This week’s notable decision is Kaviani, D.M.D. v. Reliance Standard Life Insurance Company, No. 19-11798, __F.App’x__, 2020 WL 506551 (11th Cir. Jan. 31, 2020), where the Eleventh Circuit characterized Reliance Standard’s long-term disability (“LTD”) determination as ignoring “uncontradicted record evidence of disability.”  Though this is an unpublished decision, it provides a good road map of arguments for disability claimants who suffer from progressive conditions causing pain and who have attempted to continue working despite the pain.  The decision also arguably reflects a softened arbitrary and capricious standard in the Eleventh Circuit.

The LTD Claim & Appeal:  Plaintiff-Appellee Kaviani was working as a dentist when he was rear-ended in an automobile accident in April 2012.  From that injury he sustained a disc bulge, herniation, and mild stenosis in his spine.  For three years he continued to work but suffered from radiating neck pain, weakness, numbness, tingling, restless sleep, headaches, and back pain.  He sought treatment from an orthopedic surgeon and neurologist.

Kaviani’s efforts to keep working faltered in response to his debilitating pain which was making it difficult for him to do his job as a dentist.  Specifically, Kaviani was dropping his tools and could not hold the posture required to treat patients.  A June 2015 MRI showed cervical herniated nucleus pulposus/disc bulges which would require a cervical discectomy.  Ultimately, Kaviani’s doctor advised him to change occupations and he stopped working in August, 2015, which was over three years following his car accident.

Kaviani submitted an LTD claim to Reliance Standard.  Reliance Standard obtained an occupational analyst by a rehabilitation specialist, John Zurick, and also had Kaviani examined by Dr. Dan Gerstenblitt.  Dr. Gerstenblitt dismissed the MRI findings as “essentially a normal study,” and opined that there was no reason for Kaviani to be out of work.  Reliance denied Kaviani’s claim and he appealed.  In response, Kaviani submitted an Independent Medical Examination (“IME”) report from Dr. David Ross, a Functional Capacity Evaluation (“FCE”) report, statements from physicians and colleagues attending to Kaviani’s disability, and additional records. 

On appeal, Reliance commissioned Dr. James Butler to conduct a medical assessment of the file.  Dr. Butler recommended that Kaviani get cognitive behavioral therapy in order to be “a safe dentist.” He also discounted the FCE without explanation.  Because he believed that Kaviani would have pain “[w]hether he sits at home or whether he works,” Dr. Butler did not support his disability due to neck pain.  Reliance then issued a final denial and Kaviani filed suit.

The District Court:  District Judge Carlos E. Mendoza (M.D. Fla) granted Kaviani’s motion for summary judgment.  Kaviani v. Reliance Standard Life Ins. Co., 373 F.Supp.3d 1337 (M.D. Fla. 2019).  The court explained that Reliance’s “denial came down to a conclusion that Plaintiff was lying” and this conclusion is not supported by the evidence.  The court found that the “myriad of objective evidence” supported that Kaviani was experiencing debilitating pain.  The court also did not find it significant that Kaviani had not received treatment for a year-and-a-half prior to the doctor’s visit just before he stopped working.  Because his doctors told him he reached maximum medical improvement and the only other option was a significant surgery, it was reasonable for Kaviani to wait to go back to them until his pain became so unbearable that he was willing to consider the surgery.  

Further, the court rejected the implication that Kaviani’s work for three years is proof that he is not disabled.  “[T]here is objective medical evidence that Plaintiff was experiencing debilitating pain.  Plaintiff ‘should not be punished for heroic efforts to work by being held to have forfeited his entitlement to disability benefits’ once he stopped working.”  

The court also rejected the argument that the IME and FCE have no value because they were conducted after the elimination period.  The court explained:  “Plaintiff was not suddenly complaining of a completely new ailment on appeal. When Plaintiff initially submitted his claim, he included evidence that he was suffering from the exact pain that was later substantiated by Dr. Ross and the FCE.”  

In sum, the district court found that Kaviani provided an abundance of objective medical evidence and that Reliance Standard cherry-picked portions of the record to rely on.  “Defendant’s behavior suggests that its goal was to find a way to deny Plaintiff’s claim. And such behavior indicates that the conflict of interest created by Defendant’s financial incentive to deny the claim clouded Defendant’s judgment.”  The court awarded Kaviani $313,644 in benefits and interest, and $100,000 in attorney’s fees and costs.  Reliance appealed.

The Eleventh Circuit:  The court agreed with the district court that Reliance Standard acted unreasonably in denying Kaviani’s LTD claim.  Because the LTD policy vests Reliance Standard with discretionary authority, the question for the court is “whether Reliance’s decision to deny Kaviani’s claim was arbitrary and capricious.”  It was.

First, the court found that the district court did not make improper credibility determinations.  Rather, the district court rejected Reliance Standard’s arguments as insufficient to overcome the uncontroverted evidence showing that Kaviani’s condition was progressive and that he was likely not practicing dentistry in a safe manner.  The court reiterated this Circuit precedent that an employee’s attempt to work does not forever bar his eligibility for disability benefits.  

Second, the timing of the IME and FCE is not a basis to disregard their conclusions.  The court did note that the FCE did not discuss Kaviani’s condition during the elimination period and that Kaviani did not point the court to any aspects of the report consistent with findings of disability during the elimination period; however, the IME considered the FCE and found that the FCE confirmed the IME’s findings that Kaviani was totally disabled when his treating doctor made that assessment in June 2015.  Reliance Standard could not just discount the IME and FCE without good reason.

Third, even though Reliance Standard can deny claims based on conflicting, reliable evidence, in this case Reliance Standard did not articulate how Kaviani’s doctors’ opinions were flawed.  The evidence supporting disability could not be canceled out by Dr. Gerstenblitt’s unsupported conclusions about Kaviani’s self-reported pain and his belief that Kaviani can work because he would be in pain regardless of whether he is working or not.

Because the court found Reliance Standard’s decision to be arbitrary and capricious, it did not reach the question of whether Reliance Standard was improperly motivated by self-interested financial concerns.

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

Attorneys’ Fees

Fourth Circuit

Kelly et. al. v. The Johns Hopkins University, No. 1:16-cv2835-GLR, 2020 WL 434473 (D.C. Md. Jan. 28, 2020) (Judge George L. Russell, III). Class counsel filed this motion for attorney’s fees seeking one-third, or $4,666,667, of the monetary portion of the settlement. The opinion praises Schlichter Bogard & Denton, a firm known for its excessive fees litigation, for being the first to file an excessive fee case against a 403(b) plan and being able to obtain a very favorable settlement for the class in just over two years of litigating. After analyzing the nonmonetary components of the settlement, the court concluded the requested fees were less than 7.45% of the settlement value. The court also engaged in a lodestar cross-check to determine the requested fees were reasonable. In doing so, the court approved hourly rates of $1,060 per hour for attorneys with at least 25 years of experience, $900 per hour for attorneys with 15-24 years, $650 per hour for attorneys with 5-14 years, and $490 per hour for attorneys with 2-4 years of experience. The court also granted counsel’s request for expenses of $53,539.78 and $20,000 of incentive payments to each of the named plaintiffs.

Tenth Circuit

Eighth Dist. Elec. Pension Fund v. Power Founds., LLC, 19-cv-00972-CMA-NRN, 2020 WL 417585 (D. Colo. Jan. 24, 2020) (Judge Christine M. Arguello). In this action to collect delinquent fringe benefit contributions, the court granted Plaintiffs’ motion for attorney’s fees and expenses in part. The court determined that Plaintiffs properly brought their motion for attorneys’ fees and expenses and that Defendant is obligated to pay Plaintiffs’ reasonable attorneys’ fees and costs in this action. The court found the $260/hour rate asserted by Plaintiffs’ counsel to be reasonable. With respect to the reasonableness of the hours, the court determined that it had to consider whether Plaintiffs’ logged hours are inconsistent with work of a similar nature, excessive, or redundant.  The court cut time spent drafting a consent to magistrate form and proposed scheduling order since there are templates for these on the court’s website.  The court also reduced Plaintiffs’ fee award upon finding that billing on several tasks was excessive and unreasonable. The court found unreasonable to award expenses for “meals,” “cabfare,” and “Utah Business Records.”  The court awarded a total of $10,784.40 in fees and $880.51 in expenses.

Breach of Fiduciary Duty

First Circuit

Russo v. Valmet Inc. and Valmet, Inc. Defined Benefit Plan, No. 19-CV-324-DBH, 2020 WL 476670 (D. Me. Jan. 29, 2020) (Judge D. Brock Hornby).  The court denied Defendants’ motion to dismiss Plaintiff’s lawsuit seeking defined benefit plan benefits as well as an equitable remedy (plan reformation) for the employer’s breach of fiduciary duty based on Plaintiff’s allegation that he took the job in reliance on statements that he would be entitled to benefits under the plan.  The court determined that Defendants’ arguments about the plan’s coverage rely on extrinsic documents that the court cannot consider on a motion to dismiss, and their arguments about the breach of fiduciary duty claim are premature.  With respect to the breach of fiduciary duty claim, the court determined that at this stage it is not clear whether Plaintiff has a remedy under subsection (a)(1) and that Plaintiff’s request for equitable relief in the form of money payments does not foreclose his subsection (a)(3) claim.  The court declined to decide at this stage whether equitable estoppel under subsection (a)(3) could extend to modification of a plan’s terms.

Fourth Circuit

Pizella v. Vinoskey, et. al., No. 6:16-CV-00062, 2020 WL 476669 (W.D. Va. Jan. 29, 2020) (Judge Normal Moon). The Department of Labor brought this action against Defendant Vinoskey, the CEO of Sentry, Evolve, and the Adam Vinoskey Trust, alleging that they caused a prohibited transaction under 29 U.S.C. § 1106(a)(1)(A) in violation of ERISA by approving an ESOP purchase of Vinoskey’s stock at an inflated price.  After a five-day trial, the court determined that the sale was a prohibited transaction caused by Evolve, Evolve breached its fiduciary duties of loyalty and prudence by causing the sale, and that Vinoskey was jointly and severally liable for Evolve’s breaches. Evolve moved for a new trial or, in the alternative, to rearrange the parties to make the ESOP a plaintiff rather than defendant in the action. The court did not find persuasive Evolve’s arguments that the Secretary of Labor did not have standing to pursue monetary judgments against Plaintiffs, instead finding that the plain language of  29 U.S.C. §1132(a)(2) gave the Secretary standing to pursue all remedies available 29 U.S.C. §1109, including monetary damages. The Court also found that no harm had been caused by the ESOP being a defendant rather than a plaintiff. Defendant’s motion to alter judgment was denied. 

Eleventh Circuit

Perras v. The Coca Cola Company of N. Am., No. 1:2019cv01831 (N.D. Ga. Jan. 24, 2020) (Judge Mark H. Cohen). Plaintiff worked for Coca Cola long enough to accrue retirement benefits. He alleges that he was orally informed that his life insurance and health insurance benefits would continue permanently. After he retired, however, he received a letter explaining that due to a clerical error, his benefits would end in sixty days. The letter did not include conversion rights to his life insurance benefits. Plaintiff alleged that Coca Cola breached its fiduciary duties by terminating his benefits and failing to provide conversion rights. The court concluded that Defendant did not breach its fiduciary duties by failing to continue Plaintiff’s benefits, as 1) “continuing to provide benefits . . . after they should have ceased” does not constitute a breach, and 2) the allegation that Perras was orally informed by an unidentified person that his benefits continue was not sufficient to establish a breach. However, the court concluded that defendant did breach its fiduciaries duties by failing to provide conversion rights. It concluded that while there is no general duty under ERISA to provide such rights, a duty arose in this situation because 1) Defendant did know Plaintiff was disabled, 2) it was reasonable to infer that Coca-Cola knew that this was due to cancer, 3) it was reasonable that Coca-Cola knew it erroneously continued his benefits, and 4) it was reasonable to infer that Defendant should have known Plaintiff’s conversion rights would be impacted by this error. Thus, Coca-Cola was “aware of specific facts related to [Plaintiff’s] circumstances which made the issue of conversation rights significant to him, and thus, invoked the company’s fiduciary duties.”

Class Actions

Eighth Circuit

McDonald v. Edward D. Jones & Co., L.P., et al., No. 19-2158, 2020 WL 504865 (8th Cir. Jan. 31, 2020) (Before Shepherd, Stras, and Kobes, Circuit Judges).  The court affirmed the judgment certifying a settlement class, approving the settlement agreement, and awarding attorneys’ fees and case contribution awards.  The court found that the district court did not abuse its discretion in certifying the class under FRCP 23(b)(1)(A).

Disability Benefit Claims

Eleventh Circuit

Kaviani, D.M.D. v. Reliance Standard Life Insurance Company, No. 19-11798, __F.App’x__, 2020 WL 506551 (11th Cir. Jan. 31, 2020) (Before Martin, Jordan, and Newsom, Circuit Judges).  See Notable Decision above.

Discovery

Sixth Circuit

IUOE Local 324 Retirement Trust Fund, et al. v. LGC Global FM, LLC, No. CV 17-13921, 2020 WL 486817 (E.D. Mich. Jan. 30, 2020) (Judge Linda V. Parker).  In this dispute over fringe benefit contributions, Plaintiffs filed a motion seeking “additional discovery to address Defendants’ contention that they are not liable under the CBA for Tiskono’s failure to pay the required fringe benefit contributions.” The court went through the factors set forth in FRCP 16(b)(4) and denied Plaintiffs’ motion because they were not diligent in pursuing the discovery.

Eighth Circuit

Painters District Council No. 58, et al. v. RDB Universal Services, LLC, et al., 14-cv-01812 ERW, 2020 WL 409111 (E.D. Mo., Jan. 24, 2020) (Senior Judge E. Richard Webber). The Court specifically analyzed its limits to sanction non-parties under Federal Rules of Civil Procedure Rule 37. The Court determined that Rule 37 does not allow a court to impose a default judgment on non-parties. The Court observed that the only permissible sanctions a court can order to compel non-party compliance with post-judgment deposition and document requests are monetary fines, the issuance of a writ of body attachment for incarceration until the contempt is purged and attorneys’ fees and costs. Here, Plaintiffs obtained judgment in the amount of $271,271.69 against Defendant RDB Universal Services, LLC (RDB) after a two-day bench trial in December 2016. In an attempt to collect the judgment balance, Plaintiffs noticed a post-judgment deposition requiring the attendance of RBD’s officer, Deloris Berry, to testify about the corporate relationship between RDB and an alter-ego entity. After a string of failed appearances by Berry at depositions, motions of default judgment, motions for contempt between 2017 and 2019, Plaintiffs sought for the Court to enter default judgment against Berry and the alter-ego entity. The Court held that Due Process and the Federal Rules do not countenance the entry of judgment against non-parties in which jurisdiction has not been established. 

Tenth Circuit

Adams v. Symetra Life Insurance Company, No. 19-MC-401-EFM-ADM, 2020 WL 489523 (D. Kan. Jan. 28, 2020) (Magistrate Judge Angel D. Mitchell).  In this dispute over disability benefits, the court denied without prejudice Plaintiff’s motion for an order compelling The Agents Association (“TAA”) to produce documents responsive to a subpoena duces tecum that Plaintiff served on TAA in a case he filed in the District of Arizona.  TAA did not respond to the motion.  The court found that it should be re-filed in the District of Arizona since that is the district that compliance is required.  See FED. R. CIV. P. 45(d)(2)(B)(i).  Plaintiff served TAA in Topeka but Plaintiff listed his counsel’s address in Sedona, Arizona as the place where TAA was to produce documents.  “[T]he undersigned shares the view of courts that have determined that the place of compliance is the location for production identified on the subpoena.”  The court also denied Plaintiff’s motion for being untimely.  Under the court’s local rules, a motion to compel must be filed and served within 30 days of the default or service of the response, answer, objection that is the subject of the motion.  Plaintiff did not file his motion until six months after the 30-day deadline.

ERISA Preemption

Third Circuit

UPMC d/b/a University of Pittsburgh Medical Center v. CBIZ, Inc., et al., No. 3:16-CV-204, 2020 WL 495216 (W.D. Pa. Jan. 30, 2020) (Judge Kim R. Gibson).  Plaintiff alleged malpractice and lost opportunity claims against Defendants on the basis that its acquisition of Plaintiff Altoona Regional Health System resulted in over $100 million in damages from Defendants’ negligent understatement of Altoona’s pension plan liabilities.  The court determined that “ERISA does not preempt Plaintiffs’ malpractice and lost opportunity claims because they do not relate to the administration of an ERISA benefit plan. The mere fact that an ERISA plan is a part of Plaintiffs’ claim is not enough to trigger ERISA preemption. Plaintiffs’ malpractice claim focuses on Defendants’ conduct as actuarial service providers and does not involve the administration of an ERISA plan. Plaintiffs’ lost opportunity claim also does not relate to ERISA because it does not require extensive analysis of the Plans; instead it focuses on how the PBGC would have assessed Altoona’s distress termination application. Plaintiffs’ claims are between an ERISA plan sponsor and a third-party actuary; they do not affect how ERISA plans are administered. Plaintiffs’ lost opportunity claim is brought under state contract law, a separate area of law from that which ERISA was intended to regulate.”

Ninth Circuit

Ramin M. Roohipour, M.D., Inc., v. ILWU-PMA Welfare Plan et al., No. CV 19-08177-AB (EX), 2020 WL 472921 (C.D. Cal. Jan. 28, 2020) (Judge Andre Birotte Jr.).  Plaintiff, a healthcare provider who alleges that Defendant pre-authorized treatment and then failed to pay Plaintiff specific rates, brought three state-law claims against Defendant in superior court.  Defendant removed the case.  In granting Plaintiff’s motion to remand, the court determined that Defendant did not satisfy its burden of showing that Plaintiff’s case meets both prongs of the two-prong complete preemption test set forth in Aetna Health Inc. v. Davila, 542 U.S. 200 (2004).  The court found that the first Davila prong is not met because Plaintiff could not have brought his claims under ERISA Section 502(a)(1)(B).  The court judicially estopped Defendant from arguing that Plaintiff could have brought its claims under ERISA because Defendant had argued that Plaintiff could not do so in a previous lawsuit where Defendant successfully challenged Plaintiff’s standing due to the Plan’s anti-assignment clause.  The court denied Plaintiff attorney’s fees because Defendant has an objectively reasonable basis to seek removal.

Life Insurance & AD&D Benefit Claims

Ninth Circuit

Sun Life Assurance Co. of Canada v. Estate of Robert Wheeler, et al., No. C19-0364 JLR, 2020 WL 433352 (W.D. Wash. Jan 28, 2020). (Judge James L. Robart). Before the court were two motions: (1) Sun Life’s motion for interpleader and dismissal and (2) Defendant Kathleen McComb’s motion for default judgment against Defendant the Estate of Robert Wheeler. Neither motion was opposed. Sun Life had received conflicting claims for payment of $332,000 in life insurance proceeds on Robert Wheeler’s life insurance policy obtained through his employer, Avanade, Inc. Ms. McComb, Mr. Wheeler’s mother and the named beneficiary, made a claim for benefits. As did Mr. Wheeler’s spouse at the time of his death – asserting a community property interest in the funds. Sun Life interplead. Ms. McComb answered. Mr. Wheeler’s spouse, the executor of his estate, did not answer. Sun Life made a motion for interpleader and dismissal which was granted. Ms. McComb made a motion for default judgment, after an earlier motion for entry of default. The court reviewed a seven-factor test before granting the motion for default judgment. This included determining that, as ERISA governs the plan, the validity of the Estate’s claim turned on questions of preemption. Because ERISA preempted Washington’s community property laws, the Estate had no claim on the proceeds. 

Medical Benefit Claims

Eleventh Circuit

Doe v. Aetna Life Ins. Co., No. 1:17-cv-01167-SDG (N.D. Ga. Jan. 27, 2020) (Judge Steven D. Grimberg). The court considered cross-motions for judgment on the pleadings regarding mental health benefits for a child, Julie’s, residential treatment. In 2018, the court denied Aetna’s motion for summary judgment, finding that Aetna could not show its decision was not arbitrary and capricious and that Aetna ignored opinions of treatment physicians and cherry-picked a fact from records it deemed were untimely and were not reviewed. Plaintiff did not move for summary judgment and therefore the court reserved judgment on that issue at that time. Aetna issued a denial and first appeal denial claiming that residential treatment was not medically necessary because at the time of admission, the child was not actively suicidal, engaging in dangerous sexual behavior, or suffering from addiction, and was cooperative. Aetna denied the second appeal on the same basis and claimed the submission of supplemental materials on appeal was untimely. The court found that the supplemental materials submitted to Aetna are part of the administrative record. The court also found that Aetna’s benefit determination was de novo wrong because Julie satisfied multiple categories in the LOCAT guidelines for residential treatment and “good clinical judgment” supported residential treatment. The court found significant that Julie’s treating physicians uniformly found residential treatment to be medically necessary. The court deemed Aetna’s review to be “extraordinarily narrow” to the “precise moment” that Julie was admitted and ignored previous years of documented trauma, self-harm, and destructive behavior. The court found that the guidelines allowed Aetna to consider Julie’s clinical, medical, and family history in the assessment. The court found that Julie met the criterion of acute dangerousness, functional impairment, mental status changes, psychosocial factors, and additional modifier due to her history. The court also found that Aetna’s benefits determination was arbitrary and capricious and no reasonable grounds support its decision. The court found that Aetna suffered under a structural conflict of interest that reinforced “the view that Aetna had a results-oriented approach towards its medical necessity determination.” The court concluded that remand is not appropriate and granted plaintiffs’ motion for judgment. 

Plan Status

Seventh Circuit

Burclaw v. Standard Ins. Co., No. 18-cv-855-wmc, 2020 WL 409981 (W.D. Wis. Jan. 24, 2020) (Judge William M. Conley). At bottom, this lawsuit concerns Plaintiff’s state law claims that Standard Insurance Company wrongfully denied her an additional life insurance benefit of $100,000 following the death of her husband. The dispute turned on whether the insurance policy was governed by ERISA. The court held the policy was governed by ERISA because West Bend, the employer, had initiated an amendment to a prior ERISA-governed group benefit to include the benefit at issue. West Bend had subsequently submitted Form 5500 filings to the IRS listing the policy number at issue. The court also found the Safe Harbor Provision did not apply because West Bend paid some of the premiums for benefits under the plan. The court allowed Plaintiff to amend the complaint to allege various ERISA based claims – rejecting Standard’s objection that the proposed claims would be futile largely on the grounds that ample conflicting evidence existed that required weighing prior to adjudication of the merits. 

Pleading Issues & Procedure

Sixth Circuit

Coultas v. Carlisle Brake & Friction, Inc., No. 19-3420, ___F.App’x___, 2020 WL 429840 (6th Cir. Jan. 28, 2020) (Before Gilman, McKeague, and Kethledge, Circuit Judges). Plaintiff sued her former employer, asserting claims under ERISA as well as several claims based on state law. The district court granted her ERISA claim, but dismissed her state law claims, and this appeal followed. The Circuit Court affirmed the district court’s judgment. Plaintiff did not present evidence creating a genuine issue of fact on her age discrimination claim, and did not show that Defendant dispossessed Plaintiff of her belongings wrongfully after it fired her in order to prevail on her conversion claim. Dismissal with prejudice was proper because Plaintiff could not re-litigate her claims in state court after they have been litigated in federal court.

Seventh Circuit

LJ Consulting Services, LLC v. SunTrust Investment Services, Inc., No. 19-cv-06763, 2020 WL 469677 (N.D. Ill. Jan. 28, 2020) (Judge Mary M. Rowland). This case began with litigation of a breach of contract dispute over the sale of an ophthalmology practice. One of the results was an order by the Michigan state court placing a freeze on distributions from the pension trust.  The Plan and the Plan Administrator filed a complaint against SunTrust, who holds the pension assets, for violation of ERISA’s anti-alienation provision in refusing to distribute funds from the trust. SunTrust brought a motion to dismiss the complaint arguing Plaintiffs do not have Article III standing and, in the alternative, have failed to state a claim. The district court analyzed the three elements necessary for Article III standing: injury in fact, causation and redressability. The court explained “[a] plaintiff does not have Article III standing if the injury ‘results from the independent action of some third party not before the court.’” quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 41-42 (1976). The court ruled Plaintiffs do not have Article III standing because the injury was caused by the freeze order issued by the Michigan state court, not by SunTrust.

Ninth Circuit

Con. Lab. Tr. Funds for So. Cal. Admin. Co. v. H&S Electric Inc., No. CV 19-05347, 2020 WL 410176 (C.D. Cal. Jan. 23, 2020) (Judge Dean Pregerson). Plaintiff alleges that Defendant, an electrical contractor, is a party to collective bargaining agreements with labor unions to pay required contributions to the employee benefit plans Plaintiff administers. Defendant contends those contributions were owed and paid to other benefit plans pursuant to agreements with Trustees of the Southern California IBEW-NECA Pension Plan and trustees of funds associated with the International Brotherhood of Electrical Workers (collectively, the “Intervenor-Defendants”). The Intervenor-Defendants filed a motion to intervene. A motion to intervene under FRCP 24(a)(2) is analyzed using a four part test:  (1) the motion must be timely; (2) applicant must claim a “significant protectable” interest relating to the subject of the action; (3) the disposition of the action may impair or impede the applicants ability to protect that interest; and (4) the applicant’s interest must be inadequately represented by the parties to the action. Defendant did not object to Intervenor-Defendant’s motion to intervene. Plaintiff objected and argued the Intervenor-Defendants did not have a significant protectable interest in the action. The court found that there was a significant protectable interest because Plaintiff is seeking to be paid contributions already paid to the Intervenor-Defendants. The motion to intervene was granted. 

Provider Claims

Third Circuit

New Jersey Spine and Orthopedics, LLC v. Bae Systems, Inc., No. 2:19-CV-10735, 2020 WL 491258 (D.N.J. Jan. 29, 2020) (Judge Claire C. Cecchi).  The court dismissed Plaintiff’s lawsuit since it was brought under an assignment of benefits, which is barred by the plan’s anti-assignment provision.  Plaintiff does not have standing to bring its ERISA claims.

Seventh Circuit

Aerocare Medical Transport System, Inc., f/k/a R&M Aviation, Inc. v. Cigna Health Management, Inc., et al., No. 18 C 06437, 2020 WL 469301 (N.D. Ill. Jan. 29, 2020) (Judge John J. Tharp, Jr.).  A global transport and logistics company sued Cigna to pay for air ambulance services it provided to a participant of a self-funded health plan.  The court granted Cigna’s motion to dismiss since it is not a proper defendant to Plaintiff’s claim.  Cigna provides administrative services for the plan.  While Cigna has discretionary authority to interpret the plan and make factual determinations, it does not have “sole and absolute discretion” over the plan, nor is it the only entity capable of providing direct relief to Plaintiff.  Relief under Section 502(a)(1)(B) comes from the party responsible for paying benefits and Cigna is not the obligor responsible for paying any benefits due.  The court denied Plaintiff leave to amend the complaint to add a breach of fiduciary duty claim against Cigna under Section 502(a)(3) since Plaintiff has a claim under Section 502(a)(1)(B) and the fiduciary breach claim is premised on the denial of benefits.

Standard of Review

Sixth Circuit 

Duncan, et al., v. Minnesota Life Ins. Co., No. 3:17-CV-00025, 2020 WL 430958 (S.D. Ohio Jan. 28, 2020) (Judge Thomas Rose).  In this dispute over life insurance benefits, Plaintiffs alleged that Defendants’ failures to comply with ERISA procedures during the appeal justified de novo standard of review, rather than the abuse of discretion standard. However the court noted that 1) despite Plaintiff’s many allegations of procedural defects, he never explained how these defects interfered with his ability to obtain a full and fair review, instead relying on conclusory allegations, 2) even if there was some prejudice experienced by Plaintiff, Defendants substantially complied with ERISA regulations, and 3) even if they did not comply, and the court granted de novo review, “the Court will still find that Plaintiffs are not entitled to AD&D benefits under the Policy . . .”

Statute of Limitations

Fifth Circuit

Scott v. Prudential Ins. Co. of North Amer., No. CV 19-9294, 2020 WL 409636 (E.D. La. Jan. 24, 2020) (Judge Greg Gerard Guidry). Plaintiff filed suit alleging various state law claims against Defendant for its termination of her disability benefits. Defendant moved to dismiss on the basis of ERISA preemption and the disability plan’s three-year contractual limitations.  The court found the claims preempted and untimely. With respect to the contractual limitations period, the court, citing to Heimeshoff, explained that a participant and a plan may agree by contract to a particular limitations period, even one that starts to run before the cause of action accrues, as long as the period is reasonable. In this case, the court found that the plan has an enforceable three-year limitation on legal actions for benefits under the plan. Plaintiff’s claims are time-barred because Plaintiff did not file this suit within three years of Defendant’s notification that it would cease making disability payments to Plaintiff.  Here, Defendant informed Plaintiff on May 24, 2012 that it was terminating her claim. Thus, she had to file suit by no later than May 24, 2015, which she did not.  Accordingly, the court granted Defendant’s motion to dismiss.

Ninth Circuit

Serafin v. William C. Earhart Co., Inc., No. 3:18-CV-00192-YY, 2020 WL 437542 (D. Or. Jan. 28, 2020) (Mag. J. Youlee Yim You). Plaintiff was a participant in his employer’s collectively bargained group pension plan, which included a disability benefit. Plaintiff became injured at work in 2002 and was terminated in 2004 because he could not obtain medical clearance to return to work. He was awarded Social Security benefits in 2008, which were paid retroactive to 2005. In 2008, Plaintiff also submitted a disability benefit claim to the plan, which was approved. However, the plan only paid benefits beginning in 2008. Ten years later, in 2018, plaintiff sued both the plan and his union. He contended that benefits should have been paid retroactive to 2005, and that his benefits had been incorrectly calculated. Defendants filed a motion to dismiss, arguing that the suit was time-barred. The court agreed, finding that the various limitation periods for Plaintiff’s claims had all expired by 2018 when Plaintiff filed suit. Plaintiff countered with an equitable tolling argument, contending that he had been engaged in negotiations with the plan prior to his lawsuit and that his English was poor. The court rejected this argument, noting that Plaintiff admitted that the negotiations had been in good faith and that there was no allegation that Plaintiff had been misled. Furthermore, Plaintiff had been able to negotiate with the plan and was able to navigate the Social Security system, and thus his limited English was insufficient to toll the various statutes of limitation. The court thus granted Defendants’ motion to dismiss; however, it declined to award them attorney’s fees.

Statutory Penalties

Fifth Circuit

Theriot v. Building Trades United Pension Trust Fund, et al., No. 18-10250, 2020 WL 474960 (E.D. La. Jan. 29, 2020) (Judge Lance M. Africk). The Court denied the pro se Plaintiff’s motion to reconsider, under Federal Rules of Civil Procedure Rule 59(e), its grant of summary judgment as to count three of Plaintiff’s second amended complaint alleging that the Pension Trust Fund failed to timely produce a copy of a 1990 collective bargaining agreement pursuant to 29 U.S.C. § 1024(b)(4). Plaintiff claimed that her letter to the Fund requesting “a list of all contracts related to the plan’s operations and copies of same, including a copy of any signed contract between the employer and the third party” did not provide the Fund with “the necessary clear notice” required to show that the Fund violated ERISA when it failed to produce the collective bargaining agreement. The context and purpose of Plaintiff’s request was to aid in her determination of an entitlement to her deceased mother’s lump-sum payout. Such a motive for this document request, the Court held, would not lead a plan administrator to “reasonably conclude” that a collective bargaining agreement was within the scope of Plaintiff’s request as styled. Instead, the Court observed that Plaintiff’s request actually sought governing Plan documents which would best aid her determination of her entitlement to her deceased mother’s benefits. The Court observed that a collective bargaining agreement does not relate to any plan provision or policy that would resolve the question of Plaintiff’s entitlement to benefits. The Court also did not find that Plaintiff’s motion for reconsideration was “so frivolous” as to amount to “bad faith” therefore attorney’s fees were denied to Defendants. 

Eighth Circuit

Williams v. H & H Auto Parts, LLC, No. 8:18-CV-137, 2020 WL 490963 (D. Neb. Jan. 30, 2020) (Judge Brian C. Buescher).  The court declined to exercise its discretion in awarding Plaintiff damages due to Defendant’s failure to comply with the COBRA notice requirements because the court found that the company acted in good faith and Plaintiff suffered no harm from the notice violation.  The employer’s plan administrator testified that she did not know the company was subject to COBRA because its insurance agent said that it was not.  Upon receiving a DOL notice informing the company that it was subject to COBRA, the company properly sent Plaintiff a letter regarding her right to continue her health coverage.  Plaintiff also testified that she did not incur any medical expenses while she was uninsured, and she secured health insurance at her new job.  She was also able to obtain free counseling sessions during the time she did not have insurance. 

Subrogation/Reimbursement Claims

Sixth Circuit

Zirbel v. Ford Motor Co., No. 18-13212, 2020 WL 475336 (E.D. Mich. Jan. 29, 2020) (Judge Nancy G. Edmunds). In 2013, the retirement plan paid Plaintiff a lump sum of her ex-husband’s retirement benefits pursuant to a QRDO. In 2017 the plan realized it had miscalculated and wrote her a letter demanding the return of $243,189.70 within 30 days. Plaintiff filed suit under ERISA arguing that the plan (1) should have exercised its discretion to reduce the amount she owed given the circumstances, and (2) was barred by equitable estoppel from recovering the overpayment. The plan counter-claimed for equitable relief. Under cross-motions for judgment, the court found that the abuse of discretion standard of review applied to Plaintiff’s first claim because the plan conferred discretionary authority to reduce repayment amounts. It further found that the plan’s refusal to reduce the repayment was not an abuse of discretion because the overpayment and the amount were not in dispute. The court found that no deference was owed under Plaintiff’s equitable estoppel argument. Under that argument, the court found that estoppel did not apply because the plan was not engaged in misconduct and was initially unaware of its error. Furthermore, the error did not “induce Plaintiff to make a life-altering decision that she would not have otherwise made[.]” Plaintiff had significant assets and could afford to repay the plan. The court ruled that the overpayments themselves were a “specific fund” from which the plan could recover, and thus its claim did not run afoul of Supreme Court precedent regarding the tracing of funds under equitable claims for relief. As a result, the court granted the plan’s motion and ordered Plaintiff to repay the plan the full amount.

Venue

Seventh Circuit

Kelley, et al., v. MailFinance Inc., et al., No. 19 C 758, 2020 WL 469305 (N.D. Ill. Jan. 29, 2020) (Judge Charles P. Kocoras). Defendants filed a motion to transfer venue to the District of Connecticut under 28 U.S.C. § 1404(a). Plaintiffs were the trustees of a multiemployer benefits plan under ERISA, with the Fund’s principal office in Chicago, Illinois. Both Defendants have a principal place of business in Milford, Connecticut. The court granted Defendants’ motion. First, the executed Finance Agreement referenced Professional Services Agreement and the Maintenance Agreement, both of which contained a forum selection clause that designated the District of Connecticut as the parties’ chosen forum. The court rejected Plaintiffs’ argument that the Software Agreement, which did not include a forum selection clause, was controlling for three reasons: 1) the agreement related only to the software component, and not the hardware component; 2) the agreement was between Plaintiffs and only one of the Defendants; and 3) the Fund sued to enforce the Agreement as a whole, not just the Software Agreement. The court also found that the forum selection clause was enforceable because the Fund did not allege that it resulted from fraud, undue influence, or overweening bargaining power. The Fund sued for breach of contract and sought declaratory relief. Furthermore, the Fund did not argue that enforcing the clause would have been unjust or unreasonable, or that enforcing the clause would deprive them of their day in court. Finally, the court held that ERISA’s venue provision did not prevent enforcement of forum selection clause, because nothing in that provision precluded parties from contractually channeling litigation to a particular federal district.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Ferrara, Sr., et al. v. Happy Time Trucking, LLC a/k/a Happy Time Trucking, Inc., et al., No. 217CV7450ADSAKT, 2020 WL 509145 (E.D.N.Y. Jan. 31, 2020) (Judge Arthur D. Spatt).  In this dispute over withdrawal liability, the court granted Plaintiffs’ Rule 56 motion and found that the Defendant companies are jointly and severally liable to Plaintiffs for damages, attorneys’ fees, and costs. The court dismissed the action, without prejudice and with leave to re-file, as to the John Doe Defendants. The court referred the matter to a Magistrate Judge for a recommendation as to the amount of damages, attorneys’ fees, and costs owed. 

Plumbers, Pipefitters and Apprentices Local No. 112 Pension Fund v. K&S Plumbing, Heating & Air, Inc., et al., No. 318CV0198LEKDEP, 2020 WL 502403 (N.D.N.Y. Jan. 31, 2020) (Judge Lawrence E. Kahn).  The court granted Plaintiff’s Motion to Reopen upon concluding that Defendants breached the Stipulation of Settlement and that Plaintiffs are entitled to the relief they seek.  The court entered judgment for Plaintiff in the amount of $17,166.86, plus interest at the rate provided for by 28 U.S.C. § 1961(a) from the date judgment is entered.

Trustees for The New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund v. Cornerstone Carpentry Limited d/b/a Cornerstone Carpentry, No. 19 CIV. 10801 (PAE), 2020 WL 506457 (S.D.N.Y. Jan. 31, 2020) (Judge Paul A. Engelmayer). In this dispute over delinquent contributions, the court confirmed the Arbitration Award in favor of petitioners and issued judgment in the amount of $26,090.02, plus post-judgment interest pursuant to 28 U.S.C. § 1961(a).

Third Circuit

Trustees of the New Jersey B.A.C. Health Fund, et al. v. Doran Tatrow Associates, Inc., No. CV 18-16556 (CCC), 2020 WL 525922 (D.N.J. Jan. 31, 2020) (Judge Claire C. Cecchi). The court granted Plaintiffs’ motion for default judgment and awarded Plaintiffs a total amount of $69,528.36 consisting of: (1) contributions to the funds in the principal amount of $42,468.19; (2) interest in the amount of $6,629.50; (3) liquidated damages in the amount of $8,493.64; (4) attorney’s fees and costs in the amount of $7,143.74; and (6) dues check-offs to the Union in the amount of $4,793.29. 

Trustees of the UFCW Local 152 Health and Welfare Fund, et al., v. Liberty Food Store, Inc., No. CV176811MASTJB, 2020 WL 473791 (D.N.J. Jan. 29, 2020) (Judge Michael A. Shipp).  In this case seeking delinquent fringe benefit contributions, the court granted Plaintiffs’ motion for summary judgment.  The court found that “Defendant may not skirt its obligations under the CBAs even though the Funds suspended employee benefits. Plaintiffs are entitled to the total amount listed in Section I.C. ($334,794.48) of this Memorandum Opinion.”

Seventh Circuit

Wisconsin Glaziers & Glass Workers Money Purchase Plan, et al. v. The Lurie Companies Inc., et al., No. 19-CV-1605-JPS, 2020 WL 433938 (E.D. Wis. Jan. 28, 2020) (Judge J.P. Stadtmueller).  In this dispute over unpaid contributions, the court granted Plaintiffs’ motions for default judgment and ordered Defendant The Lurie Companies, Inc. to pay Plaintiffs the total sum of $106,060.41, together with post-judgment interest, and Defendant Mark S. Lurie to pay Plaintiffs the total sum of $43,893.84, together with post-judgment interest.

Eighth Circuit

Local 513, International Union of Operating Engineers, AFL-CIO, et al., v. Invision Excavating & Contracting, LLC, No. 4:18CV01278 AGF, 2020 WL 491322 (E.D. Mo. Jan. 30, 2020) (Judge Audrey G. Fleissig). In this action to recover delinquent contributions and liquidated damages, the court granted Plaintiffs’ motions for default judgment against Defendant in the amounts of $138,730.81 in principal, $28,083.87 in liquidated damages, $41.93 in outstanding variances, and $5,906.96 in attorney fees and costs, for a total of $172,763.57. 

Ninth Circuit

Carpenters Health and Security Trust of Western Washington et al. v. Gifford Industries, Inc., No. C19-0258-JCC, 2020 WL 433357 (W.D. Wash. Jan. 28, 2020) (Judge John C. Coughenour).  The court granted Plaintiffs’ motion for summary judgment and ordered Defendant to pay $72,958.91 in fringe benefit contributions for the period of January 1, 2016 through December 31, 2016; $8,755.08 in liquidated damages; $27,728.34 in accrued interest through the date of the audit report; and $3,272.50 in accounting/audit fees.  The court instructed Plaintiffs to submit their application for attorney fees and costs to the court within 14 days.

Your ERISA Watch is made possible by the collaboration of the following Kantor & Kantor attorneys:  Brent Dorian Brehm, Beth Davis, Sarah Demers, Elizabeth Green, Andrew Kantor, Susan Meter, Michelle Roberts, Tim Rozelle, Peter Sessions, and Zoya Yarnykh.