This week’s notable decision is a magistrate recommendation that comes to us from ERISA Watch reader Norris Adams, who represents the plaintiff. Rose v. PSA Airlines, Inc. Group Insurance Plan, No. 3:19-CV-00695-GCM-DCK (W.D.N.C. Mar. 25, 2021), originated in the tragic death of a 27-year-old man, Kyree Devon Holman, who died while waiting for his heart transplant to be approved by his healthcare plan. The administrator of his estate filed suit against the Plan and numerous plan fiduciaries, including claims administrators, UMR, Quantum, and the outside reviewer with which they contracted, MCMC.
Mr. Holman was a flight attendant for PSA Airlines and a participant in the PSA healthcare plan. After becoming acutely ill, he was transferred to Duke Hospital, where he was diagnosed with acute heart failure and ventricular tachycardia and, after a series of biopsies, with giant cell myocarditis. His doctors at Duke recommended him for a heart transplant and were ready to perform the transplant immediately, placing him as number one on the waiting list. Despite the urgency of his need for the transplant, however, defendants denied his claim as “experimental or investigational.” Mr. Holman’s doctors resubmitted the claim and defendants again denied, allegedly based on an extra-plan criterion that they mistakenly claimed required that a heart transplant recipient not have used alcohol for six month prior to any transplant. The denial was upheld on the same basis, although this denial also noted that Mr. Holman would die without the transplant. Defendants then allegedly contracted with MCMC to perform an external review within 45 days and thus not on an expedited basis. Mr. Holman died before that review was completed.
The administrator of Mr. Holman’s estate filed suit, making ERISA claims both for wrongful denial of plan benefits under ERISA Section 502(a)(1)(B), and for equitable relief under ERISA Section 502(a)(3), to remedy breaches of fiduciary duty, and the defendants moved to dismiss. Perhaps not unexpectedly, although with evident regret, the magistrate judge recommended that the claim for benefits be denied because Mr. Holman had not received the transplant and thus his estate was not entitled to sue for the value of a medical procedure that he did not undergo.
However, the magistrate judge reached a different conclusion with respect to the claim for equitable relief under Section 502(a)(3). The magistrate agreed with the estate administrator that she the relief she was seeking under Section 502(a)(3) was in the alternative to the claim for benefits and did not seek a duplicative recovery. Furthermore, the magistrate concluded that the stated claim was plausible. The magistrate reasoned that if plaintiff were successful in proving that the defendants breached their fiduciary duties in the dilatory manner in which they processed Mr. Holman’s claims as he was dying, surcharge in the amount that the PSA Defendants were unjustly enriched – presumably equal to the cost of the heart transplant – could be an available remedy. With respect to the other defendants, the court concluded that surcharge might be available if the decedent were shown to have suffered actual harm from any wrongful conduct. The court also concluded that plaintiff adequately pled that each of the defendants had acted as a fiduciary with respect to Mr. Holman’s claim for benefits, and that they each breached fiduciary duties with respect to the handling of his claim.
Although ERISA Watch rarely selects a magistrate’s recommended decision as the featured notable decision, the magistrate’s thoughtful treatment of the important and unfortunately recurring issues raised in this case warrants a departure from the normal rule. To update an aphorism, sad cases make good law. Time will tell if this decision stands.
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Peck v. SELEX Sys. Integration, Inc., No. CV 13-0073 (RJL), 2021 WL 1146298 (D.D.C. Mar. 25, 2021) (Judge Richard J. Leon). Plaintiff Peck prevailed on his claim for benefits under Selex’s deferred compensation plan and filed a motion for attorney’s fees. The magistrate judge recommended that Peck receive $421,904.83, or 90% of his claimed fees, and Selex filed an objection. The district court agreed that Peck was entitled to fees, but found that there was some overlap in the work done, and some of the work was vague, unreasonable, and inefficient. As a result, the district court reduced Peck’s total fee award by 10%, to 80% of his claimed fees, or $378,394.35.
Gray v. Minnesota Life Ins. Co., No. CV H-19-4672, 2021 WL 1141171 (S.D. Tex. Mar. 25, 2021) (Judge Gray H. Miller). Minnesota Life prevailed in this case over Gray’s claim for ERISA-governed benefits, and filed a motion for attorney’s fees. The court exercised its discretion to deny Minnesota Life’s motion, finding that it did not satisfy the Fifth Circuit’s five-factor test for fees articulated in Iron Workers Loc. No. 272 v. Bowen. Specifically, the court found that (1) Gray’s claims were not made in bad faith, (2) Minnesota Life had not demonstrated that Gray could pay any fees, (3) a fee award would have no deterrent effect because Gray’s arguments were substantive, (4) Minnesota Life did not seek to benefit all plan participants and the suit did not resolve any significant legal questions, and (5) while Minnesota Life prevailed, Gray had valid arguments and thus no fees were warranted.
Roofers Local 149 Pension Fund v. Pack, No. 2:19-CV-10628, 2021 WL 1152996 (E.D. Mich. Mar. 26, 2021) (Judge Terrence G. Berg). This was an interpleader action involving benefits under an ERISA-governed pension plan. Two people claimed to be surviving spouses of the decedent pension plan participant for the purpose of obtaining benefits, and the district court ruled in favor of defendant Pack. The interpleading pension fund filed a motion for attorney’s fees and costs, which a magistrate judge recommended granting in part. The fund objected to the magistrate’s findings, but the district judge upheld the findings. The fund contended that its fees should have been higher because it was forced to litigate much of the merits of the case instead of interpleading the funds and stepping back to let the defendants make their cases. However, the court found that Pack had acted in good faith, and that it would be unfair to grant the fund’s full request because such an award would consume most of the benefits at issue. The court also noted that Pack had actively represented herself, and that the award already accounted for Pack’s failure to follow some of the court’s procedures as a pro se litigant.
Breach of Fiduciary Duty
Board of Trs. of UAW Grp. Health & Welfare Plan v. Acosta, No. 14-6247 (SDW) (CLW), 2021 WL 1153138 (D.N.J. Mar. 26, 2021) (Judge Susan D. Wigenton). This action involved a dispute over the alleged fraudulent administration of health insurance benefits to ineligible participants under an ERISA-governed benefit plan. Among the defendants were the union trustee for the plan (Acosta), the plan’s independent auditor (Bacheler), and the CEO of an alleged sham business that provided the improper insurance coverage (Ackerman). Acosta and Ackerman had pled guilty to related criminal charges. All three defendants filed motions to dismiss, which the court denied. The court found that plaintiff had properly alleged that Acosta breached his fiduciary duties under ERISA by knowingly or recklessly facilitating the improper insurance coverage and by failing to make contributions to the plan. The court further found that plaintiff properly pled professional negligence against Bacheler because in performing its audit Bacheler knew or should have known that the plan was not providing proper coverage and was not receiving proper contributions. Finally, the court found that plaintiff had properly alleged that Ackerman had defrauded the plan by setting up shell companies that provided insurance to ineligible people and had pocketed excess premiums.
Technibilt Grp. Ins. Plan v. Blue Cross & Blue Shield of N.C., No. 5:10-CV-00070, 2021 WL 1147168 (W.D.N.C. Mar. 25, 2021) (Judge Kenneth D. Bell). An ERISA healthcare plan sued the plan’s third-party administrator, Blue Cross, for breaches of fiduciary duty in delaying payment on the medical claims of a plan beneficiary, which led to a substantial loss to the self-funded plan when these expenses could not be claimed under a reinsurance policy. Blue Cross moved to dismiss. Taking an essentially pragmatic approach, the court held that the plan itself had standing to sue for losses stemming from a breach of fiduciary duty. The court also held that the complaint plausibly alleged that Blue Cross was exercising discretion and thus acting as a fiduciary with respect to the payment of the claims at issue. Reasoning that “sometimes just ok is not ok,” the court concluded that the complaint plausibly alleged that Blue Cross breached its fiduciary duties in delaying payment on the claims. Finally, the court held that it was premature to decide the question of what relief might be appropriate or to dismiss on the basis that no relief was possible. The court therefore denied the motion to dismiss in its entirety.
Nolan v. Detroit Edison Company, 2021 – F.3d –, 2021 WL 1097101 (Mar. 23, 2021) (Before Batchelder, Stranch, and Nalbandian, Circuit Judges). On appeal from dismissal on a motion to dismiss allegations that a participant and putative class were misled into transferring from a traditional pension plan to a class action, the Sixth Circuit affirmed in part, reversed in part and remanded to the district court. The appellate court reversed the lower court’s finding that the claims were time barred. The Sixth Circuit also disagreed with the district court’s finding that the summary of material modifications were sufficient, concluding instead that they were not written in a manner calculated to be understood by a participant. The court, however, affirmed the dismissal of the claim challenging the sufficiency of the 204(h) notice because the plan made a good faith effort to comply with the notice of amendment to the plan requirement even though it did not convey understandable information about the impact of wear away and interest rates.
Curtis v. Aetna Life Ins. Co., Case No. 3:19-cv-01579, 2021 WL 1056785 (D. Conn. March 18, 2021) (Judge Michael P. Shea). Plaintiff Curtis, on his own behalf and on behalf of all others similarly situated, brought an action against Aetna, alleging that Aetna has violated ERISA by failing to administer Curtis’s and the putative class members’ claims for benefits under their ERISA group medical benefits plans in accordance with the plans’ provisions. Specifically, Curtis alleged that Aetna violated ERISA by denying benefits to plan members based upon definitions of “medically necessary” contained in a series of internal Aetna Clinical Policy Bulletins that were not a part of, or incorporated in, any of the ERISA plans and that modify and limit, to plan members’ detriment, the plans’ definition of “medically necessary.” Aetna filed a motion to dismiss, seeking to dismiss the complaint in its entirety. Aetna argued that Curtis’s complaint failed as a matter of law because his core theory of liability – that Aetna’s medical guidelines add a condition allegedly not present in his benefits plan, that physical therapy services must be expected to improve function – fails as a matter of law because the benefits plan also requires that physical therapy services be expected to improve function. The court agreed with Aetna, holding that Curtis’ claims failed as a matter of law, because even accepting his factual allegations as true and drawing all reasonable inferences in his favor, he sought a benefit – rehabilitation maintenance physical therapy – which was not covered under his Plan. Accordingly, the court granted Aetna’s motion to dismiss.
Feinberg v. T. Rowe Price Group, NO. JKB-17-427, 2021 WL 1102455, (D. Md. Mar. 23, 2021) (Judge James K. Bredar). This class action is centered around the Defendant’s practice of only offering Plan participants T. Rowe Price investment options, a constraint that was explicitly written into the plan. On motion for reconsideration of denial of summary judgment, Plaintiffs argued that the court should have granted summary judgment and held that certain provisions of the plan are void under ERISA. The court declined both to find the provisions at issue void under ERISA, or constituting a complete defense to Defendants. Plaintiffs also took issue with wording the court had used in its prior opinion, however the court emphasized that language was only in the introductory section and did not constitute findings of fact or law, and therefore was not grounds for reconsideration.
Disability Benefit Claims
Wallace v. Grp. Long Term Disability Plan for Employees of TD Ameritrade Holding Corp., No. 19 Civ.10574, 2021 WL 1146282 (S.D.N.Y. Mar. 24, 2021) (Judge Edgardo Ramos). Plaintiff, an employee of TD Ameritrade, brought suit for disability benefits. Although she had first obtained benefits based on a foot injury, when that resolved, she sought continuing benefits based on her fibromyalgia. She filed suit after her claim was denied by the plan’s insurer, Hartford. Following a complicated procedural history, including two remands to Hartford for further “full and fair review,” the court again reviewed the denial. As an initial matter, the court concluded that ordinary arbitrary and capricious review applied because of a grant of discretionary authority despite the insurance company’s structural conflict of interest. Although the court concluded that considerable evidence in the record supported plaintiff’s contention that she was unable to work because of her fibromyalgia, the court nevertheless concluded that Hartford did not abuse its discretion in concluding that she could work, both as an initial matter on her claim for benefits and on appeal of that denial.
Patrick v. Reliance Standard Life Ins. Co., No. CV 19-2106-CFC, 2021 WL 1064098 (D. Del. Mar. 19, 2021) (Judge Colm F. Connolly). In 2007, Dr. Patrick suffered a debilitating injury to her right shoulder and underwent surgery. The surgery was only partly successful, and the right shoulder injury prevented Dr. Patrick from performing her gastroenterological duties. In July 2008, Dr. Patrick stopped working and submitted to Reliance a claim for long term disability (“LTD”) benefits. In April 2009, defendant approved LTD benefits and started making monthly payments, which it terminated in December 2018, based on a report dated December 2018, in which plaintiff’s doctor (Dr. Jobin) stated that she was able to return to work without restrictions. Dr. Jobin later amended her report and also submitted a sworn declaration clarifying her position. The court held that Reliance’s reliance on Dr. Jobin’s December 2018 report to terminate Dr. Patrick’s benefits and its rejection of Dr. Jobin’s February 2019 report and sworn declaration were arbitrary and capricious. No medical note or opinion in the record contradicted or even called into question Dr. Jobin’s conclusion that Dr. Patrick was unable as of 2019 to practice as a full-time gastroenterologist. Reliance also incorrectly stated that Plaintiff’s occupation was an internal medicine specialist (whereas throughout her decade-long claim, it correctly listed her occupation as gastroenterologist). The court held Reliance’s abrupt change in how it construed Dr. Patrick’s “regular occupation” was unreasonable, unsupported by substantial record evidence, and in conflict with the policy’s unambiguous terms. The change was unreasonable because, for the ten years leading up to 2019, Reliance had in effect, if not expressly, treated Dr. Patrick as if her job as a full-time gastroenterologist was her “regular occupation” as defined by the policy. Reliance paid disability benefits to Dr. Patrick for more than a decade because she was unable to perform on a full-time basis gastroenterological— not internal medicine specialist— procedures.
Withers v. United of Omaha Life Insurance Company, No. 1:19-CV-00108, 2021 WL 1062551 (W.D. KY March 19, 2021) (Judge Greg N. Stivers). Plaintiff successfully challenged defendant’s denial of short- and long-term disability benefits under an ERISA plan. The court applied the de novo standard of review and the parties agreed that the court’s review was limited to the information in the claim file. Plaintiff’s treating providers noted that she had decreased motor activity and cognitive decline. Plaintiff had many symptoms including fatigue, weakness, daily headaches, tremors of the right hand and head and knee hyperreflexia. Plaintiff was assessed with unspecified tremor, cervical disc degeneration at C5-6, chronic headache and other disorders of the autonomic nervous system, and eventually diagnosed with Parkinson’s disease. Plaintiff consistently sought medical care and had support for her disability from two of her treating providers. Although plaintiff’s medical records were reviewed by non-examining physicians, however, the court noted that defendant did not explain why the opinion of its non-examining physicians merited more weight than plaintiff’s treating physicians. The court also noted that defendant’s dual role as administrator and insurer of benefits should be considered, even though the de novo standard of review applied. Defendant had the right to utilize a physical examination, but instead relied on file reviews, which was another factor to be considered by the court. The court further noted that the non-examining physicians failed to consider any the requirements of plaintiff’s job. As the last step in its analysis, the court discussed the award of Social Security disability benefits to plaintiff and highlighted relevant portions of the ALJ’s decision. The court granted judgment in favor of plaintiff and awarded back benefits under both the short-term and long-term disability plans and remanded the claim to defendant to determine whether plaintiff remained disabled going forward.
Jackson v. Aetna Life Ins. Co., Case No. 2:19-cv-5324, 2021 WL 1084609 (S.D. Ohio Mar. 22, 2021) (Mag. Judge Chelsey M. Vascura). Plaintiff sued for disability benefits after filing a claim for disability in October 2015 for bone, joint, tendon and nerve abnormalities in her foot and heel. Aetna paid benefits until 2018 and then terminated benefits under the “any occupation” standard of disability, finding that there were jobs she could do that did not involve any standing or walking. The case was reviewed under the arbitrary and capricious standard, and the court upheld Aetna’s decision.
Avenoso v. Reliance Standard Life Ins. Co., No. 19-CV-2488, 2021 WL 1140205 (D. Minn. Mar. 25, 2021) (Judge Wilhelmina Wright). Plaintiff sought payment of long-term disability benefits. Reviewing the case under a de novo standard of review, the court granted plaintiff’s motion for summary judgement, finding that he was unable to perform any occupation according to the terms of the plan. It found that his allegations of pain and resulting limitations were consistent with the objective evidence. The court further noted that it need not make a determination regarding the sufficiency of the appeal review because the question was mooted by the court’s award of benefits for plaintiff, and that further briefing was needed to determine whether plaintiff was entitled to fees.
Meyer v. Unum Life Ins. Co. of Am., Case No. 8:19-cv-01725 JLS (ADS), 2021 WL 1102443 (C.D. Cal. March 23, 2021) (Judge Josephine L. Staton). Plaintiff Meyer brought a claim for benefits under a policy for long-term disability insurance issued by Unum. Plaintiff’s claim was originally based on certain physical and cognitive ailments that he contends arose due to a motor vehicle accident. Unum approved plaintiff’s claim to the extent it was based on the (since resolved) physical ailments, but did not approve his claim based on reports of cognitive dysfunction, which he contends arose because he suffered a concussion in the accident. The court found that plaintiff’s occupation as an executive recruiter required near-constant mental focus, several components of higher cognitive functioning, and strong communication skills. The court found that plaintiff performed his regular occupation successfully before the accident but was unable to perform his regular occupation successfully after the accident. The court further found that the medical evidence established that plaintiff more likely than not continued to suffer from post-accident deficits in the cognitive functioning required to perform his regular occupation. The court concluded that plaintiff established that he was disabled through his own subjective accounts (as set forth in his doctors’ notes, his wife’s statement, and his own statement) and through the valid results of objective neuro-psychological testing that were consistent with his subjective accounts of his symptoms. Accordingly, the court held that plaintiff has shown he was disabled for the remainder of twelve months of the “regular occupation” standard of determining disability, as a result of cognitive dysfunction.
Wilmington Tr., N.A. v. Stout Risius Ross, Inc., 20 Civ. 2505, 2021 WL 1110040 (LLS), (S.D.N.Y. Mar. 23, 2021) (Judge Louis L. Stanton) The Constellis Group formed an ESOP and hired plaintiff to be the trustee. In a prior litigation, plaintiff was found liable for overvaluing Constellis’ stock when the company’s owners sold it to the ESOP. Plaintiff had relied on a report by defendant in reaching the valuation, and brought suit against defendant. Defendant moved to dismiss. The court found that the statute of limitations barred the breach of contract claim and negligence claim, but that the contribution claim was not preempted by ERISA could move forward.
Wright v. Regions Bank, No. 2:18-CV-01897-SGC, 2021 WL 1139759 (N.D. Ala. Mar. 25, 2021) (Magistrate Judge Staci G. Cornelius). Plaintiff Iradell Wright and her husband James were both employed by Regions Bank and insured under Regions’ employee life insurance benefit plan. When James became ill, Iradell contacted Regions and was informed that she would recover survivor benefits in the event of his death. However, when James died, Iradell’s benefit claim was denied on the ground that she and her husband were both Regions employees. Iradell sued Regions and MetLife, the plan’s insurer. The defendants filed a motion to dismiss, arguing that Iradell’s state law claims were preempted by ERISA, she had not exhausted her administrative remedies, and she was not entitled to extracontractual damages. The court agreed that Iradell’s state law claims were preempted because the plan at issue was governed by ERISA and her claims exclusively “related to” benefits available from the plan. The court also found that Iradell was not entitled to seek extracontractual damages because such damages are unavailable under ERISA. The court further found that Iradell had not yet exhausted her administrative remedies because she had not officially appealed MetLife’s denial decision, but chose not to grant the defendants’ motion on this ground. Instead, the court ordered the parties “to file a joint submission regarding the status of Mrs. Wright’s claims in the administrative review process.”
Exhaustion of Administrative Remedies
Goldstein v. Aetna Life Insurance Co., et al., No. CV 19-2188-CFC-SRF, 2021 WL 1115915, at (D. Del. Mar. 24, 2021) (Magistrate Judge Sherry R. Fallon). Mr. Goldstein sued under ERISA claiming that Aetna abused its discretion by insufficiently paying his claims for reimbursement of a portion of the out-of-pocket costs he paid for home health care services for himself and his wife, Marsha Goldstein. The magistrate recommended a denial of plaintiff’s motion for summary judgement because, under the Plan’s terms, Aetna has discretion to pay all, some, or none of the “recognized charge” of a member’s claim for coverage. Aetna also has discretionary authority to review and decide a member’s appeal of an “adverse benefit determination.” The court declined to “substitute its own judgment for that of the defendants in determining eligibility for plan benefits.” In addition, the court agreed with Aetna that nothing in the record supported that Mr. Goldstein had filed the requisite second level appeal to exhaust his administrative remedies prior to filing suit.
Select Specialty Hosp.-Memphis, Inc. v. Trustees of the Langston Cos., Inc. Benefit Program, No. 2:19-CV-02654-JPM-ATC, 2021 WL 1131714 (W.D. Tenn. Mar. 24, 2021) (Judge Jon P. McCalla). Plaintiff Select sued as an assignee of a patient covered by an ERISA-governed health insurance benefit plan. The patient incurred hundreds of thousands of dollars in medical care during the course of two hospitalizations at Select before being discharged to hospice. However, the defendants denied most of Select’s claims for benefits on the ground that the patient’s treatment was excluded from coverage as a “hospital acquired condition.” In essence, they contended that the treatment was only necessitated because of malpractice that took place at a different hospital prior to the patient’s admission to Select. The defendants moved for summary judgment, contending that Select had failed to exhaust its administrative remedies. The court agreed with the defendants that Select had not properly appealed the denial decisions, and that the defendants’ notifications regarding the denials substantially complied with ERISA’s regulatory requirements. The court further found that Select’s claims were not “deemed exhausted” under those regulations, and that the futility exception to the exhaustion doctrine did not apply. Thus, the court dismissed Select’s ERISA claim for payment of plan benefits. The court also dismissed Select’s breach of fiduciary duty claim under ERISA, as well as its declaratory judgment claim, finding them duplicative of, and therefore “subsumed by,” its dismissed plan benefits claim.
Medical Benefit Claims
Stewart v. Bridgeport Health Care Center, Inc., 3:16-CV-01519 (KAD), 2021 WL 1090841(D. Conn. Mar. 22, 2021) (Judge Kari A. Dooley). The Secretary of Labor moved for an injunction to temporarily prohibit healthcare providers from direct billing participants and/or commencing or continuing any actions against participants while the claims administrator was working through the requirements of July 23, 2020, consent judgment. The Secretary argued that the All Writs Act, 28 U.S.C. § 1651, gave the court discretion to grant injunctive relief in this ERISA action. The All Writs Act allows the district court to prohibit persons who are not parties to the action from frustrating the implementation of a court order. The Secretary also argued the injunction would not violate the Anti-Injunction Act, in part, because any state court actions by providers against participants would be resolved by allowing the payment to the providers through the operation of the consent judgment. The court granted the Secretary’s motion.
Gray v. Blue Cross & Blue Shield of N. Carolina, No. 1:19CV1234, 2021 WL 1090734 (M.D.N.C. Mar. 22, 2021) (Judge William L. Osteen, Jr.). Plaintiffs allege defendants wrongfully denied claims for health benefits and treated claims in a preferential manner based on which employees they hoped to retain in the future. Defendants brought motions to dismiss the second amended complaint and motion to strike. The court found plaintiffs plausibly alleged their fiduciary breach claims against all defendants except one. Defendants also claimed failure to exhaust administrative remedies, which the court concluded should not be decided on a motion to dismiss because it is an affirmative defense and a motion to dismiss. Although the plan was self-funded, the court found Blue Cross was a proper defendant because it played a role in denying benefits rather than functioning as a third-party administrator only. However, the court dismissed the COBRA claim against Blue Cross since it did not assume responsibility for COBRA administration. Finally, the court dismissed state law claims as preempted by ERISA.
AK & CK v. Behavioral Health Systems, Inc., et al., No. 3:18-CV-01238, 2021 WL 1143847 (M.D. Tenn. Mar. 25, 2021) (Judge Waverly D. Crenshaw, Jr.). Plaintiff sought benefits covering the cost of residential eating disorder treatment for his daughter under his healthcare plan, and also claimed that the plan violated the federal mental health parity act based on the plan’s exclusion of residential treatment. The parties filed cross-motions for judgment on the administrative record. Under a de novo review, the court found that the parity argument fails because the addenda to the plan provide mental health coverage and there is no requirement that the terms of the ERISA plan must be contained in a single document. The court also found that the denial of residential treatment did not violate the parity act because the plan excludes treatment at both residential mental health facilities and skilled nursing facilities. The court then concluded that defendants correctly denied benefits and granted defendants’ motions for judgment.
Scott M. v. Blue Cross & Blue Shield of Massachusetts, No. 1:17-CV-00009, 2021 WL 1118083 (D. Utah Mar. 24, 2021) (Judge Clark Waddoups). Plaintiff sought mental health benefits for residential treatment of a minor. The parties filed cross-motions for summary judgment. The court found that Blue Cross was granted discretionary authority but due to substantial procedural irregularities, a de novo standard of review applies. The court found Blue Cross violated ERISA when it failed to address the patient’s substance use disorder, failed to apply or explain the subacute level of care, failed to access all medical information, and failed to assess all medical information. The court ordered the case remanded to Blue Cross for a full and fair evaluation of Plaintiffs’ claims, considering all medical records, level of care, and diagnoses. The court deferred an order prejudgment interest and found attorney’s fees appropriate.
Atkins v. CB&I, L.L.C., No. 20-30004, 2021 WL 1085807 (5th Cir. Mar. 22, 2021) (Before Jolly, Southwick, and Costa, Circuit Judges). The Fifth Circuit examined whether a project completion bonus plan was governed by ERISA. The plan lacked things that would make it similar to an ERISA plan. It did not require ongoing administration, and administrative procedures were absent from the plan document. The payment was easily calculated. There was little complexity in the plan about who would be paid and how that would require the plan administrator to exercise discretion. The Fifth Circuit reversed the district court, determining that ERISA did not govern the bonus plan, and remanded the case back to state court for the parties to litigate under state law.
Gray v. Reliance Standard Life Ins. Co., No. 2:18-CV-01551-JAD-BNW, 2021 WL 1131690 (D. Nev. Mar. 24, 2021) (Judge Jennifer A. Dorsey). Gray, a retired Los Angeles Police Department employee, became disabled and successfully made a claim for benefits to Reliance, the insurer of the Los Angeles Police Protective League’s (LAPPL) ERISA-governed long term disability benefit plan. After paying benefits for two years, Reliance informed Gray that it had overpaid him by more than $100,000 because his pension benefits had not been properly offset from his disability benefits. Gray sued to prevent Reliance from taking the offset. The court noted that Gray was insured at one point by a policy purchased by the “RSL Group and Blanket Insurance Trust,” but at some point the LAAPL terminated its participation in the Trust and bought its own insurance policy from Reliance. The two policies defined the pension offset differently, and thus it was crucial to determine which policy applied. However, Gray’s disability occurred during the transition from one policy to the other, and the court ruled, based on the documents provided to it, that it could not determine which policy controlled. The extrinsic evidence presented by the parties was no help either. Thus, the court stated, “[W]hile I recognize that courts are generally confined to the record presented to the administrator in ERISA cases, I cannot even reach the salient issue of whether the insurer erred here without first determining which contract applies.” The court denied both parties’ motions without prejudice to allow them to provide the court with more information.
Pleading Issues & Procedure
McNinch v. The Guardian Life Ins. Co. of Am., No. 19-CV-02305, 2021 WL 1057306 (N.D. Ill. Mar. 18, 2021) (Judge Mary M. Rowland). Plaintiffs sought recovery of accidental death benefits under an ERISA plan provided to their son before his death. Plaintiffs filed a motion to exclude an expert report provided by defendants during litigation, which provided evidentiary support for its denial of plaintiff’s claim based on the plan’s exclusion for losses caused by the “voluntary use of a controlled substance.” Plaintiffs objected based on the traditional evidentiary standards set forth under FRE 702 and Daubert v. Merrell Dow Pharms. The court rejected plaintiff’s motion to exclude, finding that the report was sufficiently reliable and relevant under those standards.
R.J. v. Cigna Behavioral Health, Inc., No. 5:20-cv-02255, nb (N.D. Cal March 23, 2021) (Judge Edward J. Davila). In this putative class action, RJ as the representative of her beneficiary son, SJ sued defendant Cigna for failure to reimburse covered mental health provider claims at the usual, customary and reasonable (“UCR”) rates. Plaintiff also sued defendant Viant for its role in determining the UCR. Cigna sent every claim to Viant for repricing. Viant purported to offer payments at UCR rates, but in reality, the amount offered bore no relationship to UCR rates as that term is defined in Cigna’s policy. Plaintiff was not advised of Viant’s role, nor its repricing or negotiations of claims until after she signed an agreement with the treatment provider Summit Estate. Plaintiff paid approximately $51,000 in unreimbursed medical expenses. Plaintiff filed this lawsuit and asserted claims for: (1) violations of RICO against both defendants; (2) underpayment of benefits under 502(a)(1)(B); (3) breach of plan provisions under 502(a)(1)(B); (4) failure to provide accurate materials and request for declaratory and injunctive relief under 502(c); (5) violations of fiduciary duties of loyalty and duty of care under 502(a)(3); (6) violation of fiduciary duty of full and fair review under 502(a)(3); (7) declaratory and injunctive relief under 502(a)(3) against both defendants; and, (8) other equitable relief against both defendants. Cigna and Viant filed motions to dismiss. The court denied Cigna’s motion as to claims 2, 3 and 5. The court granted Cigna’s motion as to claim number 6 without leave to amend and granted both defendants’ motions to dismiss as to claims 1, 7 and 8, with leave to amend. This case provides a thorough discussion of plaintiff’s RICO claim.
Nelson v. Salt Lake County and Life Ins. Co. of N. America, No. 2:18-CV-00189-JNP-DBP, 2021 WL 1063236 (D. Utah Mar. 18, 2021) (Judge Jill N. Parrish). Plaintiff Lisa Nelson was an employee of Salt Lake County and received LTD benefits for a mental condition from Life Insurance Company of North America (“LINA”) under her employer sponsored plan. After paying several months of benefits, LINA terminated the benefit payments and denied Nelson’s appeals. The court granted LINA’s motion for summary judgment on Nelson’s ERISA claims finding that the LTD plan was a government plan exempt from ERISA because Salt Lake County had “established” the plan. The court also granted LINA summary judgment on Nelson’s state law claims of breach of fiduciary duty and fraud, determining that Nelson did not actually plead any independent state law claims because the wording of the complaint appeared to only reference ERISA.
Statute of Limitations
D.S.S. v. Prudential Ins. Co. of Am., No. 3:20-CV-248-CRS, 2021 WL 1069040 (W.D. Ky. Mar. 19, 2021) (Judge Charles R. Simpson III). Plaintiffs filed suit alleging various state law claims and wrongful denial of life insurance benefits under 29 U.S.C. § 1132(a)(1)(B). The court dismissed Plaintiffs’ state law claims due to ERISA preemption. The court also dismissed Plaintiff’s claim for benefits due as untimely. The plan document contained a one-year limitation on bringing a lawsuit, which the Court found to be reasonable. Although Plaintiffs were minors at the time of the benefit denial, the Court determined they were still bound by the contractual time limitation on bringing suit.