Stratton v. Life Insurance Co. of North Am., No. 20-CV-2037 JLS (NLS), 2022 WL 712926 (S.D. Cal. Mar. 8, 2022) (Judge Janis L. Sammartino).

This week’s case of the week is a significant long-term disability win for plaintiff Maureen Stratton, represented by our talented colleagues at Kantor & Kantor, Corrine Chandler and Andrew Kantor. 

Ms. Stratton, who worked as a senior executive partner at Gartner Inc., began experiencing significant back pain in 2011. This pain progressed to such a point that, by early 2017, she was calling in sick to meetings and could no longer tolerate plane travel or extended sitting. Around that time, she stopped working and applied for disability benefits.

 At first, Life Insurance Company of America (LINA), which had initially denied her disability benefits, overturned this decision and granted her benefits after she retained counsel, who submitted a functional capacity examination and notes from her treating physician, Dr. Brizzie. This evidence, as well as the report of LINA’s own retained expert, Dr. Hill, supported Ms. Stratton’s claim of disability. 

Her saga, however, was far from over. Ms. Stratton was also covered under two ERISA-governed life insurance policies which contained a waiver of premium for disabled individuals. After Ms. Stratton applied for this waiver of premium, LINA began an investigation into her disability, which led to denial of both her waiver of premium claim and her long-term disability benefits. After exhausting her administrative appeals, Ms. Stratton filed this lawsuit for benefits under ERISA Section 502(a)(1)(B).

Both Ms. Stratton and LINA moved for judgment under Federal Rule of Civil Procedure 52. Although the court noted that both parties to the lawsuit accused the other of “selectively summarizing” and “cherry picking” the factual record, the court declined to resolve this argument given that a de novo standard of review was applicable to the denial. Instead, the court reviewed for itself the nearly 3,600 pages of record evidence and the parties’ arguments and found “it appropriate to accord significant weight to the evaluations and opinions of Dr. Brizzie, who treated Plaintiff for a period of more than three years, from December 2016 through the LTD appeal, and who repeatedly and consistently opined that the physical abnormalities indicated in Plaintiff’s MRI and x-rays were consistent with her subjective complaints of pain.”

The court also accorded significant weight to the two functional capacity examinations submitted by Ms. Stratton, which the court found consistent with the restrictions identified by Dr. Brizzie and with the record as a whole. The court was also persuaded by the opinion of LINA’s expert, Dr. Hill, who corroborated Dr. Brizzie’s opinion that Ms. Stratton could not work in a sedentary position. 

On the other hand, the court was not persuaded by and largely rejected the opinions of LINA’s other reviewing doctors, finding that one misread Plaintiff’s medical diagnosis, another either misread Plaintiff’s functional capacity examination and other medical opinions or ignored them without justification, and the third failed in both respects. Furthermore, the court accorded these opinions even less weight because they were based on a file review rather than an examination of the Plaintiff, despite the fact that LINA was entitled, under the policy, to asked that Plaintiff be examined. 

Although the court concluded that the award of disability benefits by the Social Security Administration was of limited probative value, the court rejected LINA’s argument that Dr. Brizzie’s opinion was likewise entitled to little weight, finding no merit to LINA’s argument that his report was internally inconsistent. 

The court likewise rejected LINA’s argument that Ms. Stratton was not entitled to disability benefits because of the lack of objective medical evidence in the record of her disability. In this regard, the court noted that the governing disability policy contained no requirement of objective medical support, and, in any event, the record was “replete with evidence of diagnostic testing and physical examinations corroborating spinal abnormalities that could result in Plaintiff’s reported pain.” The court also pointed out that the Ninth Circuit has consistently noted that pain is subjective and not easily determined based on objective measurements.

The court next found that activities reported by Plaintiff in the medical record – such as the ability to drive, use her computer, walk and do other household and personal tasks –  were not indicative of a lack of disability. Similarly, the court rejected, as irrelevant, medical findings such as normal strength, range of motion and reflexes, again determining that these findings were determinative with respect to disability. 

The court also rejected LINA’s argument that Plaintiff was not disabled because she did not undergo back surgery, noting that the back surgeon whom Plaintiff consulted recommended against such surgery. Finally, the court rejected the suggestion by LINA that Plaintiff had any reason to malinger, noting that she had a consistent, successful and lucrative career and stated that she loved her job.

For all these reasons, the court found that Ms. Stratton was incapable of performing any sedentary job and was therefore disabled under the terms of her disability policy.

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

Class Actions

Fourth Circuit

Jones v. Coca-Cola Consol., No. 3:20-CV-00654-FDW-DSC, 2022 WL 703605 (W.D.N.C. Mar. 8, 2022) (Judge Frank D. Whitney). In this order the court certified a class, and preliminarily approved of a class action settlement. First, the court certified a class of participants and beneficiaries of the Coca-Cola Consolidates, Inc. 401(k) Plan, finding the proposed class satisfied Federal Rules of Civil Procedure 23(a) and 23(b). As for the proposed settlement itself, the court found the $3,500,000 settlement to be fair, reasonable, and adequate, and the result of informed negotiation. In addition, the qualified settlement fund, funded and administrated as laid out within the settlement agreement, was determined to be appropriate. Finally, the court approved of the appointment of Strategic Claims Services as the settlement administrator. Having preliminarily approved of the settlement, a fairness hearing was scheduled for August, and settlement notice was ordered to be mailed to members of the class. 

Disability Benefit Claims

Fifth Circuit

Trahan v. United of Omaha Life Insurance Co., No. 2:21-CV-02281, 2022 WL 710436 (W.D. La. Mar. 9, 2022) (Judge James D. Cain, Jr.). Plaintiff Steven Trahan filed a wrongful denial of benefits suit against United of Omaha Life Insurance Company after his disability benefit application was denied. Mr. Trahan applied for long-term disability benefits in 2020 due to health issues of hypertension and anxiety. The language of the policy defines disability as “a significant change in … mental or physical functional capacity,’ caused by injury or sickness, that prevents the insured ‘from performing at least one of the Material Duties of his Regular Occupation on a part-time or full-time basis.’” Disability for mental disorders, such as anxiety, are subject by the plan to a 24 month limitation. Both parties moved for judgment on the record, and agreed the policy does not confer discretion to United of Omaha making de novo review the appropriate review standard in the case. While the court agreed with United of Omaha that the medical record did not adequately demonstrate Mr. Trahan’s hypertension as a disability because it was being sufficiently controlled with medication, the court held that there was sufficient information in the record to show that Mr. Trahan’s anxiety rendered him disabled as defined by the plan. However, because Mr. Trahan’s disabling condition is a mental health disorder, the court agreed with defendant that the disability is subject to the 2 year limitation of benefits. Therefore, the court entered judgment for Mr. Trahan, and remanded to the plan administrator to determine the 24-month dates of eligibility and pay the amount due. 

Sixth Circuit

Willard v. Unum Life Ins. Co. of Am., No. 1:20-cv-125, 2022 WL 721528 (E.D. Tenn. Mar. 9, 2022) (Judge Travis R. McDonough). Plaintiff Ronald Willard moved for judgment on the administrative record in his wrongful denial of long-term disability benefit case. Mr. Willard worked for Amcor Flexibles, LLC and is a participant Armcor’s long-term disability insurance policy. His disabling condition is ankylosing spondylitis (“AS”) which he has suffered from since 2004, and which got progressively worse. Unum denied the claim for benefits and determined Mr. Willard was able to perform the functional requirements of his job. The plan grants discretion to the administrator of the policy. The court therefore reviewed the denial under the arbitrary and capricious standard. Mr. Willard argued that the denial of benefits was an abuse of discretion because “Unum: (1) refused to have Willard physically examined, (2) relied on its in-house file reviewer’s credibility determinations, (3) relied exclusively on doctors in its own employ to deny Willard’s claim, and (4) failed to meaningfully evaluate the medical evidence.” The court found these arguments persuasive, and stressed that Unum’s failure to examine Mr. Willard in person “avoided additional evidence that had a reasonable likelihood of confirming Willard’s disability.” In addition, Unum ignored objective medical evidence that supported Mr. Willard’s disability including a Schober’s Test that confirmed the worsening of Mr. Willard’s mobility due to his AS. The court concluded that it was also arbitrary of Unum to determine that Mr. Willard’s self-reported pain and limitations were not credible. Although the court established that the denial was arbitrary and capricious, it decided the proper recourse in this instance would be remanding to Unum to “allow for properly considered and explained determination of whether Willard is entitled to long-term disability benefits,” thereby granting Unum a second chance at denying the claim. 

Ninth Circuit

Alves v. Hewlett-Packard Comprehensive Welfare Benefits Plan, No. 21-55476, __ F. App’x __, 2022 WL 726928 (9th Cir. Mar. 10, 2022) (Before Circuit Judges Ikuta, Lee, and Forrest). Plaintiff Michael Alves appealed the district court’s ruling entered in favor defendant/appellee Sedgwick Claims Management Services, Inc. The district court concluded Sedgwick did not abuse its discretion in denying Mr. Alves’s disability benefit application. On appeal, the Ninth Circuit affirmed the district court’s findings. The court of appeals agreed that the medical evidence did not support a finding of total disability as defined by the plan, and that Sedgwick’s reviewing physicians examined and discussed all of the medical evidence and reasonably concluded Mr. Alves was able to perform his sedentary occupation. In addition, Sedgwick addressed, but disagreed with the Social Security Administration’s award of disability benefits, as ERISA allows for. Finally, the court asserted that Sedgwick did not err in hiring specialized physicians to focus on their areas of expertise when reviewing the medical record. 


Ninth Circuit

Raya v. Barka, No. 3:19-cv-2295-WQH-AHG, 2022 WL 686460 (S.D. Cal. Mar. 8, 2022) (Magistrate Judge Allison H. Goddard). Plaintiff Robert Raya sued his former employer, Calbiotech, and the trustees and fiduciaries of the company’s two pension plans. Mr. Raya brought a claim for benefits, a retaliation claim, and fiduciary breach claims against defendants after Mr. Raya was fired allegedly for attempting to enroll in one of the pension plans, make contributions to the other, and receive plan documents for both plans. In response to Mr. Raya’s complaint against Calbiotech filed in 2018, the Department of Labor opened an investigation of the Calbiotech Inc. 401(k) Profit Sharing Plan and defendants’ “missed contributions, embezzled payments, failures to provide Plan Documents, and other actions with breached fiduciaries’ responsibilities.” Parties jointly moved for determination of discovery dispute. Defendants sought a protective order to prevent disclosure of documents relating to the DOL’s investigation. Mr. Raya objected. Defendants argued the discovery request pertaining to the investigation was overly broad, unduly burdensome, irrelevant to Mr. Raya’s claims, and contains privileged information. Mr. Raya argued that relevance of the requested information and documents was undeniable as the department’s investigation stemmed from his very complaint. Mr. Raya further argued that any burden defendants would suffer by producing the requested documents would be outweighed by the relevance and necessity of the information. The court agreed with Mr. Raya that the requested documents were both relevant and proportional. Accordingly, the court denied defendants’ motion for protective order, and ordered defendants to produce the disputed documents.

ERISA Preemption

Ninth Circuit

Regents of the Univ. of Cal. V. E.B.A. & M. Corp., No. SACV 22-61 JVS (ADSx), 2022 WL 707209 (C.D. Cal. Mar. 9, 2022) (Judge James V. Selna). Provider UC Irvine Health brought suit in state court against plan administrator E.B.A. & M. Corporation after it provided treatment to six patients who were beneficiaries of a plan administered by E.B.A. & M. UC Irvine Health alleged that it entered into an implied-in-fact contract with the E.B.A. & M. to reimburse UC Irvine Health “in exchange for the provision of medically necessary care to the Patients.” According to its complaint, UC Irvine Health provided the treatment, but E.B.A. & M. breached the contract by underpaying for the services by $76,267.76. E.B.A. & M. removed the case to the federal court. UC Irvine Health in turn moved to remand the case to the Superior Court of the State of California. It argued that remand is appropriate because the complaint brings state law claims that are independent and not preempted by ERISA. The court stated, “while it may have been possible for UC Irvine Health to bring a suit under ERISA based on these facts, that does not prevent it from choosing to bring different claims.” Because UC Irvine Health brought state law claims based on an independent obligation that does not stem from an ERISA plan, the court was satisfied that the two prongs of the Davila test were not satisfied and ERISA does not preempt the breach of implied-in-fact contract and quantum meruit claims.  Thus the court granted UC Irvine Health’s motion and remanded the case. 

Pension Benefit Claims

First Circuit

Belknap v. Partners HealthCare Sys., No. 19-11437-FDS, 2022 WL 658653 (D. Mass. Mar. 4, 2022) (Judge F. Dennis Saylor IV). Plaintiff Scott Belknap brought this putative class action on behalf of himself and similarly situated individuals against defendant Partners HealthCare System, Inc. alleging the company is utilizing unreasonable actuarial assumptions that do not reflect current mortality or interest rates to determine benefits of its early retirement joint and survivor annuities in violation of ERISA Sections 1054(c)(3) and 1055. According to the complaint, the company uses a 1951 Adjusted Mortality Table to calculate the actuarial equivalence of non-single life annuities. In addition, Partners HealthCare uses a 7.5% interest rate to calculate the value of the annuity, as opposed to the 3.7% interest rate it uses to calculate its financial statements for the year. Thus, the complaint alleged that because of these unreasonable inputs, participants, like Mr. Belknap, are not receiving benefits that are actuarially equivalent to the single life annuities. Partners HealthCare moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of standing and Rule 12(b)(6) for failure to state a claim. Both parties have submitted supplemental briefing requested by the court on the meaning of the term “actuarial equivalence” as well as expert affidavits. Because of this evidence submitted outside the pleadings, the court gave notice under Federal Rule of Civil Procedure 12(d) that it was converting the motion to dismiss to a motion for summary judgment. First, the court held that Mr. Belknap has sufficiently alleged an injury in fact to confer standing under Article III to bring suit. Accordingly, the court denied the motion to dismiss for lack of standing. However, examining Section 1054(c)(3) of ERISA, the court concluded that the actual text of the statute “contains no reasonableness requirement.” Instead, the court held that the provision only provides that a benefit taken “shall be the actuarial equivalent” of a single life annuity starting at normal retirement age of 65. Because the statute does not specifically say anything about how the actuarial equivalence needs to be calculated or what inputs should be used, “it does not explicitly require them to be ‘reasonable’ either individually or in the aggregate.” Furthermore, the court stated that because there are no allegations of Partners HealthCare violating the terms of the plan, and the only place where “actuarial equivalence” is defined was within the plan itself, the court concluded no violation of ERISA had taken place. Judgement was thus granted in favor of Partners HealthCare.  

Sixth Circuit

Helgemo v. Operating Eng’rs Local 324 Pension Fund, No. 21-2951, __ F. App’x __, 2022 WL 670139 (6th Cir. Mar. 7, 2022) (Before Circuit Judges Sutton, Gibbons, and Griffin). Retiree, William Helgemo received monthly pension benefits from the Operating Engineers Local 324 Pension Fund, until the fund halted the payments upon learning that Mr. Helgemo was working for another company in a related field in violation of the terms of the pension fund. Mr. Helgemo challenged that decision in this suit. Under arbitrary and capricious review, the district court granted summary judgment in favor of the Pension Fund. Mr. Helgemo appealed. The Sixth Circuit affirmed, holding that ERISA and the terms of the pension agreement clearly allow for suspension of benefits if a participant works in the same state in the same industry or craft. Strengthening this argument was the notice Mr. Helgemo received along with his approval which stated, “if you return to work as an operating engineer or in a related capacity within the State of Michigan, you will be subject to the Plan’s suspension of benefit rules.” As there was clear evidence that Mr. Helgemo returned to similar employment within Michigan, both the district court and the court of appeals were satisfied that the Fund’s decision to cease payments was reasonable. 

Seventh Circuit

Novosel v. Azcon Inc., No. 21 C 3080, 2022 WL 672776 (N.D. Ill. Mar. 7, 2022) (Judge Rebecca R. Pallmeyer). When plaintiff Jillian Novosel retired from Azcon, Inc. in 2015, she sought to cash out her holdings in the company’s ESOP plan. Ms. Novosel claims that the plan’s benefits committee miscalculated the value of the price per share and distributed $50,000 less than she was owed based on the valuation the company was contractually obligated the pay per the terms of a settlement agreement she had with Azcon. In her complaint, Ms. Novosel brought two ERISA claims, one for benefits, and one for amending the plan to reduce her accrued benefit in violation of Section 204(g). Ms. Novosel also brought a third claim for breach of contract, alleging the company breached the terms of the settlement agreement. Defendants moved to dismiss for failure to state a claim. First, the court dismissed Ms. Novosel’s ERISA claim for benefits because the court could find no way to read the plan language of the relevant provision “in a way that supports her claim.” Giving Ms. Novosel a potential path for amendment, the court signaled that had she alleged Azcon’s “decision to use the April 30, 2020 Accounting Date for her 2020 distribution was arbitrary and capricious” she may be able to state a valid claim. Ms. Novosel’s second ERISA count was also dismissed. The court held that Section 204(g) of ERISA requires a plan amendment in order to state a valid claim, and Ms. Novosel did not allege a plan amendment but rather an “interim valuation” which operated as a decrease of accrued benefits. Lastly, Ms. Novosel’s claim pertaining to Azcon’s breach of the terms of the settlement agreement was not dismissed as Ms. Novosel’s allegation that the parties agreed subsequent distributions would be distributed in the same way as the first distribution was a reasonable interpretation of the contract and stated a valid claim. For the two ERISA claims that were dismissed, Ms. Novosel was granted leave to file an amended complaint. 

Ninth Circuit 

Dion v. Wright, No. CV-21-00441-PHX-SMB, 2022 WL 704041 (D. Ariz. Mar. 9, 2022) (Judge Susan M. Brnovich). Plaintiff Jamie Dion and defendant Bradley Eugene Wright were married in 2001 and divorced in 2021. Mr. Wright is a vested participant in the Pinnacle West Retirement Plan, which allows married participants to make an election to receive 5 year certain payments instead of a lifetime annuity, with the signed consent of the participant’s spouse. Mr. Wright submitted two documents to modify his benefits under the plan to change the payouts and to waive Ms. Dion’s rights to survivor benefits. Ms. Dion contends she never signed the documents. In the Dissolution Decree issued by the state court last July the court found based on the evidence of handwriting experts and Ms. Dion’s testimony that Ms. Dion had not signed the documents. The Maricopa County count went on to express that its finding was limited to being between the divorced couple, and because the other defendants in the federal case were not party to the divorce proceed it could not “resolve the current pending federal court litigation concerning the form of the SEBRP benefit,” and deferred to the federal court. The insurance company and the employer both attested that they would comply with both any QDRO and any order from the federal court. Ms. Dion moved for summary judgment. The motion was denied as moot because the court decided not to exercise jurisdiction. The court cited Ninth Circuit precent from Transamerica Occidental Life Ins. Co. v. DiGregorio, 811 F.2d 1249, 1253 (9th Cir. 1987), “Congress has expressly provided ERISA beneficiaries with the choice between a state or federal forum in their actions to recover benefits” to decline jurisdiction in favor of the pending state court litigation. The court was satisfied that the state court proceedings will decide the questions in controversy and found the litigations duplicative of one another. Accordingly, the court dismissed the case with prejudice. 

Eleventh Circuit

Stanton v. NCR Pension Plan, No. 1:17-cv-2309-MLB, 2022 WL 704692 (N.D. Ga. Mar. 9, 2022) (Judge Michael L. Brown). Plaintiff Arthur Stanton brought suit challenging the denial of his pension benefit application against his former employer NCR corporation, the NCR Pension Plan, the plan’s benefits committee, and members of NCR board of directors. Mr. Stanton worked for the company from 1961 to 1969, and again from 1971 to 1979. The NCR Pension Plan required participants to work for ten consecutive years to be eligible for benefits. Mr. Stanton alleged that individuals at the company promised him pension benefits and said his work during the 60s could be combined with his employment in the 70s, making him eligible for retirement benefits. However, in 2016, when Mr. Stanton applied for benefits, the committee as plan administrator denied the application because the plan language since the plan was created to the current day required 10 years consecutive employment as a prerequisite for eligibility. Mr. Stanton brought a claim for benefits under Section 502(a)(1)(B), a fiduciary breach claim under Section 502(a)(3), and sought penalties for failure to furnish requested plan documents and an award of attorneys’ fees and costs. Parties filed cross motions for summary judgment. First, the court granted judgment in favor of defendants on Mr. Stanton’s wrongful denial of benefits claim. The court agreed with defendants that Mr. Stanton needed to name the committee, the plan administrator, in his Section 502(a)(1)(B) claim, which he failed to do. “Plaintiff’s failure to name the proper defendant is fatal to this request for relief.” Moving to Mr. Stanton’s fiduciary breach claim, the court concluded that defendants were either not fiduciaries, or were not acting as fiduciaries. In addition, the misrepresentations made to Mr. Stanton were not made by any of the defendants, and Mr. Stanton’s reliance on those misrepresentations was not detrimental. Finally, the misrepresentations, made in the 70s were determined to be barred by the statute of limitations. For these reasons, the court granted defendants’ motion for judgment on the Section 502(a)(3) claim and denied Mr. Stanton’s motion. The court also denied Mr. Stanton’s request for an award of $154,440 in statutory penalties for failure to furnish requested documents. The committee, the court held, provided all documents enumerated in ERISA Section 1024(b)(4) in a timely manner when requested by Mr. Stanton. The other documents which were not provided, were not documents required under ERISA, and therefore did not warrant an award of fees. Finally, because Mr. Stanton’s motion for summary judgment was denied, the court denied his motion for attorneys’ fees and costs.

Plan Status

Seventh Circuit

Till v. Nat’l Gen. Accident & Health Ins. Co., No. 21-1256, 2022 WL 683670 (N.D. Ill. Mar. 8, 2022) (Judge Thomas M. Durkin). Plaintiff Charles Till sued National General Accident and Health Insurance Company alleging the insurer improperly denied him coverage for medical services in violation of ERISA. Mr. Till visited a hospital on March 14, 2018, and purchased his health insurance policy at issue here the next day. According to Mr. Till, the hospital did not diagnosis him at that time with any condition. Mr. Till also claimed that his policy was obtained as an ERISA-governed group policy for his business. Then, the day after the policy was purchased, Mr. Till returned to the emergency room. This time he was diagnosed with a pulmonary embolism, was admitted to the hospital and stayed until March 21, 2018. Mr. Till filed a claim under the policy for this treatment. National General denied coverage, asserting the policy’s exclusion for coverage of pre-existing conditions. National General moved to dismiss for failure to state a claim, arguing Mr. Till’s policy is not an ERISA plan, but an individual policy. Mr. Till argued sole proprietors without any employees can still be within ERISA’s scope, and that the policy qualifies as an ERISA plan. The court disagreed, concluding that Mr. Till did not plausibly allege that his company satisfies ERISA’s definition of an “association of employers.” As the court held the policy was not covered by ERISA, the court granted the motion to dismiss.

Pleading Issues & Procedure

Fourth Circuit

Smith v. Michelin N. Am., Inc., No. 3:20-cv-02850-JMC, 2022 WL 719613 (D.S.C. Mar. 10, 2022) (Judge Julianna Michelle Childs). Plaintiff Jeremy Smith is a former employee of Michelin North America, Inc. Prior to working for the company Mr. Smith had injured himself leaving him with chronic leg and back problems. During the pre-employment physical exam required by Michelin, Mr. Smith checked yes on a questionnaire for leg injury. He did not check yes on the questionnaire for back pain, but did tell the examining doctor about his past injury and his chronic back pain. While working for Michelin, Mr. Smith suffered two on the job injuries, which left him disabled. Mr. Smith began receiving long-term disability benefits. While receiving the benefits, Michelin terminated Mr. Smith. Michelin claimed it fired him for “not disclosing medical information during his pre-employment physical examination.” Michelin then informed the insurer that Mr. Smith had been terminated for cause and that his long-term disability benefits should also therefore be terminated. Mr. Smith sued Michelin in state court for fraud, unfair and deceptive trade practices, and negligence. The case was removed to the federal court due to ERISA preemption. Mr. Smith then amended his complaint to assert claims under ERISA for benefits, and breaches of fiduciary duty. Michelin moved to dismiss for failure to state a claim. First, Michelin argued that Mr. Smith failed to exhaust administrative remedies under the plan before bringing suit. The court held failure to exhaust is an affirmative defense not appropriate for a motion to dismiss, especially as Mr. Smith argued that he did not have access to plan documents and exhaustion would have been futile. Next, Michelin argued that Mr. Smith’s Section 502(a)(3) claim should be dismissed because he has adequate relief through his right to sue under Section 502(a)(1)(B). The court disagreed, and state that at the pleading stage Mr. Smith may bring alternative legal and equitable theories of relief. Finally, Michelin argued that it was not acting in a fiduciary role when it informed the insurer of Mr. Smith’s employment status. The court again disagreed with Michelin. Mr. Smith’s complaint, the court found, makes clear that he is arguing Michelin “intentionally effected his termination to cut off his benefits.” Such an intention action, the court concluded plausibly alleges a breach of fiduciary duty. For these reasons, the court denied the motion to dismiss. 

Seventh Circuit

Gibbs v. Deere & Co., No. 4:19-cv-04163-SLD-JEH, 2022 WL 731503 (C.D. Ill. Mar. 10, 2022) (Judge Sara Darrow). Plaintiff Dannie Gibbs received disability benefits for eight years from 2009 to 2017, when he sought to return to work. As a prerequisite to returning to work, his employer defendant Deere & Company informed Mr. Gibbs he needed to complete a medical examination. Mr. Gibbs did not do this, and accordingly never returned to his former position. A year and a half later, Mr. Gibbs filed this complaint alleging Deere violated ERISA by underpaying his disability benefits, and discriminated against him, by not allowing him to return to work, because he is African American. Deere moved for summary judgment. First, the court determined that Mr. Gibbs’s underpayment claim was barred by the doctrine of laches because Mr. Gibbs knew how about “his alleged underpayment ‘for more than a decade’ and that ‘his decade-long delay in filing this is the epitome of unreasonable and inexcusable.’” The court went on to conclude that Mr. Gibbs did not provide sufficient evidence to prove race discrimination. Deere’s motion for summary judgment was thus granted. 

Provider Claims

Fifth Circuit

Bailey v. Blue Cross & Blue Shield of Tex., Inc., No. 21-917, 2022 WL 669855 (S.D. Tex. Mar. 7, 2022) (Judge Gray H. Miller). Plaintiffs are medical providers who sued Blue Cross & Blue Shield of Texas in state court over a dispute of payments for surgical services and other medical care. In their complaint, plaintiffs brought common law contract claims, a tortious interference claim, and claims under two Texas medical payment laws. Blue Cross removed the case to federal court, twice. Plaintiffs moved to remand. Blue Cross argued that the claims arising from 13 plans at issue are preempted by ERISA, and preclude assignment of benefits. The case when then referred to the Magistrate Judge who recommended denying plaintiffs’ motion. The Magistrate Judge concluded that the court has jurisdiction due to ERISA preemption for one of the 13 plans, and that it was proper to exert supplemental jurisdiction on the remaining claims. Defendants objected to the Magistrate Judge’s report arguing that while the Magistrate Judge was correct to deny the motion to remand, the Magistrate Judge’s interpretation of the anti-assignment language of the other twelve plans was incorrect. The Magistrate Judge concluded that the language of the provisions allows for the assignment of the right to receive direct payments. Blue Cross argued that the provisions actually allow for automatic payment, but do not, even with written assignment, allow for the assignment of benefits itself. The court agreed, and sustained the objection and amended the contested section of the report. Finally, the court denied the motion to remand. 

Retaliation Claims

Ninth Circuit

Loza v. Intel Am’s, Inc., No. 20-06705, 2022 WL 718022 (N.D. Cal. Mar. 9, 2022) (Judge William Alsup). Plaintiff Thomas Loza sued his former employer Intel Americas, Inc. for age discrimination and interference with obtaining retirement benefits after Intel fired him. The heart of Mr. Loza’s complaint was that Intel’s fired him in an effort to save costs by replacing experienced older employees close to retirement age with lower-cost younger employees. The ERISA plan at issue contains a “Rule of 75” which states that participants become eligible for retirement, including retiree medical, dental, and vision benefits along with pension benefits, when the sum of an employee’s age and years of employment at Intel equals 75. Intel’s purported reason for firing Mr. Loza, which the court described as “vague,” was that Mr. Loza was incompatible with Intel’s work culture, after Mr. Loza had been with the company for well over two decades and had consistently received very good performance reviews. Intel moved for summary judgment. First, the court denied the motion with regards to Mr. Loza’s ERISA Section 510 retaliation claim. Mr. Loza, the court held made a prima facie case of interference with ERISA rights and a “reasonable factfinder could infer from (the) evidence…that the impending cost of plaintiff’s retirement benefits motivated the discharge.” However, the court did not find that Mr. Loza sufficiently alleged facts that established Intel’s decision to fire him was motivated by age specifically but was rather motivated by a desire to save money. Accordingly, Intel’s motion for summary judgment was granted with regards to both Mr. Loza’s federal and California state age discrimination claims. 

Severance Benefit Claims

Eleventh Circuit

Rhode v. CSX Transp., No. 3:20-cv-480-MMH-MCR, 2022 WL 703012 (M.D. Fla. Mar. 9, 2022) (Judge Marcia Morales Howard). Plaintiff Bryan Rhode filed suit alleging his former employer, CSX Transportation Inc., wrongfully denied him severance benefits under the company’s Executive Severance Plan. On February 3, 2022, Magistrate Judge Richardson issued a Report and Recommendation, recommending defendant’s motion for summary judgment and supporting memorandum of law be granted and Mr. Rhode’s motion for summary judgment and incorporated memorandum of law be denied. Mr. Rhode timely objected to the report objecting to: (1) the Magistrate Judge’s analysis of whether the plan administrator applied the correct legal standard for determining that Mr. Rhode had resigned; (2) the Magistrate Judge’s conclusion that the plan administrator conducted a full and fair review; and (3) the Magistrate Judge’s analysis of the conflict of interest. First, the court held that there is no particular legal standard for “resignation” in ERISA cases, and the relevant term within the plan “voluntary termination” was reasonably interpreted by the plan administrator. Next, the court was satisfied that the Magistrate Judge “extensively considered the adequacy” of the plan administrator’s review, and reasonably concluded the review was full and fair given the extensive evidence provided which supported the administrator’s conclusion that Mr. Rhode had resigned. Finally, the court was satisfied that the evidence the plan administrator had “a personal bias, conflict of interest, or financial motive to terminate (Mr. Rhode) and to deny him severance were not supported by ‘persuasive evidence’ and were ‘speculative at best.’” Thus, the court overruled Mr. Rhode’s objections, adopted the Magistrate Judge’s report as the court’s opinion, granted defendant’s motion for summary judgment, and denied Mr. Rhode’s motion for summary judgment. 

Statute of Limitations

Fifth Circuit

Sauls v. Coastal Bridge Co., No. 21-302, 2022 WL 717081 (M.D. La. Mar. 9, 2022) (Judge Shelly D. Dick). Plaintiffs Joe Sauls and Luis Nieves-Rivera worked for Coastal Bridge Company, LLC and were covered by the company’s group health insurance plan until they received a letter from Blue Cross informing them that the plan had been canceled. Both Mr. Sauls and Mr. Nieves-Rivera had recently incurred medical expenses for heart surgery and a motorcycle accident respectively, and had hundreds of thousands of dollars of medical expenses. Plaintiffs alleged that because of the letter from Blue Cross they were unable to submit claims for benefits to cover their medical expenses. In their suit for benefits, they alleged that the letter had the effect of “denying payment of incurred medical expenses.” Defendants moved to dismiss. The court found defendants’ timeliness argument dispositive and granted the motion. Per the terms of the plan, plaintiffs were required to file claims for benefits within 90 days of the date services were rendered “unless it is not reasonably possible to do so.” In addition, the plan provides that “no lawsuit related to a Claim may be filed any later than twelve months after the claims are required to be filed.” The court was not satisfied that plaintiffs could not have filed claims within 90 days simply because the plan was terminated. Nor was the court satisfied that plaintiffs’ complaint contained factual allegations to support their argument that their suit was timely because it was filed within 15 months of the dates of their medical services, because plaintiffs did not make or even attempt to make claims. This was especially true because the plan has language addressing what would happen in the case of plan termination stating, “the rights of the Plan Participants are limited to expenses incurred before termination.” Both Mr. Sauls’ and Mr. Nieves-Rivera’s medical expenses were incurred before the plan was terminated. As it was not clear to the court that submitting claims would have been futile, defendants’ motion to dismiss was granted without prejudice, and plaintiffs were granted leave to amend their complaint.