Retirement plan participants received a partial victory from the Eighth Circuit Court of Appeals in one of several actions brought against large universities for the alleged mismanagement of their section 403(b) retirement-savings plans. In Davis v. Washington Univ. in St. Louis, No. 18-3345, __F.3d__, 2020 WL 2609865 (8th Cir. May 22, 2020), the plan participants alleged two separate breach of fiduciary duty claims. The first claim alleges that Washington University allowed the investment-management fees and record-keeping expenses “to get out of control.” The second claim alleges that Washington University allowed several underperforming investments to stay in the plan for too long. The district court (E.D. Mo. – St. Louis) granted the University’s motion to dismiss both claims. The plan participants appealed. The Eighth Circuit affirmed in part, reversed in part, and remanded for further proceedings.

With respect to the first claim, the Eighth Circuit found that at the pleading stage, Plaintiffs’ complaint alleged enough to infer that the plan management process was flawed. Plaintiffs allege that the fees were too high, and that Washington University should have negotiated a better deal. For example, Vanguard’s “mixed” lineup of institutional and retail shares. Vanguard offered lower-cost institutional shares for some investments but did not offer these shares across its entire lineup. Plaintiffs allege that Washington University breached its fiduciary duty by not replacing retail shares for other funds because the higher fees led to lower overall returns.  Based on the alleged facts, the court found that two inferences of the University’s mismanagement are plausible. “The first is that it failed to gain access to them because, as the complaint alleges, it did not negotiate aggressively enough with Vanguard. The second is that it was asleep at the wheel: it failed to pay close enough attention to available lower-cost alternatives. Either way, a ‘failure of effort [or] competence’ is enough to state a claim for breach of the duty of prudence.”

With respect to the second claim, the Eighth Circuit found that Plaintiffs’ allegations about three specific investment options—TIAA Real Estate Account, CREF Stock Account, and the TIAA Traditional Annuity—failed to provide sound basis for comparison demonstrating that the University breached its duty of prudence by failing to monitor and remove imprudent investment options. “Comparing apples and oranges is not a way to show that one is better or worse than the other.”

The TIAA Real Estate Account’s “principal strategy is to purchase direct ownership interests in income-producing real estate, primarily office, industrial, retail and multi-family properties.” The court found that it is not imprudent for a fiduciary to provide investment options that include real estate investments through an actively managed portfolio. 

The CREF Stock Account, a variable annuity, “invests at least 80% of its assets in [a] broadly diversified portfolio of common stocks.” Even though this Account performed more poorly than they did over certain periods of time, fiduciaries are not required to pick the best performing fund. They also are not required to pick the lowest-cost fund. “The bottom line is that there is simply not enough in the complaint to infer that a reasonably prudent fiduciary would have refused to stick with CREF Stock Account.”

The TIAA Traditional Annuity, a fixed-annuity contract, promises a guaranteed stream of payments for life at retirement, with TIAA bearing any downside risk by guaranteeing a fixed minimum return. Plaintiffs do not identify even one other investment with a similar risk-and-reward profile that offers better terms. “A unique investment option like this one shows why a meaningful benchmark is so important. Some investors are perfectly willing to trade liquidity and higher returns for reduced risk and guaranteed income. At a minimum, a prudent fiduciary can offer them that choice.”

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

Breach of Fiduciary Duty

Fifth Circuit

Schweitzer v. The Investment Committee of The Phillips 66 Savings Plan, No. 18-20379, __F.3d__, 2020 WL 2611542 (5th Cir. May 22, 2020) (Before Higginbotham, Smith, and Higginson, Circuit Judges). The Fifth Circuit affirmed dismissal of this putative class action against the Investment Committee of the Phillips 66 Savings Plan for breach of their fiduciary duty to diversify under § 1104(a)(1)(C) and their duty of prudence under § 1104(a)(1)(B) by failing to consider reducing their holdings in the ConocoPhillips Funds. The court made the following findings: (1) The ConocoPhillips Funds were not “employer securities” after the ConocoPhillips spun off Phillips 66 in 2012; (2) Plaintiffs did not allege that the fiduciaries did not offer sufficient investment options or failed to warn Plan participants of the risk of a concentrated portfolio so their § 1104(a)(1)(C) claim fails; (3) Plaintiffs’ duty-of-prudence claim does not implicate Dudenhoeffer; (4) ERISA contains no prohibition on individual account plans’ offering single-stock funds and while Plaintiffs plausibly alleged that the ConocoPhillips Funds became an imprudent investment with the spinoff, the fiduciaries were not obligated to force Plan participants to divest from the Funds.

Eighth Circuit

Davis v. Washington Univ. in St. Louis, No. 18-3345, __F.3d__, 2020 WL 2609865 (8th Cir. May 22, 2020) (Before Kelly, Melloy, and Stras, Circuit Judges). See Notable Decision summary above.

Class Actions

Eighth Circuit

Larson v. Allina Health System, No. 17CV03835SRNTNL, 2020 WL 2611633 (D. Minn. May 22, 2020) (Judge Susan Richard Nelson). The court granted Plaintiffs’ motion for an award of Class Counsel attorneys’ fees in the amount of $808,252.50 and reimbursement of expenses in the sum of $12,413.78, to be paid from the Settlement Fund. The court also awarded each of the Class Representatives $5,000.00 as a Case Contribution Award, as defined in the Settlement Agreement, in recognition of their contributions to this Action.

Tenth Circuit

Ramos v. Banner Health, No. 15-CV-2556-WJM-NRN, 2020 WL 2553705 (D. Colo. May 20, 2020) (J. William J. Martinez). Plaintiff, an employee of Banner Health, filed a class action, certified by the court, alleging that Banner and persons working for Banner breached their fiduciary duties in the management of Banner’s ERISA-governed 401(k) employee benefit plan. The case went to trial and the court found partly in Plaintiffs’ favor, and partly in Banner’s favor. In a lengthy decision, the court ruled that Plaintiffs suffered no economic loss from the Plan’s decision to invest in certain mutual funds, or that the Plan was motivated by self-interest in selecting those funds. The court also found that the Plan’s decision to invest in certain funds was reasonable and not imprudent, and that its payment of recordkeeping and administrative fees to a third-party administrator was not a prohibited transaction under ERISA. However, the court also found that the Plan did not act prudently when it failed to regularly assess whether it was paying reasonable recordkeeping and administrative fees to the administrator, and that the Plan made numerous improper expense reimbursements to certain Plan fiduciaries. As a result, the court ordered judgment against the Plan in excess of $2.3 million.

Disability Benefit Claims

Second Circuit

Deane, Jr. v. Aetna Life Ins. Co., No. 3:17-CV-01646 (SRU), 2020 WL 2572756 (D. Conn. May 21, 2020) (Judge Stefan R. Underhill).  On abuse of discretion review, the court found that Aetna’s decision to deny Plaintiff’s long-term disability benefits was not arbitrary and capricious. First, Aetna’s decision was supported by substantial medical evidence. Though Plaintiff’s condition deteriorated from 2016-2017, his medical condition as of the date of his benefit termination in May 2015, as reflected in his prison records in the time leading up to this date, showed that Plaintiff sustained work capacity. Second, the court found that Aetna did not err in relying on a transferrable skills analysis (“TSA”) which appropriately considered his past work history and his current limitations.

Fifth Circuit

Bayer v. Unum Life Insurance Company of America, et al., No. CV 18-9702, 2020 WL 2558218 (E.D. La. May 20, 2020) (Judge Eldon E. Fallon). Plaintiff was diagnosed with multiple sclerosis (“MS”) and applied for short-term disability (“STD”) benefits, alleging issues with balance and gait, inability to stand for long periods of time, fatigue, and memory impairment. Unum denied her claim and appeal. Plaintiff thereafter applied for long-term disability (“LTD”) benefits. Defendant denied benefits because it determined that MS was a pre-existing condition. Plaintiff appealed and provided an affidavit of her treating physician explaining how Plaintiff’s eye condition may have been a symptom of MS, but that not all persons with the eye condition actually have MS. Unum denied Plaintiff’s appeal, and she filed suit. The court analyzed this case de novo. The court determined that Defendant erred in denying Plaintiff’s STD claim, criticizing the fact that there were no in-person examinations of Plaintiff, that the reviewing consultants were not MS specialists and were not even medical doctors. Unum also erred by disregarding the opinions of Plaintiff’s treating physicians. Insofar as the LTD claim, the court found that the record and the language of the policies at issue did not support Defendant’s conclusion that Plaintiff’s MS was a pre-existing condition, based, in part, on the affidavit provided by Plaintiff’s treating physician related to the eye condition. The court again criticized Defendant on relying on opinions of peer reviewers who were not medical doctors and who were not MS specialists, and that it could not arbitrarily refuse to credit reliable evidence, including the opinions of treating physicians. The court declined awarding penalties against Plaintiff’s employer Sealy, because the issue was raised for the first time in the motion for summary judgment, but even if it were properly alleged, the employer needed to have either: (1) knowingly participated in, or concealed, Unum’s breach, (2) engaged in a breach of its own fiduciary duty that enabled Unum to commit a breach, (3) or have knowledge of Unum’s breach and not have made reasonable efforts to remedy the breach. There are no facts to support Plaintiff’s claim—other than mere speculation of Sealy’s motives in choosing Unum as an insurer—because discovery was not conducted on this issue. Moreover, the court cannot point to any facts that show that Sealy should be held liable for Unum’s breach of fiduciary responsibility for the same reason: sufficient discovery on this issue was not conducted because it was not pled in Plaintiff’s Complaint.

Ninth Circuit

Hislop v. CH2M Hill Companies Ltd., No. 3:19-CV-0073-HRH, 2020 WL 2530346 (D. Alaska May 18, 2020) (Judge H. Russel Holland). In this dispute where the parties stipulated to a de novo standard of review, Plaintiff argued that LINA incorrectly terminated his benefits under the “any occupation” standard of disability because a Functional Capacity Evaluation (“FCE”) established that he is not capable of even sedentary work, and if LINA disagreed, it should have ordered its own FCE. However, the court found that Plaintiff incorrectly interpreted the findings in the FCE that he was only capable of sitting 30 minutes per day; in fact, the finding was that he should be able to shift his position every 30 minutes. In addition, the opinions of the FCE evaluator and a rehabilitation specialist that Plaintiff could not do sedentary work was contradicted by other medical evidence from doctors who have personally examined Plaintiff and opined that he could perform sedentary work. Several peer reviewers were of the same opinion. The court found that Plaintiff has not shown by a preponderance of the evidence that he could not perform sedentary work. In addition, the court found that LINA appropriately adjusted Plaintiff’s pre-disability earnings under the terms of the Plan, and there was at least one sedentary job LINA identified that would have allowed Plaintiff to earn at least 60% of his adjusted pre-disability earnings. 


Eleventh Circuit

Woznicki v. Raydon Corp., No. 6:18-CV-2090-ORL-78GJK, 2020 WL 2562874 (M.D. Fla. May 19, 2020) (Magistrate Judge Gregory J. Kelly). Plaintiff, an employee of Raydon Corporation, filed a class action, certified by the court, alleging improprieties in the sale of Raydon stock to Raydon’s ERISA-governed employee stock ownership plan (ESOP). During discovery, Plaintiff served requests for production on defendant Lubbock National Bank, the trustee for the ESOP. Lubbock objected and Plaintiff filed a motion to compel. The court granted the motion in part and denied it in part. The court found that documents post-dating the transaction were discoverable, as were documents reflecting insurance coverage. The court also found that documents reflecting Lubbock’s record retention policy were discoverable. However, the court gave Lubbock the opportunity to file a motion for a protective order regarding the production of documents that might be subject to attorney-client privilege.

ERISA Preemption

Ninth Circuit

Dish Network Corp. v. Pompa, No. 2:17-CV-1601-KJD-CWH, 2020 WL 2513671 (D. Nev. May 15, 2020) (Judge Kent J. Dawson). An employee of Dish Network died, and a dispute arose as to who was entitled to his benefits under Dish Network’s ERISA-governed 401(k) employee benefit plan. The designated beneficiary was the employee’s domestic partner, but the employee’s father asserted that the designation was void under Nevada law because the domestic partner was the employee’s caregiver. (Nevada law presumes a transfer to be void if the transferee is “a caregiver of the transferor who is a dependent adult”). The domestic partner brought a motion for summary judgment asserting that she, not the father, was entitled to the benefits as the sole designated beneficiary. The court agreed with the domestic partner and granted the motion. First, the court found that the Nevada transfer law was unenforceable because it was preempted by ERISA. It ruled that the Nevada law was “impermissibly connected” to the 401(k) plan because it “injects itself into the relationship between an ERISA-governed plan and the plan participant.” Second, the court found that because Nevada law did not apply, the father had the burden of proving that the beneficiary designation was fraudulent under federal common law. The father did not meet that burden because his proffered evidence only showed “personal doubt about material facts” and “speculation or guesswork” about his son’s beneficiary wishes.

Life Insurance & AD&D Benefit Claims

Second Circuit

Metro. Life Ins. Co. v. Bell, No. 19-CV-1310 (LJV), 2020 WL 2553019 (W.D.N.Y. May 20, 2020) (Magistrate Judge Hugh B. Scott). In 2018, George Bell’s wife filed a claim for life insurance benefits for a policy taken out on his life. Mr. Bell’s daughters claimed that they should be entitled to the funds, as they claimed different beneficiary forms should be in effect. Facing the prospect of multiple litigation, plaintiff Metropolitan Life filed this motion for interpleader. While Mrs. Bell was reflected as the rightful beneficiary according to the most recent beneficiary form (filled out in April 2016), his daughters argued that he did not have capacity to make decisions at that time and should thus refer to the prior beneficiary form naming the daughters as full beneficiaries, completed in 2011. The Court found no reason to oppose MetLife’s motion: “Here, plaintiff has satisfied all the criteria for deposit and for an award of fees. The potential beneficiaries have made clear that they oppose each other’s claims to George’s benefits. Additionally, the Court intentionally omitted from this writing any detailed description of the contents of the potential beneficiaries’ correspondence with plaintiff or with the Court; the contents indicate an unfortunate amount of discord between the potential beneficiaries and show that litigation of this case likely will be acrimonious. Multiple litigation is very likely under these circumstances. As for costs and fees, the amount that plaintiff requests is fairly modest considering the work required to prepare the complaint, to draft the pending motion, and to take the steps that were required to obtain waivers of service.” As such, the court granted the motion and awarded costs and fees.

Fifth Circuit

Kinder Morgan, Inc. v. Crout, No. 19-20037, __ F.App’x __, 2020 WL 2529376 (5th Cir. May 18, 2020) (Smith, Graves, and Ho, Circuit Judges). Primarily at issue was whether Danny Lee Crout’s wife or children was the appropriate beneficiary of an ERISA governed employee savings plan following Crout’s death. The plan provided benefits to a designated beneficiary or, if none was elected, benefits were distributed according to a ranked list. First in that list was the participant’s surviving spouse. The Fifth Circuit resolved four issues. First, without resolving the question, it determined the district court had jurisdiction because this was an ERISA matter and thus rules allocating probate matters to state courts when filed in federal court based on diversity jurisdiction did not apply. Second, the Burford v. Sun Oil Co., 319 U.S. 351 (1943) abstention doctrine did not apply because all the claims arose under federal law, specifically ERISA. Third, the district court properly granted summary judgment to Crout’s wife because the children failed to prove they were the named beneficiaries (or there was any named beneficiary), and thus the plan’s terms dictated she receive the funds. The court rejected arguments that prior designations under different plans showed a “habit” sufficient to overcome the plan’s express terms. Fourth, the district court did not abuse its discretion denying the children’s post-judgment motion for leave to file an amended counterclaim because the proposed action was against a party that had been dismissed from the case nine months prior. 

Ninth Circuit

Bircher Tr. of Bircher Living Tr. v. Metro. Life Ins. Co., No. CV 19-04864 PA (SKX), 2020 WL 2521271 (C.D. Cal. May 16, 2020) (Judge Percy Anderson). Lupe Bircher was born in 1922 and began working for AT&T Corp in 1964. She retired from AT&T in 1988, at the age of 65. The month prior to her retirement she had $12,000 in basic life insurance and submitted a form for $24,000 in supplemental life insurance. She never made premium payments on the supplemental life insurance. She died in 2016 at age 93. MetLife, the insurer of AT&T’s life insurance benefits, paid the $12,000 basic benefit but denied the supplemental benefit claim. MetLife claimed the decedent was not eligible to continue supplemental life insurance past the later of age 65 or retirement. The AT&T Plan permits a limited class of retired employees to continue supplemental life insurance after retirement and age 65. Pursuant to the plan, only employees of AT&T West were eligible to continue coverage provided they were also part of one of five listed bargaining groups. While decedent was a member of one of the bargaining groups, she was an employee of AT&T Corp., not AT&T West. Thus, the court found she was not eligible for supplemental life insurance after retirement or age 65 and upheld the denial of life insurance benefits. 

Medical Benefit Claims

Fourth Circuit

Silva v. Voya Services Company Employee Welfare Benefits Plan, Case No. 19-cv-318, 2020 WL 2537454 (D.S.C. May 19, 2020) (Judge Donald C. Coggins Jr.). Plaintiff Christopher Silva (“Silva”) was a beneficiary of Defendant Voya Services Company Employee Welfare Benefits Plan (the “Plan”) based upon his father’s participation in the Plan as an employee of Voya Financial Services. From January 8, 2015 through May 15, 2016, Silva received inpatient mental health treatment at CooperRiis, a residential treatment facility in Asheville, North Carolina. The Plan approved coverage for inpatient treatment for the period January 8, 2015 through March 18, 2015 but denied further benefits after determining Silva’s condition did not meet the standard for inpatient or residential care. Before the court were the parties’ cross-Memoranda in Support of Judgment. The court held that the Plan did not abuse its discretion in denying further care at the inpatient level after March 18, 2015 and that the outpatient level of care would have been just as effective in treating Silva’s conditions as the treatment he received at CooperRiis. The court held that the Plan’s decision-making process was principled and well-reasoned and supported by substantial evidence in the administrative record.

Tenth Circuit

E.W. v. Health Net Life Ins. Co., No. 2:19-CV-499-TC, 2020 WL 2543353 (D. Utah May 19, 2020) (Before District Court Judge Tena Campbell). Defendant denied Plaintiff’s claim for health insurance coverage of mental health treatment as a residential facility in Utah. Plaintiff filed claims under ERISA and the Mental Health Parity and Addiction Equity Act of 2008. Defendants filed a Rule 12(b)(6) motion to dismiss both counts. The court concluded that Plaintiff had sufficiently stated a claim under ERISA, as under the liberal pleading standard, Plaintiff merely had to put Health Net on sufficient notice of the nature of Plaintiff’s claim that the denial of benefits was arbitrary and capricious. Plaintiff met this standard, which was sufficient to survive dismissal at this stage. The court, in contrast, did uphold the dismissal of Plaintiff’s cause of action under the MHPAEA, finding that “Plaintiffs do not plausibly allege why treatment of mental health claims is not in parity with review of medical/surgical claims. The majority of the Complaint’s MHPAEA claim contains conclusory allegations that recite the language of MHPAEA and its implementing regulations. . . . Without a plausible link to benefit claims in the medical/surgical categories, Plaintiffs do not allege a cause of action under the Parity Act. As for Plaintiffs’ contention that they need discovery before they can articulate the connection, they request permission to conduct a fishing expedition. To accept as fact a suspicion that has no known support is inherently contrary to Rule 8.”

Hundley v. Employee Benefit Plan of Compass Grp., Inc., No. 19-2366-JWB, 2020 WL 2513070 (D. Kan. May 15, 2020) (Judge John W. Broomes). Plaintiff seeks benefits for her daughter’s (referenced as “Hundley”) air ambulance from Shawnee Mission Medical Center to ACUTE Center for Eating Disorders. Hundley was hospitalized at Shawnee with severe and life-threatening anorexia nervosa, weighing only 55 pounds when admitted. Air ambulance was arranged 10 days after admission and she was noted to be stabilized, although some complications persisted. United HealthCare denied benefits for the air ambulance to Denver, claiming that the services needed were available in a facility closer to Hundley. Plaintiff contends the level of specialized treatment that Hundley needed was not available in Kansas hospitals. The court disregarded Plaintiff’s references to hospitals’ websites in her appeal letter because the citations do not link to data contemporaneous to the administrator’s review and there is no assurance that the link did not change at the time the court opened the website. The court found that there was nothing arbitrary and capricious in the conclusion that treatment for Hundley’s acute malnutrition could have continued at Shawnee. The court also found that there was no evidence that Hundley sought treatment at the University of Kansas Hospital. The court found that the Kansas hospitals do not need to be the best treatment choice, only that they be equipped to provide Hundley with the care she needed. The court also found that the administrator did not need to address the appeal submissions. The court granted Defendant’s motion for summary judgment.

Moon v. Tall Tree Administrators, LLC, No. 18-4034, __F.App’x__, 2020 WL 2535692 (10th Cir. May 19, 2020) (Before Lucero, Bacharach, and Eid, Circuit Judges). Appellant challenges the district court’s order granting summary judgment to Defendants. Appellant sought medical benefits for surrogate pregnancy in 2015 and contends the policy exclusion related to surrogate pregnancy is ambiguous. The circuit court affirmed the district court’s decision awarding summary judgment to Defendants. Although the plan covers pregnancy, it also contains an exclusion for pregnancy charges “acting as a surrogate mother.” Defendants previously paid for pregnancy-related expenses in 2013, but there is no evidence that Defendants knew Moon was acting as a surrogate for those expenses. The circuit court found that the district court did indicate that it considered Moon’s arguments and was not required to address every argument in-depth. The circuit court found that the exclusion language “non-traditional medical expenses” is not susceptible to more than one meaning and agreed with the district court that the exclusion is unambiguous.

Pension Benefit Claims

Sixth Circuit

Roofers Local 149 Pension Fund v. Pack, No. 2:19-CV-10628, 2020 WL 2526091 (E.D. Mich. May 18, 2020) (Judge Terrence G. Berg). In this interpleader action, due to failure to finalize his first divorce, deceased participant was married to two women at the time of his death. The first wife, after learning they were never officially divorced, filed a claim for the surviving spouse pension benefit. The court had to undertake a determination of whether the second marriage was valid. In doing so, it turned to Michigan state law which presumes that a later marriage is valid if: (1) that the parties are innocent of bigamy; and (2) that there is regularity in the actions of officiating and licensing officers. The participant was married to his second wife in an official ceremony at a church with 365 guests. They were married for 27 years and had several children together. In addition, the first wife had also remarried in 1998 and remained remarried through the time of the participant’s death. The first wife was unable to overcome her burden of the presumption of validity of the second marriage. The surviving spouse benefit was granted to the second wife.

Pleading Issues & Procedure

First Circuit

Feeney Bros. Excavation LLC v. Morgan Stanley & Co. LLC, No. CV 18-12313-LTS, 2020 WL 2527851 (D. Mass. May 18, 2020) (Judge Leo T. Sorokin). This case was originally brought in state court on allegations that the 401(k) plan’s third party administrator, recommended by the Plan’s investment advisor, was not suitable to administer the plan and the investment advisor made numerous misrepresentations about the TPAs capabilities resulting in over a million dollars in damages. Defendants removed the case to federal court and defeated Plaintiffs’ motion to remand on the basis Plaintiffs’ claims were preempted by ERISA. Defendants then filed this motion to dismiss arguing they were not acting as fiduciaries for the one ERISA claim and the state law claims were preempted by ERISA. In the alternative, they argued the complaint failed to allege sufficient facts to state a claim. The court found Plaintiffs’ ERISA claims failed because Defendants were not acting in a fiduciary capacity. The court then found Plaintiffs’ state law claims were not preempted by ERISA because the misrepresentations, negligence and fraud claims did not depend on an interpretation of the Plan. Finally, the court found the state law claims alleged sufficient facts to state a claim. Having dismissed the ERISA claim, the court remanded the case back to state court.

Provider Claims

Fifth Circuit

CFM Interests, LTD v. Aetna Health, Inc., No. CV H-12-02070, 2020 WL 2528541 (S.D. Tex. May 18, 2020) (Judge Lynn Hughes). CFM is an association of doctors that own and operate a free-standing emergency room that was founded in 2006. Texas did not license free-standing emergency rooms until 2010. CFM was billing Aetna at the rate of an emergency room rather than the lower rate associated with outpatient services or urgent care. Aetna found out CFM was charging the emergency room rate without being a licensed facility and refused to pay claims from CFM from January 2007 until August 2009. CFM sued in state court, Aetna removed to federal court based on federal question jurisdiction. The court determined that CMF’s claims were under ERISA and therefore preempted. The plan document clearly states facility fees will not be paid to unlicensed facilities, so CMF is not entitled to anything. The court granted summary judgment for Aetna.  

Ninth Circuit

Glendale Outpatient Surgery Center v. United Healthcare Services, Inc., No. 19-55412, __F.App’x__, 2020 WL 2537317 (9th Cir. May 19, 2020) (Before: COLLINS and LEE, Circuit Judges, and PRESNELL, District Judge). The court affirmed the district court’s sua sponte dismissal without prejudice of Glendale Outpatient Surgery Center’s ERISA action for failure to state a claim. “GOSC’s complaint fails to state a claim under this statute because it does not identify: (i) any ERISA plan, apart from vague references to anonymous patients who allegedly assigned rights to GOSC; or (ii) any plan terms that specify benefits that the defendants were obligated to pay but failed to pay. These deficiencies are exacerbated by GOSC’s decision to lump 44 separate events — presumably involving distinct ERISA plans, coverage provisions, medical procedures, and insurer communications — into a single set of generalized allegations.”

Retaliation Claims

Sixth Circuit

Wright v. General Engine Products, LLC, et al., Case No. 19-cv-885, 2020 WL 2526123 (S.D. Ohio May 18, 2020) (Judge Matthew W. McFarland). Plaintiff was employed with General Engine Products (GEP) as a Military Engine Technician from 2004 until September 29, 2017. On January 14, 2016, Plaintiff suffered a diabetic seizure while at work. Wright was administered a glucagon injection and taken to the emergency room. The emergency room physician cleared Wright to return to work immediately following his discharge from the emergency room. Wright returned to GEP that same day and presented his employer with a medical clearance and authorization to return to work. GEP refused to allow Wright to return to work and sent him home with instructions not to enter GEP’s premises. Wright was placed on administrative leave and instructed to not return to work. Even GEP’s own handpicked physician that evaluated Wright said that Wright was able to return to work. On May 18, 2016, GEP required Plaintiff to sign an “Agreement Regarding Employee Health and Safety” as an express condition precedent to his return to work. GEP terminated Wright’s employment on September 29, 2017, for purportedly making certain statements and using curse words or profanity after Wright discovered his diabetic supplies had been ransacked and vandalized. Wright alleged seven claims for relief, including a violation of ERISA § 510. The court held that there were insufficient factual allegations to support the claim that GEP (even though GEP allegedly denied Wright the right to participate in its healthcare plan in violation of COBRA by delaying his receipt of COBRA insurance for 56 days)  had a specific intent to deprive Wright of his ERISA rights. The court dismissed Wright’s ERISA interference claim. 

Statute of Limitations

Third Circuit

Moyer v. Trustees of Boilermaker-Blacksmith Nat’l Pension Tr., No. 3:19-CV-01270, 2020 WL 2512991 (M.D. Pa. May 15, 2020) (Judge Jennifer Wilson). Moyer retired in 2006, choosing a 75% Husband-and-Wife option. Moyer and his wife divorced in 2010. As part of the divorce, the parties agreed Moyer’s wife would relinquish any claim to Moyer’s pension. When Moyer contacted the Pension Trust and attempted to change his pension election to single life annuity, he was denied. He attempted to resolve the dispute with the pension fund through counsel in 2013 and 2014 but was unsuccessful. He brought this lawsuit in 2019. The Pension Trust moved for Summary Judgment. The Court granted the motion, finding that the ERISA claims were time-barred under either the two-year contractual limitation period contained in the plan or the state four-year statute of limitations on contract claims. 

Withdrawal Liability & Unpaid Contributions

Sixth Circuit

Iron Workers District Council of Southern Ohio & Vicinity Benefit Trust., et al. v. Huber Inc., LLC, et al., No. 3:18-CV-129, 2020 WL 2542820 (S.D. Ohio May 19, 2020) (Judge Walter H. Rice). The court issued a declaratory order finding Huber to be in violation of the terms and conditions of the Local Union’s Collective Bargaining Agreement by failing to pay required amounts to the Union on behalf of bargaining unit employees (“Dues”), and to be in violation of the Trust Agreements for failing to timely submit employer and employee fringe benefit contributions to the Trusts. The court entered judgment against Huber in the amount of $280,095.83, in unpaid Dues known to be owed to the Union and delinquent fringe benefits, interest, and liquidated damages known to be owed to the Trusts, and a judgment against Huber pursuant to Section 502(g)(2)(D) of ERISA, 29 U.S.C. § 1132(g)(2)(D) in the amount of $4,031.25, which represents Plaintiffs’ reasonable attorneys’ fees and costs incurred in pursuing this Case.

Sofco Erectors, Inc. v. Trustees of Ohio, No. 2:19-CV-2238, 2020 WL 2541970 (S.D. Ohio May 19, 2020) (Judge Algenon L. Marbley). The court granted in part and denied in part Plaintiff’s Motion for Summary Judgment and Defendants’ Motion to Enforce the Arbitration Award. “Summary judgment is granted in favor of Plaintiff as to the complete withdrawal liability for the shop work and the Fund’s use of the Segal Blend. Defendants’ Motion to Enforce the Arbitration Award is granted in part as to all other aspects of the Arbitration Award.”

Ninth Circuit

Carpenters Health & Sec. Tr. of W. Washington v. Teras Constr., LLC, No. 19-CV-01029-RAJ, 2020 WL 2557229 (W.D. Wash. May 20, 2020) (Judge Richard A. Jones). The court denied Plaintiffs’ motion for default judgment. “[T]he Court leaves Plaintiffs with a few simple admonitions: check your math, clearly explain Teras’s history of delinquency and payments, and ensure that the amount you seek is clearly supported by exhibits and declarations.”

Board of Trustees of The Western States Office and Professional Employees Pension Fund v. Welfare & Pension Administration Service, Inc., No. 3:19-CV-00811-SB, 2020 WL 2545315 (D. Or. May 19, 2020) (Magistrate Judge Stacie F. Beckerman). In this case WPAS disputed the Board’s methodology to calculate its highest contribution rate. The arbitrator found that the Board should not have included the 10 percent surcharge in calculating WPAS’s annual withdrawal liability payment and directed the Board to recalculate WPAS’s annual withdrawal liability payment using $2.95 per hour rather than $3.245 per hour as the highest contribution rate permitted under 29 U.S.C. § 1399(c)(1). The court found that the arbitrator correctly concluded that the Board should not have included the PPA surcharge in calculating WPAS’s annual withdrawal liability payment and affirmed the arbitrator’s finding that $2.95 was WPAS’s “highest contribution rate.” 

Operating Engineers Health and Welfare Trust Fund for Northern California v. TDW Construction, Inc., No. C 19-01985 WHA, 2020 WL 2524919 (N.D. Cal. May 18, 2020) (Judge William Alsup). In this ERISA dispute to collect delinquent fringe benefits, the court granted in part and denied in part Plaintiffs’ motion for summary judgment. 

IBEW Pac. Coast Pension Fund v. Harris Elec. Inc., No. C18-0181JLR, 2020 WL 2526532 (W.D. Wash. May 18, 2020) (Judge James L. Robart). The court granted Defendant Mackay’s request to take judicial notice of state court filings.  On the question of successor liability:  “If IBEW properly alleges Mackay’s liability under the successorship doctrine, then although IBEW’s notice of and participation in the state receivership proceeding ‘is a factor to be considered along with other factors in a particular case,’ id., it is not—standing alone—dispositive. Thus, the court rejects Mackay’s argument that the Harris Receivership or the sale pursuant to RCW 7.60.260 that occurred therein ‘cut[s] off’ any possibility of successor liability for IBEW’s claims and denies IBEW’s motion to dismiss on that basis.”

Tenth Circuit

Boilermaker-Blacksmith Nat’l Pension Tr. v. Becker Boiler Co., No. 19-2346-EFM, 2020 WL 2523289 (D. Kan. May 18, 2020) (Magistrate Judge James P. O’Hara). In this dispute over funds paid to a pension fund, Plaintiffs filed a motion to stay discovery pending a ruling on their motion for judgment on the pleadings. The court denied the motion to stay since Defendant has shown discovery on an equitable defense may affect the resolution of the dispositive motion.

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