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

Attorneys’ Fees

Third Circuit

Cunningham v. Wawa, Inc., No. CV 18-3355, 2021 WL 1626482 (E.D. Pa. Apr. 21, 2021) (Judge Paul S. Diamond). Plaintiffs are former employees of Wawa who participated in the Company’s Employee Stock Ownership Plan (“ESOP”), by which Wawa shares are allocated to individual Plan participants. Before 2014, the ESOP’s written instrument provided that former employees were entitled to retain ownership of their Wawa stock until age 68. In 2014, Wawa amended the ESOP and instructed the Trustee to “liquidate the ESOP Stock held in the ESOP Stock Account of any Participant who terminates employment with the Company and all Affiliated Companies on or after January 1, 2015.” Wawa amended the ESOP again in 2015, directing the Trustee to liquidate shares for participants who had terminated employment or retired before January 1, 2015. Plaintiffs contend that these forced sales violated ERISA, and that Defendants undervalued the Wawa stock (which is not publicly traded) when compensating former ESOP participants for their shares. The parties now seek approval of settlement and plaintiffs’ attorney fees. The court approved both requests, ordering defendants to pay $21,612,500 to the Class (an estimated $500 per share), up to 20% of the award amount and $175,000 for litigation expenses to Class Counsel, and a $25,000 incentive award to each Class Representative. The court also approved the parties’ agreement that defendants pay settlement administration costs, including the costs of the independent fiduciary retained to review the settlement. In all, the court also awarded $4,322,500 in fees, and $153,851.05 in costs.

Disability Benefit Claims

Fifth Circuit

Calkin v. U.S. Life Ins. Co., CIVIL ACTION NO. 4:20-CV-00035, 2021 WL 1700771  (S.D. Tex. Apr. 29, 2021) (Judge Kenneth M. Hoyt). Plaintiff brought suit for benefits under his disability plan, insured by American International Group, Inc. (“AIG”). Plaintiff Mark Calkin, a systems analyst in his 60s, had a sedentary job that required him to be able to sit for four hours at a time, with occasional reaching and lifting up to 10 pounds.  He developed impingement syndrome and tendinitis in his left shoulder after a rotator cuff surgery, epicondylitis in his right elbow, degenerative disc disease in his lumbar spine, and had a left knee arthroscopy. He filed for disability based on his doctor’s determination that he could not sit for more than an hour at a time or reach above shoulder height. He was awarded Social Security disability benefits, but AIG denied his disability benefits after its occupational medicine physician reviewed the file and determined that Calkin could work full time without restrictions. Plaintiff appealed and AIG had an orthopedic surgeon review the file, who also determined that plaintiff could work full time. The court declined to determine which standard of review applied, as it concluded that plaintiff was not entitled to benefits under either standard. The court determined that Plaintiff had demonstrated the existence of diagnoses, but not functional limitations, during the 182-day elimination period in the policy.


Sixth Circuit

Tuttle v. Metro. Life Ins. Co., No. 20-13013, 2021 WL 1660512 (E.D. Mich. Apr. 28, 2021) (Judge Paul D. Borman). This matter was before the court on defendant MetLife’s objections to a magistrate’s order allowing discovery in an ERISA life insurance case. Defendant objected on two grounds: (1) the procedural irregularities claimed by plaintiff were unrelated to any bias resulting from the fact that defendant was both the claim administrator and payor); and (2) neither the briefing nor the order identified any specific proposed discovery from MetLife that would be relevant to the issue of bias. With regard to the first objection, the district court found that, by showing irregularities in the handling of her claim, plaintiff has made more than a conclusory allegation of bias. Thus, the court concluded that the magistrate’s ruling was not clearly erroneous or contrary to law. With regard to MetLife’s second objection, the court looked at whether the discovery sought was either relevant in itself or “appears reasonably calculated to lead to the discovery of admissible evidence,” and also to whether the discovery is subject to the limitations of Fed. R. Civ. P. 26(b). The court found that the magistrate determined that discovery be “strictly circumscribed to obtain potential evidence showing the identified procedural challenge[], e.g. bias” and was not contrary to law. Accordingly, the court overruled MetLife’s second objection.

ERISA Preemption

Eleventh Circuit

Gulf-to-Bay Anesthesiology Assocs., LLC v. United Heatlhcare of Fla., Inc., No. 8:20-CV-2964-CEH-SPF, 2021 WL 1718808 (M.D. Fla., April 30, 2021) (Judge Charlene Edwards Honeywell). The action arose out of dispute over rates of reimbursement for medical bills paid by United Healthcare to medical providers. Defendant MultiPlan removed the action to federal court, claiming this court had subject matter jurisdiction because the action involved benefit claims under ERISA and the Federal Employees Health Benefits Act (“FEHBA”). The court determined that MultiPlan was raising the FEHBA as a defense to plaintiff’s state law claims, and a federal defense did not make the case removable. The court also determined that the case fell outside the scope of ERISA Section 502(a) because the dispute was over the rate of reimbursement, not denied benefits. The court thus remanded the action to state court for lack of subject matter jurisdiction.

Medical Benefit Claims

Third Circuit

The Plastic Surgery Center, P.A. v. Cigna Health and Life Ins. Co., et al., No. 3:17-CV-2055-FLW-DEA, 2021 WL 1686772 (D.N.J. Apr. 29, 2021) (Judge Freda L. Wolfson). Plaintiff, a medical provider, brought suit based on an alleged underpayment of benefits for an out-of-network double mastectomy and bilateral breast reconstruction surgery. The parties brought cross-motions for summary judgment. Plaintiff argued the maximum reimbursable charge provision in the plan was ambiguous or was applied by Defendant Cigna in an arbitrary manner. The court found the language at issue was far from “plain English” but, even so, its relevant provisions were not ambiguous. Nevertheless, the court found that the relationship between the “maximum reimbursable charge” and the Medicare rate was problematic. The court found that the absence of a discernable methodology/schedule raises the possibility that Cigna inconsistently applied or followed procedures to determine the allowable amount for plaintiff’s bill, which could lead to an arbitrary reimbursement decision. On this basis, the court concluded that Cigna arbitrarily applied the maximum reimbursable provision and remanded to Cigna to recalculate any amounts paid under the provision. The court also found that Cigna did not abuse its discretion by denying benefits with respect to bills submitted under certain codes. 

Fourth Circuit

Garner v. States, No. 2021 1:20-CV-471, WL 1648766 (M.D.N.C. April 27, 2021) (Judge Catherine C. Eagles). Plaintiff filed suit after her health insurance plan refused to pay her medical bills arising from a spinal surgery, having concluded that the surgery was not “medically necessary.” The parties agreed the standard of review was abuse of discretion. The court granted plaintiff’s motion for summary of judgment, finding that there was no question of fact and defendant’s decision to deny coverage was based on a flawed, unreasonable process in which defendant relied on a recommendation from a reviewing physician without providing all the relevant records. 

Pension Benefit Claims

Third Circuit

Luciano v. Teachers Ins. And Annuity Assoc. of Am. – College Retirement Equities Fund (TIAA-CREF), et al., Case No. 15-6726, 2021 WL 1663712 (D.N.J. April 28, 2021) (Judge Michael A. Shipp). This is a putative class action concerning the two retirement and savings plans of plaintiff’s deceased husband, James Rosso (“Mr. Rosso”), both of which are governed by ERISA. Mr. Rosso was employed by ETS from 1979 to 1993 and participated in ETS’s 401(a) plan (the “Plan”) and a 403(b) plan. Upon Mr. Rosso’s death in 2014, plaintiff learned from Defendants Teachers Insurance and Annuity Association of America – College Retirement Equities Fund, Teachers Insurance and Annuity Association of America, and College Retirement Equities Fund (collectively, “TIAA-CREF Defendants”) that the surviving spouse death benefit she would receive under both plans would be half of Mr. Rosso’s account balance, with the other half going to Mr. Rosso’s sister and pre-marriage beneficiary, Lucille Rosso. Plaintiff subsequently filed a claim for the entire amount of the account balance, which the TIAA-CREF Defendants denied. Plaintiff appealed the TIAA-CREF Defendants’ decision to ETS, and the denial was affirmed. Plaintiff filed suit challenging the fifty-percent benefit determination. On TIAA-CREF Defendants’ motion to dismiss, the court found that the Plan was subject to a mandatory arbitration provision and compelled arbitration for the surviving claims under the Plan and stayed the action pending arbitration as it related to the 403(b) Plan. The arbitrator determined that the terms of the Plan were clear and unambiguous and required payment to plaintiff of the full account balance value of Mr. Rosso’s account and granted plaintiffs’ requests for costs. Plaintiff moved to confirm the arbitrator’s decisions and reopen the case. The court acknowledged the strong presumption in favor of enforcing arbitration awards. The court found the arbitrator did not manifestly disregard the appropriate standard of review, and therefore the matter did not present the rare circumstances where there was manifest disregard of the law by an arbitrator that would justify revisiting or reversing the arbitrator’s decision. Therefore, the court granted plaintiff’s motion to confirm the arbitration award with respect to the 401(k) Plan, but reopened the case to resolve the remaining issues with respect to the 403(b) plan.

Pleading Issues & Procedure

Sixth Circuit

Shirley T. Sherrod MD PC v. Suntrust Inv. Servs., Inc., No. 21-10484, 2021 WL 1686291 (E.D. Mich. Apr. 29, 2021)(Before Judge Robert H. Cleland). Plaintiff, a pension plan, brought suit seeking declaratory relief against the investment service providers who managed the plan’s funds. On a motion for preliminary injunction, the court concluded that the plan failed to meet any of the relevant factors. First, the court found that the plan failed to demonstrate a substantial likelihood of success on the merits because other courts had already concluded that the plan did not have standing to pursue its claims.  Moreover, the court concluded that “since the Plan’s assets are fungible, the chance of irreparable injury seems extremely small.” In addition, the court concluded that “[t]he public interest does not weigh strongly in favor of an injunction, but an injunction is unlikely to cause substantial harm to others.” Accordingly, the court concluded that “the majority of factors weigh heavily against the issuance of a preliminary injunction,” and denied the motion Plaintiff.

Tenth Circuit

Ferrell Companies, Inc. v. Greatbanc Trust Co., No. 20-2229-JWL, 2021 WL 1663919 (D. Kan. Apr. 28, 2021) (Judge John W. Lungstrum). Plaintiff brought a motion to strike defendant’s affirmative defenses in a suit asserting fiduciary breach and breach of contract claims against a plan service provider and fiduciary. Defendant asserted that plaintiff’s ERISA claims were barred by the plaintiff’s own fiduciary breaches, acting as sponsor and administrator of the subject ERISA plan, of fiduciary duties owed to the ESOP. Plaintiff argued the defense was legally insufficient because defendant had no standing to assert a breach of fiduciary duty by plaintiff to a third party. While defendant provided no authority to challenge plaintiff’s argument, it argued that the damages asserted by plaintiff were caused by plaintiff’s own breach and not by the alleged breaches by defendant. Based on this causation theory, the Court denied the motion to strike.