Richmond v. Life Ins. Co. of N. Am., No. 21-3929, __ F.4th __, 2022 WL 10225155 (8th Cir. Oct. 18, 2022) (Before Circuit Judges Gruender, Shepherd, and Erickson)

Today’s notable decision is yet another in a long-running series of cases involving Life Insurance Company of North America and its ERISA-governed accidental death insurance policies. Many of these cases involve a semantic deep-dive into what constitutes an “accident,” an investigation that Supreme Court Justice Benjamin Cardozo likened to a “plunge in the Serbonian Bog.” Today’s ruling neatly dodges bog-plunging, however, and instead examines an exclusion in one of LINA’s policies.

The plaintiff in the case is Jay Richmond, whose wife, Marie Richmond, worked as a registered nurse. She was a participant in her employer’s voluntary accident insurance plan, which was insured and administered by LINA. She was insured in the amount of $500,000; Jay was her sole beneficiary.

Sadly, one day after work Marie was found slumped over the side of her bed, unresponsive. Emergency responders attempted to revive her, but could not, and she was pronounced dead. Investigators found various injection materials nearby and the autopsy report identified serial needle punctures in her body. The medical examiner opined that Marie had died from mixed drug toxicity involving morphine, hydromorphone, meperidine, and fentanyl. Marie did not have prescriptions for these medications, and although the dosage of each was within the reported therapeutic range, the combination of the drugs was unfortunately lethal.

Jay submitted a claim for accidental death benefits to LINA, which denied the claim on two grounds. LINA contended both that the plan’s “voluntary ingestion” exclusion barred the claim, and that Marie’s death was not a “covered accident” because her death was “a reasonably foreseeable result of self-injecting a mixture of controlled substances.”

After exhausting his appeals with LINA, Jay brought this action seeking payment of benefits under ERISA, 29 U.S.C. § 1132(a)(1)(b). The district court granted judgment to LINA, specifically affirming both of LINA’s rationales for denying Jay’s benefit claim. Jay appealed.

At the outset, the Eighth Circuit noted that the benefit plan granted LINA discretionary authority to interpret the terms and conditions of the plan, and thus it reviewed LINA’s denial for abuse of discretion. Addressing the first basis for denial – whether the voluntary ingestion exclusion barred Jay’s claim – the court employed a two-step approach. First, it “evaluate[d] whether LINA’s interpretation of the plan language is reasonable,” and second, “analyze[d] LINA’s application of that interpretation to the facts to ensure that it is supported by substantial evidence.”

The court found that LINA’s interpretation was reasonable. The court noted that the plan excludes coverage for any accident resulting from the “voluntary ingestion of any narcotic, drug, poison, gas or fumes, unless prescribed or taken under the direction of a Physician and taken in accordance with the prescribed dosage.” The parties did not dispute that Marie had voluntarily taken the drugs in her system, and that she did not have a prescription for them, and thus the sole point of dispute was the word “ingestion.” LINA contended that the term includes self-injections, while Jay argued that the term only means “oral intake for the purposes of digestion.”

To resolve this dispute, the Eighth Circuit employed the five-factor test set forth in Finley v. Special Agents Mut. Ben. Ass’n, Inc., which asks whether an interpretation (1) is consistent with the goals of the plan, (2) renders any plan language meaningless or inconsistent, (3) conflicts with substantive or procedural requirements of ERISA, (4) is consistent over time, or (5) is contrary to the clear language of the plan.

The court found that the first factor was neutral, because while the plan is designed to pay benefits, it is also designed only to pay covered claims. The second factor weighed in LINA’s favor, because Jay’s argument that “ingestion” only meant digestion rendered the part of the exclusion about gas or fumes “nonsensical.” The third factor supported LINA because “the average plan participant would read the voluntary ingestion exclusion to cover any death caused by willingly using unprescribed narcotics,” and thus LINA’s interpretation did not run afoul of ERISA’s requirements. The fourth factor did not weigh in either party’s favor because there was no history in the record of LINA’s interpretation of “ingestion.”

Finally, in evaluating the fifth factor, the court discussed the competing interpretations of the word “ingestion” provided by the parties, including dictionary definitions, and agreed that neither party’s interpretation was unreasonable. However, the court ruled that “the context controls here.” Because the exclusion referred to the ingestion of “gas or fumes,” which are not introduced to the body by digestion, “LINA’s interpretation is more in line with the Plan’s clear language, as Richmond’s would render part of the exclusion meaningless. Thus, the fifth factor weighs in LINA’s favor.”

In sum, the Eighth Circuit found that the Finley factors “tilt slightly in LINA’s favor.” Furthermore, because of the standard of review, LINA’s interpretation only needed to be “reasonable” to survive review. Because LINA “offered a ‘reasonable interpretation’…LINA’s interpretation stands.”

Having decided that LINA’s interpretation was reasonable, the Eighth Circuit then quickly dispensed with the question of whether LINA’s decision was “supported by substantial evidence.” Because the record showed that “Marie undisputedly died because she willingly injected herself with a combination of unprescribed narcotics,” the court found “sufficient evidence to support LINA’s application of the voluntary ingestion exclusion[.]” Because a reasonable person could have reached the same conclusion as LINA, the court was obliged to uphold it, “even if we might have found differently in the first instance.”

As for the question of whether Marie’s death was a covered accident in the first place, the Eighth Circuit declined to address it. Because the court found that Jay’s claim was barred by the voluntary ingestion exclusion, the court stated, “we need not address LINA’s assertion that Marie’s death was not accidental.” As a result, the Eighth Circuit affirmed the judgment for LINA in its entirety.

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

Breach of Fiduciary Duty

Eighth Circuit

Adams v. U.S. Bancorp, No. 22-CV-509 (NEB/LIB), 2022 WL 10046049 (D. Minn. Oct. 17, 2022) (Judge Nancy E. Brasel). In this putative class action lawsuit, former employees of U.S. Bancorp who took early retirement allege that defendants violated ERISA by using unreasonable mortality tables and discount rates, which resulted in the employees receiving pension benefits that were not actuarially equivalent to those they would have received had they retired at the normal age of 65. Defendants moved to dismiss and moved to strike plaintiffs’ class allegations. Defendants argued that their downward adjustments for the longer withdrawal periods were not in violation of Section 1054(c)(3) or 1053(a). At the pleading stage the court accepted plaintiffs’ allegations that defendants were using outdated assumptions to calculate early retirement pension benefits and their basic assertion that because of this they are receiving less in monthly benefits than they are rightly entitled to. The court stated that, contrary to defendants’ position, Section 1054(c)(3) requires pension plans to calculate early retirement benefits with reasonable assumptions. To find otherwise, the court determined, would render the function of the actuarial equivalent provision meaningless or even nonsensical. If fiduciaries could input whatever assumptions they desired to calculate actuarial equivalence, the court reasoned those fiduciaries could engage in self-serving conduct antithetical to ERISA’s guiding principles. Defendants’ position that ERISA’s anti-forfeiture provision does not apply to early retirees proved no more successful. Because Congress did not include language limiting the anti-forfeiture provision’s applicability only to employees who reach “normal retirement age,” the court was convinced that the provision applies to plaintiffs and that they therefore stated their claim. Finally, the court declined to strike plaintiffs’ class allegations and rejected defendants’ position that “the putative class definition is an impermissible fail-safe class.” To the court, striking plaintiffs’ class allegations prior to a motion to certify was an extreme action that defendants failed to demonstrate was warranted or appropriate. For these reasons, the court denied defendants’ motions.

Class Actions

Seventh Circuit

Lysengen v. Argent Tr. Co., No. 20-1177, 2022 WL 11915656 (C.D. Ill. Oct. 20, 2022) (Judge Michael M. Mihm). Plaintiff Jackie Lysengen moved for reconsideration of the court’s order denying class certification in this action challenging the actions of fiduciaries during an Employee Stock Ownership Plan (“ESOP”) transaction and accompanying stock valuation. In this order the court not only affirmed its prior position but expanded upon its reasoning in support of denying certification as the court anticipates the decision will be appealed to the Seventh Circuit. To begin, the court upheld its view that a conflict exists in the proposed class. Prior to the creation of the ESOP, many of the proposed class members were participants in The Morton Buildings, Inc. 401(k) and ESOP (“KSOP”), including Ms. Lysengen. In the court’s view, the KSOP participants who received cash payments compensating them for alleged “undervaluation” of the stock, as well as those who were under a price-protected status immediately following the ESOP transaction, were financially different from, and potentially even in conflict with, other members of the proposed class. This “irreconcilable conflict” precluded Ms. Lysengen from satisfying the requirements of commonality and typicality under Rule 23(a). In addition, the court concluded that Ms. Lysengen did not satisfy the adequacy requirement because she was “in an unusual position in that she left the company while the KSOP stock value was depressed, but she was ineligible to receive the price protected status,” and her situation is therefore not clearly aligned with those of the other class members. These same complicating factors also prevented Ms. Lysengen from satisfying the requirements of Rule 23(b)(1). In the end, the decision to deny certification can be summed up simply: the conduct at issue hurt some of the class members and benefitted others and for this reason the claim was not common among them.

ERISA Preemption

Second Circuit

Murphy Med. Assocs. v. Cigna Health & Life Ins. Co., No. 3:20cv1675 (JBA), 2022 WL 10560321 (D. Conn. Oct. 18, 2022) (Judge Janet Bond Arterton). In this action plaintiffs are healthcare providers seeking reimbursement of COVID-19 testing and care they provided to insureds which went unpaid by defendant Cigna Health & Life Insurance Company. On March 11, 2022, the court issued an order dismissing in part plaintiffs’ complaint. As relevant here, the court dismissed two state law counts, a claim under Connecticut’s Unfair Insurance Act and a claim for unjust enrichment, as being preempted by ERISA. Plaintiffs have since moved for reconsideration of that decision. They argued that the court’s dismissal was improper because their state law claims were brought against both ERISA-governed and non-ERISA plans, and the court therefore should have allowed the state law claims to proceed for the non-ERISA plans. Plaintiffs wished to amend their complaint to specify that these two claims pertain to the non-ERISA plans. In this decision the court granted the motion for reconsideration and permitted plaintiffs to amend their complaint. The court agreed that ERISA preemption does not apply to non-ERISA plans, and because plaintiffs have now made clear to the court that they are bringing claims for non-ERISA plans, the court modified its judgment allowing the two state law claims to proceed for those plans not governed by ERISA.

Third Circuit

Rider v. PPG Indus., No. 21-1819-GBW, 2022 WL 10466974 (D. Del. Oct. 18, 2022) (Judge Gregory B. Williams). Plaintiff Ronald Rider sued PPG Industries, Inc. along with PPG’s welfare and retirement plans under both ERISA and state law to obtain retiree health and pension benefits that were promised to him when he was negotiating the terms of his employment returning to the company post-retirement. Mr. Rider claimed that during those negotiations PPG’s HR representative and recruiter made promises to him in writing that his benefits would be reinstated as if his employment with PPG, which dated back to the 1980s, had never ended. However, after accepting the position and agreeing to return to work for PPG, Mr. Rider was informed that he was ineligible for these benefits, which prompted him to commence litigation. Defendants moved to dismiss Mr. Rider’s state law breach of contract, promissory estoppel, and negligent misrepresentation claims. Defendants argued these claims are preempted by ERISA because they are duplicative of Mr. Rider’s Section 502 ERISA claims and therefore do not create any independent legal duty. The court agreed in part and disagreed in part. The court held that Mr. Rider’s breach of contract and promissory estoppel claims, at least at the pleading stage, are not preempted by ERISA because they are premised on an independent agreement between him and the company meaning that the factfinder could resolve those claims without relying on the terms of the ERISA plans. The motion to dismiss these two claims was thus denied. However, the court found that the negligent misrepresentation claim rested on Mr. Rider’s benefits eligibility and therefore his right to recovery depends upon the court interpreting the terms of the ERISA plans. Accordingly, the court concluded Mr. Rider’s negligent misrepresentation claim was preempted by ERISA. Consequently, the motion to dismiss the negligent misrepresentation claim was granted.

Pension Benefit Claims

Fourth Circuit

Dove v. Johnson, No. 4:20-CV-154-BO, 2022 WL 11282218 (E.D.N.C. Oct. 18, 2022) (Judge Terrence W. Boyle). “Who is the surviving spouse of Vaughan Johnson?” The answer to that question is the gravamen of this case. Two women, Faith Dove and Shirley Johnson, each believes that she is the surviving wife of former NFL player Vaughan M. Johnson, and therefore entitled to receive benefits from The Bert Bell/Pete Rozelle NFL Player Retirement Plan. Ms. Johnson, believing that Ms. Dove was never legally married to Mr. Johnson, moved to strike Ms. Dove’s affidavit and portions of her statement of facts which reference “marriage ceremony,” “lawful marriage,” “spouse” and other phrases of the like. The court denied the motion to strike, as Ms. Johnson’s own affidavit and statement of material facts made the same or similar references to her own marriage. Ms. Johnson’s motion for summary judgment on the ERISA claims was likewise denied. The court once again stressed that the record is not clear or definite as to the validity and status of either marriage. Accordingly, the court concluded that summary judgment could not be awarded at this juncture.

Plan Status

Ninth Circuit

Adams v. Symetra Life Ins. Co., No. CV-18-00378-TUC-JGZ, 2022 WL 10550558 (D. Ariz. Oct. 17, 2022) (Judge Jennifer G. Zipps). In this disability benefit action plaintiff Luke Adams brings state law causes of action against defendant Symetra Life Insurance Company. The parties have been disagreeing over the issues of plan status and ERISA preemption for years, with Mr. Adams maintaining the plan is not governed by ERISA and Symetra holding the opposite view. In 2020 the court ruled that the plan was not governed by ERISA. Now, more than two years after that ruling and just before the case is about to proceed to trial, Symetra has moved to reopen discovery to further develop facts relevant to its position that the plan is governed by ERISA and the state law causes of action are preempted. The court in this brief order denied Symetra’s motion to reopen discovery, holding that the insurer had not shown good cause or demonstrated due diligence to warrant granting the motion. Instead, the court directed Symetra to file briefing addressing why the issue of ERISA preemption is a contested fact and why Mr. Adams should not be entitled to partial summary judgment on the issue of ERISA preemption. The decision ended with the court stressing its intention not to cause further delay and ordering trial preparation to continue.

Provider Claims

Third Circuit

Advanced Orthopedics & Sports Med. Inst. v. Anthem Blue Cross Life & Health Ins. Co., No. 20-13243 (FLW), 2022 WL 13477952 (D.N.J. Oct. 21, 2022) (Judge Freda L. Wolfson). Plaintiff Advanced Orthopedics and Sports Medicine Institute, on behalf of an insured patient, sued Anthem Blue Cross Life and Health Insurance Company, Horizon Healthcare Services Inc., and Central Garden & Pet for underpayment of benefits for spinal surgical services it provided. Plaintiff brought claims under ERISA Sections 502(a)(1)(B), (a)(3), and (a)(3)(B). Defendants moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). As a threshold matter, the insurance companies argued that they are not proper parties to the action nor fiduciaries. The court agreed, and found they did not fund or underwrite the plan and were not otherwise functioning as fiduciaries. Accordingly, Anthem and Horizon’s motions to dismiss were granted. The court also dismissed the denial of full and fair review claim as to all defendants, holding that 29 U.S.C. § 1133 does not confer a private right of action. However, the remainder of defendant Central Garden & Pet’s motion to dismiss was denied.

Retaliation Claims

Fifth Circuit

Oliver v. Roehm Am., No. 21-1831, 2022 WL 11763644 (E.D. La. Oct. 20, 2022) (Judge Nannette Jolivette Brown). Plaintiff Chelsea Oliver was terminated from her employment working at Roehm America LLC after she took two family and medical leaves to undergo knee surgeries. In her action Ms. Oliver sued Roehm America, the company’s general counsel, its human resources manager, Chubb Insurance Company of New Jersey, and Federal Insurance Company, alleging violations of FMLA, Title VII, ERISA, ADA, and Louisiana state law. Roehm moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The motion was granted in part and denied in part. Specifically with regard to Ms. Oliver’s ERISA Section 510 claim, the court agreed with Ms. Oliver that she had stated a viable claim. Circumstantial evidence could lead a factfinder to conclude that Ms. Oliver’s termination was motivated at least in part by Roehm’s intent to interfere with Ms. Oliver’s attempt to obtain further costly medical and disability benefits.