This week’s notable decision allows three cancer patients to proceed with their case challenging United Healthcare’s policy of denying proton beam therapy. In Weissman v. United Healthcare Ins. Co., 19-cv-10580, 2021 WL 858436 (D. Mass. Mar. 8, 2021) (Judge Allison D. Burroughs), three cancer patients brought a putative class action alleging that United Healthcare and their individual healthcare plans violated ERISA by wrongfully denying medically necessary proton beam therapy cancer treatment (“PBRT”). Lead class plaintiff Kate Weissman was able to come up with over $125,000 to privately pay for medically necessary proton therapy treatment to treat her cervical cancer diagnosis after UHC denied her coverage for the treatment in 2016.  She, along with two other named plaintiffs – Zachary Rizzuto and Richard Cole – brought suit challenging UnitedHealthcare’s application of its own internal guidelines on proton therapy as flawed and out-of-date. 

On March 8, 2021, the court issued a decision denying in full United Healthcare’s motion to dismiss, thus allowing the Plaintiffs to proceed on both their claims for benefits and their fiduciary breach claims. The court concluded first that Plaintiffs had plausibly alleged that Defendants acted arbitrarily and capriciously in denying their claims for proton therapy and allowed them to proceed on their claims for plan benefits.  Furthermore, the court held that “[n]otwithstanding Defendants’ arguments to the contrary, Plaintiffs have alleged more than just that their requests for pre-authorization for PBRT were arbitrarily and capriciously denied.  Rather, they have alleged that UnitedHealthcare has developed and applied the PBRT Policy to broadly deny coverage for PBRT, even though it is safe and effective, because it is more expensive than” more traditional radiation therapy. The court reasoned that “[i]f these allegations are borne out, § 1132(a)(1)(B)’s remedy of repayment of benefits may turn out to be inadequate, and it would therefore be premature to foreclose the possibility of equitable relief, including an accounting and disgorgement” of UnitedHealthcare’s profits from wrongfully denying PBRT claims. Finally, the court concluded that “even if Plaintiffs can ultimately prove only that UnitedHealthcare breached its fiduciary duty by impermissibly denying their benefits, it is possible that relief under § 1132(a)(1)(B) would still be insufficient. In other words, it is conceivable that even past due benefits, prejudgment interest, and attorneys’ fees may not put Plaintiffs in the position they would have been in but for UnitedHealthcare’s alleged misconduct.”

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

Attorneys’ Fees

Sixth Circuit

UAW Int’l v. TRW Auto. U.S. LLC, Case No. 19-2252, 2021 WL 926527 (6th Cir. March 11, 2021) (Rogers, Sutton, and Stranch, Circuit Judges).  Plaintiffs-Appellees were retirees and a labor union representing former employees TRW, an automotive manufacturer, who brought suit in federal district court under a previously negotiated collective bargaining agreement alleging breach of contract, breach of fiduciary duty, and ERISA violations. The labor union and retirees alleged that TRW’s proposed health reimbursement account arrangement, in lieu of previously provided medical coverage, materially reduced their health care benefits and were forced into arbitration under provisions in the collective bargaining agreement (“CBA”) that compelled arbitration and required each party to bear their own attorneys’ fees. The arbitrator ordered TRW to restore plaintiffs’ health care coverage to remedy its breach of the CBA, but declined to grant plaintiffs’ request for attorney’s fees pursuant to the terms of the CBA that required each party to bear its own costs. Plaintiffs then filed a motion for attorney’s fees and expenses under ERISA in district court. Plaintiffs also filed a renewed motion for summary judgment later that same month, arguing that TRW’s breach its ERISA fiduciary duties by eliminating health benefits that had vested.  The district court granted the motion for summary judgment, and later granted in part plaintiffs’ motion for attorneys’ fees as to the ERISA claim.  On appeal, the Sixth Circuit held that the district court’s summary judgment and attorney’s fee orders were beyond its power. The district court lacked the authority to rule on those matters because both the ERISA vesting claim and attorney’s fee claim were subject to mandatory arbitration under the CBA, allowing only limited court review for issues of legality or enforcement. Once the district court ordered all claims subject to mandatory arbitration, the arbitrator had sole authority to determine the merits and issue a remedy, and the district court had no power to second-guess the arbitrator’s decision.  Accordingly, because the district court lacked the authority to award fees, the award was reversed.

Class Actions

Third Circuit

Boley v. Universal Health Services, Inc., No. 20-2644, 2021 WL 859399 (E.D. Pa., 2021) (Judge Mark A. Kearney).  In this class action involving allegations of breach of fiduciary duty for selecting and retaining expensive and underperforming investments, three Plaintiffs moved for class certification. Defendants opposed the motion arguing that individualized defenses, such as statute of limitations and Plaintiffs’ claims being atypical, renders class certification inappropriate. The Court disagreed and granted the motion to certify the class.

Disability Benefit Claims

Fourth Circuit

Brooks v. Hartford Life and Accident Insurance Co., No. 1:20-CV-85, 2021 WL 930183 (E.D. Va. Mar. 11, 2021) (Judge T. S. Ellis, III). The court reviewed Hartford’s denial of long-term disability (“LTD”) benefits for abuse of discretion. Brooks received short-term disability benefits and LTD benefits starting in 2013. He continued receiving LTD benefits until his benefits were terminated in 2019, following the policy definition change to “any occupation” in 2018. In its denial letter, Hartford determined that Brooks no longer met the definition for physical disability but qualified as having a mental disability, which would provide for 24 months of benefits. Hartford requested records to show that Brooks was under regular care of a physician for his mental condition. After Brooks failed to provide the documentation of mental disability, Hartford terminated his LTD benefits. Brooks appealed Hartford’s denial, arguing that he was disabled due to a physical condition and specifying that he was not disabled due to a mental condition. On appeal, Hartford upheld its determination that Brooks was not disabled due to a physical condition. Hartford also concluded that Brooks was not disabled due to a mental condition based on the appeal evidence. The court held that Hartford’s determination that Brooks was not disabled due to a physical condition was reasonable and not an abuse of discretion. However, the court found that even though Brooks himself consistently denied being disabled due to mental condition, Hartford’s final letter changing its opinion regarding disability due to a mental condition constituted a denial on new grounds, which should have entitled Brooks to an appeal. The court remanded the mental disability question back to the administrator for administrative review.


Third Circuit

Brainbuilders, LLC v. Ocean Healthcare Mgmt. Grp. Benefit Plan, No. CV 20-2495 (MAS), 2021 WL 949321 (D.N.J. Mar. 12, 2021) (Judge Tonianne Bongiovanni). A medical provider that had been assigned a participant’s claim for ABA treatment of autism spectrum disorder under an ERISA-governed health insurance plan sought discovery. Plaintiff, unsatisfied with only the administrative record produced by the insurer, requested any documents relied upon by the insurer in reviewing claims and appeals for the denied services. The court concluded that under the applicable abuse of discretion standard, discovery was limited to the administrative record. The court also determined that Plaintiff’s state law claims of intentional interference in an economic relationship, civil conspiracy, and civil aiding and abetting against the Plan’s stop-loss insurance provider were all pre-empted by ERISA and therefore no discovery outside the administrative record should be allowed on those claims.

ERISA Preemption

Seventh Circuit

Schwartz v. Anthem Ins. Co., No. 120CV00069RLMMPB, 2021 WL 878610 (S.D. Ind. Mar. 9, 2021) (Judge Robert L. Miller). Parents with health insurance coverage through their employer delivered a premature baby. They purchased a Medicaid secondary insurance policy through Anthem to cover the high cost of medical care for the infant. They sued Anthem and Kroger pharmacy for negligence under state law when communication issues between the entities caused their baby to miss the window to receive a critical vaccine. Because of the delay, the baby contracted respiratory syncytial virus and spent 17 days on life support. Anthem argued the case should be dismissed under Federal Rule of Civil Procedure 12(b)(6) because Plaintiffs’ state claims were preempted by ERISA. The court concluded that ERISA does not preempt state law negligence claims against a secondary insurer whose coverage only begins if coverage under the primary ERISA plan is not available. The parents were thus allowed to proceed on their state law negligence claims.

Ninth Circuit

Meyer v. United Healthcare, Ins. Co., No. 20-35407, 2021 WL 930258 (9th Cir. Mar. 11, 2021) (Before Paez, Watford, and, sitting by designation, Boggs). Plaintiff, pro se, alleged United Healthcare violated Montana’s Unfair Trade Practices Act because it engaged in “an unfair or deceptive act or practice,” “breached its contract,” and “committed fraud” during the handling of his claim. United filed a motion to dismiss asserting ERISA preemption. The district court agreed with United. On appeal, Meyers claimed his benefits were not governed by ERISA because United had emailed him stating, “[Their] records reflect that Mr. Meyer is on a small group Non-ERISA plan.” He also claimed his misrepresentation cause of action was not subject to ERISA. The panel disagreed. It noted none of the facts relevant to whether Plaintiff’s insurance plan was covered by ERISA were contested or subject to reasonable dispute. Plaintiff’s previous employer engaged United to provide health insurance for its employees. The employer was required to ensure that a minimum number of employees obtained insurance plans through its group policy. And the employer paid a portion of its employees’ premiums. An insurer’s out-of-court opinion regarding ERISA’s applicability was irrelevant. Thus, Meyer’s plan was an ERISA plan. Since Plaintiff’s suit exclusively focused on a claim-payment dispute covered by ERISA’s comprehensive scheme, his claims were preempted by ERISA, and the misrepresentation claim could not stand on its own. 

Life Insurance & AD&D Benefit Claims

Fifth Circuit

Gray v. Minn. Life Ins. Co., No. H-19-4672, 2021 WL 861298  (S.D. Tex. Mar. 8, 2021) (Judge Gray H. Miller).  Plaintiff had an accidental death and dismemberment policy through his employer, subject to ERISA. He had developed a seizure disorder after a car accident.  The insurance policy had an exclusion for any injury caused directly or indirectly by bodily or mental infirmity, illness or disease.  After a series of worsening seizures, Plaintiff fell during two grand mal seizures, hitting the floor with his head.  He underwent several medical procedures and ended up losing his sight in his right eye and being paralyzed on the right side of his body.  Plaintiff made a claim under the AD&D policy and it was denied as excluded on the basis that the fall was caused by a seizure.  The court held that the injury was caused by the seizure and therefore was not covered under the policy.  

Medical Benefit Claims

Seventh Circuit

Aerocare Medical Transport System, Inc. v. Health Care Service Corp., Case No. 20 C 7753, 2021 WL 949332 (N.D. Ill. March 12, 2021) (Judge Ronald A. Guzman).  Deborah Chagal was a participant in a health-benefit plan administered by Defendant. Chagal was injured during a trip to Costa Rica. As the purported assignee of Chagal, Plaintiff sued under 29 U.S.C. § 1132(a)(1)(B) of ERISA, seeking reimbursement for Chagal’s air transport from Costa Rica to Northwestern, a hospital in Chicago, for medical treatment. Defendant moved to dismiss the complaint for failure to state a claim.  The court granted Defendant’s motion to dismiss without prejudice, holding that the definition of “ambulance transportation” in the plan covered local, not long-distance transportation.  The court found that Plaintiff did not allege that Northwestern, which was roughly 3,500 miles from Costa Rica, was the closest facility that could have provided the necessary service.  Accordingly, Plaintiff failed to allege facts establishing a plausible claim for relief and Defendant’s motion to dismiss was granted.  

Ninth Circuit

LD, et al. v. United Behavioral Health, et al., No. 4:20-CV-02254 YGR, 2021 WL 930624 (N.D. Cal. Mar. 11, 2021) (Judge Yvonne Gonzalez Rogers). Plaintiff brought a putative class action against UBH and MultiPlan under ERISA and RICO for failing to reimburse claims for intensive outpatient treatment at the usual, customary, and reasonable rate. MultiPlan brought a motion to dismiss the RICO claim. The court found plaintiffs alleged sufficient facts to raise the inference that MultiPlan engaged in a pattern of racketeering activity involving mail and wire fraud by virtue of being UBH’s “co-schemer.” The court found that under the co-schemer theory of liability, MultiPlan need not have made any misrepresentations itself for it to be liable for mail and wire fraud. The court denies the motion to dismiss.

St. Jude Hosp. Ctr., Inc. v. Orora Visual LLC, No. 820CV01700JLSADS, 2021 WL 871987 (C.D. Cal. Mar. 9, 2021) (Judge Josephine L. Staton). Plaintiff, a hospital, sued Defendant in state court for underpaid claims for hospital services. After Defendant removed, Plaintiff moved to remand the case to state court because its claims were based on state law and Plaintiff was not pursuing ERISA plan benefits. Plaintiff alleged Defendant authorized treatment or stated that authorization was not required and that this conduct constitute an implied-in-fact agreement to reimburse Plaintiff the full value of services. Plaintiff sought the amount of payment promised during pre-authorization which is in excess of what is owed under the ERISA plan. The court found Plaintiff could not have brought its state-law claims based on an alleged implied-in-fact agreement under ERISA. The court also found that Plaintiff’s claims would exist regardless of an ERISA plan because they were based on the pre-authorization call and allegations that Defendant entered into an independent, implied-in-fact agreement to pay the full value of services rendered. The court granted Plaintiff’s motion to remand. 

Pleading Issues & Procedure

Seventh Circuit

Kim McKeown v. Sun Life Assurance Company of Canada, No. 16 C 748, 2021 WL 916079 (N.D. Ill March 10, 2021) (Judge John Z. Lee).  In this ERISA action, Sun Life filed a counter-claim asserting that plaintiff, during its claim review process, made false statements and concealed factual information regarding her psychological impairments in an attempt to avoid the 24-month mental illness cap.  Sun Life also claimed that plaintiff falsely asserted she was unable to further assist Sun Life in obtaining her Social Security file.  Plaintiff moved to dismiss Sun Life’s counter-claim on the grounds that it was preempted by ERISA and that Sun Life had failed to properly plead all the elements of its fraud claims.  As to preemption, the court held that Sun Life’s tort claims were not preempted.  The court explained that plaintiff has a separate and distinct duty under Illinois tort law to not misrepresent that she had access to test results that revealed her psychological impairment and ERISA’s civil enforcement provisions neither address nor provide a remedy for situations where an employee benefit plan has been defrauded by a non-fiduciary.  As to plaintiff’s claim that Sun Life failed to plead certain elements of its fraud claim, plaintiff argued that Sun Life could not prove reliance as it knew of her psychological condition after remand. In its opposition, Sun Life clarified and explained that it was seeking the administrative costs it incurred prior to remand, before it was aware of plaintiff’s psychological issues.  As to damages, Sun Life sought both administrative costs as discussed above and its attorney fees. Plaintiff argued that Sun Life may not recover it attorney fees as there is no contract or statute permitting such recovery.  The court agreed.  The court granted in part and denied in part Sun Life’s motion to dismiss.  The court explained that based on Sun Life’s clarification in response to its motion to dismiss, it could pursue its fraud claims as to those expenses incurred by Sun Life to review plaintiff’s psychological history prior to remand only.

First Circuit

Wade v. Tri-Wire Engineering Solutions, No. 20-10523-LTS, 2021 WL 847989 (D. Mass. Mar. 5, 2021) (Judge Leo T. Sorokin). In this case, the Wade family alleged that after John Wade sold his ownership interest in Tri-Wire to the Tri-Wire employee stock ownership trust (ESOT), he was illegally stripped of control of the company and family members were wrongfully terminated from their positions. Tri-Wire counterclaimed that Wade fraudulently inflated the value of the company prior to its sale. Among many other counts, Wade brought several ERISA claims. The court dismissed all of the ERISA claims for lack of standing because the Wades were not beneficiaries or participants in the plan by its terms, they were not fiduciaries, and none of them was the Secretary of Labor.

Ninth Circuit

Dioquino v. United of Omaha Life Ins. Co., No. 20-CV-0167-BAS-RBB 2021 WL 873286 (S.D. Cal. March 9, 2021) (Judge Cynthia Bashant). In tandem with a motion for summary judgment, the court denied an insurance company’s motion to seal the record. The Court noted the “general right to inspect and copy public records” and the “strong presumption in favor of access” as the starting point for its analysis. The Court discussed two standards by which motions to seal can be analyzed: the “compelling reasons” standard applies when the underlying motion is “more than tangentially related to the merits;” and the “good cause” standard applies when the underlying motion does not pass the tangential relevance threshold. In this case, because the underlying motion was more than tangentially related to the merits, the Court applied the “compelling reasons” standard and found that Defendant could not meet its burden of showing that there were compelling reasons to seal all of Plaintiff’s claim files because they include routine correspondence and “other items.” The Court also found that although the claim files contain Plaintiff’s medical records, Plaintiff “placed her medical condition at issue by filing the ERISA action.” For these reasons, the Court denied the motion to seal the record.

Statute of Limitations

Second Circuit

Landry v. Metro. Life Ins. Co., No. 19 CIV. 3385 (KPF), 2021 WL 848455 (S.D.N.Y. Mar. 5, 2021) (Judge Katherine Polk Failla). Plaintiff brought a lawsuit against MetLife for miscalculated long-term disability benefits. In response, MetLife asserted the claim was barred by a contractual three-year suit limitation provision found in the Plan. Since he was not on notice of the contractually shortened limitations period, Plaintiff argued that New York’s six-year statute of limitations should apply instead. The court agreed with Plaintiff. After an in-depth review of cases, including the Supreme Court’s decisions in Amara and Heimeshoff, the court concluded no cases undermined its authority to decline to enforce a limitation provision that was not communicated to the Plaintiff as required by statute and regulation (here, the SPD did not contain the limitation). “Indeed, at least one other circuit court has determined that district courts retain the authority after Amara to decline to enforce an undisclosed limitations period.”

Withdrawal Liability & Unpaid Contributions

Seventh Circuit

Teamsters Loc. Union No.727 Health & Welfare Fund v. De La Torre Funeral Home & Cremation Servs., Inc., No. 19-CV-6082, 2021 WL 843453 (N.D. Ill. Mar. 5, 2021) (Judge Robert M. Dow, Jr.). The De La Torre Funeral Home is an employer covered by the Labor Management Relations Act (“LMRA”) and ERISA. In March 2011, the funeral home entered into a compliance agreement with the Teamsters Local 727 by which it agreed to be bound by collective bargaining agreements (“CBAs”) with Local 727 and the Funeral Directors Services Association of Greater Chicago. Article 10 of the CBAs required De La Torre Funeral Home to make monthly contributions to the Health and Welfare, Pension, and Legal and Educational Assistance Funds (“Funds”) per the terms set forth by respective Trust Agreements. In their complaint, the plaintiff Funds sought to recover the confession of judgment figure. Plaintiffs also sought to audit Defendants’ payroll records from January 1, 2017, through present, requesting that the Court compel Defendants to cooperate with Plaintiffs in conducting an audit. Plaintiffs’ complaint proposed three theories of liability: “alter ego / veil piercing,” “joint employer liability,” and “successor liability.” The court denied Defendants’ motion to dismiss, explaining that Defendants did not advance any reasons why allegations based on “information and belief” were inappropriate, offered no argument or authority about “allegations of entitlement”, and as discovery unfolds and the parties learn more about which Defendants took which actions any arguments that Plaintiffs have painted with too broad a brush will emerge and could be addressed at the summary judgment stage.