Wit v. United Behavioral Health, No. 20-17363, __ F.4th __, 2023 WL 411441 (9th Cir. Jan. 26, 2023) (Before Circuit Judges Christen and Forrest, and District Judge Michael M. Anello)

In the March 30, 2022 edition of Your ERISA Watch, we examined the Ninth Circuit’s prior decision in this case, issued on March 22, 2022. We found it notable that despite the case’s long history – which includes numerous extensive orders by the district court on a variety of issues, including class certification, a ten-day bench trial, a finding that defendant United engaged in “pervasive and long-standing violations of ERISA,” and attorneys’ fees of more than $20 million – the Ninth Circuit cursorily reversed in a breezy eight-page non-precedential memorandum disposition.

Plaintiffs, a class of benefit plan participants who had alleged that United violated ERISA by denying their mental health and substance use disorder claims under medical necessity guidelines that were inconsistent with plan requirements, were understandably miffed. They filed a petition for rehearing and rehearing en banc, and numerous amici curiae weighed in as well.

In this decision the Ninth Circuit responded by withdrawing its 2022 memorandum disposition, replacing it with a new published opinion, and denying as moot the petition for rehearing and the amicus motions. The new opinion addresses the issues on appeal more thoroughly, but the result is not what the plaintiffs had hoped.

As in its prior decision, the Ninth Circuit first tackled standing. United argued that the plaintiffs “did not suffer concrete injuries” and “did not show proof of benefits denied,” and thus were not harmed by United’s guidelines. The court disagreed, holding that the plaintiffs had suffered a concrete injury because United’s alleged misadministration of their claims “presents a material risk to their interest in fair adjudication of their entitlement to their contractual benefits. Plaintiffs need not have demonstrated that they were, or will be, entitled to benefits to allege a concrete injury.”

The court also found that the plaintiffs’ injuries were “particularized because the Guidelines are applied to the contractual benefits afforded to each individual class member” and “fairly traceable” to United because plaintiffs’ interest in the proper interpretation of their benefits was connected to United’s improper conduct.

That was the end of the good news for the plaintiffs, however, as the Ninth Circuit moved on to the district court’s class certification order. In last year’s decision, the Ninth Circuit affirmed the district court’s ruling on this issue, holding that the plaintiffs’ breach of fiduciary claim “is capable of being resolved on a class-wide basis.” The court also found that the plaintiffs’ denial of benefits claim “avoided the individualized nature of the benefits remedy available under § 1132(a)(1)(B) by seeking ‘reprocessing.’” The court dodged the issue of whether the reprocessing remedy sought by the plaintiffs “overextended Rule 23 in violation of the Rules Enabling Act.”

Judge Forrest objected to this evasion in her concurrence last year, and in the new opinion the rest of the court agreed with her and squarely addressed this issue. The court observed that the plaintiffs had attempted to avoid the problem of “numerous individualized questions” for each benefit claim by seeking a uniform remedy, i.e., the “reprocessing” of their benefit claims by United. However, the court found that this strategy violated the Rules Enabling Act, which provides that procedural rules “shall not abridge, enlarge or modify any substantive right.”

Specifically, the Ninth Circuit stated that ERISA’s benefit claim provision (29 U.S.C. § 1132(a)(1)(B)) only provides a right to “recover benefits or to enforce or clarify rights under the plan.” Thus, reprocessing, which entails “a remand to the administrator for reevaluation” is not a proper remedy under this provision, and is only “a means to the ultimate remedy,” i.e., the payment of benefits. As a result, the court ruled that the district court violated the Rules Enabling Act by creating a substantive right not authorized in ERISA: “The district court abused its discretion in accepting the erroneous legal view that reprocessing is itself a remedy…independent from the express statutory remedies that Congress created, justifying class treatment.”

The court further ruled that reprocessing was not an available remedy under ERISA’s equitable relief provision (29 U.S.C. § 1132(a)(3)) for two reasons. First, the court stated that plaintiffs are not allowed to repackage their benefit claims as equitable claims, and second, the district court “did not explain or refer to precedent showing how a ‘reprocessing’ remedy constitutes relief that was typically available in equity.”

Next, the court addressed the merits of plaintiffs’ argument, and the result was the same as in last year’s ruling. Because the parties agreed that the standard of review was abuse of discretion, United’s decisions could only be overturned if they were “unreasonable.” The court emphasized that the benefit plans at issue “exclude coverage for treatment inconsistent with GASC [generally accepted standards of care] or otherwise condition treatment on consistency with GASC.” However, while this provision “mandates that a treatment be consistent with GASC as a starting point, it does not compel [United] to cover all treatment that is consistent with GASC. Nor does the exclusion – or any other provision in the Plans – require United to develop Guidelines that mirror GASC.” As a result, United’s interpretation of the plans was not unreasonable. The Ninth Circuit further ruled that the district court’s findings regarding United’s conflict of interest did not change this result.

Finally, the Ninth Circuit examined United’s exhaustion argument, another issue it ducked in last year’s decision. The court ruled in United’s favor on this as well. United contended that the district court erred by excusing unnamed class members from showing that they had complied with the plan’s contractual requirement that they exhaust all appeals before filing suit. The Ninth Circuit agreed, ruling that “application of judicially created exhaustion exceptions would conflict with the written terms of the plan.” Furthermore, the district court’s ruling once again violated the Rules Enabling Act because, “by excusing all absent class members’ failure to exhaust, the district court abridged [United’s] affirmative defense of failure to exhaust and expanded many absent class members’ right to seek judicial remedies.”

After all this, what remains of the plaintiffs’ lawsuit? The Ninth Circuit concluded that the plaintiffs “have Article III standing to bring their breach of fiduciary duty and improper denial of benefits claims,” and that the district court “did not err in certifying three classes to pursue the fiduciary duty claim.” However, the court also ruled that the plaintiffs’ class-wide reprocessing remedy was improper because it violated the Rules Enabling Act. It also ruled that United’s guidelines do not violate the requirements of the benefit plans. Plus, the court’s exhaustion ruling will require a reformulation of the classes in the action. As a result, while the case is not dead, the path forward back in the district court will be tricky.

Or, the plaintiffs could petition the Ninth Circuit for rehearing once again, which seems likely. Stay tuned to Your ERISA Watch to find out.

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


Third Circuit

Burnett v. Prudent Fiduciary Servs., No. C. A. 22-270-RGA-JLH, 2023 WL 387586 (D. Del. Jan. 25, 2023) (Magistrate Judge Jennifer L. Hall). In this putative class action, participants of the Western Global Airlines, Inc. Employee Stock Ownership Plan (“ESOP”) allege breaches of fiduciary duties in connection with a transaction selling stock to the ESOP at what plaintiffs allege was an inflated stock valuation. Plaintiffs’ complaint seeks plan-wide relief seeking to hold defendants liable for the losses resulting from the ESOP transaction and to disgorge any profits made through the plan assets. Additionally, plaintiffs seek removal of the plan trustee and other changes among the plan’s fiduciaries, “as well as certain other equitable and declaratory relief.” Defendants moved to compel arbitration and to either stay proceedings or dismiss the case pursuant to the Federal Arbitration Act. Plaintiffs opposed. They argued that the arbitration provision at issue contains a clause which bans them from seeking plan-wide relief, and because that portion of the arbitration provision is both invalid and not severable, defendants’ motion should be denied. Magistrate Judge Hall agreed. “The ERISA statute gives plan beneficiaries the right to sue on behalf of plan and recover plan-wide damages for a breach of fiduciary duty… But what the statue provides, the arbitration provision takes away… The arbitration provision thus eliminates a right to pursue a remedy provided by a federal statute.” Finally, the magistrate agreed with plaintiffs that the provision’s express language saying that the invalid provision cannot be severed meant that the court could not enforce the arbitration provision at all. Accordingly, Magistrate Judge Hall recommended that defendants’ motion be denied.

Attorneys’ Fees

Ninth Circuit

Robinson v. American Int’l Grp., No. 2:21-cv-00749-MEMF-MRWx, 2023 WL 375939 (C.D. Cal. Jan. 24, 2023) (Judge Maame Ewusi-Mensah Frimpong). Last September, the court issued an order granting summary judgment in favor of plaintiff Ian Robinson in this action challenging a denial of a claim for death benefits under an Accidental Death and Dismemberment Policy. Mr. Robinson subsequently filed a motion for an award of attorneys’ fees, costs, final judgment, and interest. To begin, the parties agreed that attorneys’ fees in the amount of $133,125 and costs in the amount of $2,735.25 were appropriate. Without any objection on the part of the defendant, the court granted the motion to award fees and costs in those amounts. Next, it was undisputed that the benefit claim amounted to $236,000, and defendant was found liable by the court for that amount. Most of the decision’s focus was directed on the primary dispute between the parties – the amount of prejudgment interest. Mr. Robinson argued that historically high inflation deprived him of a period of high growth and favorable returns had he been able to invest the benefit at the time when he filed the claim. Accordingly, Mr. Robinson sought the interest rate prescribed by California’s Civil Code in the amount of 10% per annum from the date of the breach of fiduciary duty. In contrast, defendants argued in favor of the 4.5% interest rate set under 28 U.S.C. § 1961. The court held that Mr. Robinson failed to demonstrate that he would have invested the benefit the manner outlined in his motion. Thus, the court concluded that the equities did not demonstrate the need in this case to award the greater interest rate. The court awarded prejudgment interest calculated at the rate of 4.66% per annum. Finally, the court declined to award compound interest. It stated that prejudgment interest is a form of compensation, not a penalty, and the court’s discretion is whether to award prejudgment interest, not whether the court “elects compound or simple interest.” Awarding compound interest, the court concluded, would be tantamount to imposing a penalty, “a request that the Court cannot accommodate.” Therefore, the court awarded simple interest. Using the established interest rate, the court awarded prejudgment interest of $29,738.72. For these reasons, Mr. Robinson’s motion was granted, as modified by the judge, and judgment was ordered in the amounts described above.

Breach of Fiduciary Duty

First Circuit

Erban v. Tufts Med. Ctr. Physicians Org., No. 22-11193-PBS, 2023 WL 363588 (D. Mass. Jan. 23, 2023) (Judge Patti B. Saris). In 2019, Dr. John Erban, an oncologist at Tufts Medical Center, was given a terminal diagnosis when test results revealed a malignant tumor. In the year between the date of his diagnosis and his death in September 2020, Dr. Erban suffered from cognitive impairments. After her husband’s death, widow Lisa Erban applied for life insurance benefits as the named beneficiary. Her claims for both basic and supplemental life insurance benefits were denied because the policies had lapsed when they were not converted to individual policies. Ms. Erban then brought this action under ERISA Section 502(a)(3) alleging that Tufts Medical Center Physicians Organization and its director of human resources, Nicolas Martin, breached their fiduciary duties by failing to instruct Ms. Erban to continue paying premiums, and failing to inform her about the deadline to convert her husband’s life insurance plans. Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). In this order the court denied the motion “on the grounds Plaintiff Lisa Erban has stated a plausible claim that Defendants breached their fiduciary duty in light of their knowledge of Dr. Erban’s impaired cognitive ability and that Nicolas Martin, an employee and Human Resources Director, acted as a fiduciary.” The court went on to stress that because defendants were aware of Dr. Erban’s illness, they had an affirmative obligation to inform the Erbans and provide them with accurate and complete material information on their benefit status and options to continue coverage. As the court wrote, “the HR staff knew that the Erbans’ main focus was to ‘assure continuance of active status’ of his life insurance policy,” accordingly, they had a fiduciary duty “to do more than simply not misinform.”

Turner v. Schneider Elec. Holdings, No. 20-11006-NMG, 2023 WL 387592 (D. Mass. Jan. 24, 2023) (Judge Nathaniel M. Gorton). Participants of the Schneider Electric 401(k) Plan initiated a putative class action against the plan, Schneider Electric, the plan’s benefits and investments committees, and the plan’s investment manager, Aon Hewitt Investment Consulting, Inc., for breaches of fiduciary duties of prudence, loyalty, and to monitor after Aon Hewitt replaced existing plan investment options with its own set of proprietary investment trusts. According to plaintiffs, the plan’s decision to invest in these Aon Hewitt trusts resulted in major losses to participants’ retirement savings through underperformance and unreasonably high associated management and recordkeeping fees. Defendants moved for summary judgment. The court first addressed plaintiffs’ breach of fiduciary duty claim arising from the selection of the Aon Trusts. Defendants argued that plaintiffs failed to prove that the plan suffered any losses from the selection and retention of the Aon Trusts. They stated that, to the contrary, thanks to profit earned on separate investments, the plan actually accrued a gain of $27 million during the relevant time period. Plaintiffs pushed back on the concept that a fiduciary is able “to reduce its liability by profit earned on separate investments.” The court held that “combining gains and losses is permissible in the negligence context,” and accordingly found that plaintiffs failed to prove as a matter of law that the selection of the Aon Trusts was imprudent or disloyal. As this was the only claim asserted against defendant Aon Hewitt, the court granted summary judgment in favor of Aon Hewitt and dismissed it from the action. The remaining defendants were granted summary judgment on this claim alone and were not dismissed. Plaintiffs’ breach of fiduciary duty claims of imprudence and monitoring related to the fees were found to have genuine issues of material fact precluding summary judgment.

Eighth Circuit

Riley v. Olin Corp., No. 4:21-cv-01328-SRC, 2023 WL 371872 (E.D. Mo. Jan. 24, 2023) (Judge Stephen R. Clark). Federal Rule of Civil Procedure 8 requires that, in order to state a claim for relief, a pleading must contain “a short and plain statement of the claim showing the pleader is entitled to relief.” However, in the context of ERISA breach of fiduciary duty putative class actions, short and plain statements no longer suffice under precedents set by many of the circuit courts. Rather, specificity, detail, and sufficiently similar comparators have become the keys to unlocking the courthouse door past pleading. And unless complaints are sufficiently festooned with these extras, courts are becoming more and more unwilling to find their allegations of wrongdoing plausible. Such was the case here. Last summer, the court granted defendants’ motion to dismiss plaintiffs’ complaint, which alleged that the fiduciaries of their ERISA retirement plan failed to adequately monitor the plan’s fees, improperly maintained underperforming funds, and failed to prudently select investment options. At the time, the court held that plaintiffs’ complaint did not plausibly state an inferential case that defendants’ actions as fiduciaries of the Olin Corporation retirement plan were imprudent or that their process was flawed. Following the court’s dismissal, plaintiffs moved for leave to amend their complaint. The court denied their motion on futility grounds in this decision. Specifically, the court expressed that plaintiffs’ updated comparisons of the challenged fees and funds were inapposite and thus not meaningful benchmarks with which to compare and contrast. Funds costing more or performing worse than other available options the court stated, “does not, in and of itself, an ERISA violation make.” The court concluded that while courts may not resolve factual questions on the pleadings, they may, and under Eight Circuit precedent must, “analyze whether a meaningful benchmark exists at the motion-to-dismiss phase.” Here, the court found meaningful benchmarks were not provided. Accordingly, the court held the amended complaint failed to address or rectify the deficiencies it previously identified and for this reason denied plaintiffs’ motion to amend.

Class Actions

Second Circuit

Garthwait v. Eversource Energy Serv. Co., No. 3:20-CV-00902 (JCH), 2023 WL 371036 (D. Conn. Jan. 24, 2023) (Judge Janet C. Hall). On December 7, 2022, the court issued an order in this breach of fiduciary duty class action allowing plaintiffs to proceed with some of their ERISA claims before a jury. Your ERISA Watch summarized that decision in its December 14,2022 issue. Following that order, defendants moved for a certificate of appealability and to stay the proceedings. In their motion, defendants argued that neither ERISA nor the Seventh Amendment provide a jury trial right and orders about the availability of jury trials “are often certified for interlocutory appeal.” The court disagreed, writing, “[c]ontrary to defendants’ argument, however, courts in this Circuit have denied motions for certificates of appealability regarding the jury trial right in ERISA cases.” And, although the court recognized that whether ERISA cases are tried in front of a jury is an important issue without consensus, the court stated that it is not a “controlling” issue. Furthermore, the court pointed out that selecting a jury would require minimum time and impact for what will surely be a “multi-week trial (whether before a jury, the court, or both.)” Meanwhile, allowing appeal of this interlocutory order would be a substantial time drain protracting the litigation. On balance, the court found there was significant downside to granting defendants’ request. Accordingly, it denied the motion to issue a certificate of appealability.

Disability Benefit Claims

Eighth Circuit

Elias v. Unum Life Ins. Co. of Am., No. 21-cv-1813 (WMW/TNL), 2023 WL 375649 (D. Minn. Jan. 24, 2023) (Judge Wilhelmina M. Wright). Plaintiff Bijan Elias brought this action under ERISA against Unum Life Insurance Company of America after Unum terminated his long-term disability benefits. The parties cross-moved for summary judgment and agreed that the plan’s discretionary clause triggered deferential review. Mr. Elias offered several reasons why he believed Unum’s termination of benefits constituted an abuse of discretion. First, Mr. Elias maintained that Unum selectively picked from the medical record to support its desired result and ignored evidence of Elias’s disability. The court disagreed. As this was primarily an instance of differing conclusions between medical professionals, the court concluded it was not an abuse of discretion for Unum to disagree with Mr. Elias’s treating doctors so long as it offered reasonable explanations for drawing different conclusions. As the court felt Unum had done so here, it held that a reasonable person could have reached Unum’s conclusions and therefore concluded that Unum did not abuse its discretion by ignoring favorable evidence of disability. Next, Mr. Elias argued that Unum failed to demonstrate substantial evidence of an improvement in his condition from the date of its approval of disability benefits in 2008 to the date when it terminated the benefits in 2021. The court again disagreed, pointing to evidence of improvement in Mr. Elias’s conditions between 2016 and 2021 that affected the benefits determination. Mr. Elias also argued that Unum failed to consider the combined effects of his multiple physical and mental health conditions. Again, the court disagreed, as it viewed Unum’s review as holistic. Regarding Mr. Elias’s argument that Unum unreasonably relied on a paper review, the court expressed that an in-person review may have been stronger or more desirable but was not strictly necessary. Mr. Elias also contended that Unum acted arbitrarily and capriciously by failing to review his appeal fully and fairly by not proving him with the opportunity to review and respond to the reviewing doctor’s reports in violation of the 2018 Department of Labor regulation. The court stated that the 2018 regulation’s rights did not apply to claims filed before 2018. However, this aspect of the court’s ruling was at odds with last week’s notable decision from the Seventh Circuit, Zall v. Standard Ins. Co., which found that the 2018 regulation should be applied if the benefit termination occurred after 2018. Finally, Mr. Elias argued that Unum had a history of biased claims administration that the court should consider in its decision-making. However, the court stated that it would not consider Unum’s history of bias because “Unum’s period of biased claims administration ended before 2003.” Accordingly, the court affirmed Unum’s decision and granted its motion for summary judgment. Mr. Elias’s cross-motion for summary judgment was denied. 

Ninth Circuit

Connor v. Unum Life Ins. Co. of Am., No. 21-15034, __ F. App’x __, 2023 WL 417903 (9th Cir. Jan. 26, 2023) (Before Circuit Judges Bybee, Callahan, and Collins). In a straightforward and brief unpublished decision, the Ninth Circuit affirmed a district court judgment awarding plaintiff Caroline Connor long-term disability benefits and attorney’s fees. Defendant Unum Life Insurance Company of America was unable to persuade the appeals court that the district court abused its discretion in concluding that Ms. Connor is disabled and was a full-time active employee eligible for benefits under the plan. Relying on the unambiguous plan language, the court of appeals agreed with the lower court that active employment was defined as “working at least 30 hours per week,” and although the term “full-time” was not expressly defined, it was a reasonable interpretation of the plan to read the 30-hour minimum required for active employment as setting the hourly minimum for full-time work. In fact, the Ninth Circuit wrote, “it would be odd to read the eligibility provision as expressly specifying a particular numerical standard for weekly work, only to then implicitly override that numerical standard by the additional use of a general and undefined term.” The court also stated that it found no clear error in the district court’s determination that Ms. Connor worked at least 30 hours per week. Finally, because the Ninth Circuit affirmed the judgment on the merits in favor of Ms. Connor, it also upheld the award of attorney’s fees pursuant to Section 502(g)(1). Here, no “special circumstances would render such an award unjust.”

ERISA Preemption

Third Circuit

Johnson & Johnson Health Care Sys. v. Save on SP, LLC, No. 22-2632, 2023 WL 415092 (D.N.J. Jan. 25, 2023) (Judge John Michael Vazquez). Plaintiff Johnson & Johnson Health Care Systems Inc. administers a financial assistance program to help patients afford out-of-pocket costs for some of Johnson & Johnson pharmaceutical’s most costly medications, including its biologics. As part of the program’s eligibility criteria, prospective patients wishing to enroll must agree to the program’s terms and conditions which include, among other things, an agreement not to utilize any other coupon or engage in any other savings program. In this lawsuit, plaintiff alleges that defendant Save on SP, LLC and its cost-savings program have artificially reclassified some of Johnson & Johnson’s medications as non-essential in order to raise the co-pay costs for participants of healthcare plans taking these drugs. This was allegedly part of a scheme to pressure patients, including those enrolled in Johnson & Johnson’s payment assistance program, to enroll in Save on SP’s savings program to avoid the exorbitant out-of-pocket costs. Thus, Johnson & Johnson Health alleges that defendant Save on SP knowingly operates its program in violation of the terms and conditions of Johnson & Johnson’s program and is financially depleting the Johnson & Johnson payment assistance program, to the economic benefit of defendant and its partners. Save on SP moved to dismiss for failure to state a claim. It argued that plaintiff’s tortious interference and deceptive trade practice claims are preempted by ERISA. The court disagreed. “Granting relief to Plaintiff on either claim would not require plan administrators to make any plan changes,” as the claims here “do not mandate certain payments or impose any new rules on plan administrators.” Given this, the court stated that the claims do not undermine ERISA’s objective of facilitating uniform plan administration and procedures and were therefore not connected to any ERISA plan for the purposes of preemption. Furthermore, the court emphasized that the claims do not reference or rely on the terms of any ERISA plan because the Save on SP program applies to both ERISA and non-ERISA plans and the court will not need to interpret the meaning of any plan provision to rule on the claims. In addition to finding that ERISA did not preempt the claims, the court also found that Johnson & Johnson adequately stated its claims and had constitutional standing to assert them. Accordingly, the motion to dismiss was denied.

Exhaustion of Administrative Remedies

Second Circuit

Israel v. Unum Life Ins. Co. of Am., No. 21-CV-4335 (GHW) (JLC), 2023 WL 491039 (S.D.N.Y. Jan. 27, 2023) (Magistrate Judge James L. Cott). Plaintiff Jessica Israel brought suit under ERISA against Unum Life Insurance Company after Unum denied her claims for long-term disability benefits and a waiver of her life insurance premium. The parties filed cross-motions for summary judgment. At issue was whether Ms. Israel exhausted her administrative remedies before taking legal action. Ms. Israel argued that the written letter she submitted challenging the long-term disability benefit determination constituted an appeal under the guidelines provided by Unum. Conversely, Unum stated that Ms. Israel never formally appealed either benefit determination and she therefore lacks a legal basis to challenge the terminations. The court found for each party in part. Pertaining to the long-term disability appeal, the court agreed with Ms. Israel that she had properly taken the steps to appeal. Furthermore, any lack of clarity on the issue, the court stated, should be weighed in favor of Ms. Israel, as the onus is on Unum to comply with ERISA’s regulations. Additionally, the court found Unum’s review to be “ad hoc” and wrote that “Israel’s claim could alternatively be deemed exhausted on the grounds that Unum’s extra-regulatory review of her submissions following the initial May 15 Determination triggered exhaustion of Israel’s claim.” Thus, Ms. Israel’s long-term disability claim was deemed exhausted, and she was granted summary judgment on this issue. The court remanded to Unum for a full and fair review of the long-term disability benefit claim. This remedy was determined appropriate in this case because “the crux of this matter is not substantive but procedural.” Finally, the court held that Ms. Israel failed to exhaust her claim pertaining to her waiver of premium benefit, as “[n]othing in the record suggests that Israel…attempted to appeal the May 21 decision with respect to WOP benefits.” Accordingly, summary judgment was granted in favor of Unum with respect to this claim.

Life Insurance & AD&D Benefit Claims

Sixth Circuit

Igo v. Sun Life Assurance Co. of Can., No. 1:22-cv-91, 2023 WL 406195 (S.D. Ohio Jan. 25, 2023) (Judge Timothy S. Black). Plaintiff Patrick Igo brought an ERISA lawsuit seeking the full amount of life insurance benefits his late husband, Dr. Marcos Estrada Gomez, elected and paid premiums on. Mr. Igo’s claim for benefits was paid at a lower rate because the plan’s administrator and insurance company, Sun Life Assurance Company of Canada, found that Dr. Estrada Gomez had not included an evidence of insurability form with his option to increase his coverage. In his complaint, Mr. Igo argued that an evidence of insurability form was not required as part of the election form and Dr. Estrada Gomez therefore met all the necessary conditions for receipt of his full elected benefits. Defendants Sun Life and Benefit Advisors Services Group, LLC moved to dismiss. Their motion was denied, as it was not only untimely, but also because the court disagreed with their assertion that Mr. Igo’s complaint impermissibly engaged in group pleading of the defendants. The court stated that the complaint adequately alleges that the defendants all had a hand in administering the plan and in making benefit determinations, and that the complaint sufficiently puts the defendants on notice of the allegations against them. Thus, the motion to dismiss was denied. Finally, the court granted Mr. Igo’s motion to voluntarily dismiss defendant Bon Secours Mercy Health, Dr. Estrada Gomez’s former employer, as Mercy Health reached a settlement with Mr. Igo.

Ninth Circuit

Wilcox v. Dearborn Ins. Co., No. 2:21-cv-04605-JLS (JCx), 2023 WL 424256 (C.D. Cal. Jan. 26, 2023) (Judge Josephine L. Staton). Plaintiff Kevin Wilcox brought this action against Dearborn Insurance Company challenging its denial of waiver of premium due to disability on his life insurance policy. Mr. Wilcox, who has a diagnosis of HIV, argued that his physical, psychological, and neurological symptoms have rendered him totally disabled from any occupation and that he should therefore qualify for the waiver of premium. The parties moved for judgment pursuant to Federal Rule of Civil Procedure 52. The court reviewed the medical record de novo, emphasizing that the burden of proof of disability lay with Mr. Wilcox. Mr. Wilcox issued a statement expressing “that he’s not been able to drive since 2013, that his spouse quit his job to take care of him full time in 2014 due to his cognitive decline…that he has lost control of his bowels and bladder, that he has frequent falls from peripheral neuropathy and has ‘pain at a level 6 of 10 on most days,’ and that he also has severe outbreaks of psoriasis.” Notwithstanding Mr. Wilcox’s complaints within his personal statement and throughout litigation and his submission of a voluminous medical record that both pre- and post-dated the date that Dearborn discontinued plaintiff’s life insurance premium waiver, the court held that Mr. Wilcox did not adequately support his position with contemporaneous office notes and treatment records. Accordingly, the court held that Mr. Wilcox failed to meet the definition of totally disabled and upheld Dearborn’s decision to discontinue his life insurance premium waiver. Thus, judgment was entered in favor of Dearborn.

Medical Benefit Claims

Third Circuit

Tamburrino v. United HealthCare Ins. Co., No. 21-12766 (SDW)(ESK), 2023 WL 416157 (D.N.J. Jan. 26, 2023) (Judge Susan D. Wigenton). A surgeon and a covered patient have brought a putative class action challenging United Healthcare Insurance Company’s uniform claim practice of denying coverage for the cost of assistant or co-surgeons for women undergoing post-mastectomy reconstructive breast surgery. Plaintiffs asserted causes of action under ERISA Sections 502(a)(1)(B) and 502(a)(3), seeking payment of benefits along with other equitable relief including reprocessing and an injunctive order changing United’s practice. United moved to dismiss plaintiffs’ breach of fiduciary duty claims pursuant to Section 502(a)(3). It argued that plaintiffs’ claims for breaches of fiduciary duties were duplicative of their claims for benefits. Plaintiffs, on the other hand, argued that their fiduciary breach claims are distinct from their claim for benefits. Specifically, plaintiffs asserted that United breached its duty of loyalty and violated the Women’s Health and Cancer Rights Act, a law specifically designed to ensure breast cancer patients have access to reconstructive plastic surgery. In this order the court sided with United. The court viewed plaintiffs’ breach of duty of loyalty claims to be conclusory and to fall short of alleging facts which could support a conclusion that United acted to benefit itself. Regarding plaintiffs’ claims that United violated the Women’s Health and Cancer Rights Act, the court held that the Act does not specify the level of coverage that must be provided, and so interpreted the law to allow for United’s actions alleged here. Thus, the court concluded plaintiffs did not sufficiently allege a violation of the Act to warrant equitable relief under Section 502(a)(3). Accordingly, United’s motion to dismiss the breach of fiduciary duty claims asserted against it was granted. Dismissal of these claims was with prejudice.

Fourth Circuit

L.L. v. MedCost Benefits Servs., No. 1:21-cv-00265-MR, 2023 WL 362391 (W.D.N.C. Jan. 23, 2023) (Judge Martin Reidmger). A mother and her minor child sued MedCost Benefit Services and the Mountain Area Health Education Center Medical and Dental Care Plan in a two-count ERISA complaint. Plaintiffs sought both recovery of medical benefits for the cost of a stay at a residential treatment facility under Section 502(a)(1)(B) and equitable relief under Section 502(a)(3) for violating the Mental Health Parity and Addiction Equity Act. Defendants moved for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6). To begin, the court denied MedCost’s motion to dismiss plaintiffs’ claim for recovery of benefits. “L.L. alleges the existence of an ERISA-governed plan, and alleges that E.R. was a beneficiary of the plan. She goes on to identify the provision of the Plan that she contends entitles E.R. to coverage; she specifically alleges that the Plan covers medically necessary treatment at residential facilities…L.L. alleged that the treatment at (the facility at issue) was medically necessary, and that (it) was not an excluded facility.” A plaintiff, the court held, need not plead more to plausibly allege an ERISA medical benefits claim. However, the court held that the injury of plaintiffs’ Section 502(a)(3) claim was not distinct from the injury of their claim for benefits. Thus, the court found “equitable relief pursuant to § 1132(a)(3) is not appropriate.” Plaintiffs’ second claim was accordingly dismissed. Defendants’ motion was thus granted in part and denied in part. Finally, plaintiffs were ordered to show cause as to why they should be allowed to proceed under pseudonyms.

Provider Claims

Fifth Circuit

Bailey v. Avis Budget Grp., No. 11-22-1647, 2023 WL 375371 (S.D. Tex. Jan. 23, 2023) (Judge Lynn N. Hughes). A healthcare provider, Jason Bailey, and a covered plan participant, Michelle Fairley, sued Avis Budget Group, Inc., and Aetna Life Insurance Co. under ERISA Section 502(a)(1)(B) challenging the amount the healthcare plan paid for medically necessary breast reconstruction surgery following a mastectomy. Defendants moved to dismiss plaintiff Jason Bailey for lack of standing. Defendants provided the court with a copy of the plan which includes a valid and unambiguous anti-assignment provision. Given the evidence provided by defendants and the fact that plaintiffs did not file a response, the court granted the motion and dismissed Jason Bailey’s claims in the case. Accordingly, the action will remain with Ms. Fairley as the plaintiff.

Seventh Circuit

Advanced Physical Med. of Yorkville v. Cigna Healthcare of Ill. Inc., No. 22-cv-1581, 2023 WL 358575 (N.D. Ill. Jan. 23, 2023) (Judge Jorge L. Alonso). Healthcare provider Advanced Physical Medicine of Yorkville sued Cigna Health Management Inc. after one of its patients, Zachary Jump, was denied reimbursement for therapeutic services it provided to him. In this action, Advanced Physical sought recovery of plan benefits as well as statutory penalties for failure to provide plan documents upon request. Cigna moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Cigna attached a copy of the plan to its motion and argued that in light of the plan’s unambiguous anti-assignment provision the provider could not proceed on its ERISA claims. The court agreed and held the benefits are not assignable. “Similarly, Plaintiff’s contention that it is a beneficiary because it was Jump’s authorized representative lacks a basis in law. An ERISA beneficiary is someone ‘entitled to a benefit’ under a plan…not someone authorized to vindicate another’s right to benefits.” Mr. Jump, the court stated, is the proper beneficiary under the plan and is thus “the real party-in-interest.” Furthermore, the court held that a claim for failure to provide plan documents needs to be asserted against the plan administrator, which the plan states is Starbucks not Cigna. As a result, the court dismissed both causes of action for failure to state a claim, and did so with prejudice, concluding, “repleading would be futile.”

Eleventh Circuit

Surgery Ctr. of Viera v. Cigna Health & Life Ins. Co., No. 6:22-cv-393-JA-LHP, 2023 WL 375556 (M.D. Fla. Jan. 24, 2023) (Judge John Antoon II). Plaintiff Surgery Center of Viera, LLC, sued Cigna Health & Life Insurance Company after a claim it submitted for reimbursement of a pre-approved surgery performed on an insured patient was paid at an amount well below the billed charge, allegedly in violation of a repricing agreement between the parties. In its complaint, Surgery Center of Viera asserted three causes of action: breach of contract, unjust enrichment, and quantum meruit. Cigna moved to dismiss the complaint. Cigna argued that the complaint “constitutes an impermissible ‘shotgun pleading,’” and that the state law claims are preempted by ERISA. The court agreed with Cigna on both points. The court reprimanded plaintiff for interweaving necessary facts among legal conclusions and premature arguments. “The result is not a ‘short and plain statement of the claim’…but a frustrating thicket of roughhewn prose in which Cigna – and the Court – are forced to forage for morsels of relevant information.” Along with taking issue with the pleading’s prose and generally finding that the complaint did not satisfy Federal Rule of Civil Procedure 8, the court also found ERISA preempts the state law claims as those claims have “a connection with or reference to an ERISA plan,” and there is no way to determine what amount the provider should be paid without consulting that plan. For these reasons, the court granted the motion and dismissed the complaint.

Retaliation Claims

Sixth Circuit

Schramm v. Neenah Paper Mich., Inc., No. 2:22-cv-00047, 2023 WL 415592 (W.D. Mich. Jan. 25, 2023) (Magistrate Judge Maarten Vermaat). Magistrate Judge Vermaat issued this report and recommendation recommending the court grant in part and deny in part defendant Neenah Paper Michigan, Inc.’s motion to dismiss this wrongful termination and retaliation action under ERISA’s whistleblower provision. Plaintiff Thomas Schramm alleged that his employer took retaliatory actions against him after he reported a chemical spill of 2,000 gallons of bleach at the plant where he worked to the Michigan Department of Environment, Great Lakes, and Energy. As pertains to ERISA, Mr. Schramm brought a Section 510 claim alleging he was fired in retaliation for attempting to exercise his rights under the company’s health insurance plan. Defendant argued that Mr. Schramm argued only that he was “working through his Union to clarify and secure his rights under Neenah’s health insurance plan,” that this allegation is not sufficient to demonstrate that he was exercising a right under the plan, and therefore it is not an activity protected under ERISA. The Magistrate Judge agreed, concluding that Mr. Schramm did not sufficiently state a claim alleging he was terminated due to his use of an employee benefit and thus recommended Mr. Schramm’s ERISA claim be dismissed.

Severance Benefit Claims

Fifth Circuit

Dunn v. Southwest Airlines Co., No. 3:21-CV-1393-X, 2023 WL 360246 (N.D. Tex. Jan. 23, 2023) (Judge Brantley Starr). In May 2020, plaintiff Lafe Dunn, a pilot employed by Southwest Airlines, went on sick leave to enter a substance abuse treatment program to address mental health problems. Just days after he took his sick leave, on June 1, 2020, Southwest created a voluntary separation program in response to the COVID pandemic which would provide severance payments to those interested in voluntarily resigning. Mr. Dunn was interested in taking this deal and applied to participate. The plan stated that Southwest offered this program to “Pilots on active status at Southwest as of June 1, 2020.” Mr. Dunn’s claim for benefits was denied by the board of trustees who interpreted the undefined term “active status” as excluding pilots who were on leave of absence from work as of June 1, 2020. Accordingly, Mr. Dunn’s benefit application was denied, despite oral promises and assurances from Mr. Dunn’s superiors that he would certainly qualify. After an unsuccessful internal appeal, Mr. Dunn brought this lawsuit in which he alleged two causes of action: wrongful denial of benefits under Section 502(a)(1)(B) and breach of fiduciary duty under Section 502(a)(3). The parties cross-moved for summary judgment on both counts. First, the court granted summary judgment to Southwest on Mr. Dunn’s benefit claim. The court determined the plain meaning of the word “inactive,” defined as “’being out of use’ or ‘not performing or available for duties,’” supported the board’s decision to deny benefits. Mr. Dunn argued that considering an employee on sick leave as being inactive is problematic for several reasons, not least because the employee could “fall in and out of insurance coverage as that employee fell in and out of ‘active employment.’” The court stated that because the board reasonably believed Mr. Dunn’s absence from work for medical reasons would last at least six months, Mr. Dunn’s arguments and concerns were irrelevant to the present situation. Thus, under abuse of discretion review, the decision was upheld. Next, the court denied both parties’ motions for summary judgment on the breach of fiduciary duty claim. The court disagreed with Southwest that Mr. Dunn’s claim for breach of fiduciary duty was duplicative of his claim for benefits. Not only were the facts distinct for each claim, but the court also stated that its decision to grant summary judgment to Southwest on the claim for benefits meant that there was “no predicate claim of which his § 1132(a)(3) claim could be duplicative.” However, Mr. Dunn was also unable to convince the court that he was entitled to summary judgment on the breach of fiduciary duty claim. Thus, Mr. Dunn’s summary judgment motion was denied, and Southwest’s cross-motion for summary judgment was granted in part and denied in part.