This week’s notable decision is Miller v. Hartford Life & Accident Ins. Co., No. 19-1096, __F.3d__, 2019 WL 6834049 (8th Cir. Dec. 16, 2019), a case highlighting the difficulty of establishing a “physical” disability claim when the symptoms are psychiatric in nature.  Plaintiff Diane Miller filed an action against Hartford Life & Accident Insurance Company (“Hartford”) when it terminated her claim for long term disability benefits based on the exhaustion of benefits owed due to a mental illness, and the lack of evidence of a disabling physical condition which would justify further benefit payments. The district court granted Hartford’s motion to dismiss, finding that Hartford’s decision was supported by substantial evidence. The Eighth Circuit Court of Appeals affirmed. 

Plaintiff argued that the dismissal of her complaint was erroneous for several reasons, including that there was insufficient evidence of improvement in her condition and that Hartford failed to consider the potential medications side effects and the future risk of additional psychotic episodes. The court explained that these arguments fail to consider the primary reason for Hartford’s benefit termination:  the fact that the record did not support a finding of a physical disability. 

Specifically, Plaintiff challenged the opinion of Hartford’s psychiatric medical expert, Dr. Taral R. Sharma, and argued that Hartford erroneously based its decision to terminate benefits on his opinion alone. However, Dr. Sharma’s opinion focused exclusively on her impairments from a mental health perspective. And while Plaintiff argued that she suffered from psychotic episodes due to an autoimmune thyroid disorder, the record contained no record of treatment for any such disorder since 2015. At best, the court noted, the evidence shows a potential link between such disorders and psychotic episodes. Further, to the extent that Plaintiff challenged Hartford’s reliance on its own experts rather than Plaintiff’s treating physicians, such reliance is not an abuse of discretion unless the record does not support the denial. 

Plaintiff also argued that Hartford did not provide her with a full and fair review when it communicated with her psychiatrist without notifying her. The court pointed out that Plaintiff was provided appropriate notice of the denial and an opportunity to respond throughout the appeal process. Further, “Miller’s claim of one communication with a physician of which she was not notified, even if true, did not deprive her of the necessary information to adequately prepare for further review.”

The court concluded “[i]n essence, Miller’s arguments largely amount to no more than a request for this court to substitute its judgement for that of Hartford’s. This is inconsistent with our role as a reviewing court, where we are tasked with determining only whether Hartford’s decision was supported by substantial evidence. . . .substantial evidence supported this determination; Hartford thus did not abuse its discretion in terminating Miller’s benefits.”

This week’s notable decision summary was contributed to by Kantor & Kantor attorney, Andrew Kantor.

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

Breach of Fiduciary Duty

Third Circuit

Laufenberg v. Ne. Carpenters Pension Fund, No. CV 17-1200 (MAH), 2019 WL 6975090 (D.N.J. Dec. 19, 2019) (Magistrate Judge Michael A. Hammer).  Plaintiff claimed that Defendants were obligated to pay his claim for benefits and then bring a claim under their fiduciary liability insurance policy.  While Section 412 generally requires fiduciaries to be bonded in order to protect plans from risk of loss due to fraud or dishonesty, it does not require the processing of benefits.  There is no support or authority for the supposition that plan administrators or fiduciaries are obligated to pay disputed benefits within the purview of Section 412 and then seek recourse from the surety or insurer.  The court also found that Plaintiff’s claim seeking benefits under the Annuity Plan “is nothing more than a garden-variety, denial-of-benefits claim that has been improperly pled as a breach of fiduciary duty claim.”  The court found that the allegations do not meet the pleading standards set forth in Twombly and Iqbal and dismissed the claim without prejudice.

Ninth Circuit

Estate of Foster, et al. v. American Marine SVS Group Benefit Plan, et al., No. CV 17-165-M-DLC, 2019 WL 7020192 (D. Mont. Dec. 20, 2019) (Judge Dana L. Christensen).  Plaintiff alleged that American Marine (employer) breached its fiduciary duty by failing to timely inform the insured that he lost eligibility under the life insurance policy, which deprived the insured of his right to timely seek conversion benefits.  American Marine contended that it had no duty to inform the insured of the plan terms beyond the content of an SPD, which it provided to the insured.  The court determined that “no factual dispute exists as to whether the information contained within the Life Certificate/SPD completely and accurately conveys information to Plan participants about their right to convert.”  Because the insured received the Life Certificate/SPD, the breach of fiduciary duty claim fails as a matter of law.

Cave v. Delta Dental of California, No. 18-17134, __F.App’x__, 2019 WL 6903319 (9th Cir. Dec. 18, 2019) (Before: Wallace, Canby, and Tashima, Circuit Judges).  In a short opinion and without oral argument, the Ninth Circuit affirmed the dismissal of the pro se appellant’s breach of fiduciary duty claim for failure to state a plausible claim under ERISA Sections 502(a)(2) and/or (a)(3).  The court also affirmed the dismissal of her claim for statutory penalties since she failed to raise a genuine dispute of material fact as to whether Defendant failed to produce documents that a plan administrator is required to produce. 

Del Castillo v. Cmty. Child Care Council of Santa Clara Cnty., Inc., No. 17-cv-07243-BLF, 2019 WL 6841222 (N.D. Cal. Dec. 16, 2019) (Judge Beth Labson Freeman). A consolidated motion to dismiss Plaintiffs’ Third Amended Complaint (“TAC”) for an ERISA putative class action was granted with one last leave to amend for one defendant and without leave to amend for the other. Through prior motions Plaintiffs were permitted to amend to seek relief from Defendants Life Insurance Company of the Southwest (“LSW”) and Kevin Logan on alleged violations of ERISA Section 502(a)(3). Plaintiffs did not allege that either LSW or Logan were fiduciaries. Plaintiff’s TAC alleged that LSW and Logan had “actual and constructive knowledge” that other Defendants violated ERISA “by engaging in, authorizing and permitting prohibited financial transactions.” Those transactions were (1) the other Defendant’s failure to engage in competitive bidding procedures for the purposes of determining if LSW and Logan’s costs and fees were reasonable and (2) that the compensation paid to LSW and Logan was in excess of market rates. To state a Section 502(a)(3) claim against non-fiduciaries, Plaintiffs must plead sufficient facts supporting three elements: (1) funds rightfully belonging to a plan were wrongfully transferred to the non-fiduciary; (2) the non-fiduciary had actual or constructive knowledge of the circumstances that rendered the transfer wrongful; and (3) the plaintiff seeks appropriate equitable relief. The claims against LSW and Logan failed on the knowledge and equitable relief elements. The TAC was devoid of any facts supporting a plausible inference that the other Defendants paid LSW and Logan unlawfully excessive fees and that LSW and Logan knew or should have known that those fees were excessive. The court noted that, absent factual allegations of some guidepost for reasonable market rates, Plaintiffs failed to state this claim. Further, the court viewed Plaintiffs’ request for return of “unreasonable” compensation that was not linked to a specific account, to be legal in nature, not equitable. For LSW, only to the extent Plaintiffs sought the return of insurance premiums, the court viewed those funds as traceable because premiums were deposited in a specific annuity account. The court allowed Plaintiffs to amend to seek a return of the insurance premiums only. For Logan, an insurance agent for LSW, the court found no plausible allegation that Logan maintained the commissions and fees he received in a specifically identifiable account and thus no equitable relief was available against him. Logan’s motion to dismiss was granted without leave to amend. 

Class Actions

Sixth Circuit

Wilson, et al. v. Anthem Health Plans of Kentucky, No. 3:14-CV-743, 2019 WL 6898662 (W.D. Ky. Dec. 18, 2019) (Judge Rebecca Grady Jennings). The court granted Plaintiff’s unopposed motion for preliminary approval of class settlement and approval of notice to the class. Plaintiffs filed a class action arguing that Anthem violated ERISA and the Federal Parity Act by imposing limits on benefits for insureds seeking treatment for autism spectrum disorder. The court found the settlement to be fair, reasonable, and adequate. The court found the relief adequate despite 38% going to fees and costs which is at the high end of what courts in this district have found to be reasonable. The court also found the settlement satisfies analysis under the Sixth Circuit’s factors, including the probability of success on the merits and the settlement serving the public interest. The court directs notice under Federal Rule of Civil Procedure 23(c)(2)(B) to all class members.

Ninth Circuit

D.T., et al. v. NECA/IBEW Family Medical Care Plan, et al., No. 2:17-CV-00004-RAJ, 2019 WL 6894508 (W.D. Wash. Dec. 18, 2019) (Judge Richard A. Jones). The court denied the parties’ cross-motions for summary judgment. Plaintiffs’ class action alleges Defendants’ denial of benefits for children with developmental mental health conditions, such as autism spectrum disorder, on the basis of its Developmental Delay Exclusion (“exclusion”) violates ERISA and the Federal Parity Act. The court previously granted class certification. The court determined that the abuse of discretion standard applied because the Plan grants discretion to the Trustees who make a substantive interpretation of the exclusion. The court found that Plaintiffs and Defendants offer equally plausible interpretations of the exclusion. The court denied Plaintiffs’ motion because taking the facts in the light most favorable to Defendants, the court could not conclude the Plan mandates coverage. Likewise, the court could not grant summary judgment regarding the Federal Parity Act because the court could not conclude as a matter of law that the exclusion expressly excludes, or was consistently applied to exclude, all coverage for developmental mental health conditions.

Disability Benefit Claims

Sixth Circuit

Counts v. United of Omaha Life Ins. Co., No. 18-12312, 2019 WL 6877880 (E.D. Mich. Dec. 17, 2019) (Judge Judith E. Levy). In this dispute over Plaintiff’s eligibility for short-term and long-term disability benefits, the court found that Plaintiff was entitled to both benefits.  On the standard of review, the court determined that de novo review applies since Colorado law, C.R.S. § 10-3-1116(2), prohibits policies containing discretionary authority clauses which trigger the arbitrary and capricious standard of review.  The court found that Plaintiff demonstrated by a preponderance of the evidence that she was disabled.  First, Plaintiff demonstrated that she had an injury or sickness within the meaning of the Plan where she suffered from degenerative disc disease, spinal abnormalities, and carpal tunnel syndrome.  Second, Plaintiff demonstrated that her conditions caused a significant change in her physical functional capacity.  “In short, Plaintiff’s medical and anecdotal evidence evinces a clear portrait of a woman whose condition began to slowly decline in 2014, and then significantly declined further at various points in 2015, 2016, and 2017, culminating in May 2017 with a complete inability to stand, carry, sit, or walk without severe restrictions. There is no language in the Plan suggesting that the ‘significant change’ must happen instantly instead of gradually, and Defendant may not read this additional requirement into the text.”  Third, Plaintiff demonstrated that her medical conditions prevented her from performing at least one of the material duties of her regular job on either a full-time or part-time basis.  The court found that the medical evidence, including her doctors’ affidavits, x-rays, pain medication logs, treatment records, etc. suggested that she could not perform most of her material duties.  United’s reviewing doctors’ reports contained “clear inconsistencies that render suspect the thoroughness and accuracy of Defendant’s process.”  Lastly, Plaintiff demonstrated that her conditions prevented her from earning more than 99% of her weekly earnings in other ways, including two affidavits from examining physicians who concluded that Plaintiff was totally disabled and not capable of any competitive employment.  As a remedy, the court ordered United to pay Plaintiff what she is due but remanded the case to United to calculate the benefits payable since the benefit amount is not appropriate for summary judgment on the current record.

Eighth Circuit

Miller v. Hartford Life & Accident Ins. Co., No. 19-1096, __F.3d__, 2019 WL 6834049 (8th Cir. Dec. 16, 2019) (Before Gruender, Benton, and Shepherd, Circuit Judges).  See Notable Decision summary above.

Ninth Circuit

Kollar v. Sun Life Assurance Co. of Can., 3:19-cv-05180-RBL, 2019 WL 6839335 (W.D. Wash. Dec, 16, 2019) (Judge Ronald B. Leighton). The matter was before the court on the parties’ cross motions for summary judgment and Plaintiff’s motion to supplement the administrative record. The court granted Plaintiff’s motion to supplement the record with 71 pages of medical records since Sun Life agreed that they were erroneously excluded from the record.  However, the court declined to expand the record to include a Social Security Administration Notice of Award and Plaintiff’s declaration since they did not meet any of the Opeta criteria.  On the merits of the claim, the court found that the case turned on one question: whether Plaintiff satisfied the policy’s definition of “totally disabled” before his insurance terminated on May 11, 2018. The court found that apart from his treating physicians’ statement that he was disabled on April 5, 2018; the remainder of the evidence did not support total disability as defined in the policy. Because he was not disabled prior to his insurance termination on May 11, 2018, the court denied his motion for summary judgment and granted Defendant’s motion.


Fourth Circuit

Feinberg v. T. Rowe Price Grp., Inc., No. 17-CV-00427-JKB, 2019 WL 6895580 (D. Md. Dec. 17, 2019) (Magistrate Judge J. Mark Coulson). Defendants withheld several documents in discovery based on assertions of privilege. The withheld documents included: redacted versions of Plan trustee committee meetings, an email with a code name chosen by counsel for a project, and a communication from in-house counsel to an employee regarding changes in the Plan. The Court completed an in camera review of the contested documents. It determined the redactions in the committee meeting notes were justified because the portions contained privileged legal advice. Defendants argued the email with the project code name was not privileged because the name itself would reveal legal analysis. The Court disagreed. Information about the project had already been disclosed, and just the name by itself was not privileged. The third document fell within the fiduciary exception because it was advice from in-house counsel to plan participants about plan administration. Several other documents withheld by Defendants were examined by the Court. The Court looked for legal advice, legal analysis, or legal strategy within the documents, and if any was present, Defendants were allowed to withhold the documents as privileged.

Sixth Circuit

Smith v. Hartford Life & Accident Insurance Company, No. CV 5:19-061-DCR, 2019 WL 6829953 (E.D. Ky. Dec. 13, 2019) (Judge Danny C. Reeves). Plaintiff filed a second motion to compel further discovery responses from Defendant. Plaintiff also asked the court to compel the deposition of Renae Fortson or, in the event Ms. Fortson was not the principal decision-maker in denying Plaintiff LTD benefits, the deposition of any person identified in response to Interrogatory No. 1. Plaintiff’s discovery requests concerned the following matters: (1) information relating to the supervision and monitoring of the claims investigation and the Benefits Administrators making determinations on behalf of The Hartford, Interrog. Nos. 2 & 4; (2) information relating to the method for determining compensation of Benefits Administrators, Interrog. Nos. 3 & 5; (3) policies and procedures relating to: (a) supervision and monitoring of claims investigations and Benefits Administrators; and (b) methods for determining compensation, Doc. Req. No. 1; (4) employment agreements of Benefits Administrators, Doc. Req. No. 3; (5) employee benefits of Benefits Administrators, Doc. Req. No. 4; and (6) reports and statistical data regarding claim approvals and denials by the Benefits Administrators, Doc. Req. No. 5. The court ordered Defendant to produce supplemental responses to Interrogatory Nos. 2-4 and Document Request Nos. 1 and 5, but denied Plaintiff’s request to compel the deposition. The court explained that generally courts consider the administrative record but the court may consider evidence outside of the administrative record if that evidence is offered in support of a procedural challenge to the administrator’s decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part. Further, an inherent conflict of interest arises when a single entity evaluates claims and pays the claims it approves. Defendant concedes that it administers and pays claims under the Plan. Therefore, Plaintiff is entitled to some discovery outside the administrative record. Insofar as the deposition, Plaintiff failed to comply with the scheduling order and did not serve the notice until five days after discovery closed.  Therefore, the court denied her request to compel it.

ERISA Preemption

Third Circuit

Laufenberg v. Ne. Carpenters Pension Fund, No. CV 17-1200 (MAH), 2019 WL 6975090 (D.N.J. Dec. 19, 2019) (Magistrate Judge Michael A. Hammer).  Plaintiff’s Third Amended Complaint alleges eight contract and tort claims under New Jersey law. The court found the claims preempted to the extent that they are predicated on the parties’ rights and obligations under the ERISA benefit plans.  To the extent that the claims relate to the Employment Contract’s provision of a salary and the Deferred Pension Supplement (which is not governed by ERISA), the court granted in part and denied in part the motion to dismiss those claims.

Ninth Circuit

Barr v. Ross Island Sand & Gravel Company, No. 18-35688, __F.App’x__, 2019 WL 6999490 (9th Cir. Dec. 20, 2019) (Before: Paez and Rawlinson, Circuit Judges, and Kobayashi,** District Judge).  The court affirmed the district court, finding that Plaintiffs’ statutory claims are preempted by ERISA § 514.  The court declined to decide whether they provide for a private cause of action.

Brenda Martin v. DPR Construction et al., No. 19-cv-03254-HSG, 2019 WL 6912005 (N.D. Cal. Dec. 19, 2019 (Judge Haywood S. Gilliam, Jr.). Plaintiff, a widow, was denied life insurance benefits after losing her husband to esophageal cancer. DPR Construction and Life Insurance Company of North America (“LINA”) both failed to advise her husband of his right to convert the policy and failed to inform him of the terminal illness provision despite knowing his cancer was terminal. Plaintiff’s claim for life insurance was denied by LINA on the basis the coverage had terminated before her late husband passed away. Plaintiff then contacted DPR Construction to get some answers about why the coverage had been cancelled. In an apparent attempt to right its wrong, DPR Construction made a promise to pay Plaintiff the amount of the life insurance in exchange for her not suing DPR Construction or LINA. In subsequent conversations, DPR Construction told Plaintiff it would only pay a fraction of the amount of the life insurance. Plaintiff then filed this action for breach of fiduciary duty for failure to provide notice of the conversion option and the terminal illness benefit and a separate non-ERISA claim for breach of contract. Defendant DPR Construction moved to dismiss the breach of contract claim on the basis it was preempted by ERISA. The Court denied the motion stating the breach of contract claim, similar to a settlement agreement, is separate and distinct from the ERISA policy and the plan.  It operates outside of the policy and plan administration and, therefore, is not preempted by ERISA.

Eleventh Circuit

South Fulton Dialysis, LLC v. Caldwell, No. 19-cv-979, __F.Supp.3d__, 2019 WL 6872846 (N.D. Ga. Dec. 17, 2019) (Judge Steve C. Jones). The court granted UnitedHealthcare’s (“UHC’s”) motion to dismiss Plaintiff-Provider’s state law claims and motion to strike jury demand on the grounds that such “right of payment” state law claims were preempted by ERISA. Here, South Fulton Dialysis (“SFD”) filed state law claims for breach of contract, open account, account stated, unjust enrichment and quantum meruit against the pro se patient and UHC, which served as the third-party claims administrator under the self-funded health plan that Caldwell (the patient) was a beneficiary under. SFD obtained written assignments from Caldwell who incurred $1.33 million in medical bills for her dialysis treatment, none of which had been paid by UHC or Caldwell. SFD also had a “contract for medical services” with Caldwell identifying SFD as an intended beneficiary of the insurance agreement between Caldwell and UHC. SFD attempted to evade ERISA preemption by arguing that it did not have derivative ERISA standing under the valid assignments obtained from Caldwell because UHC did not carry the burden of establishing that those assignments were enforceable.  The court disagreed with SFD and held that SFD had derivative standing to sue under ERISA. Moreover, the court found that SFD’s claims amounted to a “right of payment” claim clearly falling within the Davila analysis regarding ERISA preemption. Additionally, SFD’s state law claims were not predicated on any legal duty outside of ERISA. The court gave SFD until January 13, 2020 to file an amended claim alleging an ERISA cause of action.  

Life Insurance & AD&D Benefit Claims

Ninth Circuit

Estate of Foster, et al. v. American Marine SVS Group Benefit Plan, et al., No. CV 17-165-M-DLC, 2019 WL 7020192 (D. Mont. Dec. 20, 2019) (Judge Dana L. Christensen).  The Estate sued the deceased insured’s employer and its life insurance carrier for failure to provide notice to the insured of the termination of his life insurance coverage which deprived him of the opportunity to convert the policy.  On the benefit claim under ERISA Section 502(a)(1)(B), the court agreed with American Marine, the Plan Administrator, that it is not a proper defendant under Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (9th Cir. 2011) because United of Omaha is both the designated Plan interpreter and the payor of Plan benefits.  The court granted summary judgment to United of Omaha on the benefit claim, finding that it is undisputed that there was adequate notice of the right to convert contained in the Life Certificate/SPD (which the insured received) and the right to convert coverage under the policy expired before the insured took any action (he died the following month).

Medical Benefit Claims

Tenth Circuit

Charles W., et al. v. United Behavioral Health, Wells Fargo & Company Health Plan, 18-cv-829, 2019 WL 6895331 (D. Utah Dec. 18, 2019) (Judge Tena Campbell).  The court granted in part and denied part Defendant’s motion to dismiss a complaint, for recovery of denied benefits and for a Mental Health Parity and Addiction Equity Act (“MHPAEA” or “Parity Act”) violation, filed by the parents of a teenage girl, T.W., who received $149,000 in inpatient mental health treatment at Chrysalis between January 2017 and January 2018. The court first rejected United Behavioral Health’s (“UBH”) argument that T.W.’s father did not have either statutory or constitutional standing to bring a benefit claim to recover the $149,000 he paid out-of-pocket for the treatment of his dependent, minor daughter. Secondly, the court held that T.W.’s claims in this individual lawsuit were subject to the pending class action in Wit v. United Behavioral Health, 3:14-cv-2346-JCS (N.D. Cal., May 21, 2014). The court specifically rejected Plaintiffs’ assertion that T.W.’s claims fell outside of the Wit class time period (originally defined as claims incurred in 2011 and after). Additionally, the court held that although Plaintiffs argued that it did not receive proper class notice in Wit, Plaintiffs must go back to the Wit court for a determination on whether T.W.’s failure to opt out could be excused. Finally, the Court held that Plaintiffs’ MHPAEA claim did not sufficiently meet the pleading requirements held in Welp v. Cigna Health Life Ins. Co., No. 17-80237-CIV, 2017 WL 3263138 at *6 (S.D. Fla. Jul. 20, 2017), requiring the Parity Act claim to (1) identify a specific limitation on behavioral health treatment coverage, (2) identify a specific analogous medical or surgical service covered under the plan to the denied behavioral health treatment service, and (3) plausibly allege a disparity in the limitation criteria applicable to the analogous medical/surgical service and the denied behavioral health treatment service.  Plaintiffs’ bare and conclusory recitations of statutory and regulatory language without tying the standards to any specific facts rendered Plaintiffs’ MHPAEA claim dismissed. 

Plan Status

Third Circuit

Laufenberg v. Ne. Carpenters Pension Fund, No. CV 17-1200 (MAH), 2019 WL 6975090 (D.N.J. Dec. 19, 2019) (Magistrate Judge Michael A. Hammer).  The court determined that the Deferred Pension Supplement (“Supplement”) does not constitute an ERISA plan because the payment of benefits does not involve the establishment and maintenance of a separate and ongoing administrative scheme or any discretionary determination.  The only preconditions for the Supplement are the attainment of retirement age and separation from employment (whether voluntary or termination with or without cause).  Payments are determined by a one-time computation and Plaintiff may elect to receive the Supplement as a one-time lump sum payment in the case that his employment is severed.  “In short, there is no ‘plan’ to administer because there is nothing discretionary about the Plaintiff’s eligibility for, and the timing, form, and amount of the [Supplement].”

Ninth Circuit

Bates v. Hartford Life & Accident Ins. Co., No. 2:18-CV-00439-BLW, 2019 WL 6954261 (D. Idaho Dec. 19, 2019) (Judge B. Lynn Winmill).  The parties dispute whether Plaintiff’s disability policy, which was a group disability policy that Plaintiff converted to an individual policy upon the termination of her employment, meets the elements of an ERISA Plan.  The court first found that Plaintiff converted her coverage from American Family to the Northern Plan, which is a conversion plan.  The court then found that the Northern Trust, which provided the group conversion right, is not an “employer” for purposes of ERISA.  Because the Northern Plan does not cover a single “employee,” it cannot provide coverage to “participants” for ERISA’s purposes.  The court concluded that Hartford did not meet its burden of establishing that the Northern Plan is governed by ERISA.

Pleading Issues & Procedure

Fifth Circuit

Texas v. United States, No. 19-10011, __F.3d__, 2019 WL 6888446 (5th Cir. Dec. 18, 2019), as revised (Dec. 20, 2019) (Before King (dissenting), Elrod, and Engelhardt, Circuit Judges).  In this lawsuit challenging the constitutionality and inseverability of the Patient Protection and Affordable Care Act’s (ACA) individual mandate, the panel majority held that (1) the ACA, as amended by the Tax Cuts and Jobs Act (TCJA), was no longer a legitimate exercise of Congress’ taxing power under the Taxing and Spending Clause; (2) the individual mandate is a command to purchase insurance, which exceeded the powers of Congress under the Interstate Commerce Clause and the Necessary and Proper Clause; and (3) Congress’ labeling of the ACA’s individual mandate as being “essential” to its goal of creating effective health insurance markets did not, standing alone, support a finding of inseverability.


Tenth Circuit

Christine S. et al. v. Blue Cross Blue Shield of New Mexico, No. 218CV00874JNPDBP, __F.Supp.3d__, 2019 WL 6974772 (D. Utah Dec. 19, 2019) (Judge Jill N. Parrish). In this dispute over the payment of $243,000 in residential treatment medical expenses for a minor, where Plaintiff alleged violations of ERISA and the Parity Act, the court granted in part and denied in part Defendants’ motion to dismiss.  The court analyzed ERISA Section 502(a)(3) and the Parity Act and determined that “[t]he combined effect of this statutory scheme for Plaintiffs is that they can seek one type of relief under Section 502(a)(1)(B) and another under Section 502(a)(3). Pursuant to Section 502(a)(1)(2), Plaintiffs can sue for money damages to recover benefits by enforcing their rights ‘under the terms of [their] plan.’ 29 U.S.C. § 1132(a)(1)(B). Pursuant to Section 502(a)(3), Plaintiffs can seek traditional equitable remedies for ‘any act or practice’ that violates another substantive provision of ERISA not included in their benefits plan. Id. § 1132(a)(3). And because the Parity Act is a substantive provision of ERISA, this court has held that it must be enforced through Section 502(a)(3).”  The court also held “that under the applicable legal framework concerning simultaneous ERISA causes of action, Section 502(a)(1)(B) and Section 502(a)(3) are not mutually exclusive. ERISA Plaintiffs are permitted to plead alternative and inconsistent theories of liability, and the court cannot determine at the motion to dismiss stage whether the relief available under Section 502(a)(1)(B) would completely remedy Plaintiffs’ alleged injuries if they were to prevail.”  The court denied Defendants’ Motion to Dismiss Plaintiffs’ Section 502(a)(3) claims as a matter of law.

Severance Benefit Claims

Fourth Circuit

Young v. State Farm Automobile Insurance Company, No. 2:18-cv-01469, 2019 WL 6833854 (S.D.W. Va. Dec. 13, 2019) (Magistrate Judge Dwayne L. Tinsley). Plaintiff worked for State Farm for more than 20 years as a field auto estimator and was classified as a mobile worker. In May 2014, Plaintiff began working in the Charleston, West Virginia office as an in-office worker, but his classification was never changed in the company’s computer system. In May 2016, State Farm announced a transition plan for certain teleworking employees which would include severance benefits.  Plaintiff was originally informed he was part of the transition plan, that he would receive severance benefits and his employment would be terminated. However, he was later informed this notification was an error because the transition plan was intended to downsize and reorganize the company by eliminating teleworking positions. Plaintiff filed this action seeking the severance benefits. On cross-motions for summary judgment, the Court found Plaintiff was not an intended party to the transition plan because although his classification was never changed in the computer system, he actually worked an in-office job at the time the transition plan was established. The Court held Defendant did not abuse its discretion and granted its motion. 

Subrogation/Reimbursement Claims

Ninth Circuit

Board of Trustees of the Construction Industry and Laborers Joint Pension Trust for Southern Nevada v. Dunlap, No. 218CV02163JADVCF, 2019 WL 6898647 (D. Nev. Dec. 18, 2019) (Judge Jennifer A. Dorsey).  The court granted the Plan’s motion for default judgment enforcing an equitable lien by agreement against pension payments it paid to Defendant who is liable to Plaintiffs for fraud for misrepresenting his marital status when he applied for benefits.  The elements of an equitable lien are met here because “(1) The Plan terms require reimbursement of any benefits obtained due to fraudulent statements; (2) The Plan terms also identify the specific funds, the pension overpayments made due to fraudulent statements. As shown above, the Trustees have calculated an identifiable, specific amount that has been paid to Dunlap; and (3) the Plan sent these payments to Dunlap.”  The court also found that the Plan established each of the elements of a fraud claim under Nevada common law.  The court found that “Plaintiffs were damaged in the amount of $549,506, consisting of fraudulently obtained pension payments, lost investment interest and attorney’s fees and costs.”  The court concluded that the seven Eitel factors weigh in favor of entering default judgment and entered final judgment against Defendant “for fraudulently obtained pension payments ($389,701), interest ($156,057) and attorney’s fees ($3,748) in the total amount of $549,506, …”  

Withdrawal Liability & Unpaid Contributions

Seventh Circuit

Building Trades United Pension Trust Fund, et al. v. Howard Grote & Sons, Inc., No. 18-CV-812-WMC, 2019 WL 6877560 (W.D. Wis. Dec. 17, 2019) (Judge William M. Conley).  The court granted in part and denied in part Plaintiffs’ motion for summary judgment. The court granted the motion as to Plaintiff’s claim that Defendant failed to make contributions to the Local 802 Pension Fund for 196.50 hours worked by employee Jeremy Calow in November and December 2016 and denied the motion in all other respects.

Your ERISA Watch is made possible by the collaboration of the following Kantor & Kantor attorneys:  Brent Dorian BrehmBeth Davis, Sarah DemersElizabeth GreenAndrew Kantor, Susan Meter, Michelle RobertsTim Rozelle, Peter Sessions, and Zoya Yarnykh.