Kay v. Hartford Life & Accident Ins. Co., No. 21-55463, __ F. App’x __, 2022 WL 4363444 (9th Cir. Sept. 21, 2022) (Before Circuit Judges Paez and Watford, and District Judge Richard D. Bennett (D. Md.))

One key feature of long-term disability benefit plans that employees often don’t know is that plans typically don’t insure you from being unable to perform the duties of your specific job – they insure you from being unable to perform the duties of your occupation as it generally performed. Usually, this distinction between a “job” and an “occupation” is inconsequential, but LTD plan administrators can sometimes use it to their advantage to deny claims. In this case, the Ninth Circuit tackled this distinction and ruled that the plan insurer, Hartford Life & Accident Insurance Company, went too far in choosing an appropriate “occupation.”

Plaintiff Anne Kay was a clinical specialist for Candela Corporation, a cosmetic dermatology company. Her job was physically demanding; she “was required to travel up to 80% of the time, to work over 40 hours per week, and to move equipment that weighed upwards of 270 pounds.” Unfortunately, she was forced to stop working in August 2015 due to escalating back pain.

She submitted a claim for benefits under Candela’s LTD employee benefit plan, which was insured by Hartford. Hartford initially approved Kay’s claim, but it terminated her benefits in July 2016, claiming that she was no longer disabled from performing the duties of her job. Kay appealed that decision, and Hartford upheld it. However, Hartford did so under a new rationale – it concluded that “the travel and lift requirements imposed by Candela were not essential to her occupation in the ‘general workplace,’ functionally redefining her occupation for the first time.”

In doing so, Hartford relied on two new pieces of evidence that it had not previously shared with Kay: “(1) a new occupational report defining the essential duties of Kay’s role as a hybrid of two definitions from the Department of Labor’s Dictionary of Occupational Titles (‘DOT’); and (2) a medical report from an independent physician concluding that Kay was not disabled from performing these duties.” In other words, Hartford did not decide whether Kay could perform the duties of her job with Candela, it decided whether she could perform the duties of a hybrid occupation it devised by consulting the DOT, and then asked a doctor whether Kay could perform those duties.

Having exhausted her appeals with Hartford, Kay filed suit under ERISA. She attempted to augment the record by moving to introduce evidence refuting Hartford’s recharacterization of her job, but the district court denied Kay’s motion. The district court then conducted a bench trial, after which it granted judgment to Hartford, concluding that Kay had not met her burden of proving disability.

Kay appealed to the Ninth Circuit, which reversed in this memorandum disposition. First, the Ninth Circuit concluded that “the district court abused its discretion by denying Kay’s motion to augment the record.” Although evidence from outside the record is typically only allowed “when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision,” the court ruled that Kay met this standard. The court noted that ERISA guarantees claimants “a full and fair review” on appeal, and that guarantee is violated “[w]hen an administrator tacks on a new reason for denying benefits in a final decision, thereby precluding the plan participant from responding to that rationale for denial at the administrative level.”

The Ninth Circuit found that Hartford had offered a “new rationale” for denying Kay’s claim in its appeal denial because it “concluded that the travel and lift requirements imposed by Candela were not essential to her occupation in the ‘general workplace,’ functionally redefining her occupation for the first time.” The evidence Hartford used to arrive at this new decision “was not available to Kay prior to the denial of her appeal” and thus Kay should have been allowed to rebut it. The Ninth Circuit criticized the district court’s order to the contrary because, by denying Kay’s motion to augment the record, “the district court effectively insulated the insurer’s decision from ‘full and fair review.’”

The Ninth Circuit was not done, however. The court further found that “both the insurer and the district court erred by defining Kay’s position to omit the 80% travel and 270-pound lifting requirements that formed the gravamen of her disability claim.” The court conceded that the DOT is “an appropriate source for an employee’s occupational duties.” However, while a claim administrator may be allowed to “extrapolate definitions from the DOT,” it cannot choose whatever definitions it likes.

Instead, “a proper administrative review requires [the insurer] to analyze, in a reasoned and deliberative fashion, what the claimant actually does before it determines what the [essential duties] of a claimant’s occupation are.” The court found that Hartford had failed in this respect because it did not “select DOT titles that approximated her actual responsibilities with Candela, including her position’s extensive travel and lifting requirements.” The district court compounded this error by adopting Hartford’s redefinition of Kay’s job, and as a result the Ninth Circuit reversed and remanded for further review.

This decision, while brief and unpublished, should make LTD claim administrators more cautious in interpreting plans that insure an employee’s inability to perform the duties of his or her “occupation.” While administrators do have some leeway in interpreting such provisions, the Ninth Circuit has made it clear here that they cannot stray too far from the employee’s actual job duties in determining what an “occupation” is for the purposes of determining disability.

Ms. Kay was represented by Kantor & Kantor attorneys Glenn Kantor, Sally Mermelstein, and Anna Martin.

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


Sixth Circuit

Best v. James, No. 3:20-cv-299-RGJ, 2022 WL 4389707 (W.D. Ky. Sep. 22, 2022) (Judge Rebecca Grady Jennings). Participants of the ISCO Employee Stock Ownership Plan (ESOP) commenced this putative class action alleging defendants breached their fiduciary duties and engaged in a prohibited transaction. Defendant ISCO Industries, Inc., along with its president and CEO, moved to dismiss the class action in favor of arbitration. Their motion was granted in this order. Defendants argued that plaintiffs’ claims are subject to mandatory arbitration agreements that they each signed. Plaintiffs argued that these agreements are not applicable because their claims “do not arise out of or relate to their employment.” To begin, the court found there to be no dispute that the employment arbitration agreements were valid, and the parties were the signatories. What was contested though was the validity of the ESOP’s arbitration amendment containing an arbitration clause and class action waiver. The plaintiffs argued that they never consented to this agreement and therefore should not be bound by it. The court concluded, “while Plaintiffs argue the ESOP Agreement is unsupported by consideration, ‘Kentucky precedent holds that continued employment is sufficient consideration to support an arbitration agreement.’” However, the court noted that defendants failed to submit proof that plaintiffs were on notice of the ESOP arbitration agreement or the fact that they were bound by its terms. Therefore, the court found the arbitration agreement in the ESOP was not valid and continued its analysis with respect to the valid arbitration agreements in the plaintiffs’ employment contracts. In the end, the court concluded that plaintiffs’ claims fell within the scope of the arbitration provisions of their signed employment agreements, which applied to ERISA claims. The court held that plaintiffs must therefore engage in arbitration. Finally, the court opted to dismiss the action without prejudice rather than stay the proceedings, finding that staying the action would “serve no meaningful purpose.”

Eleventh Circuit

Nalco Co. v. Bonday, No. 2:21-cv-727-JLB-NPM, 2022 WL 4384450 (M.D. Fla. Sep. 22, 2022) (Judge John L. Badalamenti). Defendant Laurence Bonday lost his job at the Nalco Company during Nalco’s downsize. Mr. Bonday requested severance under a severance policy agreement he had with his employer, which Nalco denied. Mr. Bonday then filed a demand for arbitration. During the arbitration proceedings Mr. Bonday sought severance pay. Nalco, however, maintained that Mr. Bonday’s demand for severance payment was non-arbitrable under the parties’ arbitration agreement and declined to participate in the proceedings. The arbitrator, relying on the fact that Mr. Bonday appeared pro se during the proceedings, construed Mr. Bonday’s demand for severance pay as a Section 510 ERISA retaliation claim, and awarded Mr. Bonday $129,465.50 in equitable relief for the retaliation violation, plus costs and fees. In this lawsuit the Nalco Company sought a declaration that Mr. Bonday’s demand was not arbitrable, that the arbitrator overstepped by finding a Section 510 claim implicitly present in Mr. Bonday’s arbitration demand, and moved for the court to accordingly vacate the arbitration award. The court here agreed with Nalco. Because the arbitration agreement between the parties expressly carved out claims relating to employee benefits, the court held the arbitrator had “exceeded her authority by deciding a nonarbitrable issue.” Therefore, the court stated that the issue of severance was for the court to decide and not the arbitrator and accordingly granted Nalco’s motion, vacating the arbitration award.

Attorneys’ Fees

Second Circuit

Curiale v. Hartford Life & Accident Ins. Co., No. 2:21-cv-54, 2022 WL 4364072 (D. Vt. Sep. 21, 2022) (Judge William K. Sessions, III). On June 8, 2022, plaintiff Anthony Curiale won his long-term disability benefit suit against Hartford Life & Accident Insurance Company. Following that win, Mr. Curiale moved for entry of judgment and an award of attorney’s fees, costs, and interest. In this order, the court granted in part and denied in part Mr. Curiale’s motion. Mr. Curiale “requested judgment in the amount of $66,312 for past benefits, $16,667.50 for attorney’s fees, and $1,052 in costs,” to which Hartford had no objection. Accordingly, the court granted this part of Mr. Curiale’s motion without hesitation. Hartford did however contest Mr. Curiale’s arguments for enhanced attorney’s fees, the terms for terminating future benefits – i.e., that benefits could only be terminated going forward upon a showing by Hartford that Mr. Curiale’s condition has changed – and the rate of prejudgment interest. Additionally, Mr. Curiale himself challenged the fee agreement with his counsel under which his attorney was to be provided with a fee equal to one-third of all recovered benefits, both past and future. The order focused on these disputed issues. To begin, the court stated that it was “reluctant to rule on the enforceability of a private contingency fee agreement,” without argument or evidence submitted by Mr. Curiale on this issue, but the court did express that, in its view, the contingency fee agreement seemed reasonable and standard. Accordingly, the court did not formally decide this issue. Next, the court agreed with Hartford that there was no basis for an enhanced award of attorney’s fees as Hartford has already agreed to pay Mr. Curiale’s counsel’s fees based upon his normal hourly rate and his time spent on litigation. Regarding the terms for awarding future benefits, the court “agreed with Hartford that the policy must dictate the entitlement to any future benefits.” Finally, the court addressed the appropriate interest rate to be applied. Mr. Curiale asked the court to apply the federal prime rate of 5.5%. Hartford requested the court apply the federal prejudgment interest rate of 2.14%. Emphasizing that “prejudgment interest is meant to compensate for the loss of use of funds,” the court awarded the prime rate of 5.5%.

Sixth Circuit

Fitch v. Am. Elec. Power Sys. Comprehensive Med. Plan, No. 21-cv-576, 2022 WL 4376230 (S.D. Ohio Sep. 22, 2022) (Judge Edmund A. Sargus, Jr.). John and Glori Fitch are the parents of Jack Fitch, who died tragically from a car crash in 2019. Following Jack’s death, the Fitches were awarded wrongful death proceeds in probate court. Anthem Blue Cross Blue Shield and the American Electric Power Service Corporation Medical Plan attempted to receive reimbursement of medical expenses it paid immediately after the car accident, before Jack died, from the settlement proceeds the Fitches received from the responsible third party. The parties were engaged in two cases over this dispute: Fitch v. Am. Elec. Power Sys. Comprehensive Med. Plan No. 21-cv-576 (“Fitch I”), and Am. Elec. Power Serv. Corp. v. Fitch No. 21-cv-682 (“Fitch II”). In the end, because the settlement proceeds had been awarded as wrongful death funds to the Fitches in probate court, the federal district court concluded that the probate exception to federal jurisdiction deprived it of subject-matter jurisdiction over both Fitch cases. That decision was upheld by the Sixth Circuit. The Fitches then moved for an award of attorney’s fees. In this order, the court denied their motion. To begin, the court declined awarding fees under Section 1447(c) pertaining to defendant’s removal of Fitch I to federal court, because the court felt American Electric Power’s basis for removal was not objectively unreasonable or meritless. Next, the court addressed plaintiffs’ fee motion brought under Section 1132(g) for their success on the ERISA suit, Fitch II. On balance, the court felt a fee award was not appropriate under the King factors because the case was limited in scope, presented unique circumstances, was not brought in bad faith, and the ultimate dismissal only constituted a small degree of success on the merits. The Fitches thus were not awarded any attorneys’ fees and their motion was denied.

Morgan v. Hitachi Vantara Corp., No. 2:19-cv-2982, 2022 WL 4395675 (S.D. Ohio Sep. 23, 2022) (Magistrate Judge Chelsey M. Vascura). Plaintiff Gerald Morgan filed this lawsuit claiming that his long-term disability benefits had been incorrectly calculated. Last year, on September 24, 2021, the court granted defendant Liberty Life Assurance Company of Boston’s motion for summary judgment. Liberty then moved for an award of attorney’s fees in the amount of $11,948.18 under Section 1132(g)(1). The court denied Liberty’s motion. Liberty’s two main arguments in favor of an award of attorney’s fees were that it ultimately prevailed in the action and an award against Mr. Morgan “would deter cluttering court dockets with ERISA claims that are unmeritorious on their face.” Given ERISA’s guiding purpose to protect “the interests of participants in employee benefits plans and their beneficiaries,” the court was not willing to punish Mr. Morgan for “seeking to exercise his ERISA rights in good faith.” Thus, the court viewed an award of attorney’s fees to Liberty to be inappropriate and declined to do so.

Breach of Fiduciary Duty

Third Circuit

Walsh v. Great Alt. Graphics, Inc., No. 21-3280, 2022 WL 4331205 (E.D. Pa. Sep. 19, 2022) (Judge Berle M. Schiller). Secretary of Labor, Martin J. Walsh, brought suit against Great Atlantic Graphics, Inc., the company’s owner, another individual fiduciary, and Great Atlantic Graphic’s health and 401(k) plans for breaches of fiduciary duties and prohibited transactions. The lawsuit was brought in connection with defendants’ administration of the plans after the company entered bankruptcy in 2018. At that time participants did not receive the retirement distributions they were entitled to and the contributions that were withheld from their paychecks for healthcare coverage were not forwarded to the company that had been contracted to administer their health-insurance coverage going forward. Defendants have been markedly absent throughout litigation. They waived service and have since failed to appear in the action or respond to the complaint. The court previously granted entry of default against defendants. Subsequently, Secretary Walsh moved for a default judgment against all defendants seeking imposition of over $300,000 surcharge to compensate participants for their medical expenses resulting from defendants’ actions, authority to appoint independent fiduciaries to manage the plans, and order compelling defendants cooperate with the independent fiduciaries, removal of defendants as fiduciaries, and an order barring them from serving as fiduciaries in the future. The court granted the Secretary’s motion, concluding that plaintiff would be prejudiced if default was denied, and defendants’ delay was due to culpable conduct. “Based on the uncontested allegations…. (defendants) failed to fulfill their fiduciary duties and ‘used Plan assets for their own benefit.” The court was satisfied that there was actual harm caused by defendants’ behaviors warranting imposing the requested surcharge. Finally, as the fiduciaries undoubtably breached their duties, the court removed them from their positions, and granted Secretary Walsh the authority to appoint independent fiduciaries in their places.

Fourth Circuit

Garnick v. Wake Forest Univ. Baptist Med. Ctr., No. 1:21CV454, 2022 WL 4368188 (M.D.N.C. Sep. 21, 2022) (Judge William Lindsay Osteen Jr.). Participants of the Wake Forest University Baptist Medical Center defined contribution retirement plan have brought a breach of fiduciary duty class action lawsuit against Wake Forest, the plan’s board, and the plan’s committee for causing the plan to pay excessive investment management expenses, excessively high recordkeeping fees, and exceeding the medium total plan costs for “jumbo” plans worth over one billion. Plaintiffs asserted two claims: a breach of fiduciary duty of prudence claim and a derivative failure to monitor claim. Defendants moved to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (b)(6). To begin, the court found defendants’ arguments in favor of dismissal for lack of subject matter jurisdiction to be “intertwined with the facts central to the merits of the dispute,” and therefore concluded dismissal under Rule 12(b)(1) would be inappropriate. Additionally, the court was satisfied that plaintiffs’ complaint plausibly alleged that defendants were paying too much in costs and fees compared to other plans of similar sizes, and that they therefore adequately stated a claim for breach of fiduciary duty of imprudence. Finally, as their failure to monitor claim naturally depends on an adequately pled underlying breach of fiduciary duty claim, because the court denied the motion to dismiss the imprudence claim it also allowed plaintiffs’ monitoring claim to proceed. Accordingly, the motion to dismiss was denied.

Disability Benefit Claims

Third Circuit

Mullins v. The Consol Energy, Inc., No. 2:20-cv-1883-NR, 2022 WL 4290835 (W.D. Pa. Sep. 16, 2022) (Judge J. Nicholas Ranjan). The court in this order ruled on competing summary judgment motions in an ERISA disability benefits dispute. Concluding that the decision by defendant The Consol Energy, Inc. to terminate plaintiff Timothy Mullins’s benefits was supported by substantial objective evidence in the medical record, the court granted judgment in its favor. Specifically, the court concluded that Lincoln’s peer reviewing physicians’ findings were “not fundamentally at odds with Mr. Mullins’s treating physicians’ assessments,” because Mr. Mullins’s doctors never opined on whether Mr. Mullins could perform any sedentary work for which he was qualified, and Lincoln’s doctors did not dispute that Mr. Mullins has certain physical limitations because of his unspecified “degenerative condition.” Furthermore, defendant’s failure to perform an independent medical examination on Mr. Mullins did not, the court concluded, render its decision arbitrary and capricious. Finally, the court was satisfied that Lincoln’s vocational determination that Mr. Mullins could perform certain sedentary work based on his skills, training, and work experience was also supported by the record. For these reasons, the court held that The Consol Energy, Inc. did not abuse its discretion and affirmed the decision to terminate Mr. Mullins’s benefits.

Fourth Circuit

Krysztofiak v. Bos. Mut. Life Ins. Co., No. DKC 19-879, 2022 WL 4290576 (D. Md. Sep. 16, 2022) (Judge Deborah K. Chasanow). In 2016, plaintiff Dana Krysztofiak submitted a claim for disability benefits under her ERISA-governed group long-term disability policy issued by defendant Boston Mutual Life Insurance Company after her fibromyalgia left her unable to continue working. Boston Mutual awarded Ms. Krysztofiak benefits and paid the benefits for one year. After that time, Boston Mutual terminated the benefits concluding that Ms. Krysztofiak could return to her regular occupation. Ms. Krysztofiak commenced this action challenging the decision, and the court determined that she was entitled to benefits under that “regular occupation” definition of disability. As to whether Ms. Krysztofiak was entitled to continued benefits under the “any occupation” definition of disability, the court remanded the case to Boston Mutual’s claim administrator, Disability Reinsurance Management Services, for a review to determine Ms. Krysztofiak’s eligibility for continued benefits. However, the administrative appeal was never decided, and Ms. Krysztofiak moved to reopen her case at the district court. The court did so. Then, in the case’s most important twist, Boston Mutual amended its policy to include a “Special Conditions Limitation Rider” which limits disability benefits for conditions including fibromyalgia to 24-months. This provision was of course not present in the policy either when Ms. Krysztofiak originally submitted her claim for benefits in 2016, nor when the court remanded the case in June 2020. Nevertheless, Boston Mutual argued that the policy was always supposed to have such a limitation for special conditions, and that it should therefore be allowed to apply it going forward on Ms. Krysztofiak’s claim. The court agreed. The court rejected Ms. Krysztofiak’s argument that the plan document rule requires the plan to be “enforced in accordance with the terms then in existence when she became disabled.” To the contrary, the court agreed with Boston Mutual that it had the power to amend the policy to change its terms even after Ms. Krysztofiak began receiving disability benefits because “disability benefits are not contingent upon a singular event, but upon the continued existence of a disability.” Accordingly, the court held as a matter of law “an interest in disability benefits does not vest upon the occurrence of a disability.” Thus, the court concluded the appropriate course of action here was to remand the case once again to defendant for a full and fair review of the application of the new rider and granted summary judgment to Boston Mutual on the parties’ dispute regarding the legality of the amendment.

Holder v. Metro Life Ins. Co., No. C. A. 6:21-CV-00490-DCC, 2022 WL 4354406 (D.S.C. Sep. 20, 2022) (Judge Donald c. Coggins, Jr.). Plaintiff Traci Holder filed a long-term disability benefits action in 2021 seeking judicial review of MetLife’s decision denying her long-term disability coverage after the insurer concluded that Ms. Holder had never enrolled in the plan because it had denied her submitted Statement of Health forms based on her past medical history. In her complaint, Ms. Holder did not dispute that she had never paid premiums for long-term disability insurance coverage, nor did she dispute that she never filed a claim for benefits under the terms of the plan. Instead, Ms. Holder argued that she was unable to file such a claim because MetLife took that position that she was not covered under the plan in the first place. Nevertheless, Ms. Holder asserted that she had received a coverage approval letter for the long-term disability plan in 2018, and therefore understood that she was enrolled in the plan. Thus, to resolve the parties’ disagreement, the court focused in on the gravamen of the dispute “whether Holder was enrolled in the Plan, and therefore, eligible to apply for and receive LTD benefits under (it).” Ms. Holder argued that MetLife should be bound by the coverage determination it made when it sent her the approval letter in 2018, and thus required by the court to process her claim for disability benefits on the merits. Met Life countered that Ms. Holder was never enrolled in the plan because it never approved her Statement of Health forms, and she never made a contribution for coverage. Under abuse of discretion review, the court agreed with MetLife finding that the evidence clearly established that Ms. Holder had failed to meet these conditions required under the plan for the policy to go into effect, regardless of validity of the contested 2018 approval of coverage letter. Consequently, the court found MetLife’s decision reasonable and principled, and therefore affirmed it.

Sixth Circuit

Avery v. Sedgwick Claims Mgmt. Servs., No. 20-11810, 2022 WL 4365707 (E.D. Mich. Sep. 21, 2022) (Judge Robert H. Cleland). Plaintiff Jacqueline Avery sued under Section 502(a)(1)(B) after her long-term disability benefits were terminated by defendant Sedgwick Claims Management Services. Parties each moved for summary judgment. The court began its decision by deciding the appropriate standard of review. Upon review of the plan, the court was satisfied that Sedgwick was delegated with discretionary authority. Satisfied that there were no procedural violations requiring de novo review, the court conducted its review of the denial under the deferential arbitrary and capricious review standard. Under this standard, the court felt that Ms. Avery failed to meet her burden of establishing her right to benefits under the plan. First, although the court agreed with Ms. Avery that Sedgwick ought to have explained in its denial letters why it disagreed with the Social Security Administration’s position finding Ms. Avery disabled, the court stated that this shortcoming alone was “not enough to tip the scale in Plaintiff’s favor.” Next, the court disagreed with Ms. Avery’s position that Sedgwick had ignored medical information submitted by her treating doctors and instead unfairly relied on its hired physician’s conclusions. To the contrary, the court stated that Sedgwick’s doctors accepted as true all of the medical evidence within the record, including Ms. Avery’s own opinions, and diverged from the position of her treating doctors only insofar as they found her capable of returning to work. Finally, the court took no issue with Sedgwick’s silence regarding Ms. Avery’s comments challenging the accuracy of the independent medical examination. Sedgwick, the court held, was under no “obligation to specifically elaborate (on) what it thought of Plaintiff’s remarks.” Based on this assessment, the court found no abuse of discretion and accordingly granted summary judgment in favor of Sedgwick.

Ninth Circuit

McGuire v. Life Ins. Co. of N. Am., No. SACV 20-01901-CJC (JDEx), 2022 WL 4368140 (C.D. Cal. Sep. 21, 2022) (Judge Cormac J. Carney). In December of 2005, Plaintiff Brenda McGuire had an accidental fall that left her with “intense chronic pain” in her neck and back. Ms. McGuire would continue working for another eleven years. However, by April 2017, Ms. McGuire could no longer keep things up as her said as her pain had only worsened throughout the years. By 2017 her pain was debilitating, and Ms. McGuire needed to stop working. Doctors at the time diagnosed her with cervical radiculopathy and other spinal issues. Her diagnostic x-rays and MRIs demonstrated significant abnormalities. Ms. McGuire went on worker’s compensation for two years, and after it ended, she submitted a claim for long-term disability benefits under her plan administered by Life Insurance Company of North America (“LINA”). LINA hired a doctor certified in occupational medicine to conduct a review on the papers of Ms. McGuire’s claim. LINA’s physician concluded that Ms. McGuire was not disabled. Ms. McGuire appealed the denial, and LINA hired a second occupational medicine doctor to review the appeal. The second doctor disagreed with some of the conclusions of the first but ultimately reached the same result, finding Ms. McGuire not disabled. Accordingly, Ms. McGuire commenced this lawsuit. Parties each moved for summary judgment under abuse of discretion review. In this decision the court explained why it found LINA’s denial unreasonable and an abuse of discretion. To begin, the court found LINA’s hired doctors were not specialists in the appropriate field or fields of medicine to review Ms. McGuire’s condition. Rather than doctors certified in occupational medicine, the court found that LINA should have hired neurologists, orthopedists, and pain specialists, like Ms. McGuire’s own treating physicians. Furthermore, the court stressed that LINA’s review conducted purely on the records rather than by in-person examinations additionally undermined the reliability of its doctors’ conclusions. “Also telling is that LINA’s ‘reasons for denial were shifting and inconsistent,” said the court. Ultimately, in the eyes of the court, LINA’s justifications for denial were found to be “replete with half-truths” and even “borderline illogical.” Thus, the court entered judgment in favor of Ms. McGuire and awarded long-term disability benefits under the “regular occupation” period of her policy. However, the court chose to remand to LINA to decide Ms. McGuire’s eligibility for continued benefits under the “any occupation” period.

ERISA Preemption

Fifth Circuit

ERLC, LLC v. Blue Cross Blue Shield of Tex., No. 3:22-cv-6, 2022 WL 4348471 (S.D. Tex. Sep. 19, 2022) (Judge Jeffrey Vincent Brown). Plaintiff ERLC, LLC is an emergency medical service provided. In 2020, ERLC provided emergency care to a patient, Mr. Guzman, insured by Blue Cross Blue Shield of Texas. ERLC billed Blue Cross over $90,000 for this care. Blue Cross however only paid $466.50. Following an unsuccessful meditation process to recover the remaining amount owed, ERLC sued both Blue Cross and Mr. Guzman in state court for breach of contract, breach of implied contract, and violations of the Texas Insurance Code. Blue Cross removed the case to the federal court alleging ERISA preemption, and in the alternative, diversity jurisdiction. ERLC moved to remand, which the court granted. The court concluded that joinder of Mr. Guzman as an individual was not improper and therefore held complete diversity among the parties did not exist. Additionally, the court decided that it was without subject-matter jurisdiction. The court stated that both prongs of the Davila ERISA preemption test were unsatisfied as ERLC did not have standing to sue under Section 502(a)(1)(B), and an independent legal duty was implicated by Blue Cross’s underpayment. Thus, the court held this “rate of payment” action did not implicate ERISA and remanded the matter back to state court.

Eleventh Circuit

Posey v. Sedgwick Claims Mgmt. Servs., No. 1:22-cv-01496-SDG, 2022 WL 4361742 (N.D. Ga. Sep. 19, 2022) (Judge Steven D. Grimberg). Plaintiff Jordan Michael Posey is a former police officer who sought legal defense costs from The Fraternal Order of Police Legal Plan, Inc., an employee benefit plan that provides legal defense costs for police officers charged with crimes while on duty. Mr. Posey requested these benefits to cover his legal costs related to a criminal “incident that occurred while he was employed as a law enforcement officer.” Further details regarding the criminal case against Mr. Posey were not provided in the order. Instead, the brief decision granted defendant Sedgwick Claims Management Services’ motion to dismiss Mr. Posey’s breach of contract lawsuit as preempted by ERISA. Concluding the Legal Plan, which was established by the Fraternal Order of Police, did not “meet any of the criteria for exemption under Section 1003(b)” as a governmental plan, the court held that the plan was governed by ERISA. Furthermore, the court expressed that “well-settled law” in the Eleventh Circuit holds that breach of contract claims aiming to recover benefits under ERISA-governed plans are preempted. As Mr. Posey did not pursue claims under ERISA, the court granted the motion to dismiss, but did so without prejudice.

Medical Benefit Claims

Eleventh Circuit

Howard v. Ivy Creek of Tallapoosa, LLC, No. 3:20-cv-00213-RAH-SMD, 2022 WL 4390431 (M.D. Ala. Sep. 22, 2022) (Judge R. Austin Huffaker, Jr.). Plaintiff Pamela Howard was terminated by her employer Ivy Creek of Tallapoosa, LLC after she suffered a brain aneurysm and had exhausted her medical leave. Ms. Howard needed continued healthcare, but her employer failed provide to the third-party plan administrator responsible for issuing Ms. Howard’s COBRA notice with her current address. Accordingly, the COBRA notice was sent to an old address, and Ms. Howard was left without health insurance coverage. Thus, seeking payment of her outstanding medical bills, and equitable relief including the payment of her health insurance premiums, interest, and attorneys’ fees, Ms. Howard commenced this action against Ivy Creek and UMR under Sections 502(a)(1)(B), (a)(3), (3) and 1161 of ERISA, as well as a claim against Ivy Creek for failing to provide her with plan documents upon request. Ms. Howard and Ivy Creek filed cross motions for summary judgment. UMR moved for judgment on the pleadings. The court granted UMR’s motion because UMR had issued the proper notice to the last known address it was provided. The court stated that it was Ivy Creek’s actions, not UMR’s, that lead to the harm at issue and that “UMR does not have a dog in the fight, and therefore cannot be held liable for statutory penalties associated with a failing in issuing that notice to the correct address.” However, the court felt there were genuine issues of material fact precluding awarding summary judgment to either Ms. Howard or Ivy Creek on the claims against Ivy Creek, and that it was therefore appropriate to leave resolution of those claims to the factfinder post trial. Accordingly, their motions were each denied.

Pension Benefit Claims

Second Circuit

Aracich v. The Bd. of Trs. of the Emp. Benefit Funds of Heat & Frost Insulators Local 12, No. 21 CIVIL 9622 (VB), 2022 WL 4357966 (S.D.N.Y. Sep. 20, 2022) (Judge Vincent L. Briccetti). On February 26, 2021, plaintiff Matthew Aracich announced his retirement from the Heat & Frost Insulators Local 12 Union. At that time, Mr. Aracich had over 30 years of service credit under the Union’s pension and welfare plans. When Mr. Aracich attempted to receive his retirement benefits under the plans however, his request was denied by the plan administrators who determined that he had not in fact “retired” at all because he remained the president of the Building and Construction Trades Council of Nassau and Suffolk Counties. Although, the Construction Trades Council had ended its participation in the plan the month before, the plan administrators concluded that Mr. Aracich had remained “continuously employed” and thus denied his claims for benefits. Mr. Aracich appealed this interpretation of the plan language, arguing that because he was no longer working for an employer contributing to the plan, which was how the plan defined “covered employment,” he was therefore eligible to receive retirement benefits. Mr. Aracich pointed to Section 6.8 of the plans’ governing documents which stated, “to be considered retired, a Participant must have separated from Covered Employment.” After the denial was upheld on administrative appeal, Mr. Aracich commenced this lawsuit against the plans and their fiduciaries alleging they were in violation of ERISA and state law. Mr. Aracich asserted five causes of action: (1) a claim for benefits under Section 502(a)(1)(B); (2) a Section 510 retaliation claim; (3) an anti-cut back claim under Section 204(g); (4) an ERISA breach of fiduciary duty claim; and (5) a state law breach of contract claim. Defendants moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Despite a perfunctory line in the beginning of the order stating that the court would draw all reasonable inferences in the plaintiff’s favor, the court seemingly did the reverse and granted the motion, dismissing the lawsuit. This was perhaps most striking with regard to Mr. Aracich’s claim for benefits. The court held that Mr. Aracich could only state a claim upon which relief may be granted under Section 502(a)(1)(B) if defendant’s interpretation of “retire” was arbitrary and capricious, and therefore “erroneous as a matter of law.” The court concluded that defendants’ interpretation and subsequent denial were rooted in “reasoned bases” and therefore were not arbitrary and capricious. Accordingly, the claim for benefits was dismissed. Regarding the retaliation claim, the court wrote “because the only potentially adverse action plaintiff identifies is the denial of benefits, which…he fails to plead…plaintiff does not adequately allege he suffered adverse action.” The ERISA fiduciary breach claim was similarly premised on defendants’ misinterpretation of the plan language regarding the denial of benefits and therefore dismissed for the same reasons. Mr. Aracich’s anti-cutback claim was dismissed because defendants did not “amend” the plan. Finally, the breach of contract claim was dismissed as preempted by ERISA.

Third Circuit

Hitchens v. Bd. of Trs., Plumbers & Pipefitters Local Union No. 74 Pension Fund, No. 20-1206-CJB, 2022 WL 4448195 (D. Del. Sep. 23, 2022) (Magistrate Judge Christopher J. Burke). Plaintiff Willis Franklin Hitchens commenced legal action after his application for early pension benefits from the Plumbers and Pipefitters Local Union No. 74 Pension Fund was denied. The Board of Trustees had concluded that Mr. Hitchens was engaging in “Disqualifying Employment” under the plan in working as a maintenance supervisor in the plumbing and pipefitting industry. Defendants moved for summary judgment. They argued that their interpretation of the plan language was reasonable and therefore not an abuse of discretion. Additionally, defendants stated that it was uncontested that Mr. Hitchens had performed supervisory work in the industry, and that their denial should thus be upheld. The court agreed and granted their motion in this order. While the court conceded that the section of the plan outlining the definition of “Disqualifying Employment” was “not artfully drafted,” the court also found that under deferential review any ambiguity should be construed in favor of defendants, and their interpretation was certainly logical and reasonable. The court went on to agree that Mr. Hitchens had engaged in the supervisory employment alleged by defendants. Finally, although the court agreed with Mr. Hitchens that defendants technically did not comply with Section 503 of ERISA during appeals process, the court did not feel that this noncompliance “impacted (Mr. Hitchens’s ability to have effective review of his benefits claim (nor would it change the ultimate outcome here).” The court therefore did not award relief to Mr. Hitchens regarding defendants’ procedural violations.

Plan Status

Ninth Circuit

Adams v. Symetra Life Ins. Co., No. CV-18-00378-TUC-JGZ, 2022 WL 4305622 (D. Ariz. Sep. 19, 2022) (Judge Jennifer G. Zipps). For two-and-a-half years, the court in this case has gone back and forth trying to answer the question of whether plaintiff Robert Adams’s disability policy is governed by ERISA. In a previous order the court granted defendant Symetra Life Insurance Company’s motion for summary judgment on its position that the Mr. Adams established or maintained an ERISA plan. After that order was issued however, the Ninth Circuit decided a case with nearly identical circumstances to Mr. Adams’s, Steigleman v. Symetra Life Ins. Co., No. 21-15612, 2022 WL 912255 (9th Cir. Mar. 29, 2022), concluding that the plan at issue was not governed by ERISA. Accordingly, Mr. Adams filed a motion requesting the court vacate its previous ruling on his plan’s status. Having taken the Steigleman decision into consideration, the court agreed to vacate its previous finding that ERISA governed the policy. Important to the court’s decision-making was the fact that Mr. Adams’s involvement was “limited to him paying for his employee’s insurance premiums,” which on its own was insufficient to show that Mr. Adams established or maintained a plan. Because Mr. Adams did not manage enrollment, collect premiums, establish terms for eligibility, develop benefit packages, or process claims forms, and because there was no evidence that the plan was advertised as an ERISA plan, the court found the evidence insufficient to show that the plan was governed by ERISA. The court therefore vacated its previous order holding otherwise.

Pleading Issues & Procedure

Fourth Circuit

Balkin v. Unum Life Ins. Co., No. GLS 21-1623, 2022 WL 4316270 (D. Md. Sep. 19, 2022) (Magistrate Judge Gina L. Simms). Plaintiff Kelly Balkin brought an ERISA disability benefits suit against Unum Life Insurance Company in 2021. In this order, the court resolved several pending pleading issues – namely (1) whether the plan’s choice of law provision is applicable; (2) what standard of review applies; and (3) whether discovery beyond the administrative record would be permitted and if so to what extent. First, the court addressed the plan’s choice of law provision by selecting the law of the District of Columbia to govern the plan. Currently, the Fourth Circuit has not addressed the issue of whether a choice of law provision in an ERISA plan should be enforced and if so under what circumstances. Nevertheless, the court chose to adopt the standards of the Eighth, Ninth, and Eleventh Circuits which hold that such a provision should be enforced “if not unreasonable or fundamentally unfair,” as well as that of the Sixth Circuit which allows for choice of law provisions to be enforced unless the chosen state has “no substantial relationship to the parties,” or applying the provision is somehow contrary to the “fundamental policy” of the state whose law shall be applied. The court concluded that enforcing the provision was not fundamentally unreasonable; a legitimate connection existed between the plan and D.C. because Ms. Balkin’s employer is headquartered in D.C.; and discretionary language in ERISA plans does not constitute a “fundamental state policy.”  As such, the court found the choice of law provision enforceable, and applied D.C. law with regard to the standard of review. Next, the court held that there exists no blanket ban on the enforcement of discretionary clause under D.C. law, and therefore found abuse of discretion review applicable. With these issues resolved, the court turned to the discovery dispute before it and granted in part Ms. Balkin’s discovery motion. The court allowed Ms. Balkin to pursue discovery related to bias and granted her motion to conduct discovery pertaining to defendant’s financial relationship with the doctors it hired to review Ms. Balkin’s claim, the number of claims defendant has referred to each of those doctors, the number of cases in which each doctor found claimants to be disabled, and information regarding the doctors’ experience with and expertise on fibromyalgia, Ms. Balkin’s disabling condition. However, the court denied Ms. Balkin’s request for defendant’s claims handling policies and procedures, concluding that Ms. Balkin had failed to present evidence that defendant had relied on any such procedures during its review of her claim. Finally, the court ordered parties to meet and confer to try and resolve their dispute over documents within the administrative record that defendant has redacted.

Nordman v. Tadjer-Cohen-Edelson Assocs., No. DKC 21-1818, 2022 WL 4368152 (D. Md. Sep. 21, 2022) (Judge Deborah K. Chasanow). Plaintiff Yehuda Nordman commenced legal action after his claim for pension benefits under several ERISA-governed plans sponsored by his former employer Tadjer-Cohen-Edelson Associates, Inc., including a 401(k) Plan, a Money Purchase Plan, and an Employee Stock Ownership Plan, were denied. In addition to denying the claims for benefits, the plan administrators also concluded that Mr. Nordman was not a participant of the 401(k) and Money Purchase plans, despite documentation Mr. Nordman possessed that indicated otherwise. In his suit, Mr. Nordman alleges that defendants violated ERISA, breached their fiduciary duties, and improperly administered the plans. Defendants moved to dismiss all of Mr. Nordman’s claims. Their motions were granted in part and denied in part. The court allowed both Mr. Nordman’s claim for payment of benefits under Section 502(a)(1)(B) and his claim for sanctions under Section 104(b)(4) for failure to timely provide plan documents to proceed. However, the court granted the motions to dismiss the claims brought under Section 502(a)(3), finding them duplicative of the claim for benefits.  The court likewise dismissed the breach of fiduciary duties claim, finding the complaint lacked allegations of elements necessary to state such a cause of action. Mr. Nordman’s co-fiduciary liability claim, and retaliation claims fared no better, with the court holding that Mr. Nordman failed to identify any retaliatory action that took place prior to his lawsuit.

Sixth Circuit

Merritt v. Flextronics Int’l, No. 2:20-cv-02943-TLP-cgc, 2022 WL 4397531 (W.D. Tenn. Sep. 23, 2022) (Judge Thomas L. Parker). Pro se plaintiff Kenneth Merritt brought a lawsuit in state court against his employer, Flextronics International USA, Inc., and the insurer of his short-term disability insurance plan, Hartford Financial Services Group, Inc., after Mr. Merritt received monthly disability payments that were less than he believed they should be. Defendants removed the case to the federal district court and argued that Mr. Merritt’s state law causes of action were preempted by ERISA. The court referred all pre-trial matters in the case to Magistrate Judge Charmaine G. Claxton. Judge Claxton agreed with defendants on federal subject-matter jurisdiction and ERISA preemption and advised Mr. Merritt to amend his complaint to bring his claims under ERISA, noting that, if he failed to do so, his complaint may be dismissed. Mr. Merritt did fail amend his complaint to plead ERISA claims, which prompted Judge Claxton to recommend that the court dismiss the case for lack of prosecution under Rule 41(b). In this order the court adopted Judge Claxton’s recommendation. The court emphasized Mr. Merritt’s “repeated failures to amend his complaint” despite several warnings that this behavior could lead to dismissal. According, the court found “Plaintiff’s conduct reflects a reckless disregard for the effect his conduct had on this case.” Thus, the court dismissed the complaint for failure to prosecute.

Provider Claims

Sixth Circuit

Dual Diagnosis Treatment Ctr. v. Blue Cross Blue Shield of Tenn., No. 1:22-CV-00073-DCLC-CHS, 2022 WL 4351984 (E.D. Tenn. Sep. 19, 2022) (Judge Clifton L. Corker). Plaintiffs are healthcare providers who provide care to patients suffering from mental health issues, including substance use disorder. They have sued Blue Cross Blue Shield of Tennessee for underpayment and misdirected payment of the provided healthcare services under ERISA and state law. Blue Cross moved to dismiss for failure to state a claim, arguing that plaintiffs lacked standing, that their claims are untimely, that they have failed to exhaust administrative remedies, and that their state law claims are preempted by ERISA. The court addressed each issue in turn. To begin, the court stated that all plaintiffs except for Dual Diagnosis Treatment Center have adequately alleged derivative standing as they have proved that they received valid assignments from their patients of to receive payment under the plans. As for Dual Diagnosis, the court stated that it must allege that it received valid assignments from patients to confer it with standing. Accordingly, the court reserved ruling on the issue and gave Dual Diagnosis the opportunity to respond to the issue. Next, the court rejected Blue Cross’s untimeliness argument, stating outright that Blue Cross pointed to no facts in the complaint that indicate the claims were outside any statute of limitation. Regarding preemption, the court accepted plaintiffs’ assertion that their state law claims pertained only to the non-ERISA governed plans. Thus, the court declined to dismiss the state law claims and allowed them to proceed in addition to the Section 502(a)(1)(B) ERISA claims. Finally, the court excused plaintiffs’ non-exhaustion of administrative remedies, holding that Blue Cross denied plaintiffs “meaningful access to review procedures.” Thus, for the foregoing reasons Blue Cross’s motion to dismiss was denied.

Retaliation Claims

Fourth Circuit

Chisholm v. Mountaire Farms of N.C. Corp., No. 1:21CV832, 2022 WL 4367635 (M.D.N.C. Sep. 21, 2022) (Judge Loretta C. Biggs). Plaintiff Robert Chisholm was an employee of defendant Mountaire Farms of North Carolina Corp. from November 11, 2019, to September 3, 2020. Right in the middle of that period of employment in May 2020, Mr. Chisholm injured himself. Mr. Chisholm applied for and received short-term disability benefits and was out of work from May 14, 2020, to September 3, 2020. The day he returned to work he was terminated, without a provided reason for his termination. Mr. Chisholm filed a charge of discrimination with the EEOC and received notice of right to sue. He did so, initiating this discrimination lawsuit under ERISA Section 510, the Americans with Disabilities Act (“ADA”), and under the Family and Medical Leave Act (“FMLA”). Mountaire Farms moved to dismiss for failure to state a claim. The court granted the motion. Mr. Chisholm’s FMLA claim was dismissed because he was never eligible for FMLA as he was employed at Mountaire Farms for only about six months and FMLA eligibility requirements employment for at least 12 months. Mr. Chisholm’s ADA and ERISA discrimination claims were both dismissed for essentially the same reasons – the complaint did not articulate that he was a qualified individual for his job and the complaint was devoid of facts that plausibly suggested Mountaire Farms fired him because of his disability and his attainment of ERISA disability benefits. The motion to dismiss was thus granted, and the complaint was dismissed without prejudice.

Withdrawal Liability & Unpaid Contributions

Fourth Circuit

Int’l Painters & Allied Trades Indus. Pension Fund v. I Losch Inc., No. CIVIL BPG-19-3492, 2022 WL 4386232 (D. Md. Sep. 22, 2022) (Magistrate Judge Beth P. Gesner). The International Painters and Allied Traders Industry Pension Fund sued I. Losch Inc., Cheryl Yohn, Inc., and Hy Pressure Washing & Painting, companies the under common control of a husband and wife, seeking collection of unpaid withdrawal liability payments, an injunctive order for future payments, and collection on default after Losch Inc. withdrew from the fund, and failed to either make their required payments or to demand arbitration. The parties filed cross-motions for summary judgment. Finding no genuine dispute of material fact, the court concluded that defendants waived their right to contest the timeliness of plaintiffs’ withdrawal liability demand notice by failing to initiate arbitration, and notably never contested the amounts assessed by plaintiffs either in this action or by initiating arbitration. Thus, the court held that the “amounts demanded by plaintiffs…shall be due and owing on the schedule set forth by plaintiffs,” in addition to interest, liquidated damages, attorney’s fees and costs. The court also concluded that plaintiffs proved that the companies were under common control based on the spousal attribution rule. Accordingly, the court granted plaintiffs’ motion for summary judgment, and denied defendants’ cross-motion for summary judgment. Plaintiffs were awarded their requested damages for the unpaid withdrawal liability, interest, and liquidated damages, but the court reserved the award of attorney’s fees and costs for a separate motion.