


Eighth Circuit

Lapidus v. Life Insurance Company of North America, No. 4:18CV01291 JCH, 2019 WL 2525648 (E.D. Mo. June 19, 2019) (Judge Jean C. Hamilton).  In this dispute over long-term disability benefits, where LINA produced additional documents that were part of the Administrative Record the morning of a Rule 30(b)(6) deposition and days before the deadline for Summary Judgment motions, the court did not find intentional misconduct by the Defendant and denied Plaintiff’s motion for sanctions.  The court found that less harsh remedies such as requests for additional time would have been appropriate and could mitigate against any potential prejudice in this case.

ERISA Preemption

Third Circuit

Comprehensive Spine Care, P.A. v. Oxford Health Insurance, Inc., No. CV 18-13874, 2019 WL 2498925 (D.N.J. June 17, 2019) (Judge John Michael Vazquez).  In this matter where Defendants’ written preauthorization to the plaintiff provider expressly indicates that payment would be subject to M.H.’s ERISA-governed plan and does not guarantee payment, the court found that Plaintiff’s state law claims regarding underpayment are preempted by Section 514 because they relate to an ERISA plan.  The court granted Defendants’ motion to dismiss and Plaintiff leave to amend the complaint.  

Ninth Circuit

Wilson v. Bank Of America Pension Plan For Legacy Companies, et al., No. 18-CV-07755-TSH, 2019 WL 2552192 (N.D. Cal. June 20, 2019) (Magistrate Judge Thomas S. Hixson).  The court found that Plaintiff’s state law claims for professional negligence and negligent misrepresentation against Fidelity for providing him erroneous pension statements are not preempted by ERISA.  There is no “reference to” preemption because the claims are based on the California Civil Code and they do not act immediately and exclusively on ERISA plans; the existence of an ERISA plan is not essential to these laws’ operation.  The court found that Paulsen v. CNF, Inc., 559 F.3d 1061 (9th Cir. 2009) controls here, at least where Fidelity contests its fiduciary status.  If Plaintiff amends his complaint to allege facts establishing that Fidelity is a fiduciary then he cannot recover on an ERISA claim and a state law claim.  

Life Insurance & AD&D Benefit Claims

Ninth Circuit

McBean v. United of Omaha Life Insurance Company, No. 18CV166-MMA (JLB), 2019 WL 2549229 (S.D. Cal. June 20, 2019) (Judge Michael M. Anello).  Plaintiff sought reconsideration of the court’s determination that United did not waive the “active employment” eligibility requirements or the 31-day written notice requirement to extend decedent’s coverage under the policies, arguing that the court’s decision was made in clear error and is manifestly unjust.  First, the court found that it had jurisdiction over the motion under FRAP 4(a)(4) since Plaintiff filed a motion to alter or amend judgment pursuant to FRCP 59(e).  The court denied the motion because Plaintiff’s motion asks the court to relitigate issues already decided.

Medical Benefit Claims

Tenth Circuit

Brian N. v. Coventry Healthcare of Nebraska, Inc., No. 2:17-CV-1128 TS, 2019 WL 2515783 (D. Utah June 18, 2019) (Judge Ted Stewart).  The court upheld the health plan’s denial of payment for services rendered by the Catalyst Residential Treatment Center to treat an adolescent’s mental health and substance use disorders because Plaintiff failed to obtain prior authorization which was required by the Plan.  The Plan could deny benefits on this basis and its decision to do so must be upheld.

Timothy D. v. Aetna Health and Life Insurance Company, No. 2:18CV753DAK, 2019 WL 2493449 (D. Utah June 14, 2019) (Judge Dale A. Kimball).  In this dispute over the payment of “wilderness treatment programs” under a self-funded health plan, the court denied Aetna’s motion for judgment on the pleadings.  The court reasoned that the Plan’s definition of “residential treatment facility” may contradict the Plan’s definitions of “behavioral health provider” and “medically necessary” and Defendants do not address whether the facilities were behavioral health providers or whether the treatment was medically necessary.  The court also found that Plaintiffs stated a plausible claim under the Mental Health Parity and Addiction Equity Act because the Plan appears to impose more restrictive treatment limitations on mental health and substance abuse benefits than it does on medical/surgical benefits.

Pension Benefit Claims

Fourth Circuit

Odle v. UMWA 1974 Pension Plan, No. 18-1398, __F.App’x__, 2019 WL 2539260 (4th Cir. June 20, 2019) (Before Keenan, Wynn, and Floyd, Circuit Judges).  See Notable Decision summary above.

Ninth Circuit

Wilson v. Bank of America Pension Plan For Legacy Companies, et al., No. 18-CV-07755-TSH, 2019 WL 2549044 (N.D. Cal. June 20, 2019) (Magistrate Judge Thomas S. Hixson).  Plaintiff seeks pension benefits which Defendant argues he’s not entitled to because they were previously paid out.  The court found that Plaintiff stated a claim for benefits under the Plan pursuant to ERISA Section 502(a)(1)(B).  The court must make a determination as to whether B of A abused its discretion against the full administrative record which the court did not have on a motion to dismiss.

Plan Status

Third Circuit

Scanlan v. American Airlines Group, Inc., No. CV 18-4040, __F.Supp.3d__, 2019 WL 2516046 (E.D. Pa. June 18, 2019) (Judge Harvey Bartle III).  The court granted AAG’s motion to dismiss count II which alleges that AAG’s calculation of profit sharing awards under its AAG’s Global Profit Sharing Plan violates § 4318(b)(1) of USERRA, which governs the rights of employees to benefits under “employee benefit pension plans.”  The court found that the Plan does not meet the definition of an employee benefit plan under ERISA even if employees may elect to allocate some or all of their profit sharing awards toward their retirement funds.  This Plan is essentially an extra compensation or bonus plan and not a deferred compensation plan.  The court is bound by the Third Circuit decision in Oatway v. Am. Int’l Grp., Inc., 325 F.3d 184 (3d Cir. 2003) (concluding stock options were not ERISA plans), which cited with approval the Fifth Circuit decision in Murphy v. Inexco Oil Co., 611 F.2d 570 (5th Cir. 1980) (holding that unless a plan’s bonus payments are systematically deferred it is not an ERISA pension plan).

Pleading Issues & Procedure

Sixth Circuit

UPMC Presbyterian Shadyside v. Fleet Owners Insurance Fund, et al., No. 1:19CV158, 2019 WL 2513848 (N.D. Ohio June 18, 2019) (Judge Sara Lioi).  The court granted the parties’ separate motions to consolidate this lawsuit under Rule 42(a)(2) with McHugh v. Trinity Health Systems, another action pending before this court.  Resolution of both lawsuits requires answering the question of whether Defendant Fleet was obligated to fund payments for the medical care provided to McHugh.  Consolidation will prevent against potential inconsistent adjudications, the scope of discovery will overlap significantly, and both lawsuits are still in the early stages of discovery.  

Subrogation/Reimbursement Claims

Third Circuit

Eberhard v. United of Omaha Life Insurance Company, No. 1:18-CV-536, 2019 WL 2501462 (M.D. Pa. June 17, 2019) (Judge Christopher C. Conner).  The court granted United of Omaha’s motion for judgment on the pleadings in part.  It found that judgment on the pleadings is warranted as to the declaration that United is entitlement to reimbursement for overpayment of long-term disability benefits as a result of Plaintiff’s receipt of SSDI benefits and that United is entitled to an equitable lien by agreement for the overpaid amount under Section 502(a)(3).  However, what is in dispute and unclear is the exact amount of the overpayment that must be reimbursed.  United has not demonstrated an entitlement to the amount it claims it’s owed in its brief which is not even stated in the counterclaim.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Trustees of The Local 138, 138a & 138b International Union Of Operating Engineers Welfare Fund v. Carlo Lizza & Sons Paving Inc., No. 217CV04651ADSAYS, 2019 WL 2517057 (E.D.N.Y. June 18, 2019) (Judge Arthur D. Spatt).  “[T]he R&R is adopted in its entirety. The Plaintiffs’ motion for default judgment is granted. The Plaintiffs are awarded damages, attorney’s fees and costs in the amounts set out in the R&R.”

Eighth Circuit

Local Union 513 Health and Welfare Fund, et al., v. Petry Excavating, LLC, No. 4:18-CV-01279-SNLJ, 2019 WL 2492201 (E.D. Mo. June 14, 2019) (Judge Stephen N. Limbaugh, Jr.).  In this dispute over fringe benefit obligations and unpaid contributions owed under a CBA, the court found Defendant in contempt of this court and sanctioned defendant “a fine of $200.00 per day for each day after June 21, 2019, that it continues to refuse to submit its records for inspection as directed by this Court’s December 19 Order.”

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