Gimeno v. NCHMD, Inc., No. 21-11833, __ F.4th__ 2022 WL 2309436 (11th Cir. Jun. 28, 2022) (Before Circuit Judges Pryor, Rosenbaum, and Brasher). 

Today’s case of the week goes where many cases have gone before in answering in the affirmative the straightforward question: “Does [ERISA Section 502(a)(3)] create a cause of action for an ERISA beneficiary to recover monetary benefits lost due to a fiduciary’s breach of fiduciary duty in the plan enrollment process?”

In this case, Plaintiff Raniero Gimeno’s spouse, Justin Polga, was a physician who worked for NCHMD, Inc., which sponsored an ERISA life insurance plan. When he was first hired, NCHMD’s human resources staff helped Mr. Polga enroll for these benefits, and he named his spouse the primary beneficiary. Mr. Polga elected to pay for $350,000 in supplemental life insurance benefits on top of the automatic $150,000 in benefits that were paid for by his employer. But there was a catch. To receive the supplemental benefits, Mr. Polga was required under the terms of the plan to submit an evidence of insurability form, which the human resources staff did not provide to him or tell him was necessary. Accordingly, he did not complete or submit this form. Nevertheless, his employer deducted premiums for this supplemental coverage from his paycheck for three years and informed him repeatedly that he had such coverage. When Mr. Polga died, the insurance company denied Mr. Gimeno’s claim for supplemental benefits because the evidence of insurability form had not been submitted.

Mr. Gimeno sued NCHMD and its parent company, NCH Healthcare, for benefits under ERISA Section 502(a)(1)(B). When this claim was dismissed on the basis that these two entities were not proper defendants because they had no obligation under the plan to pay the supplemental benefits, plaintiff moved to amend the complaint to assert a claim for equitable relief under Section 502(a)(3) against both defendants, alleging that both were fiduciaries under the plan. The district court denied the motion, concluding that amendment would be futile because the court believed that monetary relief of this kind was not equitable and thus was unavailable under Section 502(a)(3).     

On appeal, defendants argued, as the district court concluded, that Section 502(a)(3) does not allow the relief Mr. Gimeno sought. Defendants additionally argued that Mr. Gimeno improperly raised alternative claims for benefits under ERISA Section 502(a)(1)(B), 29 U.S.C, 1132(a)(1)(b), and for equitable relief under Section 502(a)(3), 29 U.S.C. 1132(a)(3).

Turning first to the remedial issue, the court pointed out that the Supreme Court in CIGNA Corp. v. Amara, 563 U.S. 421, 441-42 (2011), recognized the availability of such relief under Section 502(a)(3), which courts in equity referred to as “surcharge” and routinely awarded against a breaching fiduciary. Moreover, the Eleventh Circuit noted that every circuit court has addressed the issue since Amara has followed suit in recognizing the availability of a surcharge remedy. Although the Eleventh Circuit concluded that the Supreme Court’s statements concerning surcharge were “likely dicta,” as “thoroughly reasoned dicta” coming from the Supreme Court, the court reasoned that these statements in Amara should not be lightly ignored. Moreover, the Eleventh Circuit concluded that the Supreme Court was correct that a surcharge against a breaching fiduciary constitutes typical equitable relief and, as such, is available under ERISA’s equitable relief provision.

The court then concluded that the proposed amended complaint plausibly alleged that both defendants were fiduciaries with respect to the challenged conduct. NCH Healthcare was the named plan administrator and the complaint plausibly alleged that, as such, it had a duty to inform Mr. Polga and his spouse about the missing information. Likewise, the court concluded that the complaint plausibly alleged that NCHMD acted as a fiduciary in guiding the decedent through the enrollment process and then deducting the premiums from his paycheck and providing him with benefit summaries that reflected that he had supplemental coverage.    

The court also rejected defendants’ argument that the claim for surcharge under Section 502(a)(3) was an end-run around Section 502(a)(1)(B). The court reasoned that Mr. Gimeno did not have an adequate remedy under Section 502(a)(1)(B) because, as he conceded, he was not entitled to the supplemental benefits under the terms of the plan. Because without equitable relief, he would “have no remedy at all,” the court allowed his claim under Section 502(a)(3) to proceed.  

No fireworks perhaps, but a nice way for plan participants in the Eleventh Circuit to start out July thanks to ERISA Watch subscriber Eddie Dabdoub, who represented Mr. Gimeno on appeal.

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


First Circuit

United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union v. Nat’l Grid, No. 21-1833, __ F. 4th __, 2022  WL 2313946 (1st Cir. Jun. 28, 2022)  (Before Circuit Judges Lynch, Kayatta, and Gelpi). The United Steel, Paper, and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Services Workers International Union (“the Union,”) sued an employer, National Grid, on behalf of two former employees/union members after the company refused to arbitrate grievances they filed pertaining to their pension benefits, which they claimed were underpaid according to the terms of their collective bargaining agreement. In court, the Union sought an order seeking to compel arbitration of the dispute, which the district court declined to do. The Union appealed this decision to the First Circuit. On appeal, the First Circuit concluded that the district court had erred in declining to order arbitration, which was called for under the terms of the pension plan at issue, and accordingly reversed and remanded to the lower court with instructions to refer the matter to arbitration. 

Attorneys’ Fees

Ninth Circuit

Alves v. Hewlett Packard, No. 2:16-CV-09136-RGK-JEM, 2022 WL 2318523 (C.D. Cal. Jun. 17, 2022) (Judge R. Gary Klausner). Plaintiff Michael Alves sued The Hewlett Packard Enterprise Comprehensive Welfare Benefits Plan and Hewlett Packard Enterprise Company for disability benefits under the plan. Following a bench trial in 2018, the district court ruled for defendants and upheld the denials of both the short-term and long-term disability benefits. Mr. Alves appealed. The Ninth Circuit affirmed the denial of the short-term disability benefits but vacated the denial of the long-term disability benefits finding that the plan administrator had “abused its discretion in denying Plaintiff’s appeal on the ground that he failed to meet the one-week ‘waiting period’ provided in the Plan, even though Plaintiff, who had validly received short-term benefits for several months, clearly met the requirement.” The plan administrator then reevaluated Mr. Alves’s long-term disability claim and again denied it. This time both the district court and the court of appeals affirmed the denial. Before the court here was Mr. Alves’s motion for attorneys’ fees, in which he sought fees and costs incurred through the remand following the first appeal. Mr. Alves argued that because the Ninth Circuit remanded the case following the first appeal, he achieved success on the merits on a significant issue and should therefore be eligible for an award of fees. Mr. Alves requested an award of $123,300 in fees. The court weighed the Hummell factors and ultimately concluded that awarding fees was not justified. The court did not find defendants’ actions to be in bad faith, and therefore held their degree of culpability was nominal. Next, the court held that defendants could satisfy a fee award and weighed this factor in favor of awarding fees. As for any potential deterrent factor, the court was not convinced that awarding fees would have a great effect on plan administrators in the future and determined this factor was neutral. Also weighing against awarding fees was the fact that this case affects only Mr. Alves and there is nothing to suggest it would resolve any significant legal question. Finally, and most significantly, the court weighed the parties’ relative success on the merits and concluded that Mr. Alves’s success on his first appeal did not ultimately lead to him obtaining benefits and “earning the remand was minor when compared to the other issues in the case.” This factor then, according to the court, weighed against an award of fees. Balancing the Hummell factors, the court declined to award fees and costs and accordingly denied Mr. Alves’s motion. 

Sobh v. Phx. Graphix, No. CV-19-05277-PHX-ROS, 2022 WL 2316316 (D. Ariz. Jun. 28, 2022) (Judge Roslyn O. Silver). Plaintiff Sam Sobh is a participant of a profit-sharing plan, who sought a distribution of plan benefits in the form of a hardship withdrawal. Mr. Sobh was informed that a hardship withdrawal was unavailable to him but that he could nevertheless receive his benefits through a cash-out distribution. Rather than take the cash out distribution, Mr. Sobh filed a lawsuit seeking to obtain the hardship distribution. That lawsuit was dismissed because Mr. Sobh had misidentified the relief he was seeking. Again, rather than amend that complaint, Mr. Sobh filed the present lawsuit. These two decisions, not to take the cash out distribution, and not to amend the complaint of the first lawsuit, left the court frustrated with Mr. Sobh. However, the court did ultimately find in Mr. Sobh’s favor with regard to his claim for violation of Section 502(c) because defendants did not provide documents in a timely manner and awarded $2,750 in sanctions. The remainder of Mr. Sobh’s claims, a claim for benefits under Section 502(a)(1)(B), a claim for declaratory relief, and a claim for breach of fiduciary duty under Section 502(a), were all rejected by the court. Now both parties have filed competing motions for attorneys’ fees and costs pursuant to Section 502(g)(1), with each party arguing they had substantial success on the merits. The court weighed the five Hummell factors and examined the relative strengths of the competing motions. First, the court found that defendants had not acted in bad faith, but their behavior in repeatedly providing Mr. Sobh with inaccurate and late information was “extremely careless.” On the other hand, the court concluded that Mr. Sobh had acted in bad faith, given that his impetus for commencing his litigation appeared to the court to be an attempt to punish his former employer and not a simple desire to obtain benefits. Accordingly, the court found the culpability factor supported awarding defendants fees. Next, it was clear that defendants could satisfy a fee award while Mr. Sobh could not. Therefore, the court concluded that this factor supported awarding fees to Mr. Sobh. With regard to any potential deterrent factor, the court concluded that it wished to deter the behaviors of both parties, making this factor neutral. The court also concluded that this suit would not largely affect any non-parties and that this factor too was neutral. Finally, the court examined the relative merit of the parties’ positions and successes. Though both parties had some success in the case, the underlying baselessness of Mr. Sobh’s claim for benefits led the court to conclude that defendants ultimately had the stronger arguments in the case. Weighing all the factors, the court decided that the right resolution would be to deny both parties’ motions. The court also declined to award defendants’ fees based on state-law grounds, finding that neither state law they cited provided viable grounds for an award of fees in federal court. 

Breach of Fiduciary Duty

Seventh Circuit

Szalanski v. Arnold, No. 19-cv-940-wmc, 2022 WL 2315593 (W.D. Wis. Jun. 28, 2022)  (Judge William M. Conley). Plaintiff Brenda Szalanski brought this ERISA suit against four executives of PDQ, her former employer, as well as GreatBanc Trust Company, for breaches of fiduciary duties with regards to negotiating and approving the 2017 sale of the PDQ Employee Stock Option Plan’s PDQ stock to Kwik Trip for $17,500 per share. The individual defendants moved to dismiss the entirety of the complaint asserted against them. GreatBanc moved for partial dismissal. The court granted both motions. According to the complaint, GreatBanc was hired to be the sole discretionary trustee of the ESOP and its role was to determine whether the transaction was in the best interest of the participants and beneficiaries of the ESOP and whether voting for or against the sale would violate ERISA. To do this, GreatBanc hired a third-party financial consulting firm to evaluate and an independent legal advisor and financial advisor to review the fairness of the potential transaction to the company and the ESOP. GreatBanc was advised that the transaction was fair to the ESOP. Participants were then sent a copy of the information statement document which detailed the proposed transaction and summarized the terms of the deal and potential risk factors associated with the transaction. The PDQ Board unanimously voted to approve the transaction, and GreatBanc voted the ESOP’s shares in favor of the transaction. Ms. Szalanski in her suit challenged five of the “side” payments associated with the deal: (1)$1 million paid to each of the individual defendants in exchange for their promise not to compete with Kwik Trip’s new business for the next seven years; (2) Kwik Trip’s option to purchase other property owned by one of the defendants for $2 million; (3) PDQ’s payment of nearly $5 million to the individual defendants under a stock appreciation rights plan; (4) severance payments to 30 PDQ employees including the named individual defendants; and (5) an incentive to the individual defendants to earn $1.85 million from Kwik Trip for PDQ and up to $1.85 million for themselves by negotiation long-term leases or purchases of select properties on behalf of Kwik Trip following the transaction. First, the court dismissed one of the individual defendants, whom it called “the administrator defendant,” because her only role was signing regulatory filings and was, therefore, in the eyes of the court, not acting in a fiduciary capacity. The court then turned to the remaining individual defendants, “the director defendants,” and held that they too were not acting in a fiduciary capacity when negotiating the terms of the transactions and that they had functionally resigned as ESOP trustees once the company had hired an independent trustee, GreatBanc, to fulfill that role. Because the court concluded that these defendants were not acting in a fiduciary role at the time of the events in question, the court dismissed the complaint against them, holding that Ms. Szalanski failed to allege facts to infer that they had violated any fiduciary duties or obligations with respect to the transaction. Finally, the court granted GreatBanc’s motion to dismiss the portions of the complaint that challenged two of the five side payments, the payment of $1 million to each of the individual defendants in exchange for their promise not to compete, and Kwik Trip’s future option to purchase property for $2 million, because neither of these challenged payments involved the ESOP or its assets, and therefore neither could be construed as a prohibited transaction under ERISA or a breach of fiduciary duty. The court was not swayed by Ms. Szalanski’s counter-argument that the non-compete payment and purchase option were secured through and came about because of the plan assets and “the transaction of which they were a part.” 

Ninth Circuit

Scott v. AT&T Inc., No. 20-cv-07094-JD, 2022 WL 2342645 (N.D. Cal. Jun. 29, 2022) (Judge James Donato). Defendant AT&T Services, Inc. moved pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss the fiduciary breach claims against it brought under ERISA Section 502(a)(2), in this putative class action accusing AT&T of violating ERISA’s actuarial equivalence requirement and thereby improperly reducing the amounts of retirement benefits owed to participants. AT&T argued that dismissal is warranted because, plaintiffs, they claim, were seeking purely individual relief, and not relief on behalf of the plan. The court said this was not so and cited several parts of the complaint which expressly “seek all available and appropriate remedies against AT&T Services to redress and make good to the Plan all losses caused by its violations of ERISA.” The court also concluded that the complaint sufficiently alleged that the plan administrator breached its duties by undercalculating benefits, which allowed AT&T, Inc. “to save money by reducing the amount of money AT&T Inc., the Plan sponsor, had to contribute to the Plan to fund benefits.” The court also expressed that the relief plaintiffs seek, including restoration of losses to the plan, disgorgement of profits, and payment to the plan of the amounts owed to class members, were all appropriate under Section 502(a)(2). Accordingly, the court denied the motion to dismiss, with one exception. The court dismissed the plan as a defendant in the case as a plan itself cannot usually be sued for a breach of fiduciary duty, and because plaintiffs agreed that they didn’t need to name the plan as a defendant. 

Mattson v. Milliman Inc., No. C22-37 TSZ, 2022 WL 2357052 (W.D. Wash. Jun. 30, 2022) (Judge Thomas S. Zilly). The court ruled on defendants’ motion to dismiss in this putative fiduciary breach class action pertaining to the management of The Milliman Profit Sharing and Retirement Plan. First, the court denied the motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of standing. The court stated that as plaintiff Joanna P. Mattson invested in three of the funds at issue, she has standing to pursue her plan-wide relief and whether her claims “are typical of the claims of the putative class members who invested in the other funds at issue is more appropriately addressed in connection with class certification.” Next, the court dismissed the claims against The Milliman Investment Committee and The Milliman Administrative Committee because the complaint improperly named these defendants, and no entity with those exact names exists. Defendants’ motion to dismiss Ms. Mattson’s breach of duty of prudence and derivative failure to monitor claims were granted. The court held that the complaint as currently pled does not sufficiently include meaningful benchmarks which provide a sound basis of comparison with “similar aims, risks, and potential rewards” to the funds challenged in the complaint. The duty of prudence and duty to monitor claims were dismissed without prejudice, allowing plaintiff a chance to update the complaint to include satisfactory comparisons. Finally, Ms. Mattson’s claim for breach of loyalty was not dismissed. The court held that the complaint sufficiently alleges that defendants were enticed to maintain the challenged funds “in whole or in part by Milliman Financial Risk Management LLC’s continuing role as sub-adviser for the United Funds’ $250 million in assets.” Thus, the motion to dismiss was denied in part and granted in part as described above. 

Disability Benefit Claims

Seventh Circuit

Kopesky v. Aetna Life Ins. Co., No. 21-C-59, 2022 WL 2304505 (E.D. Wis. Jun. 27, 2022) (Judge William C. Griesbach). In early 2004, plaintiff Brian Kopesky walked on the shoulder of a freeway to assist a driver who had driven into a ditch and was struck from behind by a driving car. Mr. Kopesky ended up in an emergency room but was discharged the same day. After the collision, Mr. Kopesky began experiencing symptoms of post-concussive syndrome and fatigue. A few months later, he submitted a claim for disability benefits with Aetna under his employer’s disability benefit plan. Aetna paid Mr. Kopesky’s long-term disability benefits from September 30, 2004, until February 21, 2018, when it decided that Mr. Kopesky no longer met the plan’s definition of disability. Following an unsuccessful administrative appeal, Mr. Kopesky commenced this ERISA suit. In this decision, the court denied Mr. Kopesky’s motion for summary judgment, concluding the decision to terminate benefits was not arbitrary and capricious. The court was satisfied that Aetna’s decision was a reasonable interpretation of the medical records, as well as Mr. Kopesky’s part-time work and volunteer history since 2006. Mr. Kopesky’s argument that Aetna applied a moving target by suddenly insisting on relying only on clinical evidence as proof of disability under the plan after 14 years of paying benefits when nothing substantial had changed medically with him, was not convincing to the court, especially under deferential review. Because the evidence that Aetna cited was determined to be reliable, the court held that Aetna’s decision was “based on rational support in the record,” and there was no evidence “that Aetna’s determination was influenced by a conflict of interest.” Thus, the court denied Mr. Kopesky’s summary judgment motion and dismissed the case. 


Ninth Circuit

C.P. v. Blue Cross Blue Shield of Ill., No. 3:20-cv-06145-RJB, 2022 WL 2317374 (W.D. Wash. Jun. 28, 2022) (Judge Robert J. Bryan). In this class action pertaining to gender-affirming care exclusions in ERISA-governed healthcare plans administered by defendant Blue Cross, plaintiffs moved to compel discovery. Both parties also filed motions to seal. The court addressed the discovery motion first. Plaintiffs requested the court order Blue Cross to produce the “employer identity for which Blue Cross administers each related exclusion and total number of enrollees in each plan year by year,” as well as all documents, emails, and communications having to do with “covering or excluding treatment related to gender dysphoria and/or gender-affirming care exclusions.” First, the court held that the identity of the employers for which Blue Cross administers the ERISA plans containing the exclusions and the number of enrollees per plan to be “relevant, responsive, and discoverable.” Next, the court held that the communications pertaining to covering and excluding transgender treatment should also be provided, as the information within those documents is relevant to this discrimination lawsuit and will likely provide insight into whether exclusions were legitimate with non-discriminatory justifications, or were purposefully crafted to discriminate. Accordingly, the court granted plaintiffs’ discovery motion and ordered Blue Cross to produce these documents. Turning to the motions to seal, the court flat out denied Blue Cross’s motion. None of the information Blue Cross sought to seal was determined by the court to be proprietary secrets, nor was it clearly traceable to any specific employer or non-party in the suit. As for plaintiffs’ motion to seal emails between counsel, the court denied the motion but stipulated that the parties should confer about what information within the documents should remain sealed and then file a redacted copy reflecting the agreed-upon changes.  

ERISA Preemption

Seventh Circuit

Tousignant v. Metro. Life Ins. Co., No. 22 C 0735, 2022 WL 2356429 (N.D. Ill. Jun. 30, 2022) (Judge Charles P. Kocoras). Plaintiff David L. Tousignant’s son died tragically two years ago at the age of 31. Mr. Tousignant, who worked for Union Pacific Railroad, had signed up for his employer’s Dependent Accidental Death & Dismemberment policy for his son when his son was 27 years old. Following his son’s tragic death, Mr. Tousignant filed a claim under the policy. The claim was denied for two reasons. First, the policy covers dependents under the age of 26. The plan denied the claim because the dependent was 31 at the time of his death, and therefore exceeded the age limit of covered dependents. Second, the claim was denied under the plan’s drug use exclusion, as the death was likely caused by a fentanyl overdose. Mr. Tousignant sued MetLife in state court for fraud and deceptive business practices, arguing that by collecting monthly premiums on a policy that does not apply to dependents over the age of 26, and by signing Mr. Tousignant up for the policy when his son was 27, the insurer had been fraudulently making money off a policy it never had any intention of paying out on. The state law case was removed by MetLife to the federal district court based on federal question jurisdiction. MetLife then moved to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). MetLife argued that the state law claims were preempted by ERISA and should therefore be dismissed. The court agreed. As a preliminary matter, the court established that the AD&D policy was an employee welfare benefit plan governed by ERISA. Mr. Tousignant, the court next held, was a participant of the plan and therefore able to bring a claim under Section 502(a) of ERISA. Mr. Tousignant’s state law causes of action were also determined to fall within the scope of ERISA because they concern his rights to recover benefits under the terms of the plan. Finally, the court understood Mr. Tousignant’s fraud claims to necessarily require interpreting the terms of the plan to determine the truthfulness of the alleged actions. Accordingly, the court found that Mr. Tousignant’s claims were entirely preempted and granted the motion to dismiss. The complaint was dismissed without prejudice though, leaving open the possibility that Mr. Tousignant may replead his complaint as an ERISA fiduciary breach case. 

Plan Status

Eighth Circuit

Clark v. Unum Grp., No. 4:20-CV-04013-KES, 2022 WL 2355457 (D.S.D. Jun. 30, 2022) (Judge Karen E. Schreier). Plaintiff Edward Clark sued Unum Group and The Paul Revere Life Insurance Company after he was unable to settle his claim for benefits under his long-term disability policy. Mr. Clark asserted claims of bad faith, aiding and abetting bad faith, breach of contract, and interference with contract, as well as ERISA claims pled in the alternative. Defendants moved for summary judgment on the state law claims, arguing that they were preempted by ERISA. The court held an evidentiary hearing to resolve the factual disputes regarding the application of ERISA in the case and whether the policy at issue falls under ERISA’s safe-harbor provision. In this order, the court concluded that the disability policy at issue indeed satisfies the safe-harbor requirements. Defendants did not dispute that participation in the program was completely voluntary, nor that the employer received no consideration in the form of cash in connection with the program. Instead, defendants sought to prove that contributions were made by the employer, that features included in the policy were negotiated by the employer, and that the employer’s involvement in establishing the plan exceeded the “sole function” prong of the safe harbor. First, the court held that convincing evidence demonstrated that Mr. Clark paid the premiums on his policy. Next, the court was satisfied that no feature included in Mr. Clark’s policy was negotiated by his employer but was included instead because Mr. Clark was part of an employer group, which is expressly permitted under the safe-harbor provision. Finally, the court stated that the employer did not exceed the “sole function” requirement, because the employer’s actions with respect to the policy were simply ministerial tasks. Therefore, the court held that defendants “failed to carry their burden” and concluded that the plan falls within the safe-harbor provision. Accordingly, Mr. Clark’s alternative ERISA claims were dismissed, and his case will proceed under the surviving state law claims.  

Pleading Issues & Procedure

Fifth Circuit

Cervantes v. 3NT LLC, No. EP-19-CV-00383-DCG, 2022 WL 2339469 (W.D. Tex. Jun. 29, 2022) (Judge David C. Guaderrama). In this order, the court accepted and adopted the Report and Recommendation of Magistrate Judge Castañeda that Your ERISA Watch summarized in May, rejected both parties’ objections to the report, denied defendant 3NT’s motion for summary judgment on plaintiff Brenda Isabel Cervantes’s retaliation and benefit claims, and granted the motion with respect to Ms. Cervantes’s fiduciary duty and estoppel claims. The court agreed with the Magistrate that a jury could find in Ms. Cervantes’s favor with regard to her claim that her employer attempted to interfere with her attempt to attain disability and medical benefits by not allowing her to complete the required forms. The court also agreed that Ms. Cervantes may have a valid claim for benefits and determined that a reasonable jury could conclude that 3NT abused its discretion by interpreting the plan’s requirement that claims be submitted in writing to exclude text messages. Therefore, genuine issues of material fact precluded the court from granting 3NT’s summary judgment motion on these two claims. However, the court, in agreement with the Magistrate, held that Ms. Cervantes’s Section 502(a)(3) claim was duplicative of her claim for benefits, and granted defendant summary judgment for this cause of action. Finally, the court saw no evidence of “bad faith, fraud, concealment or that Cervantes repeatedly and diligently inquired about benefits only to be misled,” and therefore granted summary judgment in favor of 3NT as to Ms. Cervantes’s ERISA estoppel claim. 

Cervantes v. 3NT LLC, No. EP-19-CV-00383-DCG, 2022 WL 2376394 (W.D. Tex. Jun. 30, 2022) (Judge David C. Guaderrama). This is the second order in the Cervantes case this week (see above for the court’s ruling adopting the Magistrate’s report). In this brief decision, the court granted defendant 3NT, LLC’s motion to strike Ms. Cervantes’s jury demand, as there is no right to a jury trial on ERISA claims. The court was not swayed by Ms. Cervantes’s Seventh Amendment argument, writing that the “right to a jury trial in civil suits is not universal.” 

Sixth Circuit

BlueCross Blue Shield of Tenn. Inc. v. Nicolopoulos, No. 1:21-CV-271, 2022 WL 2379732 (E.D. Tenn. Jun. 30, 2022) (Judge J. Ronnie Greer). Plaintiff BlueCross BlueShield of Tennessee, Inc. (“Blue Cross”) provides ERISA-governed group health plans and is headquartered in Tennessee. As relevant here, Blue Cross provides insurance for the employees of a company also headquartered in Tennessee through a plan which excludes fertility treatment. An employee of the company, who lives in New Hampshire, filed a claim for medically necessary fertility treatments, which was denied by Blue Cross. This denial led to a complaint to the New Hampshire Insurance Department. In New Hampshire, insurance providers must provide coverage for medically necessary fertility treatments. The New Hampshire Insurance Department summoned Blue Cross for a hearing, alleging that Blue Cross had violated three state laws by denying the participant’s claim for medically necessary fertility treatment. The Insurance Department stated that Blue Cross could be fined or prohibited from offering insurance in New Hampshire for its actions. Before that hearing took place, Blue Cross filed this lawsuit against the commissioner of the New Hampshire Insurance Department asserting claims under ERISA Sections 502(a)(3), 502, and 514 for interfering with plan terms, ERISA compliance, and federal common law. Blue Cross seeks relief in the form of a permanent injunction prohibiting the commissioner from interfering with its plan as well as a declaratory judgment declaring that it is not required to appear in New Hampshire for the adjudicatory proceeding. Defendant filed a motion to dismiss for lack of subject matter and personal jurisdictions. Although the court stated that the commissioner may ultimately prevail on the merits of the case, it stated that “Defendant is incorrect to say that its victory is so assured that the Court lacks jurisdiction. If the Court were to rule in favor of Defendant on this motion, the Court would be deciding the merits of the case.” According to the court, the commissioner was mistakenly conflating jurisdiction with merits. The court thus denied the motion to dismiss, holding that it has jurisdiction to hear this ERISA suit. 

Comau LLC v. Blue Cross Blue Shield of Mich., No. 19-12623, 2022 WL 2373352 (E.D. Mich. Jun. 30, 2022) (Judge Bernard A. Friedman). Plaintiff Comau LLC filed this ERISA case alleging Blue Cross Blue Shield of Michigan breached its fiduciary duties by mismanaging the plan assets of the plan that it sponsored for Comau, and by overpaying healthcare claims. Comau has now moved for leave to file a second amended complaint. In addition, Blue Cross moved to seal exhibits and moved for a protective order, and plaintiff moved to compel. First, the court addressed the motion for leave to file the second amended complaint. The amended complaint included new information about the original claims, and also included a new claim about Blue Cross’s Shared Savings Program “under which BCBSM retains 30% of amounts recovered from overpaid healthcare claims,” which Comau only discovered late last year during discovery. As to the addition of the new claim, the court agreed that Comau was unaware of “the facts necessary to state a viable claim when they filed the original complaint.” The court, therefore, found no undue delay. It was also reasonable, the court held, for Comau to wait to move for leave to amend until after the court had determined the scope of the first amended complaint. Additionally, the court stated that Blue Cross cannot be surprised to see the claims within the proposed second amended complaint and was therefore on notice and not prejudiced. Finally, the court concluded that Comau did not act in bad faith or with a bad motive, especially as this is the first attempt to amend. Given all this, the court granted the motion for leave to amend. Next, the court turned to Blue Cross’s motion to seal exhibits. The court granted the motion, which sought only to seal three sentences containing information Blue Cross regarded as confidential because it could be used by “bad actors to perpetrate fraud, waste, and abuse.” The decision concluded with the court granting Comau’s motion to depose Blue Cross employees and former employees and compelling responses to interrogations and requests for documents and denying as moot Blue Cross’s motion for a protective order. 

Ninth Circuit

Raya v. Barka, No. 19-cv-2295-WQH-AHG, 2022 WL 2373344 (S.D. Cal. Jun. 30, 2022) (Judge William Q. Hayes). Last March, the court issued an order adjudicating all pending motions in this case and concluded that plaintiff Robert Raya was not eligible to participate in the pension plan at any time based on the existence of an amendment executed in 2008, concurrently with the pension plan’s adoption agreement, which excluded Mr. Raya from the class of eligible employees. The court, therefore, concluded that Mr. Raya lacked standing to bring a claim under or on behalf of the pension plan. Accordingly, the court granted summary judgment in favor of defendants on all of Mr. Raya’s ERISA claims relating to the pension plan. Mr. Raya has moved for partial reconsideration on all of his ERISA claims, requesting that the court consider documents which Mr. Raya asserted prove that the 2008 amendment was not authentic or that it was backdated. The court denied Mr. Raya’s motion for reconsideration. The court stated that Mr. Raya failed to demonstrate that any of the evidence in support of his motion was newly discovered or unknown to him earlier on during litigation. Furthermore, the court expressed that the documents also failed on the merits to create a genuine dispute as to the authenticity of the 2008 amendment or the date when it went into effect.