This week’s notable decision is Religious Sisters of Mercy v. Azar, Case No. 3:16-cv-00386, __F.Supp.3d__, 2021 WL 191009 (D.N.D. Jan. 19, 2021). In these consolidated cases, a coalition of entities affiliated with the Catholic Church and the State of North Dakota challenged the implementation of Section 1557 of the Affordable Care Act (“ACA”) contending that the Department of Health and Human Services (“HHS”) and the Equal Employment Opportunity Commission (“EEOC”) interpreted Section 1557 and related antidiscrimination laws in a way that compelled them to perform and provide insurance coverage for gender transitions and abortions. 

The Catholic Plaintiffs moved for summary judgment and injunctive relief under the Religious Freedom Restoration Act of 1993 (“RFRA”). Regarding ERISA, employers, and third-party administrators (TPAs) that wished to exclude coverage for gender-transition services in their group health plans faced a disincentive to do so under the HHS rule. ERISA requires health plans to administer them as they are written. So, if a self-insured employer designed a health plan on its own with a categorical gender-transition exclusion, ERISA would require that employer’s TPA to administer the plan by its terms. But the HHS Rule would have simultaneously found the TPA’s administration of the same plan unlawfully discriminatory. Recognizing that dichotomy, HHS committed to “adjusting” enforcement by initially determining “whether responsibility for the decision or other action alleged to be discriminatory rested with the employer or with the TPA. If the latter, HHS would commence enforcement proceedings as usual. If the former, however, jurisdictional limitations prevented the agency from pursuing enforcement unless the employer already qualified as a covered health program or activity. 

The court concluded that RFRA entitled the Catholic Plaintiffs to permanent injunctive relief from the provision or coverage of gender-transition procedures. The other claims either run afoul of jurisdictional limitations or do not warrant summary judgment.

This week’s notable decision summary was prepared by Kantor & Kantor associate, Timothy J. Rozelle. Tim is thankful to focus his career on helping patients obtain health benefits for a range of health conditions and more recently has focused specifically on denials of life-saving cancer treatment.

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

Breach of Fiduciary Duty

Fourth Circuit

Hammer v. Johnson Senior Center, Inc., et al., No. 6:19-CV-00027, 2021 WL 217140 (W.D. Va. Jan. 21, 2021) (Judge Norman K. Moon). Plaintiff alleged that her former company’s owner, Melessa, breached her ERISA fiduciary duties by failing to segregate Plan assets (by putting medical premium deductions in the company’s general bank account) and by failing to remit Plan assets to Anthem. These actions caused Plaintiff to lose insurance coverage and incur medical expenses in excess of $286,000. As to the question of whether Melessa was a functional fiduciary of the Plan, the court found that the record reveals genuine disputes of material fact regarding Melessa’s role and responsibilities at the company and whether she had discretionary authority over Plan assets. The court denied Melessa’s motion for summary judgment. 

Disability Benefit Claims

Ninth Circuit

Perez v. Lincoln Nat’l Life Ins. Co., No. 19-56274, __F.App’x__, 2021 WL 195022 (9th Cir. Jan. 20, 2021) (Judges Callahan, Watford, and Rakoff). After a bench trial, the district court reviewed Lincoln’s decision to deny Perez’s long-term disability benefits under a de novo standard and entered judgment in favor of Lincoln. The Ninth Circuit panel determined that the district court did not abuse its discretion in deciding to consider the unfavorable SSDI decision, even though that decision was not available when Lincoln terminated Perez’s claim. The panel stated that the district court’s factual determination that Perez had not proven by a preponderance of the evidence that she met the policy’s definition of disability was not clearly erroneous and affirmed the decision of the district court.

ERISA Preemption

Third Circuit

Emergency Care Services of Pennsylvania, P.C. v. Unitedhealth Group, Inc., No. 5:20-CV-05094, 2021 WL 236122 (E.D. Pa. Jan. 25, 2021) (Judge Joseph F. Leeson, Jr.). “This action concerns a dispute over the rates of reimbursement paid by several health insurance companies to hospital-based physician practices in Pennsylvania.” “Having established that this action is basically a dispute over the rate of payment of claims, there can be little doubt that Plaintiffs’ causes of action are not colorable under ERISA. This is true notwithstanding the absence of an express agreement between Plaintiffs and the United Defendants.” The court granted Plaintiffs’ motion to remand to state court, finding there is no ERISA preemption.

Exhaustion of Administrative Remedies

Eleventh Circuit

Robinson v. AT&T Services, Inc., et al., No. 2:20-CV-01027-AKK, 2021 WL 199389 (N.D. Ala. Jan. 20, 2021) (Judge Abdul K. Kallon). Plaintiff alleges that Defendants terminated him two months before his eligibility for retirement benefits in violation of § 510 of ERISA. The court dismissed this claim due to Plaintiff’s failure to exhaust administrative remedies.

Life Insurance & AD&D Benefit Claims

First Circuit

Alexandre v. National Union Fire Insurance Company of Pittsburgh, PA., No. CV 20-10636-FDS, 2021 WL 201319 (D. Mass. Jan. 20, 2021) (Judge F. Dennis Saylor IV). The court found that National Union did not abuse its discretion in denying payment of $500,000 in accidental death benefits based on a suicide exclusion where the Georgia Department of Public Health declared the death to be a suicide. The court rejected Plaintiff’s argument, based on Eleventh Circuit caselaw, that where evidence is inconclusive, there is a presumption against suicide that requires a finding of accidental death. The court determined that Eleventh Circuit precedents are not binding on the court even though the case was originally filed in the Southern District of Florida and transferred to this court pursuant to Section 1404(a). Even if the decision is persuasive, the court found that the evidence is not inconclusive.

Medical Benefit Claims

Eighth Circuit

Religious Sisters of Mercy v. Azar, Case No. 3:16-cv-00386, 2021 WL 191009 (D. N.D. Jan. 19, 2021) (Chief Judge Peter D. Welte). See Notable Decision summary above.

Pension Benefit Claims

Second Circuit

Richard Mfg. Co. v. Richard, No. 3:17-CV-01444 (VAB), 2021 WL 148974 (D. Conn. Jan. 15, 2021) (Judge Victor A. Bolden). Multiple parties disputed who was entitled to roughly $4 million in post-death payments under a top hat plan. The decedent’s estate claimed it should go there as this was what was dictated by the plan in the event no beneficiary election had been made. The decedent’s wife asserted the funds should go to her based on a “universal” beneficiary election decedent had signed that named her as the beneficiary. However, that “universal” beneficiary election made no reference to the plan at issue. It also contained spousal consent language—language that ERISA nor the plan required for the top hat plan. The unambiguous language of the “universal” beneficiary election form required decedent to do what he was not required to do under the unambiguous language of the plan. As a result, the court found the designation form could not be construed as the beneficiary designation required by the plan. Thus, the court found no basis in the plan or the “universal” beneficiary election form to award the funds to the wife and awarded the benefits to the estate. 

Plan Status

Second Circuit

Wimberly v. automotiveMastermind Inc. et al., No. 20-CV-1870 (JGK), 2021 WL 230299 (S.D.N.Y. Jan. 22, 2021) (Judge John G. Koeltl). Plaintiff alleges that Defendants violated ERISA by conditioning the payout of severance on his agreement to not sue the company. The court dismissed Plaintiff’s ERISA claims because it found that there is no ERISA severance plan. The severance is a one-time, lump-sum severance payment of six weeks of salary that does not require any managerial discretion or ongoing administrative efforts. That other employees also received an offer of severance at their termination does not plausibly establish there was an ongoing administrative program required to support the finding of an ERISA plan. “[T]here are no facts to suggest that the employer was required to analyze the circumstances of each employee’s termination separately in light of certain predetermined criteria or, if they did, what those criteria might have been. Instead, the complaint supports the reasonable inference that aM and its managers made an ad hoc determination that a severance payment in exchange for release of all claims would facilitate a speedy dissolution of their relationship with Wimberly.”

Pleading Issues & Procedure

Ninth Circuit

Mabry v. ConocoPhillips Co., No. 3:20-CV-00039-SLG, 2021 WL 189144 (D. Alaska Jan. 19, 2021) (J. Sharon L. Gleason). Plaintiff, a laid-off employee of ConocoPhillips, sued the company, its retirement plan, and the plan’s benefit administrator, Alight, alleging that they had misinformed him about his benefits under the plan. Specifically, Plaintiff alleged that Alight’s website had provided him with benefit information that was incorrect because it did not include deductions for a qualified domestic relations order. Plaintiff sought relief under state law and under ERISA for breach of fiduciary duty. Defendants moved to dismiss. The court granted Alight’s motion, finding that it was not a fiduciary under the plan because it had no discretionary authority and performed only ministerial functions, even if Plaintiff was correct that it had provided him with incorrect information. The court also dismissed ConocoPhillips as a defendant because it was not involved in providing Plaintiff with false information. The court further dismissed Plaintiff’s claim for equitable estoppel because the relief he sought was inconsistent with the plan terms. However, the court declined to dismiss Plaintiff’s claim for equitable surcharge because he had plausibly pleaded that he was financially injured when he relied on the incorrect benefit statements in making financial and employment decisions. The court further dismissed Plaintiff’s claim under ERISA § 105, finding that his online inquiries did not constitute a “written request” for a “pension benefit statement.” Finally, the court dismissed Plaintiff’s state law claims, finding them all preempted by ERISA.

Nat’l Ins. Crime Bureau v. Wagner, Case No. C19-0730JLR, 2021 WL 185033 (W.D. Wash. Jan. 19, 2021) (Judge James L. Robart). Plaintiff National Insurance Crime Bureau (“NICB”) was the employer and Savings Plan sponsor for Scott Wagner. Mr. Wagner was married to D.R. Wagner when he was hired in 2003, but they divorced in 2006. Mr. Wagner did not change her as his beneficiary, even after he remarried in 2016 to Leslie Wagner. Upon his death, both women sought the proceeds. Ms. L Wagner filed suit in state court, and Ms. D. Wagner moved to dismiss, arguing that the benefits were governed by ERISA and under ERISA, the named beneficiary controls.  The court agreed with Ms. D. Wagner and dismissed with prejudice.  Meanwhile, NCIB filed its complaint for interpleader. NICB reached an agreement with Ms. DR Wagner where she would file a motion for summary judgment and neither would seek fees against the other, but then NICB filed the motion “in the interest of disposing of this matter expeditiously.” Ms. DR Wagner did not oppose the motion.  Ms. L Wagner never appeared before the court and apparently defaulted, though NICB did not take her default. The court therefore took Ms. L Wagner’s default, ordered Ms. DR Wagner to file a motion for default judgment seeking to establish her sole right to the proceeds, and denied without prejudice NICB’s request to be dismissed from the case.  

Provider Claims

Seventh Circuit

Brand Tarzana Surgical Inst., Inc. v. Blue Cross & Blue Shield of Illinois, No. 20-55072, __F.App’x__, 2021 WL 195027 (9th Cir. Jan. 20, 2021) (Before: CALLAHAN and WATFORD, Circuit Judges, and RAKOFF, District Judge). The court affirmed the dismissal of this action for failure to state a claim. “Brand fails to allege that the plans at issue for its sixteen claims here are even ERISA plans, and fails to allege provisions in those plans, or communications from Defendant, that would entitle Brand to the reimbursements it claims. [] Brand’s description of what it was ‘typically’ told by Defendant is not ‘enough to raise a right to relief above the speculative level.’ [] Finally, that Brand’s complaint involves multiple claims does not excuse it from its obligation to allege enough facts to ‘give the defendant fair notice of what the … claim is and the grounds upon which it rests.’” 

Tenth Circuit

Classic Air Care, LLC v. Aetna Life Ins. Co., No. 2:20-CV-00506-TC, 2021 WL 199286 (D. Utah Jan. 20, 2021) (Judge Tena Campbell). In this dispute over the payment of air ambulance services, the court found Plaintiff has standing to sue under ERISA. The court found that the anti-assignment provision is unambiguous, that it is plausible that Aetna waived the Plan’s anti-assignment provision, and that the provision is not invalid based on public policy. The court did dismiss the claim under Section 1133, finding that Plaintiff cannot seek a remedy under that provision that is distinct from its first cause of action under Section 1132(a)(1)(B). The court also found that the breach of fiduciary duty claim under Section 1132(a)(2) fails as a matter of law since there is no allegation that Aetna’s conduct injured the Plan itself or the Plan’s beneficiaries as a group. Lastly, the court found all state law claims to be pre-empted by ERISA.

Statute of Limitations

Fifth Circuit

Corrections Corporation of America Medical HRA Plan v. Kevin U. Johnson, et al., No. 1:18-CV-01415, 2021 WL 233928 (W.D. La. Jan. 22, 2021) (Judge David C. Joseph). In 2012, Defendant Johnson was involved in a motor vehicle accident for which the Plaintiff Plan paid $169,276.40 in medical expenses for Johnson’s treatment. Johnson retained Defendant Daigs Law Firm who secured a third-party settlement for Johnson in July 2017. Prior to that, in January 2017, the Plan sent a notice to Daigs Law Firm informing them of its subrogation or reimbursement interest. Plaintiff was not notified of the settlement and did not receive any portion of the settlement proceeds. The issue is whether the Plan’s lawsuit, filed on October 30, 2018, is timely. The court found that it was. “ERISA does not provide a federal prescriptive period governing a fiduciary’s action to enforce a reimbursement provision pursuant to 29 U.S.C. § 1132(a)(3). … Louisiana’s ten-year prescription period for ‘personal actions’ under Louisiana Civil Code Article 3499 is applicable to the ERISA claim. … Prescription begins to run from the time the cause of action arises. … Even accepting Defendants’ argument that prescription began to run on the date of the Accident in 2012, Plaintiff filed suit six years later in 2018.”

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