Card v. Principal Life Ins. Co., No. 20-6217, __ F.4th __, 2021 WL 5074692 (6th Cir. Nov. 2, 2021) (Before Circuit Judges McKeague, Nalbandian, and Murphy).

In ERISA benefit cases, a trial court will sometimes “remand” the case back to the plan’s claim administrator for further action, especially when the administrator applied the wrong standard or failed to follow claim procedures. But what happens when an appellate court remands a case to an administrator? Is there anything the trial court can do to oversee that remand, or does the appellate ruling keep it out of the loop? What is a “remand” in an ERISA case anyway, when the administrator is not part of the judicial system?

The Sixth Circuit addressed these issues in this week’s notable decision. In plaintiff Susan Card’s first trip to the Sixth Circuit, she was able to convince the court that Principal Life, the administrator of her disability plan, arbitrarily denied her claim for benefits. As a result, the Sixth Circuit ordered a remand to the plan administrator for it to take a second look at her claims.

After this decision, Principal approved Card’s claim for short-term disability benefits. However, it asked for more information regarding her claims for long-term and total disability benefits. Card filed two motions in the district court: one for attorney’s fees, and another asking the court to reopen the case because Principal had not reached a benefits decision for her other claims within the 45 days required by ERISA regulations.

The district court refused to rule on these motions, contending that the Sixth Circuit had remanded the case directly to the administrator, bypassing the district court, and thus the district court lacked jurisdiction. Card appealed.

On appeal, Principal made two arguments: (1) the district court’s ruling was not a final decision and was thus not appealable; and (2) even if the ruling was appealable, the district court was correct that it did not have jurisdiction over Card’s claims on remand.

The Sixth Circuit quickly dispatched the first argument. The court found that the district court’s order was a “final decision” under 28 U.S.C. § 1291 because the district court had indicated it was “finished with the case.” Thus, the decision was appealable.

As for the jurisdictional argument, the Sixth Circuit admitted that its ruling in the first appeal could have been clearer. It explained that its intention was to remand to the administrator for further action, and that the district court maintained jurisdiction over that remand. This conclusion comported with the way other appellate courts have directed ERISA-related remands, in the Sixth Circuit and elsewhere.

Furthermore, this conclusion was consistent with more general non-ERISA principles, because “[w]hen an appellate court reverses a district court and orders a particular result, the appellate court generally remands for the district court to implement that result; it does not typically implement the result itself.” Thus, “[a]s in every other ERISA case in this procedural posture, we interpret our prior decision as remanding to the district [court] for it to retain jurisdiction while Principal Life engaged in the new benefits determination. The district court thus had jurisdiction to consider Card’s motions to reopen and for attorney’s fees.” The Sixth Circuit concluded by vacating the district court’s order and remanding for consideration of those motions.

Judge Eric E. Murphy wasn’t done, however. He wrote a concurrence setting forth his puzzlement with the entire idea of ERISA remands: “Why do courts have any power to ‘remand’ a pending federal lawsuit to one of the private litigants? That strikes me as quite an unusual thing. Why shouldn’t the district courts instead oversee any additional litigation compelled by an arbitrary-and-capricious finding using the normal rules of civil procedure?” 

Judge Murphy noted that even though the practice of remanding was accepted by “a mountain of cases,” the Supreme Court had not approved it, he had “little confidence” that the Court would approve it, and he saw “nothing in ERISA’s text that grants a court the power to remand a claim to an administrator.” As a result, he found it doubtful that such a practice should be allowed. However, because it is “well established in this circuit,” Judge Murphy “concur[red] in the majority opinion explaining how it should be implemented.”

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


Second Circuit

Cedeno v. Argent Tr. Co., No. 20-CV-9987 (JGK), 2021 WL 5087898 (S.D.N.Y. Nov. 2, 2021) (Judge John G. Koeltl). Plaintiff Ramon Dejesus Cedeno brought a putative ERISA class action against Argent Trust Co. and several other defendants for breach of fiduciary duties after they purchased shares for far more than market value in the Strategic Financial Solutions defined contribution retirement plan. Defendants moved to compel individual arbitration and to the stay the case. The motion to compel arbitration was denied, as the arbitration agreement at issue precluded participants in the retirement plan from seeking relief for the plan as a whole, which the judge recognized to be a form of relief provided under ERISA Sections 409(a) and 502(a)(2). In the governing plan document, three relevant sections were evaluated to decide whether or not defendants could force arbitration. The first section provided that participants must resolve claims arising out of the plan for breaches and violations of ERISA by binding arbitration. The second section stated that if a court finds the requirements set out in the plan document to be unenforceable then the entire arbitration procedure will be rendered null and void in all respects.  The final relevant section limited arbitration to providing a remedy solely with respect to an individual participant’s account and prevented the arbitrator from awarding any relief for the benefit of the plan as a whole. The court concluded that the last section was clearly contrary to law in its attempt to limit remedies expressly provided in ERISA and was thus invalid. Applying the inseverable requirement of the second section of the plan document, the court thus voided the entire arbitration agreement and refused to compel arbitration. 

Breach of Fiduciary Duty

Ninth Circuit

Gamino v. KPC Healthcare Holdings, Inc., No. 5:20-cv-01126-SB-MRW, 2021 WL 5104382 (C.D. Cal. Nov. 1, 2021) (Judge Stanley Blumenfeld, Jr.). In this case alleginh self-dealing, inflated stock prices, and prohibited transactions, plaintiff Danielle Gamino brought suit against defendant Alerus Financial, and the “KPC defendants” including Dr. Chaudhuri, William E. Thomas, KPC Healthcare Holdings, Inc., and the KPC Healthcare, Inc. ESOP Plan Committee among others. The KPC defendants and Alerus Financial separately moved to dismiss. On August 28, 2015, Dr. Chaudhuri participated in an alleged prohibited transaction in which Alerus caused the ESOP to purchase 100% of the shares of KPC stock from Dr. Chaudhuri at an allegedly inflated price. One day earlier, Mr. Thomas sold his common stock warrant to KPC entitling him to acquire a large amount of KPC common stock. It is alleged by Ms. Gamino, that Mr. Thomas and Dr. Chaudhuri knowingly participated in each other’s prohibited transactions. Regardless of whether Dr. Chaudhuri was a fiduciary, the court was satisfied that under Section 502(a)(3) of ERISA, even a nonfiduciary party in interest participating in prohibited transactions may be liable for “appropriate equitable relief.” As for Mr. Thomas, as a member of the KPC Board of Directors and as a member of the ESOP Committee, the court concluded that he was undoubtably a fiduciary. The KPC defendants’ argument that the Warrant purchase on August 27 was not “part of” the ESOP transaction on August 28 was not persuasive, as the two events were “united in a single purpose and plan’ to facilitate the ESOP’s acquisition of 100% of the shares of outstanding KPC common stock.” Ms. Gamino’s allegations that Dr. Chaudhuri and Mr. Thomas acted in transactions advancing their own self-interests rather than the interests of the plan participants was also found sufficient to withstand the motions to dismiss. The court was also satisfied that there was sufficient evidence to support claims that Dr. Chaudhuri and Mr. Thomas knowingly participated in each other’s violations. Ms. Gamino also sufficiently alleged that Alerus breached its fiduciary duty by failing “to undertake an appropriate an independent investigation of the fair market value” of the stock and failed to “correct the prohibited transaction by seeking the overpayment.” Where Ms. Gamino was less successful was in her co-fiduciary claims against the Committee defendants and Director defendants. As no underlying breaches were alleged to have been committed by either body, the court found these claims waived. Accordingly, the KPC defendants’ motion to dismiss was denied with regard to Dr. Chaudhuri and Mr. Thomas, but granted with regard to the Committee and Director defendants. Alerus’s motion to dismiss was denied.

Eleventh Circuit

Threadford v. Horizon Trust & Investment Management, No. 2:20-CV-00750-RDP, 2021 WL 5105330 (N.D. Ala. Oct. 29, 2021) (Judge R. David Proctor). In this breach of fiduciary duty case, the court found that plaintiffs told a plausible story of fiduciaries acting in their own self-interest by causing the McKinney ESOP plan to pay more than fair market value for its stocks. Such allegations sufficed to survive defendants’ motions to dismiss. As the story goes, in November 2016, the ESOP entered into an agreement with McKinney Communications Corporation to purchase all of its common stock for over $65,000,000. Horizon Trust & Investment Management was said to have failed to fulfill its duties as trustee and fiduciary by “allowing the Selling Shareholders to unload their interests in MCC above fair market value and (saddling) the ESOP with tens of millions of dollars of debt.” Horizon trust caused the ESOP to engage in a sale with parties in interest, Selling Shareholders Roddy and Janice McKinney. Defendants’ argument that the claim should be dismissed for failing to comply with Rule 8’s pleading requirements missed the mark, as the court concluded that “ERISA plaintiffs alleging breach of fiduciary duty do not need to plead details to which they have no access.” 

Class Actions

Ninth Circuit

Baird v. Blackrock Institutional Tr. Co., No. 17-cv-01892-HSG, 2021 WL 5113030 (N.D. Cal. Nov. 3, 2021) (Judge Haywood S. Gilliam, Jr.). Class action plaintiffs moved for final settlement approval, attorneys’ fees, costs, and incentive awards. This case was brought in 2017 against Blackrock Institutional Trust Company challenging its management of the BlackRock Retirement Savings Plan. The proposed settlement of $9,650,000 will be distributed to each class member proportionate to the value of each member’s individual account allocations to BlackRock managed investments. The court found the amount offered in settlement to be reasonable considering the risk and complexity of the case. The settlement amount, representing 28.4% of the damages calculated by experts, was found to be within the range of other similar ERISA settlements. Finally, as the case has proceeded for more than four years, and generated over 250,000 documents, depositions of 18 witnesses, and summary judgment, the court was satisfied that class counsel had sufficient information to make an informed decision about the merits of the case. Having considered all of the above, the court found the proposed settlement to be fair and reasonable, and granted its final approval. Class counsel also sought the court’s approval of an award of $2,798,5000 in attorneys’ fees, $641,557.58 in litigation expenses, and service awards in the amount of $15,000 to each of the named class representatives. First, the court found that the requested attorneys’ fees, totaling 29% of the gross settlement fund, were reasonable given the length, complexity, financial burden, and risk of the case. The lodestar cross-check also supported granting the requested fees as the hourly rates multiplied by the 17,733 attorney and paralegal hours billed to date results in roughly $10,586,183 in billable hours, with further hours still to be spent in the final settlement and disbursement process. As the requested fees were about 26% of the lodestar, the court granted the full award of attorneys’ fees. The $641,557.58 in costs and expenses incurred was also granted in its entirety, especially in light of the fact that $414,988.75 was dedicated to expert witness and consultant fees. However, the requested incentive award of $15,000 for each named plaintiff was reduced to $10,000 each, as the court found $10,000 to be a more appropriate compensation. 

Disability Benefit Claims

Sixth Circuit

Anderson v. Hartford Life & Accident Ins. Co., No. 4:19-CV-00140-JHM, 2021 WL 5041224 (W.D. Ky. Oct. 29, 2021) (Judge Joseph H. McKinley Jr.). Defendant Hartford Life and Accident Insurance Company and Plaintiff Ronald Anderson filed cross motions for judgment in this long-term disability case. Mr. Anderson brought suit after Hartford decided it was entitled to offset Mr. Anderson’s VA benefits from his monthly disability benefits payments. Mr. Anderson contended that this reduction constituted a breach of contract and violated ERISA. The court granted Hartford’s motion and denied Mr. Anderson’s motion. Provisions in the policy provide that Hartford may “deduct other income benefits” from the employee’s award. Disability benefits from the Department of Veterans Affairs was specifically included in the plan’s language when defining these “other income benefits.”  In addition, the plan made clear that Hartford may offset any VA benefits Mr. Anderson was receiving before becoming disabled, but “only as to the amount of any increase in the benefit attributed to (his) disability.” The court examined whether deducting the VA benefits from the LTD benefits based off of this classification of “other income benefits” was appropriate and reasonable. Mr. Anderson argued that this interpretation was unreasonable because the adjustment was not an “increase” in disability benefits and because any increase could not be attributed to his disability. As Mr. Anderson’s benefits grew from $1,888.46 per month to $3,329.03 per month, the court was satisfied this constituted an increase according to the words’ plain meaning. As to whether the benefit was attributed to Mr. Anderson’s disability, Mr. Anderson maintained that the increase in benefits must be attributed to the “same disability” that initiated those benefits. He argued that his disability benefits from the VA were from back pain due to a prior injury, and that the increase in his benefits was due to his depressive disorder. In this line of thinking, the benefit could not be attributed to the previous benefits he received for his back pain. The court was not persuaded by this argument. Rather, the court found Hartford’s argument, that the increase in VA benefits for Mr. Anderson’s depressive disorder could be attributed to his disability because the combination of the two caused him to become unable to perform the essential duties of his occupation, to be rational in light of the plan’s provisions and language. 

Seventh Circuit

Seaverson v. Unum Life Ins. Co. of Am., No. 20-cv-486-wmc, 2021 WL 5083444 (W.D. Wis. Nov. 2, 2021) (Judge William M. Conley). Plaintiff Shelly H. Seaverson brought suit against Unum Insurance Company of America after it terminated her long-term disability benefits. Both parties moved for summary judgment. The court, under an arbitrary and capricious standard, granted defendant’s motion for summary judgment finding the benefit termination to not be downright unreasonable. Ms. Seaverson suffered from spinal and neck problems, including Klippel-Feil syndrome, which causes cervical neck vertebrae to fuse. Following a car accident in 2011, her neck and back problems worsened and Ms. Seaverson was diagnosed with degenerative disc disease and left neural foraminal stenosis. In 2015, Ms. Seaverson ceased working due to her health conditions and submitted a claim for disability benefits. From 2015 to 2017, Unum approved and paid for the long-term benefits. However, in November 2017, Unum terminated the benefits, citing a failure to provide necessary medical information, and later stating that Ms. Seaverson’s treating physicians had not recommended restrictions and limitations after August 29, 2017, making her no longer disabled as defined by the plan. The court found Unum’s reliance on Ms. Seaverson’s neurologist’s notes indicating significant improvements and lifting work restrictions to be a reasonable view of the medical record. Ms. Seaverson’s argument that Unum failed to adequately factor in the second opinion of another one of her treating physicians, was unpersuasive, as Unum had noted the opinion of this doctor but found the office visit did not reveal significant findings or functional deficits on exam. The rest of Ms. Seaverson’s arguments were no more persuasive to the judge, not even her argument that Unum failed to comply with ERISA because the medical consultant it used was a registered nurse and not a doctor qualified in the appropriate field of medicine. 

Feeney v. Unum Life Ins. Co. of Am., No. 20-1685, __ F. App’x__2021 WL 5102780 (7th Cir. Nov. 3, 2021) (Before Circuit Judges Sykes, Easterbrook, Wood). Affirming the district court’s decision granting judgment in favor of Unum Life Insurance Company of America’s termination of long-term disability benefits, the Seventh Circuit Judges agreed with the determination that plaintiff Arthur Feeney was no longer disabled as defined by his employee-welfare benefit plan. Mr. Feeney sued Unum attempting to get his benefits reinstated under 502(a)(1)(B), arguing that the termination was flawed and arbitrary. Unum, he argued, had an obligation to supplement the record with benefit determinations by the Department of Veterans Affairs and from the Social Security Administration. However, none of these documents were part of the administrative record and both of the agency rulings postdated his administrative appeal. Because he failed to challenge the contents of the administrative record in the district court, the court found that Mr. Feeney waived any argument that Unum should have considered these materials. Mr. Feeney’s argument that Unum’s review was tainted by a structural conflict of interest was also unconvincing as he was not able to tie any conflict of interest concretely to the benefits determination. The Seventh Circuit was satisfied that the opinions of Unum’s physicians were adequately considered and reasonable, and there was no reason to doubt their objectivity. All of plaintiff’s remaining arguments were deemed “meritless.”  

Eighth Circuit

Davis v. Principal Life Ins. Co., No. 21-cv-00657 (ECT/DTS), 2021 WL 5114381 (D. Minn. Nov. 3, 2021) (Judge Eric C. Tostrud). Plaintiff Dale Davis was denied long-term disability benefits under a welfare benefit plan sponsored by his former employer, Aspen Aerials, Inc. Mr. Davis alleged that his claim was denied because the plan lacked insurance coverage during a one month gap when the plan’s insurer and claims fiduciary changed from Principal Life Insurance Company to Unum Life Insurance Company of America. As Mr. Davis was unsure who was ultimately responsible for his benefits denial, he sued his former employer, Aspen Aerials, Tick Tock Benefits, LLC, a benefits consultant to Aspen Aerials, as well as both Principal and Unum. Principal moved to dismiss the claims against it under Rule 12(b)(6). Principal principally argued that Mr. Davis’ disability and subsequent disability claims arose after Principal was no longer the insurer and claims fiduciary of the plan. The court interpreted Mr. Davis’ claims against Principal as including a benefits claim under Section 1132(a)(1)(B), a claim for equitable relief under Section 1132(a)(3), a claim under Section 1132(a)(2), and a freestanding claim for relief under Section 1133. At the motion to dismiss stage, the court found that Mr. Davis pleaded plausible claims against Principal under Sections 1132(a)(1)(B) and 1132(a)(3). The freestanding claims under Section 1133 and the breach of fiduciary duty claim under Section 1132(a)(2) were dismissed. The court reasoned that ERISA does not provide a cause of action for failure to follow the requirements of Section 1133 and that Mr. Davis was not seeking relief on behalf of the plan, as required under Section 1132(a)(2).

ERISA Preemption

Third Circuit

Aparicio v. Cooper River Salon, LLC, No. 21-4447-MAS-LHG, 2021 WL 5040463 (D.N.J. Oct. 29, 2021) (Judge Michael A. Shipp). Plaintiff Evelin Aparicio moved to remand her twelve count complaint back to the Superior Court of New Jersey. Ms. Aparicio’s complaint alleged that defendants failed to provide workers with accurate statements of hours worked, wages paid, and deductions taken from their paychecks in violation with several New Jersey state laws. Defendant Vanya Tyrrel removed the matter to the federal district court, asserting that the state law claims were preempted by ERISA and the Fair Labor Standards Act. The court granted plaintiff’s motion to remand, as Ms. Tyrell failed to allude to or include a relevant ERISA plan in her filings. Defendant thus failed to demonstrate that plaintiff was a participant or beneficiary under any ERISA plan and the court wrote it was “simply nonsensical for Tyrrell to assert that Plaintiff seeks to enforce her rights under a policy that does not appear to exist.” Therefore, the case was remanded back to state court, demonstrating the limits of the otherwise all-powerful ERISA preemption. 

Ninth Circuit

Doutherd v. United Parcel Serv. Freight, No. 2:21-cv-00780-KJM-JDP, 2021 WL 5087612 (E.D. Cal. Nov. 1, 2021) (Magistrate Judge Jeremy D. Peterson). Plaintiff Tyrone Doutherd brought this suit in Yolo County Superior Court alleging wrongful termination, racial discrimination, fraud, retaliation, and violations of state statues by Defendants UPSF and UPS. Defendants removed the case to the Eastern District of California alleging the complaint implicated ERISA, the Americans with Disabilities Act, and the Labor Management Relations Act. Mr. Doutherd filed objections to the district court’s exercise of subject matter jurisdiction and moved for remand. Defendants filed motions to dismiss. The court determined that the complaint does not implicate federal laws and remanded the case back to state court, which mooted defendants’ motions to dismiss. As to ERISA specifically, the court determined that Mr. Doutherd did not affirmatively allege that he was retaliated against by his employer by virtue of its withholding his 401(k) benefits and medical coverage. Rather, Mr. Doutherd argued that the withholding of funds in his 401(k) plan evidenced discrimination. This being the case, ERISA was found not to preempt the state law claims.  

Life Insurance & AD&D Benefit Claims

Fourth Circuit

Lincoln National Life Insurance Co. v. Steen, No. 5:21-cv-00042, 2021 WL 5049772 (W.D. Va. Nov. 1, 2021) (Judge Thomas T. Cullen). In this interpleader action, Lincoln National Life Insurance Company asked the court to ascertain the proper beneficiary of life insurance benefits of decedent Douglas H. Steen. Lincoln moved to deposit the interpleader funds to the court and additionally moved for default judgment against one of the three parties asserting claims for the benefits. The court granted both of Lincoln’s motions. Three parties, Carol Mautino, Faith M. Steen, and Stover Funder Home & Crematory, Inc., informed Lincoln of their intent to make a claim under the policy. The policy’s primary beneficiary is Carol Mautino, Steen’s partner. Mr. Steen’s daughter, Faith M. Steen, is the policy’s contingent beneficiary. Stover Funeral Home was assigned some of the policy’s benefits by Faith after her father’s burial services. Both Faith Steen and Carol Mautino answered Lincoln’s interpleader complaint. The funeral home did not file a timely responsive pleading and did not enter an appearance. Accordingly, Lincoln moved for default judgment against Stover Funeral Home. Having first established jurisdiction over this action, and factoring in Stover’s failure “’to plead or otherwise defend’ the case,” the court granted the motion for default judgment against it. Next, the court established that there was sufficient diversity between Ms. Mautino and Ms. Steen, and the value in controversy, $50,000, more than satisfying the minimum requirement for diversity jurisdiction. Finally, the court granted Lincoln’s motion to deposit the funds in dispute. 

Sixth Circuit

MetLife v. Mowery, No. 2:21-cv-168, 2021 WL 5040256 (S.D. Ohio Oct. 29, 2021) (Magistrate Judge Chelsey M. Vascura). Plaintiff, Metropolitan Life Insurance Company initiated this interpleader action to determine the proper life insurance beneficiary of decedent Brian Ogershok. Defendants, Patricia Mowery and Kimberly Ogershok, both claimed entitled to the benefits. Ms. Ogershok moved for summary judgment, which was denied by the court. Patricia Mowery was decedent Brian Ogershok’s “domestic partner” and designated beneficiary, while Kimberly Ogershok was Brian Ogershok’s wife, to whom he was still legally married at the time of his death. The benefit plan at issue was valued at $52,877.36, after a few thousand dollars were paid out of the plan to a funeral home for funeral expenses. After the death, both Ms. Mowery and Ms. Ogershok claimed the right to receive the remaining benefits. However, since commencing this interpleader action, Ms. Mowery has failed to respond to the complaint and default judgment was entered against her in September 2021, prompting Ms. Ogershok to file her motion for summary judgment. Ms. Ogershok argued that she was the proper beneficiary as Ms. Mowery could not have been Mr. Ogershok’s domestic partner, as defined by the plan, due to the continuing marriage between Mr. and Ms. Ogershok. Thus, Ms. Ogershok contended that she was the sole beneficiary entitled to the entirety of the remaining benefits. In addition, MetLife agreed to the entry of summary judgment in Ms. Ogershok’s favor. The crux of the issue was the Plan’s Certificate of Insurance, which defined “beneficiary” as “the person(s) to whom We will pay insurance as determined in accordance with the General Provisions section.” The General Provisions section provided that a participant may designate any beneficiary and places no restrictions on the relationship of the beneficiary to the plan participant, thus establishing a genuine issue of material fact to Ms. Ogershok’s motion. Essentially, the plan language did not require the invalidation of Ms. Mowery as Mr. Ogershok’s beneficiary, and Ms. Ogershok failed to sufficiently demonstrate that she was entitled to judgment as a matter of law. 

Ninth Circuit

MetLife v. Galicia, No. 5:19-cv-01412-JWH-KKx, 2021 WL 5083439 (C.D. Cal. Nov. 1, 2021) (Judge John W. Holcomb). In yet another interpleader action, Metropolitan Life Insurance Company asked the court to determine the proper beneficiary in competing claims over the life insurance benefits of decedent Jorge Duran made by defendant Desiree Lecea, the named beneficiary, and defendants Gudelia Galicia and Ann Duran, Mr. Duran’s family members. After stipulating that $22,072.91 of the total $91,911.25 should be paid to Forest Lawn Mortuary to fund the funeral and burial, the court evaluated the remaining competing claims and concluded that the plan benefits should be distributed to Ms. Lecea, as the sole designated beneficiary. The court found that the family member defendants failed to support both their claim that Mr. Duran was mentally incapacitated when he designated Ms. Lecea as the beneficiary, or their claim that Ms. Lecea fraudulently induced Mr. Duran to name her as the life insurance beneficiary. Having failed to sustain their burden of proof with necessary corroborating documentation, the court concluded that the family members were not entitled to the benefits. 

Medical Benefit Claims

Ninth Circuit

Healogics Inc. v. Mayfield, No. CV-20-01568-PHX-JJT, 2021 WL 5138283 (D. Ariz. Nov. 3, 2021) (Judge John J. Tuchi). In 2017, Defendant Patrick Mayfield underwent a gallbladder operation. While under the influence of opioids, the surgeon mistakenly cut Mr. Mayfield’s bile duct, significantly injuring him. During this time, Mr. Mayfield was a plan participant in the Aetna Medical Benefits Plan. As a result of the injuries sustained during the surgery, Aetna paid $101,325.02 to medical providers. The Mayfields sued the surgeon and the surgery center for their negligent misconduct and malpractice, and received a settlement payment. Healogics brought this case seeking reimbursement of the $101,325.02 it paid to medical providers from the settlement amount recovered by defendants in their lawsuit. Both Healogics, Inc. and Mr. and Ms. Mayfield filed motions for summary judgment. Resolution of the case turned on what were the governing plan documents during the relevant time periods, and what those documents required in regard to reimbursement of proceeds obtained through third-party settlement payments. The court found there were genuine disputes of material fact as to whether the plan was properly ratified and amended to include provisions requiring this type of reimbursement. Accordingly, the court determined that the case should proceed to trial on these issues. In the meantime, Healogics was not entitled to an award of attorneys’ fees. 

Pension Benefit Claims

Eighth Circuit

Headley v. Omaha Constr. Indus. Pension Plan, No. 4:21-CV-3161, 2021 WL 5114422 (D. Nev. Nov. 3, 2021) (Judge John M. Gerrard). Plaintiff and union member, Richard Headley, brought this ERISA suit, asserting that defendants failed to pay the Omaha Construction Industry Pension Plan retirement benefits due to him, failed to furnish requested documents in a timely manner, and failed to keep and produce proper records of his contributions. When Mr. Headley contacted defendant Iron Workers Union Local #21 inquiring about his pension benefits, he was told by the union that they “had no records of any pension contributions made on his behalf, that his records were lost or destroyed, and that he did not have any vested pension benefits.” This is the only fact Mr. Headley provided in his complaint related to Local #21. Accordingly, Local #21 moved under 12(b)(6) to dismiss Mr. Headley’s claims against it. Local #21 argued that Mr. Headley failed to allege sufficient facts establishing that it is a proper defendant under the applicable ERISA statues. First, under Section 1132(a)(1)(B), Local #21 argued that as it was neither the benefit plan nor the plan administrator, it was not a proper defendant. The court agreed, and additionally found Mr. Headley’s complaint “provides no facts indicating that Local #21 is in any way responsible for making benefit payments pursuant to the Plan.” Similarly, Local #21 argued it was not the proper defendant under Sections 1024(b)(4) and 1132(c)(1)(B) because it was not a plan administrator and therefore not required to furnish appropriately requested information to participants. Again, the court agreed. Finally, Local #21 argued that it was not an ERISA fiduciary and therefore could not have breached fiduciary duties. The court found that Mr. Headley failed to meet his burden to prove that Local #21 had discretionary authority or control over the plan’s assets or administration rendering it a fiduciary. Having so found, the court granted Local #21’s motion to dismiss the claims against it and was terminated as a party. 

Pleading Issues & Procedure

Second Circuit

Oriska Corp. v. Highgate LTC Mgmt., No. 1:21-cv-104 (MAD/DJS), 2021 WL 5119745 (N.D.N.Y. Nov. 4, 2021) (Judge Mae A. D’Agosting). Plaintiff Oriska Corporation commenced 26 cases in New York Supreme Court, stemming from a dispute over worker’s compensation insurance policies issued by Oriska Insurance Company, a subsidiary of Oriska. While the case was stayed and pending completion of an intra-state court transfer ordered by the New York Litigation Coordination Panel, Oriska filed an amended complaint in state court which added several causes of action under ERISA and included “class defendants.” On the basis of the ERISA claims, the class defendants removed the case to the Northern District of New York. Two months later, the original defendants to the state-court actions, the “employer defendants,” moved to remand to state court. They argued that removal was improper because the amended complaint was filed when the state-court action was stayed, meaning the amended complaint was not the operative pleading and no basis for federal subject matter existed. On top of that, the class defendants were being represented by an attorney who initially commenced the action on behalf of plaintiff. The employer defendants considered the actions taken by Oriska to be “forum shopping.” The court agreed that the removal was improper and remanded the case back to the state court. In addition to granting the motion to remand, the court also awarded attorneys’ fees and costs.

Ninth Circuit

Winsor v. Sequoia Benefits & Ins. Servs., No. 21-cv-00227-JSC, 2021 WL 5053087 (N.D. Cal. Nov. 1, 2021) (Magistrate Judge Jacqueline Scott Corley). Plaintiffs, participants in RingCentral, Inc.’s Welfare Benefits Plan, brought suit alleging defendants, fiduciaries of the plan, engaged in an unlawful kickback scheme. Having previously dismissed plaintiffs’ complaint for lack of Article III standing, the court granted defendants’ motion to dismiss plaintiffs’ amended complaint on the same grounds, this time without leave to amend. Plaintiffs alleged that defendants violated ERISA by accepting commissions from insurers that they did not return to the plan, and failing to negotiate lower administrative fees. However, plaintiffs were unable to tie this alleged wrongdoing to concrete harm suffered by them directly. The court was not convinced that if plaintiffs were to prevail, defendants would have to pay the commissions received to the plan and that the plan in turn would distribute the commissions to plan participants. According to the court,  plaintiffs failed to cite a law supporting their conclusion that the plan would distribute the recovered commissions to the beneficiaries. As the plan at issue is a defined benefit plan, “the plan participants’ benefits are fixed and will not change, regardless of how well or poorly the plan is managed.” Simply put, without adequate standing, the case could not stand; apparently leaving participants without means of contesting the alleged fiduciary wrongdoing. 


Tenth Circuit

Michael L. v. Anthem Blue Cross and Blue Shield, No. 4:21-cv-32-DN-PK, 2021 WL 5051557 (D. Utah Oct. 29, 2021) (Magistrate Judge Paul Kohler). Plaintiffs Michael L. and M.L. brought suit under Sections 502(a)(1)(B) and 502(a)(3) against Defendants Anthem Insurance Companies, Inc. and Inc. Medical Benefits Plan, seeking recovery of benefits and asserting a violation of the Mental Health Parity and Addiction Equity Act. Defendants moved to dismiss for lack of jurisdiction and improper venue and, in the alternative, to transfer this action to Indiana. The court denied defendants’ motion to dismiss but granted the motion to transfer. Plan beneficiary M.L., daughter of Michael L. the plan participant, underwent inpatient treatment at Turn Around Ranch for mental health, behavioral, and substance use issues. This inpatient treatment facility is located in Utah. However, both Michael L. and his daughter are residents of Indiana. First, the court established that it has personal jurisdiction over defendants and that venue in the District of Utah was proper because defendants failed to establish a “constitutionally significant inconvenience.” However, the court next decided that The Southern District of Indiana was a more appropriate forum for the case. Despite plaintiffs’ choice of forum weighing against the transfer, the court found the accessibility of witnesses and other evidence sources, as well as the possible enforcement of any judgment against defendants, and defendants’ and plaintiffs’ residences, weighed in favor of transfer. Additionally, as the plan was not administered, adjudicated, or breached in Utah.