Thanks to the Civil Justice Reform Act of 1990, 28 U.S.C § 476 (which was introduced by our current President when he was the junior senator from Delaware), the federal courts are required twice per year to report motion and bench trial decisions that have been pending for more than six months. One of those deadlines expired last week, on March 31, and as a result, we have been deluged with decisions – 50 in all!
There is something for everyone in this week’s installment, ranging from lawsuits against Puerto Rico and New York City involving ERISA preemption to a warning against health care behemoth United to stop removing state law cases to federal court, to an overturned jury verdict regarding ERISA retaliation. Enjoy this week’s edition while your editors take a breather.
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Arbitration
Tenth Circuit
Harrison v. Envision Management Holdings, Inc., No. 21-cv-0304-RMR-NYW, 2022 WL 909394 (D. Colo. Mar. 24, 2022) (Judge Regina M. Rodriguez). Plaintiff Robert Harrison filed this putative class action complaint alleging breaches of fiduciary duties relating to the sale of Envision Management Holding stock at an allegedly inflated price to the company’s employee stock ownership plan. Defendants moved to compel arbitration and to stay pursuant to the Federal Arbitration Act. Mr. Harrison opposed the motion to compel and argued that the arbitration provision in the plan is invalid because it eliminates certain statutory remedies available under ERISA, namely the right for plan-wide relief expressly contemplated by Section 502(a)(2). The court agreed and found the provision invalid because of this conflict with ERISA, writing, “under the terms of the arbitration provision, Mr. Harrison is unable to effectively vindicate his statutory cause of action in the arbitral forum.” Defendants’ motion to compel was therefore denied.
Attorneys’ Fees
Third Circuit
Atlantic Neurosurgical Specialists P.A. v. United Healthcare Grp., No. 20-20083 (RMB/AMD), 2022 WL 950815 (D.N.J. Mar. 30, 2022) (Judge Renee Marie Bumb). Plaintiffs are medical providers who filed their complaint against United Healthcare Group and Multiplan, Inc. in state court alleging state law claims. Defendants removed the case to federal court based on complete ERISA preemption, after which the court granted plaintiffs’ motion to remand. Plaintiffs moved for attorneys’ fees under Section 1447(c) arguing that defendants improperly removed the case on the grounds of federal question and diversity jurisdiction. The court heard oral argument on the motion for attorneys’ fees and concluded that defendants’ removal for federal question jurisdiction “rested on objectively reasonable grounds.” The court decided that it would not award attorneys’ fees based on diversity jurisdiction either as both parties had procedural issues that were likely the result of oversight, not malice. However, in the order’s most interesting passage, the court warned United not to continue its approach of removing state law cases to federal courts on ERISA preemption grounds. “If United Defendants argue for federal subject matter jurisdiction in the future based on ERISA preemption, they must disclose to the court the case law that cuts against their legal arguments.” Failing to do so, the court cautioned, would result in attorneys’ fee awards based on Section 1447(c), as well as sanctions under Federal Rule of Civil Procedure 11(c).
Breach of Fiduciary Duty
First Circuit
Mass. Laborers’ Health & Welfare Fund v. Blue Cross Blue Shield of Mass., No. 21-10523-FDS, 2022 WL 952247 (D. Mass. Mar. 30, 2022) (Judge F. Dennis Saylor IV). Plaintiff Massachusetts Laborers’ Health and Welfare Fund operates a multi-employer health welfare benefit plan governed by ERISA. The Fund brought this suit against its administrator, Blue Cross, and Blue Shield of Massachusetts, alleging breaches of fiduciary duties. According to its complaint, the Fund accuses Blue Cross of violating plan terms by “failing to process claims correctly, overpaying benefits, neglecting to recoup overpayments properly, and refusing to provide the information needed by the Fund to verify that claims were priced appropriately.” Blue Cross moved to dismiss for failure to state a claim. Blue Cross argued that it is not a plan fiduciary and “its obligations to the Fund are solely contractual in nature…and that accordingly this dispute is not governed by ERISA.” The Fund argued that Blue Cross is a fiduciary of the plan. The court agreed with Blue Cross, holding that, as a third-party plan administrator performing mostly ministerial work and not exercising discretionary authority, Blue Cross is not a fiduciary. The ERISA claims were thus dismissed. Finally, the court declined to exercise jurisdiction over the state law claims. The motion to dismiss was thus granted in its entirety.
Second Circuit
Walsh v. Ruane, No. 19-CV-9302 (ALC), 2022 WL 902285 (S.D.N.Y. Mar. 28, 2022) (Judge Andrew L. Carter, Jr.). The Secretary of Labor commenced this suit alleging that defendants, fiduciaries of the DST 401(k) Profit Sharing Plan, breached their fiduciary duties of loyalty and prudence, as well as their duty to diversify, failed to establish a written investment policy for the plan, and failed to monitor co-fiduciaries. Defendants moved to dismiss. They argued the complaint is time-barred because the Secretary’s fiduciary breach claims resulted from conduct that began in the 1970s. The Secretary responded that defendants “owed continuing fiduciary duties to the Plan and they breached these duties throughout the statutory period.” The court agreed. The court was also unwilling at this stage of the proceedings to decide the issue of whether the Secretary had “actual knowledge” of the alleged wrongdoing from the Form 5500 filings that DST annually filed with the Department of Labor. Accordingly, the complaint was not dismissed based on the statute of limitations. Additionally, the court rejected the argument made by the plan’s investment advisor that any violations related to its investments were attributable only to DST. The court said, to the contrary, it had a duty to ensure prudent management of a diversified portfolio “regardless of (DST’s) actions in this case.” The motion to dismiss was thus denied.
Third Circuit
Wright v. Elton Corp., No. 17-286-JFB, 2022 WL 911395 (D. Del. Mar. 29, 2022) (Judge Joseph F. Bataillon). This case pertains to the Mary Chichester duPont Clark Pension Trust, created in 1947 to provide retirement benefits to employees of the duPont family. In previous orders, the court determined the status of the Pension Trust, holding it is an ERISA-governed plan. As the court put it, “the gravamen of the complaint is, and has always been, equitable relief for breaches of duty in connection with the administration of an ERISA plan.” Parties filed cross-motions for summary judgment. The court outright rejected several of defendants’ arguments: (1) the trustees are not fiduciaries, (2) plaintiff Kim Williams lacks standing, (3) Ms. Williams’s claim against the Elton Corp. is barred by the statute of limitations, and (4). Ms. Williams was asserting claims against the duPont grandchildren for the first time. Nevertheless, the court was unwilling to grant any party’s motion for summary judgment, holding that “genuine issues of fact preclude summary judgement.” Accordingly, the issues, and the case itself, will be tried.
Johnson v. The PNC Fin. Servs. Grp., No. 2:20-CV-0, 2022 WL 973581 (W.D. Pa. Mar. 31, 2022) (Judge Christy Criswell Wiegand). Plan participants filed suit against The PNC Financial Services Group, Inc. and The PNC Financial Services Group, Inc. Incentive Savings Plan Administrative Committee challenging the process and management of the plan and alleging they breached their fiduciary duties and failed to monitor fiduciaries and co-fiduciaries. Plaintiffs claimed defendants allowed the plan to be charged excessive fees and paid an exorbitant amount annually to the plan administration. Defendants moved to dismiss for failure to state a claim. The court dismissed the fiduciary duty of loyalty claim finding it to share the same premise as the imprudence claim and to therefore be duplicative. In all other regards, the motion to dismiss was denied.
Sixth Circuit
Walsh v. Allen, No. 3:17-cv-784-BJB, 2022 WL 904608 (W.D. Ky. Mar. 28, 2022) (Judge Benjamin Beaton). The Secretary of Labor brought this suit asserting that defendants breached their fiduciary duties by failing to follow plan documents. The court held a telephonic argument in order to resolve the pending cross-motions for summary judgment. During that hearing, the court expressed that there were genuine issues of material fact concerning the role of outside counsel in carrying out the plan’s provisions. There was also a genuine dispute as to the extent of losses to the plans assuming breaches did occur. Because the court stated that it is possible “though, not yet proven (or even fully briefed), that (defendant’s) reliance on counsel could preclude liability under § 1104(a)(1) because ‘a prudent man acting in a like capacity and familiar with such matters’ would have taken the same action,” the court declined to rule in favor of either party on their summary judgment motions. The court therefore ordered the parties to confer on the next steps “to resolve the questions of liability and damages” and submit a joint report to the court regarding their agreements and disagreements on those issues.
Seventh Circuit
Walsh v. Sherrod, No. 16-cv-04825, 2022 WL 971857 (N.D. Ill. Mar. 31, 2022) (Judge Andrea R. Wood). The Secretary of Labor brought this ERISA suit alleging misconduct on the part of plan fiduciary defendants Shirley T. Sherrod, M.D., and Leroy Johnson. The Secretary argued that Dr. Sherrod and Mr. Johnson breached their fiduciary duty of loyalty under Section 404(a)(1)(A) and (2), their duty of due care under Section 404(a)(1)(B), and their duty to act in accordance with plan documents under Section 404(a)(1)(D). According to the complaint, defendants failed to maintain proper records in accordance with plan documents, used plan funds to pay a bond in a legal action against Dr. Sherrod, and falsely reported hundreds of thousands of dollars that Dr. Sherrod withdrew from the plan as reimbursement and expenses. The Secretary moved for summary judgment. The court held that the undisputed facts demonstrated that defendants violated their duties as alleged by the Secretary, causing financial harm to the plan, and “no reasonable jury could conclude” otherwise. The Secretary’s was thus granted, and defendants were ordered to file supplemental briefing to respond to the Secretary’s request for injunctive and equitable relief.
Tenth Circuit
Anderson v. Coca-Cola Bottlers’ Ass’n, No. 21-2054-JWL, 2022 WL 951218 (D. Kan. Mar. 30, 2022) (Judge John W. Lungstrum). Plaintiff is a plan participant in the Coca-Cola Bottlers’ Association 401(k) Plan. He brings this putative class action against plan fiduciaries for breaches of fiduciary duties of diversification, loyalty, and prudence, and for co-fiduciary breaches related to the plan’s investment portfolio, excessive fees, and investment options offered by Wells Fargo, the plan’s recordkeeper. Defendants moved to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). The motion was granted in part and denied in part. First, the court mostly rejected defendants’ argument that Mr. Anderson lacks Article III standing, but it was persuaded by defendants’ argument that Mr. Anderson lacked standing to assert his claim regarding the Coca-Cola stock fund. The court stated that the claims regarding the Coca-Cola fund alleging that the failure to remove the fund was a breach of duties of prudence, loyalty, and diversification was “discrete from his other claims, which all relate to the costs of the Plan’s funds.” Because Mr. Anderson could not demonstrate he was invested in the Coca-Cola fund, the court stated he did not have standing and dismissed the claims related to it. The court also dismissed plaintiff’s claim that defendants breached their duties by allowing the plan to pay unreasonably excessive direct recordkeeping fees. The court held that Mr. Anderson failed to include sufficient details describing the particular services performed, and what a reasonable payment would have been for those services. It was not demonstrated in the complaint that another company performed those same services for less. Finally, the court dismissed the claims against the individual defendants for co-fiduciary liability because membership of the committee changed over time and one member should not be held liable for a breach committed by a prior member. The remainder of plaintiff’s complaint was not dismissed.
Class Actions
Seventh Circuit
Stone v. Signode Industrial Group, LLC, No. 17-cv-05360, 2022 WL 909392 (N.D. Ill. Mar. 25, 2022) (Judge John F. Kness). Plaintiffs are retirees who brought this putative class action against Signode Industrial Group, LLC and Illinois Tool Works, Inc. under ERISA Sections 502(a)(1)(B), (a)(3), (e), and (f), and Section 301 of LMRA, to enforce collective bargaining agreements pertaining to pension and health insurance plans. Plaintiffs moved for class certification and appointment of class representative and class counsel. Defendants did not oppose certification. The court agreed that the proposed class satisfied the requirements of numerosity, typicality, adequacy, and commonality. Additionally, the court expressed that this ERISA/LMRA suit to enforce collectively bargained promises was well suited “to resolution in Rule 23(b)(1) and (b)(2) class actions.” Accordingly, the court certified the class and appointed plaintiff Woestman class representative and attorneys Israel, Adam, and Yokich class counsel.
Disability Benefit Claims
Second Circuit
Capsalors v. Prudential Ins. Co., No. 3:20-CV-00699 (SVN), 2022 WL 959747 (D. Conn. Mar. 30, 2022) (Judge Sarala V. Nagala). Plaintiff Melissa Capsalors initiated this suit alleging that Prudential Insurance Company violated ERISA by wrongly denying her request for disability benefits on 47 days. Ms. Capsalors’ disability benefits program functioned by awarding benefits on a day-to-day determination. In essence, when Ms. Capsalors’ symptoms were flaring up and prevent her from working, she could submit a claim for benefits for that day. Although Prudential paid Ms. Capsalors benefits for more than 100 days of missed work, Ms. Capsalors brought this suit contesting days when she submitted claims for benefits that were denied by Prudential. Before the court were Ms. Capsalors’ motion to amend the complaint to add additional dates to the 47 dates originally within her complaint, the parties’ cross-motions for summary judgment, and Prudential’s motion for sanctions stemming from Ms. Capsalors’ motion to amend. First, the court denied the motion to amend. There was undue delay in filing the motion, the court held, because it was filed more than a month after both parties filed their cross-motions for summary judgment. Granting the motion would therefore prejudice Prudential and require reopening discovery in the case. Turning to the summary judgment motions, the court, under arbitrary and capricious review, agreed with Prudential that the file reflected Ms. Capsalors was not eligible for benefits on the dates in question. The court therefore granted Prudential’s motion for judgment and denied Ms. Capsalors’ motion. Finally, the court denied Prudential’s motion for sanctions, concluding that plaintiff’s counsel did not act in bad faith.
Chicco v. First Unum Life Ins. Co., No. 20-cv-10593 (DLC), 2022 WL 973733 (S.D.N.Y. Mar. 30, 2022) (Judge Denise Cote). Defendant First Unum Life Insurance Co. moved for reconsideration of the court’s recent order granting summary judgment against First Unum, finding plaintiff Michelle Chicco “disabled within the meaning of the Plan.” First Unum requested the opinion “be amended to clarify that its finding of Chicco’s disability does not extend beyond August 31, 2020,” the date when the administrative record was closed. Unum argued that the court’s decision based upon the medical record ought to be “limited to the period covered by that record as well.” The court agreed and granted the motion. Ms. Chicco’s claim was remanded to First Unum to determine the issue of whether she qualifies for disability benefits beyond August 31, 2020.
Sixth Circuit
Whetstone v. United of Omaha Life Ins. Co., No. 2:20-cv-3756, 2022 WL 896784 (S.D. Ohio Mar. 28, 2022) (Judge Edmund A. Sargus, Jr.). Plaintiff Larry Whetstone worked as a commercial truck driver for seven years. He became disabled from post-traumatic stress disorder after a bus crashed into his truck while exiting a turnpike. Following the accident, Mr. Whetstone suffered from severe mental health disorders including anxiety, depression, insomnia, irritability, and an immense fear of driving his tractor-trailer truck. Mr. Whetstone sought the care of three doctors, all of whom opined that he could not return to work driving commercially in his condition. Given this, Mr. Whetstone applied for long-term disability benefits. The plan’s insurer, defendant United of Omaha Life Insurance Company, denied the application for benefits and upheld its denial during the internal appeals process leading to this suit for benefits. The parties filed cross-motions for judgment on the administrative record. The court held United’s denial was arbitrary and capricious, and stated it did not have a substantial basis in the medical record to support its conclusion that Mr. Whetstone was able to perform the duties of his job. According to the court, United “overlooked and outright mischaracterized several parts of the record that supported Whetstone’s claim.” Additionally, the court stated it was improper for United’s reviewing physicians to dismiss Mr. Whetstone’s self-reported symptoms and the opinions of his treating mental health providers without ever examining him in person. Finally, the court reprimanded United for failing to consider a federal safety regulation for commercial drivers that Mr. Whetstone included in his appeal. For these reasons, the court granted summary judgment in favor of Mr. Whetstone. Turning to the proper remedy, the court held that “objective medical evidence supported Whetstone’s disability claim,” and awarded him disability benefits. However, the court agreed with United that the “Mental Disorder Limitation” applied and therefore limited the benefit award to twenty-four months.
Jalali v. Unum Life Ins. Co. of Am., No. 2:20-cv-5071, 2022 WL 896785 (S.D. Ohio Mar. 28, 2022) (Judge Algenon L. Marbley). For the third time in ten years, plaintiff Sepanta Jalali brought an ERISA Section 502(a)(1)(B) claim for long-term disability benefits against defendant Unum Life Insurance Company of America. Dr. Jalali became disabled after she was injured in a car accident and underwent several major surgeries. The court ruled in her favor in the first two actions, and the third time was not the charm for Unum. The court held that Unum acted arbitrarily and capriciously in terminating Dr. Jalali’s disability benefits. The court stated that it was impermissible for Unum to add an eligibility requirement to the plan. Nowhere in the language of the plan is a claimant required to prove that he or she has a disability “that cannot be reasonably accommodated.” For Unum to have added such a requirement, the court held, was entirely improper. Unum was not able to prove that Dr. Jalali’s disability had improved since the last time the court awarded her benefits and determined she met the plan’s definition of disability. Instead, Unum based its denial only on evidence favorable to the denial and completely ignored the evidence within the record which was favorable to awarding benefits. For this reason, Dr. Jalali’s motion for judgment was granted, and Unum’s was denied. The court retroactively awarded Dr. Jalali benefits up to the date of denial but declined to award future and continuing benefits.
Tranbarger v. Lincoln Life & Annuity Co. of N.Y., No. 2:20-cv-00945, 2022 WL 912244 (S.D. Ohio Mar. 29, 2022) (Judge Algenon L. Marbley). Plaintiff Vickie Tranbarger brought this Section 502(a)(1)(B) action against Lincoln Life & Annuity Company of New York seeking to overturn the insurer’s denial of her application for long-term disability benefits. Ms. Tranbarger’s disabling conditions are fibromyalgia and chronic fatigue syndrome. Lincoln Life denied the claim, determining that Ms. Tranbarger failed to demonstrate total disability throughout the plan’s elimination period. The parties filed cross-motions for summary judgment on the administrative record. Under de novo review, the court agreed with Lincoln Life that Ms. Tranbarger did not satisfy the requirement of proving disability during the elimination period. The court held that the medical records throughout the 360 days of the elimination period demonstrated that although on some days Ms. Tranbarger experienced severe and disabling symptoms, by her own admission, other days she did not. Therefore, the court concluded that the plan administrator “made a correct decision” in denying the claim. For that reason, the court granted judgment in favor of Lincoln Life.
Beardman v. Sheet Metal, Air, Rail & Transp. Ass’n Local Union No. 33 Youngstown Dist. Pension Fund, No. 4:20-CV-2149, 2022 WL 950094 (S.D. Ohio Mar. 30, 2022) (Judge Benita Y. Pearson). Plaintiff Joel P. Beardman brought this ERISA Section 502(a)(1)(B) suit seeking judicial review of the Sheet Metal, Air, Rail & Transportation Association Local Union No. 33 Youngstown District Pension Fund’s denial of his application for disability pension benefits. The fund denied Mr. Beardman’s application, not on the grounds that he was not totally disabled, but for failing to meet the requisite number of hours in the two-year period prior to the onset of his total and permanent disability. The parties filed cross-motions for summary judgment. Because the plan language unambiguously placed this requirement on applicants, and because Mr. Beardman completed the required hours after the onset of his disability, the court determined the denial was not arbitrary and capricious. Accordingly, Mr. Beardman’s motion for judgment was denied and the plan’s motion for judgment granted.
Sandeen v. The Paul Revere Life Ins. Co., No. 1:18-CV-248, 2022 WL 966848 (E.D. Tenn. Mar. 30, 2022) (Judge J. Ronnie Greer). Plaintiff Lynnea Sandeen commenced this suit seeking reversal of the denial of her claim for long-term disability benefits by defendants Unum Group Corporation and the Paul Revere Life Insurance Company. The parties filed cross-motions for judgment on the administrative record. Given the plan’s discretionary clause, the court applied abuse of discretion review. Ms. Sandeen presented a compelling argument demonstrating Unum’s conflict of interest and its “history of using ‘quotas for its disability claims teams and communicating those goals along with the approximate value in reserves for individual claims to the claims handling personnel.’” However, the court was not convinced that this conflict of interest “heavily influenced the decision to deny her claim.” To the contrary, the court was satisfied the denial was the result of a robust review of the medical records and supported by substantial evidence. As a result, defendants’ motion for summary judgment was granted, and Ms. Sandeen’s motion for judgment was denied.
Carney v. Unum Life Ins. Co. of Am., No. 2:20-CV-12599-TGB-RSW, 2022 WL 988360 (E.D. Mich. Mar. 31, 2022) (Judge Terrence G. Berg). Plaintiff Dr. James Carney commenced this action seeking long-term disability benefits. Dr. Carney argued that Unum Life Insurance Company of America wrongly denied his claim for benefits when it concluded he was not disabled as the result of a spinal injury. The parties filed cross-motions for summary judgment. The court reviewed the denial under de novo review. Having reviewed the administrative record, the court concluded that Dr. Carney proved by a preponderance of evidence that he was disabled within the meaning of the plan and could not safely perform the material duties of his job as a physician. Accordingly, Dr. Carney’s motion for judgment on the record was granted, and Unum’s motion was denied.
Discovery
Ninth Circuit
Metaxas v. Gateway Bank F.S.B., No. 20-cv-01184-EMC (DMR), 2022 WL 972039 (N.D. Cal. Mar. 31, 2022) (Magistrate Judge Donna M. Ryu). Plaintiff Poppi Metaxas filed this lawsuit against her former employer, Gateway Bank, F.S.B., and the Gateway Bank Supplemental Executive Retirement Plan after she was denied disability pension benefits. The parties filed a joint discovery letter brief. In it, Ms. Metaxas moved to supplement the administrative record she deemed incomplete with documents she asserted were relevant to her claim and provide information on the plan and benefits. The Magistrate Judge reviewed the documents and concluded none of them were “relied upon in making the benefit determination and (were) not submitted, considered, or generated in the course of making the benefit determination.” Therefore, the motion to supplement the administrative record was denied.
ERISA Preemption
First Circuit
Medicaid & Medicare Advantage Prods. Ass’n of P.R. v. Hernandez, No. Civil 20-1760 (DRD), 2022 WL 889473 (D.P.R. Mar. 25, 2022) (Judge Daniel R. Dominguez). This suit stems from Puerto Rico’s recent approval of two laws “which set new standards for the operation of health plans throughout the Commonwealth, including those operated under the Medicare Advantage program, Medicare Part D,” ERISA, and FEHB. Plaintiffs here are: Medicaid and Medicare Advantage Products Association of Puerto Rico Inc., MMM Healthcare, LLC, Triple-S, MCS Advantage, Inc., First Medical Health Plan, Inc., and Humana. They brought this suit against Puerto Rico’s Attorney General and Insurance Commissioner seeking a declaratory judgment that the new state laws are preempted by Medicare, ERISA, and FEHB, and asking the court to permanently enjoin defendants from taking any action under the new Puerto Rican laws. Defendants moved to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). They argued that the federal legislation does not preempt the laws at issue and that the Puerto Rico Legislature has the power to enact and enforce these laws. Defendants’ principal argument was that the presumption against preemption is applicable. Plaintiffs argued to the contrary that the presumption against preemption “does not apply in the face of an express preemption clause-a condition satisfied here four times over.” They went on to argue that because this case revolves around a purely legal issue not requiring discovery, and because they believe that the preemption issue should be resolved in their favor, they were entitled to summary judgment on their claims. Both the motion to dismiss and the cross-motion for summary judgment were denied by the court. First, the court stated there was “no doubt that federal courts have jurisdiction…over an action seeking injunctive and declaratory relief against state officials on the grounds that a state regulation was preempted by federal law.” Next, the court expressed that plaintiffs presented sufficient facts to raise plausible claims for relief. Accordingly, the motion to dismiss was denied. As for the motion for summary judgment, the court stated it was premature “as there is a complete absence of a factual record beyond the Complaint in which the Court can rely on to make its ruling.” Therefore, this motion too was denied.
Second Circuit
RHC Operating LLC v. City of N.Y., No. 21-CV-9322 (JPO), 2022 WL 951168 (S.D.N.Y. Mar. 30, 2022) (Judge J. Paul Oetken). Plaintiff RHC Operating LLC, which owns the Roosevelt Hotel in New York, challenges the City of New York’s severance law requiring hotels that closed to the public due to the COVID-19 pandemic to pay laid-off employees $500 in severance pay weekly for thirty weeks. Plaintiff asserted this law is preempted by ERISA and NLRA. Plaintiff moved for a preliminary injunction to enjoin enforcement of the law. The court first concluded that ERISA does not preempt the severance law because the law does not compel an employer to establish an employee benefit plan. Specifically, the law does not require an ongoing administrative program and the tasks required by the law are ministerial in nature. Even more significantly, the court stated the severance law envisions a “one-time project” and therefore does not require employers to make “an ongoing commitment…to provide employee benefits.” The court went on to express that plaintiff failed to demonstrate a likelihood of success on the merits of any of its federal claims, and accordingly denied the motion for preliminary injunction.
Seventh Circuit
Garrity v. Sun Life & Health Ins. Co. U.S., No. 20-cv-01334, 2022 WL 972290 (N.D. Ill. Mar. 31, 2022) (Judge Andrea R. Wood). Plaintiff Emily Garrity filed this lawsuit after her husband died in 2017, seeking to obtain accidental death benefits that were denied by defendant Sun Life Health Insurance Company. Ms. Garrity asserted a claim under ERISA Section 502(a)(3) as well as state law claims for breach of insurance contract and violation of Illinois consumer fraud law. Sun Life moved to dismiss the state law claims and moved to strike Ms. Garrity’s demand for a jury trial. The court granted the motions. The court agreed with Sun Life that the state law claims were preempted by ERISA as they depend on interpreting the ERISA plan and cannot be resolved otherwise. Because the court granted the motion to dismiss the state law claims, the court also granted the motion to strike the jury trial demand as there is no right to a jury trial in ERISA cases.
Ninth Circuit
Summit Estate, Inc. v. Cigna Health & Life Ins. Co., No. 5:20-cv-04697-EJD, 2022 WL 958380 (N.D. Cal. Mar. 30, 2022) (Judge Edward J. Davila). This instant action is a refiling of a prior action with the same parties. Previously, plaintiff Summit Estate Inc., a residential substance abuse treatment center, sued defendant Cigna Health and Life Insurance Company after Cigna underpaid claims for reimbursement. The previous case ended when Summit Estate filed a notice of voluntary dismissal without prejudice and the parties entered into a tolling agreement. The attempt at resolution was unsuccessful, leading Summit Estate to file this second case. Summit Estate asserted claims for breach of contract, intentional misrepresentation, negligent misrepresentation, fraudulent concealment, negligent non-disclosure of facts, promissory estoppel, and breach of implied contract. Cigna moved to dismiss. Relevant to ERISA, Cigna argued that the claims are preempted. The court stated that “nearly all of Defendant’s arguments were rejected by Judge Koh in the previous suit,” including the preemption argument. This court agreed with Judge Koh, at least for pleading purposes, that the California contract and tort laws do not expressly act upon ERISA plans and that the plans themselves are “not essential to their operation.” Therefore, the court rejected the preemption argument as grounds for dismissal. The court did preclude Summit Estate from pursuing punitive damages for its promissory estoppel and negligent failure to disclose claims, but otherwise denied the motion to dismiss.
Medical Benefit Claims
Fourth Circuit
Harthun v. Johnson Controls, Inc., No. 3:20-cv-00036, 2022 WL 989247 (W.D. Va. Mar. 31, 2022) (Judge Norman K. Moon). Plaintiff Luther Harthun retired from Figgie International, Inc. in 1996, and is a participant in the company’s Senior Executive Benefits Program. He brought this Section 502(a)(1)(B) suit claiming defendant Johnson Controls, Inc. violated ERISA when it modified the plan and ceased paying premiums for supplemental Medicare plans. The parties filed cross-motions for summary judgment. The court concluded that the plan gave Johnson Controls discretionary authority in interpreting the plan, and that its decision “was a discretionary decision that was not contrary to the Plan’s plain language nor an unreasonable interpretation of the Plan.” Thus, the court granted Johnson Controls’ motion for judgment and denied Mr. Harthun’s motion.
Pension Benefit Claims
Eighth Circuit
Leighton v. Delta Air Lines, Inc., No. 19-cv-1089 (JNE/JFD), 2022 WL 980301 (D. Minn. Mar. 31, 2022) (Judge Joan N. Ericksen). Retirees of Delta Airlines brought this putative class action asserting the administrative committee of the pension plan violated ERISA by inappropriately interpreting plan terms to reduce lump-sum workers’ compensation settlement amounts from their pension benefits. Several motions were before the court. Defendants moved for summary judgment or in the alternative for remand to the administrative committee. Plaintiffs moved for summary judgment, to certify a class, and to exclude defendants’ expert testimony. The court concluded that defendants’ interpretation of the plan language was both reasonable and fair to participants, because it treated participants who chose to litigate their workers’ compensation claims and ended up receiving monthly payments, and those who chose to settle their workers’ compensation claims and received lump-sum settlements, the same. The court wrote that accepting plaintiffs’ interpretation of the plan would “result in a windfall to plaintiffs,” and would end up treating them better than other plan participants who litigated workers’ compensation claims. Therefore, the court granted defendants’ summary judgment motion. Plaintiffs’ motions to exclude the expert testimony and to certify a class were denied as moot.
Ninth Circuit
Raya v. Barka, No. 19-cv-22895-WQH-AHG, 2022 WL 901557 (S.D. Cal. Mar. 28, 2022) (Judge William Q. Hayes). Plaintiff Robert Raya initiated this suit in which he claims defendants, including his former employer Calbiotech, Inc., violated ERISA in the administration of its pension and profit-sharing plans, and then fired Mr. Raya in retaliation for his requests for plan documents and his attempts to obtain ERISA-protected benefits. Defendants then brought a counterclaim against Mr. Raya pertaining to a separation agreement he signed with the company which releases all claims arising to events prior to the execution of the agreement. They allege Mr. Raya is in violation of the terms of that agreement by filing complaints with the Department of Labor and initiating this and another related lawsuit. In this order, the court addressed five motions before it, including cross-motions for summary judgment on particular issues within the complaint, a motion to dismiss, and a motion for legal findings and conclusions. The court: (1) denied Mr. Raya’s motions for partial summary judgment, (2) denied defendants’ motion to dismiss with the narrow exception of dismissing the retaliation claim against one of the defendants, (3) granted defendants’ request that the court consider their sur-reply, (4) granted in part and denied in part defendants’ motion for partial judgment, and (5) denied as moot defendants’ motion for legal findings and conclusions. As for the counterclaim, the court stated that whether Mr. Raya “knowingly and voluntarily waived his ERISA claims is a question of fact inappropriate for resolution on summary judgment.” Accordingly, there was no resolution of the counterclaim within this order. Nor was there a resolution for several of Mr. Raya’s claims which were neither dismissed nor decided on summary judgment.
Plan Status
Ninth Circuit
Steigleman v. Symetra Life Ins. Co., No. 21-15613, __ F. App’x __, 2022 WL 912255 (9th Cir. Mar. 29, 2022) (Before Circuit Judges Hawkins, Paez, and Watford). Plaintiff-appellant Jill Steigleman appealed the district court’s ruling granting summary judgment to Symetra Life Insurance Company on her Arizona law bad faith claim pertaining to the insurer’s long-term disability denial. On appeal, the Ninth Circuit held that the district court erred in concluding that Ms. Steigleman’s disability policy was part of an ERISA-governed employee welfare benefit plan. According to the Ninth Circuit, “the record does not show that Steigleman’s agency specifically contracted with TAA to extend disability coverage to her employees or otherwise ‘arranged for’ that coverage.” Having established the plan is not governed by ERISA, the Ninth Circuit further held the lower court erred in concluding that Symetra’s conduct was “reasonable as a matter of law.” Because a reasonable jury could find that the insurer acted unreasonably and was aware of its unreasonable conduct, and therefore award punitive damages to Ms. Steigleman, the appeals court reversed and remanded.
Harrison v. Unum Life Ins. Co. of Am., No. CV-21-01536-PHX-SPL, 2022 WL 951076 (D. Ariz. Mar. 30, 2022) (Judge Steven P. Logan). Plaintiff Kristina Harrison filed a complaint against defendants Unum Life Insurance Company of America, Evangelical Lutheran Good Samaritan Society Long-Term Disability Plan, and Evangelical Lutheran Good Samaritan Society for violations of ERISA. Ms. Harrison now moves to amend her complaint to add state law causes of action pled in the alternative if it is determined by the court that the long-term disability plan is exempt from ERISA under its church-plan exemption. Defendants opposed the motion to amend. They argued that plaintiff’s proposed amendment would be futile because the plan is governed by ERISA and the church-plan exemption does not apply. The question of whether a plan is governed by ERISA is complex, “would benefit from full briefing,” and is “not appropriate for resolution on a Motion to Amend.” Because the applicability of ERISA is in doubt, the court granted the motion to amend the complaint to add state law claims in the alternative to the original ERISA claims.
Pleading Issues & Procedure
Second Circuit
Cunningham v. USI Ins. Servs., No. 21 Civ. 1819 (NSR), 2022 WL 889164 (S.D.N.Y. Mar. 25, 2022) (Judge Nelson S. Roman). Plaintiff Lauren Cunningham is a participant of the USI 401(k) Plan and brought this putative class action against USI Insurance Services, its Board of Directors, its committee, and individual Doe defendants, for breach of fiduciary duties of prudence and loyalty and failure to monitor co-fiduciaries pertaining to allegedly excessive service fees resulting in the loss of retirement savings of millions of dollars to the benefit of defendants. Defendants moved to dismiss for failure to state a claim. Defendants argued that Ms. Cunningham’s claims fail because she did not include relevant benchmark comparisons for the fees and their given services. Ms. Cunningham included a table compiled of data from 5500 filings of several defined contribution retirement plans of comparable size. However, the court agreed with defendants that this table was not a fair comparison to the USI Plan’s fees because none of the ten comparable plans included in the chart offered participants the “pension consulting or valuation services USICG offers to the Plan participants.” Furthermore, and perhaps even more significantly, the court echoed a math teacher and scolded Ms. Cunningham for failing to show her work. Because there was no “indication of how (she) calculated the per-participant fees for recordkeeping and administrative costs” especially regarding the indirect fees which were not available on the Form 550 filings, the court found the complaint currently fails to state a claim for breach of the duty of prudence. Furthermore, because the duty of loyalty and duty to monitor claims were “intrinsically dependent” upon the duty of prudence claim which the court found to be insufficiently pled, the motion to dismiss was granted in its entirety. However, the motion to dismiss was granted without prejudice and Ms. Cunningham was given the opportunity to amend her complaint in order to address these pleading issues.
Vellali v. Yale Univ., No. 3:16-cv-1345 (AWT), 2022 WL 951637 (D. Conn. Mar. 30, 2022) (Judge Alvin W. Thompson). In this defined contribution fiduciary breach class action defendants moved to exclude plaintiffs’ experts Wendy Dominguez and Gerald Beutow. These experts addressed the prudence of defendants’ investment monitoring, the prudence of the share classes of investments, and the prudence of 22 of the investment options within the plan. Defendants argued that Ms. Dominguez’s testimony ought to be excluded because she did not follow a reliable methodology, “she does not apply the methodology she advocates in this litigation to her own clients,” and she was improperly instructed to determine whether the funds she evaluated should have been removed. Defendants moved to exclude Mr. Beutow’s opinions because they were “just an extension of Dominguez’s.” First, the court either entirely rejected defendants’ arguments pertaining to Ms. Dominguez or expressed that they were objections that go to weight and not to admissibility. The court therefore denied the motion to exclude her testimony. Also, because the court did not exclude Ms. Dominguez’s testimony, and the only objection to Mr. Beutow’s testimony was that it was an extension of Ms. Dominguez’s, the court also denied the motion to exclude Mr. Beutow’s testimony.
Anjani Sinha Med. v. Empire HealthChoice Assurance, Inc., No. 21-CV-138 (RPK) (TAM), 2022 WL 970771 (E.D.N.Y. Mar. 31, 2022) (Judge Rachel P. Kovner). Plaintiff Anjani Sinha Medical P.C. sued Empire HealthChoice Assurance, Inc. seeking to recoup medical fees for two surgeries. The case was originally filed in state court and then removed by Empire who asserted federal jurisdiction. Before the court were plaintiff’s motion to remand and defendant’s motion to dismiss. Plaintiff’s motion to remand was denied because plaintiff’s amended complaint included an ERISA benefits claim which establishes federal jurisdiction. The court then granted the motion to dismiss. The court held that plaintiff’s ERISA claim failed because it does not identify plan language that entitled plaintiff to the particular benefits it seeks. Two of plaintiff’s state law claims, a claim for unjust enrichment and a prompt-pay claim, were dismissed as preempted by ERISA. The two remaining state law claims, for breach of contract and promissory estoppel, were dismissed. The court held that plaintiff’s complaint failed to properly allege that a contract was breached, or a clear and unambiguous promise was made.
Third Circuit
Fuhrer v. The Hartford Life & Accident Ins. Co., No. 2:21-cv-05040-JDW, 2022 WL 970848 (E.D. Pa. Mar. 31, 2022) (Judge Joshua D. Wolson). Katrina Fuhrer sued The Hartford Life & Accident Insurance Company to recover life insurance benefits. Hartford filed a motion for judgment on the pleadings. Ms. Fuhrer’s response to Hartford’s motion was due on February 14, 2022. Unfortunately, Ms. Fuhrer’s counsel “misdiaried the due date for the Motion,” and missed this deadline. The court granted Hartford’s motion as unopposed on February 24, 2022. Less than a week later, on March 3, 2022, Ms. Fuhrer filed this motion to vacate the judgment against her pursuant to Federal Rule of Civil Procedure 60(b)(1), and to try the case on the merits. The court granted the motion, writing that the “negligent nature of the error here, and the haste with which Ms. Fuhrer sought to remedy the problem, demonstrate her good faith.” The weight of the factors the court considered, coupled with its desire to resolve the case on the merits, persuaded the court that it was in the interest of justice to grant the motion and give Ms. Fuhrer 30 days to file her response to Hartford’s motion.
McCaffree Fin. Corp. v. ADP, Inc., No. 20-5492 (ES) (JRA), 2022 WL 970282 (D.N.J. Mar. 31, 2022) (Judge Esther Salas). Plaintiff is a participating employer in a multi-employer 401(k) defined contribution plan governed by ERISA. Plaintiff brings claims for breach of fiduciary duty alleging defendants breached their duties by subjecting the plan to excessive fees and “permitting objectively imprudent investment options.” Defendants moved to dismiss, arguing that plaintiff does not have either constitutional or statutory standing. The court agreed, finding that the participating employer is not a fiduciary of the plan. Accordingly, the motion to dismiss was granted without prejudice.
Atl. Neurosurgical Specialists P.A. v. United Healthcare Grp., No. Civ. 20-13834 (KM) (JBC), 2022 WL 970317 (D.N.J. Mar. 31, 2022) (Judge Kevin McNulty). Medical providers, along with individual physicians, brought this suit on behalf of three patients insured by UnitedHealth. Plaintiffs moved to amend their complaint after the court held, they lacked standing. Plaintiff argued that the amended complaint “details with particularity the substantive bases upon which their benefits were denied and the grounds for (plaintiffs’) respective challenges of the (at-issue) adverse benefit determinations.” They argued that each of the insureds was denied the opportunity to have the adverse benefit claim overturned on appeal and was prevented from developing complete administrative records that a court could scrutinize. The court, however, once again held that plaintiffs failed to allege a sufficient injury in fact to establish standing. The court agreed with United that the proposed amended complaint does not show how United’s benefit determinations violated plan terms. The court held that to satisfy Article III, plaintiffs need to allege facts establishing that the review of their claims would have resulted in payment of benefits and not just that inadequate procedures led to benefits not being received. The court thus denied the motion to amend but did so without prejudice.
Fourth Circuit
Moore v. Virginia Cmty. Bankshares, No. 3:19-cv-00045, 2022 WL 969767 (W.D. Va. Mar. 30, 2022) (Magistrate Judge Joel C. Hoppe). An ESOP plan participant commenced this putative class action alleging defendants breached fiduciary duties and engaged in a series of prohibited transactions. Plaintiff moved to amend her complaint. The proposed amendments, the court held, mostly do not change the allegations of the original complaint, but do clear up certain aspects, substitute a few parties, and add defendants. As the case is in its infancy, and motions to amend should be granted liberally, the court granted the motion to amend.
Sixth Circuit
Sherrod v. Suntrust Inv. Servs., No. 21-10484, 2022 WL 943035 (E.D. Mich. Mar. 28, 2022) (Judge Robert H. Cleland). The 2008 sale of an ophthalmology practice by Dr. Shirley Sherrod to purchaser Dr. Michael Sherman “resulted in over a decade of litigation for breach of contract in Wayne County Circuit Court,” and continues to be the cause of problems and litigation to this day. The ten years of litigation between the doctors ended in 2014 with the court granting summary judgment in favor of Dr. Sherman and issuing a freeze order prohibiting Dr. Sherrod from “selling, transferring, assigning…or otherwise disposing of any Trust Assets in any manner, pending further order of this court.” The order defined the “Trust” as the Shirley T. Sherrod PC Target Benefit Pension Plan and Trust, the plaintiff in this case. In this case, the plan commenced this suit seeking declaratory and injunctive relief, and monetary damages against defendant SunTrust Investment Services. SunTrust holds the assets of the plan in an investment account, and because of court orders froze the assets of the pension plan. Plaintiff argued that SunTrust is violating ERISA by freezing the plan’s assets. In addition to this case, there is also an ongoing dispute between the plan and the Department of Labor (summarized above under the Breach of Fiduciary Duty subheading). The DOL alleges that the plan and its fiduciaries violated ERISA by withdrawing hundreds of thousands of dollars from the plan to pay a bond for Dr. Sherrod’s personal benefit. The DOL in its case seeks the removal of the fiduciaries, appointment of an independent fiduciary, and to terminate the plan by making distributions to the plan participants. Because of the many interconnected lawsuits, defendant SunTrust filed a motion to intervene for the purposes of interpleading the disputed funds. SunTrust also asked the court to stay the interpleading of the ERISA plan until the DOL case is resolved. The court in the interpleader action granted the motion to stay. That action naturally affects this case. SunTrust moved to dismiss the complaint, arguing the plan lacks standing, and that the plan fails to state a claim upon which relief can be granted. The court agreed with defendants and dismissed the case.
Seventh Circuit
GC Am. v. Hood, No. 20-cv-03045, 2022 WL 910556 (N.D. Ill. Mar. 29, 2022) (Judge Andrea R. Wood). Plaintiff GC America Inc. is the sponsor of the GC America Inc. Group Benefit Plan. It commenced this action, seeking to recover more than $1.7 million it paid in medical bills to defendant, plan participant Kevin Hood, after Mr. Hood was injured in a car accident. Mr. Hood obtained a multimillion-dollar settlement “against the parties responsible for negligent medical treatment he received for his injuries.” GC America sued Mr. Hood, as well as the attorney who represented him in his negligence suit, Law Offices of Goldberg & Goldberg, to recoup the amount it paid pursuant to the plan’s subrogation and reimbursement clause. In addition to a claim under ERISA Section 502(a)(3) against both defendants, GC America also asserts state law tortious interference claims against defendant Goldberg. Defendant Goldberg moved to dismiss all claims against it pursuant to Rule 12(b)(6). The court granted the motion to dismiss. The court held that GC America did not plead sufficient facts to support its Section 502(a)(3) claim against Goldberg because the court cannot reasonably infer that Goldberg has possession of any of the settlement funds required to sustain a claim for equitable relief. Furthermore, because Goldberg is not a plan fiduciary, the court stated that GC America is not entitled to relief in the form of an equitable surcharge either. Accordingly, the ERISA claim was dismissed. The state law claims were then dismissed because GC America, according to the court, failed to allege facts supporting its claim that Goldberg’s alleged interference was unjustified.
Ninth Circuit
Advanced Reimbursement Sols. v. Aetna Life Ins. Co., No. CV-19-05395-PHX-DLR, 2022 WL 889058 (D. Ariz. Mar. 25, 2022) (Judge Douglas L. Rayes). Defendant Aetna Life Insurance Company brought thirteen counterclaims against the medical provider plaintiffs, including recoupment of overpayment under ERISA. The counterclaims are premised on fraud, overbilling, and violations of contracts. Plaintiffs moved to dismiss the counterclaims. The motions to dismiss were denied except for the motion of plaintiffs Advanced Reimbursement Solutions, LLC and American Surgical Development, LLC to dismiss Aetna’s state and federal RICO claims against them. The court was not persuaded by plaintiffs’ argument that Aetna’s ERISA claim involved an adverse benefit determination and thus it should be dismissed for failure to exhaust administrative remedies. The court was also satisfied that Aetna, contrary to plaintiffs’ arguments, had specifically alleged plan terms that provided the basis for recoupment. Finally, plaintiffs’ argument that Aetna does not have standing to assert non-ERISA claims on behalf of the plans was also rejected by the court.
Eleventh Circuit
Gamache v. Hogue, No. 1:19-CV-21 (LAG), __ F. Supp. 3d __, 2022 WL 989483 (M.D. Ga. Mar. 30, 2022) (Judge Leslie A. Gardner). Plaintiffs in this class action are former employees of Technical Associates of Georgia, Inc., and participants in the TAG employee stock ownership plan. They allege defendants breached fiduciary duties and engaged in prohibited transactions. Before the court was non-party James H. Moore, III’s motion to quash plaintiffs’ subpoena. Plaintiffs subpoenaed Mr. Moore because he is an attorney who “regularly provides legal services to (TAG) in transaction and litigation matters most often relating to engineering services agreements and employment agreements.” Plaintiffs contend that Mr. Moore can provide testimony that will lead to evidence relevant to defendants’ statute of limitations defense. Mr. Moore argued that the subpoena should be quashed because his communications are protected by attorney-client privilege, the subpoena imposes an undue burden, and in general depositions of attorneys are discouraged. None of these arguments were persuasive to the court, who denied the motion, invoking the fiduciary exception to the attorney-client privilege.
Retaliation
Third Circuit
Kairys v. Southern Pines Trucking, No. 2:19-cv-1031-NR, __ F. Supp. 3d __, 2022 WL 969595 (W.D. Pa. Mar. 31, 2022) (Judge J. Nicholas Ranjan). Plaintiff Thomas Kairys filed this employment discrimination case against his former employer, Southern Pines Trucking, including an ERISA Section 510 retaliation claim. There was a jury trial in this case, but the ERISA issue was left for the court to decide, which it did in this order. While employed at Southern Pines Trucking, Mr. Kairys was diagnosed with degenerative arthritis in both hips and subsequently underwent costly hip replacement surgery. The cost of this surgery was covered by the company’s self-insured health insurance plan. Southern Pines therefore paid out of pocket for a portion of each claim made on the policy, and therefore had a natural incentive to keep costs low. In fact, when the company’s head, Patrick Gallagher, learned of the surgery, witnesses testified that he was very upset. Problems got worse when Mr. Kairys informed Southern Pines that he would need to have his other hip replaced. Less than one week after Mr. Kairys earned an $11,458 performance bonus, Southern Pines fired Mr. Kairys, which was a decision that Mr. Gallagher made unilaterally. Mr. Kairys alleged that he was fired both because of the cost of his first hip replacement surgery and to avoid having to pay the cost for the second hip replacement surgery. The court held that Mr. Kairys met his burden to show that his employer’s proffered reason for termination was pretextual and use of Mr. Kairys’ ERISA-protected medical benefits played “a determinative role in his termination.” For this reason, the court granted judgment in favor of Mr. Kairys and awarded him $67,500 in front pay, plus reasonable attorneys’ fees, and costs.
Sixth Circuit
Bracy v. Consumers Energy Co., No. 20-10969, 2022 WL 909349 (E.D. Mich. Mar. 28, 2022) (Judge Mark A. Goldsmith). Plaintiff Brian Bracy brought this unlawful termination suit against his former employer and his former supervisor. Mr. Bracy asserted claims under Michigan’s civil rights act and under ERISA Section 510 for interfering with his rights to obtain benefits under his ERISA-governed plans, including his retirement and healthcare plans. Mr. Bracy filed objections to the report and recommendation issued by Magistrate Judge Altman recommending the court grant defendants’ motion for summary judgment. The court assessed each of the objections in turn. First, the court disagreed with Mr. Bracy that he had presented direct evidence of age discrimination. According to the court, the documents Mr. Bracy provided did not compel the conclusion that the decision to termination Mr. Bracy was motivated because of his age, and that to make such a conclusion, the court would need to draw inferences. Thus, the court found no error in the report in rejecting the direct evidence argument and overruled this objection. Mr. Bracy next argued that the Magistrate erred in finding “that Mr. Bracy did not present evidence sufficient to create a material factual dispute as to whether Defendants terminated his employment with the specific intent of interfering with his entitled to ERISA-protected benefits.” The court rejected this argument because although Mr. Bracy cited evidence, “he does not explain how it shows Defendants’ specific intent” to interfere with his rights. Additionally, the court found that Mr. Bracy failed to state that anyone with the power to fire him had made any comments about his benefits. Thus, this objection too was overruled. The court stated that none of Mr. Bracy’s objections “created an issue of fact regarding whether Defendants’ legitimate, nondiscriminatory explanation for his termination was a pretext for age, race, or sex discrimination.” The court adopted the report and recommendation and granted defendants’ motion for summary judgment.
Hrdlicka v. General Motors, No. 20-11015, 2022 WL 989339 (E.D. Mich. Mar. 31, 2022) (Judge Robert H. Cleland). Plaintiff Haley Hrdlicka brought this wrongful termination suit alleging her former employer, General Motors, discriminated against her on the basis of sex, age, race, and disability and interfered with her rights. General Motors moved for summary judgment. The court agreed with General Motors that it had a legitimate, nondiscriminatory reason to fire Ms. Hrdlicka, and granted the motion on all claims. Regarding the ERISA retaliation claim, the court held that Ms. Hrdlicka did not offer evidence proving that General Motors fired her for the purpose of interfering “with any rights or benefits to which she was entitled.”
Severance Benefit Claims
Seventh Circuit
Carlson v. Northrop Grumman Severance Plan, No. 13-cv-02635, 2022 WL 971873 (N.D. Ill. Mar. 31, 2022) (Judge Andrea R. Wood). Two terminated employees of Northrop Grumman commenced this severance benefit class action against Northrop. They alleged that Northrop changed its practice from automatically sending human resources memoranda to eligible employees regarding benefits when they were laid off, and instead began withholding HR memos from certain individuals like plaintiffs who were otherwise eligible for severance benefits. Plaintiff asserted three claims: a claim for benefits under Section 502(a)(1)(B), a retaliation claim under Section 510, and a fiduciary breach claim under Section 502(a)(3). The parties filed cross-motions for judgment, and the court examined the case under a deferential standard of review. The court concluded that the plan clearly and unambiguously required an employee to receive an HR memo signed by the vice president of HR in order to be eligible for severance benefits. Therefore, the committee and the plan administrator had a rational basis for denial supported by the language of the plan and had not added any new requirements outside the plan. The court therefore granted defendants summary judgment on the Section 502(a)(1)(B) count. Next, the court found that Northrop had some ability to “discriminate” against employees because it was built into the plan itself and “when a benefits plan expressly affords an employer such discretion over eligibility, it is not prohibited discrimination from the employer to exercise that discretion.” Defendants were accordingly granted judgment on the Section 510 count. Finally, defendants, the court held, did not breach any fiduciary duty by failing to correct oral misrepresentations or by failing to inform beneficiaries about policy changes. Therefore, the defendants were granted summary judgment on the Section 502(a)(3) count as well.
Ninth Circuit
Gentz v. Twenty-First Century Fox, Inc. Severance Plan, No. 2:20-cv-10100, 2022 WL 888681(C.D. Cal. Mar. 25, 2022) (Judge Otis D. Wright, II). Plaintiff Wade Gentz was an attorney for Twentieth Century Fox, and a plan participant in the Twenty-First Century Fox, Inc. Severance Plan which was established in connection with the merger between Twentieth Century Fox and Disney. According to the severance plan, a participant is entitled to severance benefits if the employee’s termination satisfies the plan’s definition of “Good Reason.” After the Disney merger, Mr. Gentz terminated his employment with Disney and applied for severance benefits. In his application, Mr. Gentz detailed how his post-merger job was a “material diminution in the scope and responsibility of his role,” and thus constituted a “Good Reason” under the plan terms. The plan denied the application without referring to the Good Reason provision or directly responding to Mr. Gentz’s specific arguments made in support of his assertion that the Good Reason provision was applicable. Following an internal appeal in which the plan upheld its denial, Mr. Gentz brought suit for benefits. While working with the plan on the pre-trial joint report, Mr. Gentz was informed by the plan that it intended to argue that the Good Reason provision in the plan did not apply to him. Mr. Gentz moved for partial summary judgment, asking the court to prohibit the plan from asserting this argument during civil proceedings because it never raised it in its denial. The plan argued that because Mr. Gentz engaged with the Good Reason provision in his application, the plan’s rejection “necessarily function(s) as a rejection of the application of the Good Reason provision and of Gentz’s reasoning in support of the Good Reason provision.” The court strongly disagreed and stated that “an alternative ruling would contradict both the letter and spirit of ERISA.” Accordingly, the court granted Mr. Gentz’s motion, and prohibited the plan from arguing that the plan document “does not include a separate category for voluntary terminations made due to a diminution in job responsibilities,” and that Mr. Gentz “did not in fact experience a sufficient diminution in his job responsibilities.”
Statute of Limitations
Sixth Circuit
Gragg v. UPS Pension Plan, No. 2:20-cv-5708, 2022 WL 974413 (S.D. Ohio Mar. 31, 2022) (Judge Algenon L. Marbley). Plaintiff Ralph Gragg initiated this suit on November 2, 2022, seeking to recover pension benefits due to him under the terms of two ERISA-governed plans and to clarify his rights to future benefits. The parties filed cross-motions for judgment on the administrative record. The court granted defendant’s motion for judgment and denied Mr. Gragg’s motion. The court agreed with defendant that Mr. Gragg’s claim is barred by the applicable six-year statute of limitations. The court noted that under ERISA’s discovery rule, the limitations period begins to run when a plaintiff first discovers the injury at issue in the case. This discovery occurred, according to the court, in 2010 when Mr. Gragg received notices from the plans that the amounts he would receive from each plan when he turned 65 would drop considerably. “This repudiation…certainly alerted Plaintiff of his alleged injury.” Accordingly, the court determined that Mr. Gragg’s claim began to accrue in 2010, and thus this case was filed four years after the statute of limitations had run.
Tenth Circuit
Anne A. v. United Healthcare Ins. Co., No. 2:20-cv-00814-JNP-DAO, 2022 WL 957199 (D. Utah Mar. 30, 2022) (Judge Jill N. Parrish); E.F. v. United Healthcare Ins. Co., No. 2:21-cv-190-JNP-DBP, 2022 WL 957200 (D. Utah Mar. 30, 2022) (Judge Jill N. Parrish). In these twin decisions, plaintiffs sued United Healthcare Insurance Company, United Behavioral Health, and the Apple Inc. Health and Welfare Benefit Plan for violating the Mental Health Parity and Addiction Equity Act and seeking recovery of benefits under ERISA Section 502(a)(1)(B). Defendants moved to dismiss the complaints for failure to state a claim, arguing that plaintiffs did not file their complaints within the plan’s specified time limit of 180 days after receipt of the final benefit decision. However, the court found the contractual limitation period unenforceable because the final denial letters plaintiffs received failed to provide notice of the plan’s time limit for bringing civil suits. Thus, the court denied the motions to dismiss in both cases.
Subrogation/Reimbursement Claims
Third Circuit
Corbitt v. Trs. of Princeton Univ., No. 21-899, 2022 WL 952890 (E.D. Pa. Mar. 30, 2022) (Judge Cynthia M. Rufe). Plaintiff Andrew Corbitt has brought this putative class action against the Trustees of Princeton University, the Princeton University Benefits Committee, Aetna Life Insurance Company, and the Rawlings Company, LLC for violations of ERISA and under New Jersey state law after his health plan demanded reimbursement for benefits he received following a successful personal injury lawsuit. According to the complaint, the subrogation provision is unenforceable because it exists only in the summary plan description, and its language does not permit the plan to seek reimbursement from plan members. Defendants moved to dismiss. The motion was granted in part and denied in part. First, the court dismissed Mr. Corbitt’s state law claims as preempted by ERISA. Next, the court dismissed Mr. Corbitt’s claim for breach of fiduciary duty under Section 503 for failing to meet disclosure obligations because it does not provide a private cause of action. Finally, Mr. Corbitt’s claim for breach of fiduciary duty pertaining to defendants’ use of the SPD as both an operative plan document and as a summary plan description was dismissed because the SPD was the only plan document and the court concluded it may therefore “fulfill ERISA’s requirement for a written instrument and an SPD.” In all other respects, the motion to dismiss was denied.
Ninth Circuit
Old Dominion Freight Line Inc. v. Bowman, No. CV-20-01292-PHX-DLR, 2022 WL 901412 (D. Ariz. Mar. 28, 2022) (Judge Douglas L. Rayes). An ERISA-governed healthcare plan sued a plan participant seeking subrogation and reimbursement for payments it made to him. In an order last August, the court granted summary judgment in favor of plaintiffs in the amount of $137,175.99. Defendant Bowman moved to amend the judgment, and plaintiffs moved for attorney’s fees. Mr. Bowman argued that the court “failed to consider subsequent requests for documents related to the plan when establishing the limitations period.” The court agreed that it did not consider this but said it did so because a claim under Section 1132(c) accrues on the date of the earliest refusal to provide information. Mr. Bowman next argued that the court erred by requiring him to prove that the 2017 Summary Plan Description was unenforceable. The court disagreed again and stated that the plan was able to prove in this case that the document satisfied the requirements of a governing plan document. Finally, the court rejected Mr. Bowman’s contention that the court erred by finding the 2017 SPD enforceable. Having failed to establish the existence of a “material factual dispute,” the court denied the motion to amend judgment. As for the plan’s motion for attorneys’ fees, the court weighed the balance of the Hummell factors and decided against awarding fees. “On balance, the threat of deterrence in light of Defendant’s good faith defense favors not awarding attorney fees.”
Venue
Ninth Circuit
D.L. Markham, DDS, MSD Inc. 401(k) Plan v. The Variable Annuity Life Ins. Co., No. 2:21-cv-00007-TLN-KJN, 2022 WL 891290 (E.D. Cal. Mar. 24, 2022) (Judge Troy L. Nunley). Plaintiffs are an ERISA retirement plan and the plan’s administrator, who brought this nationwide putative class action against the Variable Annuity Life Insurance Company and Valic Retirement Services Company seeking to recover fees which they allege defendants improperly withheld from the plan assets. Plaintiffs brought claims for knowingly participating in a prohibited transaction and engaging in a self-dealing prohibited transaction. Defendants moved to transfer venue to the Southern District of Texas and also moved to dismiss. The parties agreed that the case could have been brought in the Southern District of Texas, making it an appropriate venue, and satisfying the first prong of the two-prong transfer test. Of the factors weighed, only plaintiffs’ forum choice weighed against transferring the case. However, as this is a nationwide class action, the court did not accord this factor significant weight. Defendants argued the case should be transferred because the company’s headquarters are in Texas, the agreement between the plan and Valic included a forum selection clause, and the conduct at issue took place in Texas. The court found these arguments persuasive. The court therefore granted the motion and transferred the case to the Southern District of Texas. The motion to dismiss was denied as moot.
Eleventh Circuit
Brannigan v. Excellus Blue Cross & Blue Shield, No. 8:21-cv-2352-TPB-AAS, 2022 WL 911384 (M.D. Fla. Mar. 29, 2022) (Judge Tom Barber). Plaintiff Worldwide Aircraft Services, Inc. d/b/a Jet ICU is an air ambulance company which commenced this action seeking to recover reimbursement under a health insurance benefit plan governed by ERISA. Plaintiff provided emergency air ambulance services to a plan participant in 2019 after she experienced an acute cardiac episode. The patient is a resident of New York, but the medical emergency took place while she was on a Bahamian cruise. Jet ICU evacuated the patient and brought her to a hospital in Florida. Defendant Excellus Blue Cross & Blue Shield reimbursed the ground ambulance portion of the bill as medically necessary but challenged and refused the pay the air transportation invoice arguing it was not medically necessary. Blue Cross moved for dismissal and argued that the lawsuit should have been brought in the Western District of New York as required by the forum selection clause in the health insurance plan. The court declined to dismiss the case, but did transfer it, finding the forum selection clause valid and enforceable.