Carfora v. Teachers Ins. Annuity Ass’n of Am., No. 21 CIVIL 8384 (KPF), 2022 WL 4538213 (S.D.N.Y. Sep. 28, 2022) (Judge Katherine Polk Failla)

At the heart of ERISA’s protective scheme is the notion that those responsible for the management and administration of plans and plan assets are fiduciaries who must follow ERISA’s exacting standards in dealing with the plan. But courts have long struggled to identify who is a plan fiduciary, and in what capacity, as this decision illustrates.

A group of current and former academics, researchers, and professors, who are participants in ERISA-governed defined contribution plans administered by defendant Teachers Insurance Annuity Association of America (“TIAA”), brought suit asserting that TIAA violated its duties as an ERISA fiduciary by soliciting plaintiffs into rolling over their plan assets into TIAA’s proprietary “Portfolio Advisor Program.”

In their complaint, plaintiffs outlined the details of TIAA’s scheme to enrich itself by expanding its individual advisory business. Among other revelations, plaintiffs described TIAA’s “multi-step pitch (used) to attract customers to Portfolio Advisor.” According to the complaint, TIAA used information to which it had access through its role as administrator of the ERISA plans to discover high-value plan participants which it would specifically target. In addition, plaintiffs revealed how the management advisors employed by TIAA tasked with selling Portfolio Advisor were financially incentivized to meet sale goals and penalized if participants kept their money in the ERISA plans or moved assets to IRAs. In some instances, plaintiffs said advisors went so far as to lie to participants that choosing not to roll over assets would leave them “to manage their employer-sponsored plan accounts entirely by themselves.”

Even aside from the problematic sales tactics, the complaint also claimed the Portfolio Advisor program itself performed poorly and had excessively high fees. Although TIAA was providing no meaningfully different service in managing Portfolio Advisor than it was providing for the ERISA plans, the fees were greatly increased.

TIAA moved to dismiss the action. It argued that during the relevant timeframe, it was not a fiduciary, and therefore it couldn’t have breached any fiduciary duties. The fiduciary status of TIAA was accordingly the central focus of the decision.

To begin, the court rejected plaintiffs’ argument that TIAA, which made various representations that it was a fiduciary, including in marketing material and in discussions during the sales pitches to participants, should be equitably estopped from denying fiduciary status. Because plaintiffs failed to cite any precedent in which a defendant was deemed to be a fiduciary on a theory of equitable estoppel, the court was unwilling to take the extraordinary step of applying estoppel in this way.

Next, plaintiffs argued that TIAA acted as a functional fiduciary when, it in its capacity as a third-party ERISA plan administrator, it consulted with plan participants and offered them financial advice by encouraging them to rollover their assets into its proprietary offering.

The court fundamentally disagreed. Under its interpretation of ERISA’s functional fiduciary guidelines, the court held that the funds taken out of the ERISA plans for rollover purposes were no longer plan assets and “TIAA’s pitch to plan members to roll assets out of their plans and into Portfolio Advisor necessarily did not create a fiduciary relationship.” Furthermore, the court held that sales pitches did “not constitute advice on a regular basis.” Rather, the court concluded that TIAA’s actions were a series of one-offs between TIAA and a given participant.

With regard to TIAA’s use of participants’ personal information gleaned through its position as administrator of the ERISA plans, the court concluded that “plan assets” include money and invested capital, but not participant information. Plaintiffs attempted to persuade the court that because TIAA used the data to entice participants to move their plan assets, it was exercising fiduciary control and authority over the plans’ operations, conferring it with fiduciary status under ERISA. This too was rejected by the court.

Plaintiffs made one final attempt at swaying the court that TIAA was an ERISA fiduciary. They argued that TIAA’s decision to include “bundling requirements” in some of its contracts with the plans made it a fiduciary with respect to the plans. The court disagreed, reasoning that, “[e]ven when a defendant provides services to a plan, its choices to limit the investment options available to the plan or exercise control over such options ordinarily do not suffice to create fiduciary status without more.” The court thus found that TIAA was not a fiduciary under ERISA during the relevant time period and its hard and misleading sales tactics therefore did not violate ERISA.

The court then tied up two loose ends. First, the court held that because plaintiffs failed to demonstrate that TIAA was acting as a fiduciary with respect to the challenged conduct, they failed to state a claim for injunctive and equitable relief under Section 502(a)(3). Second, the court agreed with TIAA that the claims of two of the named plaintiffs were time-barred under ERISA’s six-year statute of repose because their rollovers took place over six years before the suit commenced.

This decision thus gives TIAA a pass from ERISA’s strict fiduciary responsibilities when it should have received a failing grade.

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

Attorneys’ Fees

First Circuit

Bd. of Trs. v. ILA Local 1740, AFL-CIO, No. 18-1598 (SCC), 2022 WL 4591843 (D.P.R. Sep. 30, 2022) (Judge Silvia Carreño-Coll). Following an order by the court granting summary judgment in its favor on its delinquent contributions and withdrawal liability claims, the Board of Trustees moved for an award of damages, attorneys’ fees, and costs. To start, the court made “short work” of the damages award. Applying interest as outlined in the plan language, plus liquidated damages, the court awarded $15,485.88 to the Board for its delinquent contributions claim, and $1,025,308.72 for its withdrawal liability claim. After finishing with its quick arithmetic to assess the damages, the court moved to addressing the award of attorneys’ fees. The Board asked for $1,118,705.00 in attorneys’ fees to be paid to Trucker Huss, its San Francisco-based ERISA attorneys, and $254,762.50 in attorneys’ fees to be paid to Mendoza Law Offices, its local counsel in Puerto Rico. They were not awarded these requested amounts. To begin, the court agreed with defendant that the Trucker Huss attorneys should be compensated at Puerto Rico rates, concluding that “the legal issues were not highly complex and thus did not call for the Board to hire a San Francisco-based, high regarded ERISA boutique firm like Trucker Huss.” Thus, the court awarded hourly rates “for attorneys of similar qualifications, experience, and competence in Puerto Rico,” ranging from $170-$300 per hour for the attorneys and an hourly rate of $85 for their paralegal. Having cut the requested hourly rates, the court took to analyzing the billed hours. This analysis was painstakingly detailed and at the same time slightly arbitrary. Hours were reduced or eliminated for being (1) insufficiently documented; (2) too heavily redacted; (3) duplicative; and (4) “secretarial or clerical.” Left with its lodestar, the court felt no need to adjust the amount up or down, and ultimately awarded $634,715.60 in attorneys’ fees – $149,168.95 for Mendoza Law Offices and $485,546.65 for Trucker Huss. The court even went over the requested costs with a fine-toothed comb. Although the Board sought costs of $49,121.86, the court only ended up awarding $5,215.79 for those the court found to be “necessary on their face.”

Breach of Fiduciary Duty

Seventh Circuit

Baumeister v. Exelon Corp., No. 21-cv-6505, 2022 WL 4477916 (N.D. Ill. Sep. 22, 2022) (Judge John Robert Blakey). Your ERISA Watch’s notable decision from our September 7th Newsletter, Albert v. Oshkosh Corp., No. 21-2789, __ F.4th __, 2022 WL 3714638 (7th Cir. Aug. 29, 2022), played a pivotal role in the dismissal of this putative breach of fiduciary duty class action pertaining to the Exelon Corporation Employee Savings Plan and the actions of its fiduciaries. Consistent with “the requisite context-specific inquiry” required under Albert, the court dismissed plaintiffs’ claims for failing to demonstrate the adequacy of their comparators and benchmarks. As a result, plaintiffs’ data backing up their assertions, even at the pleading stage, was insufficient to the court for plaintiffs to plausibly state their claims. The dismissal was without prejudice, and plaintiffs were granted leave to replead in accordance with the “Albert standard.”

Coyer v. Univar Sols. U.S. Inc., No. 22-cv-00362, 2022 WL 4534791 (N.D. Ill. Sep. 28, 2022) (Judge Robert W. Gettleman). Five former participants of the Univar Solutions 401(k) Plan, on behalf of the plan and a class of similarly situated participants and beneficiaries, brought a putative ERISA class action against the plan’s fiduciaries for breaches of fiduciary duties and failure to monitor. Specifically, plaintiffs alleged defendants failed to fully disclose plan expenses and investment risks to participants, allowed unreasonable expenses and fees to be charged to participants, and selected and retained costly poorly performing investments including the plan’s default investment option, the Fidelity Freedom Fund target date suite. Defendants moved to dismiss for failure to state a claim. First, the court rejected defendants’ argument that plaintiffs lacked Article III standing to bring their claims, except to the extent they sought prospective injunctive relief, because plaintiffs were former plan participants when they initiated their suit. Next, the court evaluated plaintiff’s fiduciary breach claims. The court found that plaintiffs adequately and plausibly alleged a claim for breach of fiduciary duty based on excessive recordkeeping and administrative fees. The court agreed with plaintiffs that “the fact that each of the other similarly-sized plans were receiving at least the same services for less provides the kind of circumstantial evidence sufficient to create an inference of imprudence.” However, the court agreed with defendants that plaintiffs failed to state a claim for breach of imprudence regarding the selection and retention of the default active suit investment option. Here, the court found that plaintiffs’ comparison between index funds and actively managed funds improperly compared apples to oranges. The court also dismissed plaintiffs’ claim to the extent they argued defendants acted disloyally. The complaint, the court felt, did not demonstrate disloyal behavior. Finally, the court dismissed plaintiffs’ breach of fiduciary duty claim pertaining to failure to disclose risks and costs, and failure to act in accordance with the plan documents. The court concluded the complaint did not provide factual allegations backing up these assertions. Regarding plaintiffs’ derivative failure to monitor claim, it was dismissed in part to reflect the dismissal of the underlying breach claims. Lastly, plaintiffs’ knowing breach of trust claim, which they pled in the alternative, was dismissed for failure to plausibly plead knowledge. Thus, as outlined above, the motion to dismiss was granted in part.

Ninth Circuit

Gleason v. Orth, No. 2:22-cv-00305-JHC, 2022 WL 4534405 (W.D. Wash. Sep. 28, 2022) (Judge John H. Chun). The three plaintiffs in this action are participants and/or trustees of the Carpenters-Employers Apprenticeship Training Trust of Washington-Idaho, an ERISA-governed apprenticeship training trust. In their complaint, plaintiffs allege that defendants – trustees and co-chairs of the Board of Trustees – breached their fiduciary duties in three ways: (1) by approving a pay increase for the Executive Director of the apprenticeship program without the board’s authorization; (2) by failing to monitor the Executive Director which resulted in his poor performance, long absences from work, and his cashing out vacation hours from the trust’s assets; and (3) by failing to monitor the trust’s investments by not selecting institutional funds with lower fees. Plaintiffs also brought a derivative breach of co-fiduciary duty claim for failure to monitor. Defendants moved to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (b)(6). The court addressed standing first. Applying Thole v. U.S. Bank, the court found the participant plaintiffs lacked standing to bring their claims as they could not show an injury-in-fact, nor establish standing for their claims for injunctive relief. Thus, the court dismissed the claims brought by the plaintiffs as participants and beneficiaries but did so without prejudice. As for the trustee plaintiffs, the court found they had constitutional standing, as they were able to satisfy the causation requirement due to the court’s conclusion that they did not suffer purely self-inflicted injuries. The court then took to scrutinizing whether plaintiffs stated their claims. First, the court found plaintiffs adequately alleged defendants failed to adhere to plan documents when they approved the Executive Director’s raise without the full board’s approval. Plaintiffs’ next claim, that defendants breached their duty to investigate and monitor the trust investments, was dismissed due to ERISA’s safe harbor because the investment manager was appointed, which absolved defendants of this responsibility. Dismissal of this claim was with prejudice. The breach of fiduciary duty for failure to monitor claim and the co-fiduciary duty failure to monitor claim were likewise dismissed, albeit without prejudice. The court stated that plaintiffs failed to show how the defendants were individually responsible to monitor the performance of the Executive Director as the duty to monitor was a board-wide responsibility. Finally, the court granted plaintiffs’ motion for leave to amend their complaint.

Class Actions

Fifth Circuit

C.C. v. Baylor Scott & White Health, No. 4:18-CV-828-SDJ, 2022 WL 4477316 (E.D. Tex. Sep. 26, 2022) (Judge Sean D. Jordan). Plaintiffs moved unopposed for final approval of settlement and for awards of attorneys’ fees, costs, and incentive awards in this complex ERISA and Mental Health Parity Act class action pertaining to denied coverage of speech, occupation, physical therapy treatments, and applied behavioral analysis services for the treatment of autism. Per the terms of the settlement, class members will receive full back benefits – 100% reimbursement for their claims and their out-of-pocket expenses stemming from uncovered services – along with years of prospective continued coverage of these therapies. “The settlement here is a complete victory for Plaintiffs and the class.” As such, analysis under Rule 23(e) was straightforward, and the court decided with ease that the settlement was fair, reasonable, and adequate. The court thus approved the terms of the settlement and granted plaintiffs’ motion for final settlement approval. Next, the court granted plaintiffs’ motion for attorneys’ fees in their requested amount of $416,675.55 (which plaintiffs had voluntarily reduced from their $458,888.50 lodestar). The court concluded that the rates for the attorneys from The Harris Firm, P.C., Mack Rosenberg Law LLC, and Sirianni Youtz Spoonemore Hamburger PLLC firms, ranging from $400 to $715 per hour, were reasonable for the attorneys who each had at least 25 years of experience in the area. The court also found the 980.35 hours spent litigating the case to be fair given its “duration and complexity.” This was especially true, the court stated, because of counsels’ excellent results in the settlement. Plaintiffs’ request for reimbursement of $65,611.12 for costs expended was also granted as their costs were documented and typical of costs approved in similar actions. Finally, the court awarded $5,000 to each of the four named plaintiffs to compensate them for their time, effort, and risk in the case.

Disability Benefit Claims

Sixth Circuit

Mason v. Fed. Express Corp., No. 21-5986, __ F. App’x __, 2022 WL 4588814 (6th Cir. Sep. 30, 2022) (Before Circuit Judges Batchelder, Griffin, and Kethledge). In an unpublished decision that cut right to the chase, the Sixth Circuit affirmed the district court’s summary judgment order finding FedEx had not acted arbitrarily or capriciously in relying on its medical reviews to terminate Nanette Mason’s short-term disability benefits. The decision said little more than this: “After carefully reviewing the law, the parties’ arguments, and the record evidence, we conclude that the district court correctly assessed the proffered evidence and correctly applied the law to that evidence.”

Washington v. AT&T Umbrella Benefit Plan No. 3, No. 2:21-CV-11397-TGB-JJCG, 2022 WL 4553059 (E.D. Mich. Sep. 29, 2022) (Judge Terrence G. Berg). Before the court was Magistrate Judge Jonathan J.C. Grey’s report and recommendation recommending the court grant in part and deny in part each party’s cross-motion for summary judgment under arbitrary and capricious review of the AT&T Umbrella Benefit Plan No. 3’s denials of plaintiff Sharon Washington’s two disability claims. With a set of fresh eyes, the court analyzed the parties’ objections to the report, and ultimately adopted in part and rejected in part the advice of Magistrate Judge Grey. To begin, the court concluded that the Plan’s denial of Ms. Washington’s 2018 claim for short-term disability benefits for persistent depressive disorder was not an abuse of discretion. The court found the Plan’s reviewers did not completely discount Ms. Washington’s self-reported symptoms and instead weighed them against other medical evidence. The court found this interpretation of the record reasonable under deferential review and affirmed the denial. However, regarding Ms. Washington’s 2019 claim for benefits for major depressive disorder, the court found the entire denial to be an abuse of discretion. To the court, the denials during the 2019 claim were not supported by the medical evidence, especially considering the reviewers’ failure to even mention or credit Ms. Washington’s stay in a partial hospitalization program during the relevant period. Finding that the issues “here lay with the integrity of the plan’s decision-making,” the court concluded that remand to the administrator was the appropriate course of action to ensure a full and fair review of the 2019 claim.

Eighth Circuit

Proctor v. Unum Life Ins. Co. of Am., No. CIVIL 20-2472 (JRT/DTS), 2022 WL 4585278 (D. Minn. Sep. 29, 2022) (Judge John R. Tunheim). Following a car accident, plaintiff Tracy Proctor began experiencing cognitive and visual problems. After seeking medical care, Ms. Proctor was diagnosed with post-concussion syndrome. Ms. Proctor, unable to work due to her symptoms, applied for and received disability benefits. However, less than a year after awarding Ms. Proctor long-term disability benefits, defendant Unum Life Insurance Company of America concluded Ms. Proctor was no longer disabled as of January 29, 2020, and terminated her benefits. The parties each moved for summary judgment and agreed to de novo review. The court granted Ms. Proctor’s motion and denied Unum’s. “Unum’s main rationale supporting termination of benefits seems to be that although Proctor was disabled when it first approved benefits, she is now no longer disabled because she is not improving as one would expect. The plain language of the Policy, however, makes clear that disability is evaluated solely by the claimant’s limitations, not what might be typical or a normal trajectory.” The court found both Ms. Proctor’s self-reported symptoms as well as the opinions of her treating providers to be credible. The court therefore concluded Ms. Proctor’s inability to concentrate, read and process on a computer, and her difficulty finding words, meant she was unable to complete the duties of her occupation and thus was disabled as defined by the plan. The court interpreted the lack of change in Ms. Proctor’s condition at the time of termination as cutting against Unum. Satisfied that Ms. Proctor met her plan’s definition of disability, the court ordered Unum to reinstate the benefits retroactively to the date of termination and resume paying ongoing benefits. It also awarded Ms. Proctor reasonable attorneys’ fees, costs, and prejudgment interest, the specific amounts of which it will determine after the parties submit briefing on the matter.

Ninth Circuit

Witney v. United of Omaha Life Ins. Co., No. 2:20-cv-01273-RAJ, 2022 WL 4483179 (W.D. Wash. Sep. 27, 2022) (Judge Richard A. Jones). Plaintiff Natalie Witney and defendant United of Omaha Life Insurance Company agreed to a trial on the administrative record under de novo review in this long-term disability benefit claim action. In its decision the court concluded that the record demonstrated that Ms. Witney’s metal health disorders, including bi-polar disorder, PTSD, and anxiety, rendered her disabled within the meaning of the plan and that she was therefore entitled to receive benefits for the 24-month mental health limitation period of eligibility under the policy running from December 26, 2016 to January 4, 2018, including interest on all unpaid benefits. The court found Ms. Witney’s contemporaneous medical records persuasive as they “consistently documented mental health diagnoses and symptoms that negatively affected her life and ability to do her job.” Furthermore, the court concluded that remanding to United was not warranted given the “fully developed” 2,000-page administrative record. Thus, Ms. Witney won her Section 502(a)(1)(B) suit and was provided 20 days to move for an award of attorney’s fees.


Fifth Circuit

Jones v. AT&T Inc., No. 20-02337, 2022 WL 4592060 (E.D. La. Sep. 30, 2022) (Judge Greg Gerard Guidry). In 2012, decedent Connie Marable sustained injuries in a crash. Ms. Marable would latter receive settlement proceeds from the responsible third party. The AT&T Inc. welfare plan paid hundreds of thousands of dollars in accident-related medical bills. After Ms. Marable’s death in 2018, defendants filed an action seeking an equitable lien over the settlement proceeds. Plaintiff William Collins Jones, the executor of Ms. Marable’s estate, requested that defendants provide all plan documents relating to Ms. Marable’s health benefits. Defendants produced about 12,000 pages of documents in response. After defendants’ civil action was settled, plaintiff filed this present suit alleging defendants’ response to the request for documents in “the prior suit did not include the actual plan documents corresponding to the summary plan description upon which Defendants had based their claim for reimbursement.” Accordingly, in this suit plaintiff seeks statutory penalties for that alleged violation of Section 1024(b). After filing suit, plaintiff moved for discovery, and requested that defendants produce documents relating to a 1998 collective bargaining agreement which pertained to the ERISA plans. The Magistrate Judge tasked with overseeing the discovery dispute recommended the court grant the motion pertaining to the medical plan and deny it to the extent it sought information pertaining to other pension, life insurance, and disability plans. Plaintiff objected to the report. Finding no clear error of law, the court in this order affirmed the Magistrate’s decision and concurred with the Magistrate’s chosen discovery scope.

Medical Benefit Claims

Seventh Circuit

Midthun-Hensen v. Grp. Health Coop. of S. Cent. Wis., No. 21-cv-608-slc, 2022 WL 4482566 (W.D. Wis. Sep. 27, 2022) (Magistrate Judge Stephen L. Crocker). This putative class action challenges Group Health Cooperative of South Central Wisconsin’s denials of medical benefit claims for speech and occupational therapy for the treatment of autism under its exclusion for experimental and investigational treatments. Plaintiffs are Angela Midthun-Hensen and Tony Hensen, the parents of a daughter with autism whose claims for these therapies were denied. This past May, Your ERISA Watch summarized the court’s order denying plaintiffs’ discovery motion. In that order, the court concluded that plaintiffs failed to qualify for an exception to the general rule against discovery beyond the administrative record in ERISA benefit denial cases, and that their complaint did not plausibly allege a Mental Health Parity and Addiction Equity Act violation. That decision ended with the court granting plaintiffs the opportunity to amend their complaint to address the deficiencies of their Parity Act claim. Plaintiffs then filed an amended complaint, and defendant moved for summary judgment. Plaintiffs have moved for an extension to respond to the summary judgment motion, moved to stay summary judgment, and have renewed their Rule 56(d) motion requesting the court grant them the opportunity to pursue discovery on their Parity Act claim. The court denied the discovery motion, as it remained unpersuaded by plaintiffs’ amended Parity Act violation and their general allegations that defendant applied coverage limitations for mental health treatments to be “evidence based” rather than its general requirement that comparable medical/surgical treatment simply not be experimental or investigatory. “I disagree with plaintiffs’ suggestion that Parity Act plaintiffs may unlock the door to essentially unfettered discovery simply by parroting in their complaint the language of the Parity Act and alleging generally that the plan administrator does not apply the relevant treatment limitation as restrictively to ‘medical/surgical benefits’ as it does to ‘mental health benefits.’” The court also admonished plaintiffs for their failure to specify what types of documents and interrogatories they would request and why the information would be necessary for them to oppose the summary judgment motion. In addition to denying the discovery motion, the court also denied Plaintiff’s motion to stay summary judgment. Finally, the court allowed plaintiffs to supplement their opposition to defendant’s summary judgment motion on their Parity Act claim and gave them until October 18 to do so.

Tenth Circuit

Daniel B. v. United Healthcare, No. 2:20-cv-00606-DBB-CMR, 2022 WL 4484622 (D. Utah Sep. 27, 2022) (Judge David Barlow). On October 9, 2017, Plaintiff D.B., who was a junior in high school and a minor at the time, was hospitalized following a drug overdose. D.B. was admitted to the hospital’s psychiatric ward and then was subsequently involuntarily admitted to the Utah Neuropsychiatric Institute where he was treated for mental health disorders from October 24, 2017, to December 4, 2017. On December 4, 2017, D.B. was transferred directly to Elevations Residential Treatment Center where he remained, receiving treatment until the following May. Defendant United Behavioral Health paid for D.B.’s treatment at Utah Neuropsychiatric from October 24 through November 16, 2017. Coverage for the remainder of D.B.’s stay at Utah Neuropsychiatric was denied under the plan’s requirement that once patients are stabilized, they should be placed in a less restrictive level of care. D.B.’s stay at Elevations was covered by United for one month from December 4 to January 4. The remainder of D.B.’s stay at the residential treatment center was denied after United’s reviewers concluded that D.B. was not in imminent risk of harm to himself and had shown improvement. The medical records contradicted this position, as D.B. regressed during his stay and continued to have instances of drug use and suicidal ideation. Following unsuccessful administrative appeals for the denied claims at both facilities, D.B. and his parents commenced this ERISA action. The parties each moved for summary judgment. To begin, the court acknowledged the parties’ dispute over the applicable standard of review. Rather than resolve the disagreement, the court said, “the result is the same under both standards.” As for the result, the court granted in part and denied in part each party’s summary judgment motion. Under even de novo review the court found that United’s decision denying extended coverage at Utah Neuropsychiatric was supported by the medical records and appropriate under the terms of the policy. On the flipside, even under deferential review, the court concluded that United’s denial of continued care at the residential treatment center was an abuse of discretion. The court concluded that United did not “explain sufficiently why it denied coverage at Elevations RTC after January 4, 2018.” To remedy this, the court remanded to United to consider all the medical records and “provide a complete explanation as to whether and at what point D.B. no longer satisfied applicable level of care guidelines for residential treatment.” Finally, the court directed the parties to brief the issue of whether an award of attorney’s fees and costs is appropriate.

Theo M. v. Beacon Health Options, No. 2:19-cv-00364-JNP-DBP, 2022 WL 4484517 (D. Utah Sep. 27, 2022) (Judge Jill N. Parrish). Plaintiffs Theo M. and M.M. are a father and son who were denied coverage for medical claims they submitted for treatment M.M. received at two residential treatment centers from 2015 to 2017. Plaintiff M.M. received care at these facilities for treatment of a myriad of mental health disorders including bulimia nervosa, substance-use disorder, autism, depression, anxiety, ADHD, and suicidal ideation. Defendants are the Chevron Corporation Mental Health and Substance Abuse Plan and Beacon Health Options. The parties each moved for summary judgment on plaintiffs’ two claims: a recovery of benefits claim and a Parity Act claim. The court began its analysis by examining the benefit denials under arbitrary and capricious review. Plaintiffs argued that the denial letters failed to cite or analyze any specific facts in M.M.’s medical records, or any specific provisions of the plan. The court agreed. The court took great issue with the fact that denial letters included a single citation to all the documents that were submitted with the claim. “Such a broad reference provides Plaintiffs with almost no information…a cite to every record is essentially just as useful to a claimant as a cite to no record at all.” Moreover, the court agreed with plaintiffs that defendants’ findings about M.M. were themselves conclusory, and in fact contradicted in large part by the medical record and M.M.’s treating professionals. “Defendants need to do more than simply tell claimants they believe RTC treatment is not medically necessary; non-conclusory reasoning is required to back up their claims.” For these reasons, the court granted summary judgment in favor of plaintiffs on their claim for benefits. The court found remand to be the appropriate remedy. As for the Parity Act violation, the court decided that its decision to remand the benefit claim rendered the mental health parity dispute moot. Thus, the court did not reach the issue of whether defendants violated the Parity Act. Lastly, the court decided plaintiffs are entitled to an award of attorneys’ fees and costs and directed plaintiffs to submit briefing on their lodestar in order to decide the amount of the award.

Pension Benefit Claims

Sixth Circuit

Cohn v. W. & S. Fin. Grp. Long Term Incentive & Retention Plan I, No. 1:19-cv-943, 2022 WL 4493912 (S.D. Ohio Sep. 28, 2022) (Judge Sarah D. Morrison). From 2006 to 2018, Plaintiff Paul D. Cohn worked as the managing director of the private equity team at Western & Southern Financial Group, Inc. During the course of his employment with Western & Southern, Mr. Cohn was awarded 160 performance units under the company’s ERISA top-hat plan. At the time he left the company in 2018, 117.2 of his units had vested. Mr. Cohn elected 57 of those units be paid out to him. The plan did so. Then, the following year, on May 31, 2019, Western and Southern informed Mr. Cohn in writing “that the balance of his performance unit account was forfeited, and his distributed plan benefits were subject to recoupment,” on account of Mr. Cohn’s employment with a competing company within three years of termination, which was disallowed under the plan. Mr. Cohn appealed this determination and argued that he was not in fact working as a competitor but rather was contemplating the creation of a private equity fund. Mr. Cohn argued that “preparing to compete” is not prohibited under the Plan. After his appeal was denied, he commenced this action challenging the decision. The parties filed cross-motions for summary judgment. As the plan included a discretionary clause and discretionary clauses may be applied to top hat plans, the court reviewed the decision under the arbitrary and capricious standard. The court split the committee’s decision into two parts: (1) forfeiture of units, and (2) recoupment of benefits already distributed. Accordingly, the court began by determining whether the committee’s interpretation of the plan language pertaining to the forfeiture of units was reasonable. Ultimately, the court found that both the committee and Mr. Cohn had “cogent and rational” interpretations of the plan. This being the case, the court upheld the committee’s interpretation of the plan language and concluded that its forfeiture decision was not arbitrary or capricious. However, the court found the recoupment decision was arbitrary and capricious at least with regard to “Performance Units awarded before the 2014 Restatement.” Before the 2014 restatement was signed there was no clear authorization for recoupment of distributed plan benefits. Therefore, “neither the Western & Southern benefits department nor the Executive Committee had the authority under the Plan to demand recoupment of any benefit payments attributable to Performance Units awarded to Mr. Cohn before May 21, 2014. Doing so was arbitrary and capricious.” Nevertheless, because the administrative record was unclear as to whether all the distributions already made to Mr. Cohn were attributable to units awarded before the restatement was signed, the court remanded to the committee for further proceedings on the issue.

Plan Status

First Circuit

Campbell v. Unum Grp., No. 21-11637-TSH, 2022 WL 4486073 (D. Mass. Sep. 27, 2022) (Judge Timothy S. Hillman). Plaintiff Dr. Robert Campbell sued Unum Group and Provident Life and Accident Insurance Company in state court seeking to recover benefits under a disability policy. Defendants removed the action to federal court. They contend the policy is ERISA-governed and that Dr. Campbell’s state law causes of action are therefore preempted. Dr. Campbell, believing the opposite, moved for the court to remand the suit back to state court. The court began its analysis by analyzing the plan under the Donovan test and concluded “that a plan for purposes of ERISA was established…appears to be met.” The court held that the plan was established by Dr. Campbell’s employer, Mount Auburn Cardiology Associates, Inc., and that its purpose was to provide the participants with disability insurance. In addition, the fact that Mount Auburn was the source of financing for the plan, and the plan qualified for a group discount, provided further evidence of the plan’s ERISA status to the court. Next, the court concluded, “it can be inferred that Mount Auburn undertook to provide benefits for its employees on a regular and long-term basis,” as the policy has been in place since 1991. Finally, the court concluded that the plan did not satisfy ERISA’s safe-harbor provision. Thus, the court found that the plan was governed by ERISA, and ERISA preempted the state law claims. Dr. Campbell’s motion to remand was therefore denied.

Fourth Circuit

Onuigbo v. Wash. Metro. Area Transit Auth., No. 22-0071 PJM, 2022 WL 4449217 (D. Md. Sep. 22, 2022) (Judge Peter J. Messitte). In this order the court dismissed without prejudice pro se plaintiff Ozoema Obuakonwa Onuigbo’s Title VII and ERISA retaliation suit against his employer, the Washington Metro Area Transit Authority, wherein he alleged he was discriminated against and ultimately terminated because he is Nigerian. The court viewed the complaint as failing to tie the “termination to the fact that he is of Nigerian origin,” and therefore concluded the Title VII claim was inadequately pled. As for the ERISA Section 510 claim, the court concluded that retirement plans issued by the Washington Metro Area Transit Authority, a state agency, are excluded from coverage under ERISA.

Provider Claims

Third Circuit

Ass’n of N.J. Chiropractors v. Data Isight, Inc., No. 19-21073, 2022 WL 4483596 (D.N.J. Sep. 27, 2022) (Judge John Michael Vazquez). Plaintiffs are a group of chiropractors who have sued Cigna Health and Life Insurance Company and Aetna Health Inc. (“the insurance provider defendants”), along with Data iSight, Inc. and Multiplan, Inc. (“the vendor defendants”) for their roles in systematically repricing and underbilling plaintiffs for their services. In their third amended complaint, plaintiffs asserted claims under Sections 502(a)(1)(B), 502(a)(3), and 503. Defendants moved to dismiss. To begin, the court rejected the vendor defendants’ argument that they are not ERISA fiduciaries. The court held that plaintiffs’ amended complaint makes clear that Aetna and Cigna “delegated authority to the Vendor Defendants ‘to make unilateral determinations to reduce and/or reprice out of network chiropractic claims and the Vendor Defendants exercised this authority.” Consequently, the court denied the vendor defendants’ motion to dismiss on this ground. Next, the court moved to examining the sufficiency of the claims themselves. In the end, only one of the five provider plaintiffs was found by the court to have sufficiently stated claims, Scordilis Chiropractic, PA. The remaining four plaintiffs failed in the court’s view to identify plan language that entitled them to the relief and the amounts they sought. Because these plaintiffs did not identify plan provisions that defendants violated, their claims were dismissed. Even the one remaining plaintiff, Scordilis Chiropractic, had its claims against Aetna dismissed, because it failed to allege that it treated plaintiffs with an Aetna plan. Finally, the court dismissed Scordilis Chiropractic’s Section 503 claim, because Scordilis failed to seek “the only relief that is permissible under Section 503…remand to the plan administrator.” Thus, for these reasons, defendants’ motion to dismiss was granted in part and denied in part. The claims that were dismissed were dismissed with prejudice.

Severance Benefit Claims

Ninth Circuit

Paine v. Investment and Admin. Committee of the Walt Disney Co. Sponsored Qualified Benefit Plans and Key Emp. Deferred Comp. and Retirement Plan, No. 2:20-cv-08610-VAP-KSx, 2022 WL 4492812 (C.D. Cal. Sep. 27, 2022) (Judge Virginia A. Phillips). In March of 2019, plaintiff Bernadette Paine was working for Twenty-First Century Fox, Inc. as Vice President of Worldwide Marketing Strategy and Communications. On March 20, 2019, Twenty-First Century Fox merged with The Walt Disney Company. By July 26, 2019, Ms. Paine’s employment with Fox/Disney ended. The dispute in this severance action is whether Ms. Paine voluntarily resigned from her position, as defendants claimed in their denials, or whether Ms. Paine was terminated without cause as Ms. Paine alleged. In support of her position, Ms. Paine submitted evidence, including an approved request for paid vacation time off for August 2019, and a series of emails wherein Ms. Paine informed Disney’s HR director, “I have not resigned. I am not resigning. I will not resign…I enjoy my job at Fox very much, and I am continuing to do that job and will continue to do it until Disney involuntarily terminates my employment.” The parties filed cross-motions for summary judgment. Concluding that defendants were delegated with discretionary authority and that there were no “flagrant violations of ERISA,” the court reviewed the denial for abuse of discretion. The court’s analysis began with the Section 502(a)(1)(B) claim for severance benefits. Defendants argued that the plan’s subcommittee “was not swayed by (Plaintiff’s) transparent attempt to create a benefit claim and ultimately concluded that Plaintiff effectively resigned from her job notwithstanding her statements to the contrary.” Defendants, however, never included this reasoning in their denials. Instead, the denials stated only that Disney never provided Ms. Paine with notice of termination and their system indicated the termination was voluntary. As a result, Defendants’ rationales were rejected by the court. “The Subcommittee’s conclusion that Disney did not terminate Plaintiff’s employment ignores multiple emails from Disney’s (HR) Director suggesting, and then setting, a separation date over Plaintiff’s repeated opposition.” The court therefore granted judgment in favor of Ms. Paine, concluding the denial was arbitrary and capricious. Defendants were, however, granted summary judgment on Ms. Paine’s breach of fiduciary duty and breach of contract claims. The order ended with the court directing the parties to meet and confer to determine the amount of damages Ms. Paine is due under the plan.

Statute of Limitations

First Circuit

Rosenberg v. Macy’s, Inc., No. C.A. 20-11860-MLW, 2022 WL 4547074 (D. Mass. Sep. 29, 2022) (Judge Mark L. Wolf). Decedent Manuel Rosenberg was an executive vice president of Filene’s and worked for the company from 1957 to 1973. By the time he left the company, he was fully vested in the company’s retirement plan and applied a balance of $44,642.58 to purchase a 10 Year Certain & Life Annuity. Mr. Rosenberg elected to have his retirement benefits issued to him through a deferred annuity with a commencement date of May 1, 1995, at which time Mr. Rosenberg should have begun receiving monthly payments of $1,468.43. Mr. Rosenberg never received these payments. He died in 2017. His family, the plaintiffs in this action, learned of the existence of the annuity and non-payments in 2018. After exhausting their administrative remedies, they filed suit. Defendants moved for judgment on the pleadings. They argued plaintiffs’ claims are time-barred. In defendants’ view, ERISA’s six-year statute of limitations began to run on May 1, 1995, the date of the first nonpayment. On January 10, 2022, the Magistrate Judge issued a report and recommendation agreeing with defendants. In the report, the Magistrate Judge concluded that “nonpayment of the Annuity was a clear repudiation and that the clear repudiation should have been made known to Mr. Rosenberg in 1995, on the first nonpayment.” Plaintiffs objected to the report. They argued that the statute of limitations did not begin to run until 2018 when they learned the Annuity had been canceled. Plaintiffs argued that under First Circuit precedent, a claim for benefits could only be clearly repudiated after a claim is made and nonpayment alone could not repudiate a claim for benefits. With no communication from defendants, the statute of limitations plaintiffs alleged could not have run. The court disagreed. The injury, the court held, occurred in 1995 and “continued month after month.” This failure, the court stated, should have been obvious to Mr. Rosenberg, and a reasonable person could have taken some action at that time, even without communications from defendants. “The court finds a formal denial is not necessary to trigger the running of the statute of limitations.” Furthermore, the court concluded that “while plaintiffs may not have had actual knowledge of a clear repudiation, they did have constructive knowledge.” Accordingly, the court adopted the Magistrate’s report, and granted judgment to defendants.

Sixth Circuit

Clarke v. Pilkington N. Am., Inc., No. 21-12119, 2022 WL 4483817 (E.D. Mich. Sep. 27, 2022) (Judge Mark A. Goldsmith). In 2008, Plaintiff Sheila Clarke received notice that her 401(k) account had been completely depleted after her employer, defendant Pilkington North America, Inc., accidently distributed 100% of the funds to Ms. Clarke’s ex-husband. Per the qualified domestic relations order Ms. Clarke and her ex had entered two years before, Ms. Clarke and her ex-husband were each entitled to 50% of her retirement funds. Nearly 13 years after these events, in 2021, Ms. Clarke commenced this action in state court. Pilkington removed the case to the federal court citing ERISA preemption, which Ms. Clarke did not challenge. Following removal, Pilkington moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). It argued that Ms. Clarke’s claim is time-barred under ERISA’s statute of limitations because the single wrong alleged, the distribution of the funds to Ms. Clarke’s ex-husband, had occurred well over six years before she pursued legal action. Magistrate Judge Kimberly Altman issued a report and recommendation recommending the court grant the motion to dismiss, agreeing with Pilkington that the case was untimely. Ms. Clarke objected to the findings of that report. Here, the court agreed with Magistrate Judge Altman, overruled Ms. Clarke’s objections, adopted the report, and granted the motion to dismiss. The court found the “continuing violation” theory did not apply to Ms. Clarke’s claim which was premised off a single breach. The court went on to find that Ms. Clarke’s claims could not be equitably tolled as Ms. Clarke made no argument that she lacked notice or knowledge of the filing requirement to remain reasonably ignorant of the notice requirement of the statute of limitations. Accordingly, the court stated that although it sympathized with Ms. Clarke and her position, because she was not “diligent in pursuing her claim,” her claim was time-barred.

Ninth Circuit

Adamian v. Sun Life Assurance Co. of Can., No. 2:21-cv-01586-GMN-EJY, 2022 WL 4585279 (D. Nev. Sep. 29, 2022) (Judge Gloria M. Navarro). On October 24, 2014, plaintiff Lora Adamian submitted a claim for short-term disability benefits under her employer’s disability benefit plan insured by defendant Sun Life Assurance Company of Canada. Ms. Adamian’s claim was denied, and the denial was upheld during the administrative appeals process. By May 29, 2015, defendants had issued their final denial and advised Ms. Adamian of her right to sue under ERISA. For over six years, Ms. Adamian did not pursue legal action. On August 4, 2021, she filed a lawsuit in state court asserting state law claims pertaining to the denied claim for benefits. Defendants removed the case to federal court. Before the court was defendant Sun Life’s motion for judgment on the pleadings. Sun Life argued Ms. Adamian’s suit is untimely under both the three-year contractual limitation provision in her policy and under the analogous Nevada statute of limitations. The court agreed on both fronts and granted the motion.

Subrogation/Reimbursement Claims

Third Circuit

Gates v. Dematic Corp., No. 20-cv-08475 (KSH) (CLW), 2022 WL 4596723 (D.N.J. Sep. 30, 2022) (Judge Katharine S. Hayden). In 2016, plaintiff Roger Gates was injured in a motorcycle accident. Mr. Gates, who was employed by defendant Dematic Corporation, and a participant in its ERISA-governed health and welfare plan, had to undergo medical treatment related to the injuries he sustained in the accident. His plan ultimately paid $756,180.80 in medical benefits relating to the accident. Mr. Gates then filed a tort claim and a negligence suit against Passaic County, New Jersey in which he alleged improper road maintenance and repair. During litigation of that case, Blue Cross Blue Shield of Michigan and Dematic Corporation enforced an ERISA lien in the amount of the $756,180.80 pursuant to the plan’s 100% subrogation and reimbursement clause. Mr. Gates’ case against the County ended with the jury awarding him $2,645,00.00. After the verdict, Mr. Gates sought to amend the judgment to add the amount of the lien asserted. The court denied this post-judgment motion, finding “this case not (to be) the proper forum to adjudicate” the claim. This declaratory judgment lawsuit followed, in which Mr. Gates sought a declaration as to the enforceability of the lien. The County is a party to the suit, with the expectation that the County will ultimately be responsible for the payment of the lien. Before the court was a summary judgment motion filed by Dematic. Dematic sought both a declaration of enforceability of the lien, as well as an order finding the plan entitled to reimbursement in the full amount of the accident-related medical benefits pursuant to its reimbursement provision. Finding that the evidence sufficiently proves the plan is self-funded, the court concluded that ERISA preempts the New Jersey state law that would otherwise make the subrogation clause unenforceable. Accordingly, Dematic’s summary judgment motion was granted, and the court issued an order finding the plan entitled to the full reimbursement.