Peters v. Aetna Inc., No. CIVIL 1:15-cv-00109-MR, 2023 WL 3829407 (W.D.N.C. Jun. 5, 2023) (Judge Martin Reidinger)

Fee cases have long been a dominant part of pension litigation. With the increased scrutiny on healthcare plan practices and the uptick in ERISA healthcare litigation in recent years, plan participants and fiduciaries are increasingly challenging fees and costs associated with their healthcare plans. Today’s notable decision is a good example of this trend.

Plaintiff Sandra M. Peters brought a putative class action to challenge a billing scheme between insurance company Aetna and its subcontractor Optum. Ms. Peters alleges that the Aetna and Optum defendants circumvented the terms of the 1,954 self-funded ERISA healthcare plans encompassed in the putative class, all of which specify that Aetna is responsible for covering all subcontractor costs. Ms. Peters alleges Aetna buried the natures of these costs and billed the plans, participants, and beneficiaries for reimbursement of these administrative fees by using a dummy code to treat Optum as a medical provider rather than a subcontractor.

The case has a long procedural history. In her original complaint, Ms. Peters brought claims under ERISA Sections 502(a)(1)(B), (a)(2), and (a)(3) for restitution of the overcharged amounts, disgorgement and surcharge of improper gains, and several forms of declaratory and injunctive relief, including prospective relief. Ms. Peters seeks to bring her case as a class action on behalf of two classes, a plan class and a participant class.

After the discovery period ended, Ms. Peters moved for class certification and the defendants moved for summary judgment. The court granted summary judgment in favor of the defendants and dismissed all of Ms. Peters’ claims. She appealed to the Fourth Circuit, which ruled largely in her favor, reversing, vacating, and remanding much of the court’s summary judgment order. The Fourth Circuit’s decision in the case was Your ERISA Watch’s case of the week in our June 30, 2021 edition.

On remand from the court of appeals, Ms. Peters and the defendants renewed their arguments for and against her standing to assert her claims, Optum reasserted its arguments that it should be dismissed, and Ms. Peters renewed her arguments for class certification. The district court addressed each of these arguments in turn.

First, the court addressed the effect of the Fourth Circuit’s decision on Ms. Peters’ restitution claims. The Fourth Circuit held that Ms. Peters could not show a financial loss to establish standing on her restitution claim under the criteria set forth in Donovan v. Bierwirth, 754 F.2d 1049 (2d Cir. 1985), because Ms. Peters and her plan actually paid less than or equal to what they would have paid for her healthcare claims if Optum’s administrative fee were not included in the billed charge. In light of this ruling from the Fourth Circuit, the district court unsurprisingly dismissed Ms. Peters’ restitution claims under Section 502(a)(2).

Second, the court addressed defendants’ arguments regarding Ms. Peters’ standing to bring the rest of her claims. Again relying on the Fourth Circuit’s decision, the court was satisfied that Ms. Peters and the proposed classes have standing to bring the claims for equitable relief. The district court agreed with the Fourth Circuit that financial injury is not a prerequisite to pursue claims of surcharge, disgorgement, declaratory, and injunctive relief. The court also stated that it disagreed with defendants’ position that the Fourth Circuit’s holding with respect to standing was in conflict with standing decisions from the Supreme Court. Nevertheless, the district court held that Ms. Peters, who is no longer a plan participant insured by Aetna, lacked standing to assert claims for prospective declaratory and injunctive relief because she lacks a concrete risk of future harm. Therefore, her claim for prospective injunctive relief was dismissed.

In the third section of the decision, the court tackled Optum’s renewed request for dismissal from the class action. The district court concluded that “Optum’s arguments are foreclosed by the Fourth Circuit’s opinion.” The district court pointed out that the court of appeals had already concluded that Ms. Peters “presented sufficient evidence from which a reasonable factfinder could conclude that ‘Optum could be held as a party in interest involved in the prohibited transactions based on its apparent participation in and knowledge of Aetna’s administrative fee billing model.’” On this basis, the court denied Optum’s request to be dismissed.

In the final and longest section of the decision, the court assessed Ms. Peters’ class certification motion. As a preliminary matter, the court agreed with Ms. Peters that the proposed class members were ascertainable based on the defendants’ own data identifying the members, the plans, and the fees charged for each particular claim. The court then evaluated the two putative classes under Rule 23(a) and concluded that they met Rule 23(a)’s requirements. Regarding numerosity, there was no dispute that the class was sufficiently numerous given the 87,754 plan participants and 1,954 plans that were billed the administrative fees. As for commonality, the court identified several issues of law and fact that were common to all putative members related to both Aetna and Optum’s conduct. The court applied this same logic to its typicality assessment, concluding that Ms. Peters’ claims and the claims of the putative classes are based on the same facts and legal theories and therefore are typical of those of the classes. Finally, the court found that Ms. Peters and her experienced class counsel from the Van Winkle Law Firm and Zuckerman Spaeder LLP had proven that they could adequately represent the classes.

With the requirements of Rule 23(a) cleared, the court turned to the requirements of Rule 23(b). It found that there is a risk of inconsistent judgments resulting in conflicting standards of conduct for the defendants if the case cannot proceed as a class action. Furthermore, the court concluded that common issues predominate over insignificant individual differences, and that “judicial economy weighs heavily in favor of proceeding as a class action,” as “there is little incentive for individual plaintiffs to bring their cases independently because the cost of doing so far exceeds the value of their individual claims.” Having determined that Ms. Peters met the criteria for certification under both Rule 23(a) and (b), the court granted her motion to certify the two classes.

Clearly, this decision represents a significant victory for Ms. Peters and the participants and plans she now represents. But considering the many years it has taken to get to this point, this case demonstrates the challenges for both plaintiffs and defendants in ERISA healthcare litigation.

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

Breach of Fiduciary Duty

Sixth Circuit

Davis v. Magna Int’l of Am., No. 20-11060, 2023 WL 3821807 (E.D. Mich. Jun. 5, 2023) (Judge Nancy G. Edmunds). Participants in the Magna Group of Companies Retirement Savings 401(k) Plan sued Magna International of America, Inc., its board of directors, and two committees of the plan, an investment committee, and a retirement savings committee, for breaches of fiduciary duties of loyalty, prudence, and monitoring. The plaintiffs claim that defendants breached their duties to the plan and its participants by failing to review the plan’s investment portfolio to ensure that the investment options were prudent in terms of costs and performance. Defendants moved for summary judgment. The court granted in part and denied in part their motion. It began with an assessment of plaintiffs’ claims for breaches of fiduciary duties of prudence and loyalty. With regard to the investment option claims, the court held that defendants’ arguments defending their actions in selecting and retaining the challenged share classes, mutual funds, and collective trusts could not be resolved without the court weighing or interpreting the evidence. “Viewing the evidence in the light most favorable to Plaintiffs, the Plaintiffs have raised genuine issues of material fact related to whether the Defendants prudently monitored the Plan’s challenged investments.” As a result, the court denied defendants’ motion for summary judgment on the investment option claims. The court also denied defendants summary judgment on the recordkeeping costs claims. It concluded that the plaintiffs have presented compelling evidence that challenged whether the monitoring of recordkeeping fees was prudent. Specifically, the court agreed with plaintiffs that defendants had a duty to monitor costs on an ongoing basis, and that they likely did not do so here as they failed to regularly solicit bids from competitors and “predominately relied only on information provided by Principal (the plan’s recordkeeper) to monitor the Plan’s fees, including through documents produced by Principal.” Thus, the court agreed with plaintiffs that there were genuine issues of material fact as to whether defendants adequately monitored fees. Also, the court concluded that plaintiffs had enough evidence to allow them to continue with their breach of loyalty claim, because Principal had interests in both the recordkeeping fees and its proprietary target date funds that it selected and retained as plan investments. The court did, however, grant defendants’ motion for judgment on plaintiffs’ monitoring claim against the board, concluding that the board did not have the power to appoint or remove committee members, and therefore had no obligation under ERISA to oversee them.

Class Actions

Third Circuit

Packer v. Glenn O. Hawbaker, Inc., No. 4:21-CV-01747, 2023 WL 3851993 (M.D. Pa. Jun. 6, 2023) (Judge Matthew W. Brann). In the spring of 2021, the Office of the Attorney General of Pennsylvania filed a criminal complaint against Glenn O. Hawbaker, Inc. alleging that the company stole “its prevailing wage workers’ pension and health and welfare money” and that it used those fringe benefits for its own ends. In the criminal case, the AG calculated that Hawbaker’s theft totaled more than $20 million. In August of that same year, Hawbaker pleaded nolo contendere to all claims and committed to pay restitution in the amount of $20,696,453 to the 1,262 prevailing wage worker victims. Two months later, three of those victims filed this ERISA putative class action. Tethering their complaint to the criminal case, the plaintiffs allege that Hawbaker, its board of directors, and the administrator of the benefits plan breached their fiduciary duties to the plan participants. In this decision the court ruled on plaintiffs’ class certification motion wherein they sought to certify their class of all current and former hourly wage employees who worked at Hawbaker during the relevant period. The court began by assessing the putative class under the requirements of Rule 23(a). First, the court agreed with plaintiffs that the class will include at least the 1,262 individuals encompassed in the plea deal of the four felony charges. As this number greatly exceeds the 40 individuals sufficient to establish numerosity, the court concluded that this requirement was easily met. Next, the court concurred with plaintiffs that common questions of law and fact are applicable to all class members including “whether the Defendants breached fiduciary duties owed to the Plan and its participants by failing to pay properly and timely the correct amount of wages and benefits.” Additionally, the court decided that the injuries to the putative class members stem from the same conduct by the defendants, and that the named plaintiffs’ claims are therefore typical of those of the rest of the class. Finally, the court found that the plaintiffs and their experienced class action attorneys are adequate representatives who can appropriately represent the class members to obtain relief from the defendants. Accordingly, the court was satisfied that all of the requirements of Rule 23(a) are met. It therefore moved on to evaluating the class under Rule 23(b). Following the clear direction of the Third Circuit, the court agreed that ERISA breach of fiduciary duty actions like this one are “paradigmatic examples of claims appropriate for certification as a Rule 23(b)(1) class.” This is because allowing separate actions to proceed would likely result in contrary and incompatible rulings, meaning “one district court should determine whether Defendants’ uniform conduct with respect to the Hawbaker Benefits Plan constitutes a breach of fiduciary duties.” For these reasons, the court determined that plaintiffs presented evidence to establish the proposed class meets the obligations of Rule 23, and therefore granted the motion and certified the class.

Disability Benefit Claims

Second Circuit

Glickman v. First Unum Life Ins. Co., No. 19-CV-5908 (VSB), 2023 WL 3868519 (S.D.N.Y. Jun. 7, 2023) (Judge Vernon S. Broderick). In early 2016, Dr. Laurence T. Glickman was diagnosed with prostate cancer. That fall he underwent prostatectomy surgery. Unfortunately, the surgery did not go well. It resulted in an injury which left Dr. Glickman with pain, weakness, and fatigue. Dr. Glickman kept working for the next year. However, by December 2017, Dr. Glickman felt he could no longer continue practicing due to his limitations and he filed a claim for disability benefits under his ERISA plan. The plan’s insurance provider, defendant First Unum Life Insurance Company, approved Dr. Glickman’s claim for benefits, and determined that his disability date was November 1, 2017. Unum later rescinded that determination. It recalculated and determined that the proper start date of the elimination period was the date of the prostate surgery on September 1, 2016. The difference in the two dates amounted to a significant decrease in Dr. Glickman’s benefit, and thus he challenges that determination and Unum’s reading of the policy’s elimination period in this lawsuit. The parties cross-moved for summary judgment. The court entered judgment in favor of Dr. Glickman under de novo review. It concluded that his reading of the plan language was more straightforward than Unum’s. “Plaintiff’s reading gives effect to more of the Plan as written, making it the preferable reading…to meet the Requirements that define disability under the Plan, a person must be ‘limited from performing the material and substantial duties of his regulation occupation due to his sickness or injury; and’ must ‘have a 20% or more loss in his indexed monthly earning due to the same sickness or injury.’ Plaintiff’s reading focuses on those last seven words. As Plaintiff explains the Plan, a covered physician is disabled where a single ‘sickness or injury’ is the cause of both the Limitation Requirement and the Income Requirement.” This reading, the court found, did not require elimination of words or terms out of the plan. Moreover, even if the court found the plan language ambiguous, it stated that such ambiguity should be construed against Unum and in favor of Dr. Glickman. Accordingly, the court granted summary judgment in favor of Dr. Glickman.

Eleventh Circuit

Evans v. Life Ins. Co. of N. Am., No. 2:22-cv-00075-ACA, 2023 WL 3868384 (N.D. Ala. Jun. 7, 2023) (Judge Annemarie Carney Axon). In 2013, plaintiff Heath Evans suffered an injury to his back while working as a wireline operator. The injury left Mr. Evans with lingering pain and limitations and required him to undergo two spinal surgeries. From the time of the injury until 2018, Mr. Evans received disability benefits under his ERISA-governed disability benefit plan. Circumstances changed when the plan’s insurance company switched from MetLife to defendant Life Insurance Company of North America (“LINA”). As soon as LINA took over as the plan’s claims administrator, it opened up an investigation into Mr. Evans’ entitlement to disability benefits. As part of this review, LINA had one of its doctors conduct an in-person examination of Mr. Evans. LINA’s doctor concluded that Mr. Evans was greatly exaggerating his pain, exhibiting, in his words, “highly dramatic and over the top pain behavior.” The doctor determined that Mr. Evans did not have strict restrictions in his ability to perform many types of work. Relying on this in-person review, as well as the opinions of two other LINA-employed medical professionals, LINA determined that Mr. Evans no longer satisfied his plan’s definition of disabled from any occupation and therefore terminated his benefits. Mr. Evans exhausted LINA’s internal appeals procedures and then initiated this ERISA lawsuit. The parties filed cross-motions for judgment on the administrative record. Mr. Evans argued that LINA’s decision ignored his self-reported pain, the conclusions of his treating physicians, and his entirely favorable decision from the Social Security Administration. The court did not agree and concluded that LINA’s denial was not de novo wrong. The court favored the opinions of the non-treating physicians over those of the treating physicians, as it found their conclusions based on objective medical evidence rather than subjective self-reports of pain. The court wrote, “the more recent medical opinions all establish that Mr. Evans can perform sedentary work.” In addition, the court stressed that this more recent evidence was not before the administrative law judge who ruled in favor of Mr. Evans on his claim for Social Security Disability Benefits, which helped to explain why the Social Security Administration reached a different conclusion than LINA. Finally, the court was satisfied that LINA engaged in an appropriate vocational assessment of Mr. Evans and accurately determined that jobs existed in the economy that Mr. Evans could perform. Thus, under de novo review the court held that LINA’s decision was not wrong and entered judgment in its favor.

ERISA Preemption

Second Circuit

Facey v. Intrinsic Tech. Grp., No. 23-cv-3392(DLI)(RER), 2023 WL 3794136 (E.D.N.Y. Jun. 2, 2023) (Judge Dora L. Irizarry). Plaintiff Sasha Deandra Facey sued her former employer and former boss, defendants Intrinsic Technology Group, Inc. and Rajajneesh Dhingra, in New York state court alleging that they discriminated against her under state and local disability discrimination laws throughout her employment and when she was terminated from her employment. Defendants removed the action to federal court based on federal question jurisdiction. Ms. Facey subsequently moved for remand. To date, the defendants have not responded to Ms. Facey’s motion. She argued that ERISA does not preempt her state law causes of action. The court agreed and granted her motion in this order. First, the court found that although it is possible that Ms. Facey could have brought a claim under Section 510 of ERISA, her state law discrimination claims nevertheless implicate independent legal duties. From the complaint, it is clear that Ms. Facey alleges that she was discriminated and retaliated against because of her diagnosis of Lupus. The court found that while the complaint does mention that Ms. Facey was terminated after inquiring about health insurance relating to her medical needs, it also provides numerous other supporting factual allegations and examples of discrimination that are completely unrelated to any ERISA benefit plan, including patterns of hostile conditions and discriminatory attitudes. The court was therefore convinced that this is an example of a case where the claims can clearly survive in the absence of the ERISA benefit plan. “In sum, ‘[this] is not a lawsuit claiming wrongful withholding of ERISA covered plan benefits; it is a lawsuit claiming discrimination resulting in damages, one component of which [may be] a sum owed under the provision of [a] plan.’” Thus, the court concluded that defendants failed to establish that ERISA preempts Ms. Facey’s claims and therefore remanded the action to state court.

Life Insurance & AD&D Benefit Claims

Fifth Circuit

Krishna v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA., No. H-22-3423, 2023 WL 3887814 (S.D. Tex. Jun. 8, 2023) (Judge Sim Lake). Plaintiff Deepa Krishna is the widow of Karthik Balakrishnan. Mr. Balakrishnan was employed as a Senior Marketing Manager at Honeywell International, Inc. As part of his employment with Honeywell, Mr. Balakrishnan was a member of its employee welfare benefit plan, which included Business Travel Accident Insurance provided by defendant National Union Fire Insurance Company of Pittsburgh, PA. Sadly, Mr. Balakrishnan died on October 25, 2020, in a crash of a small private airplane flying to Texas. Ms. Krishna submitted a claim for benefits under the Business Travel Accident Insurance policy. She believed that her husband’s death fell under the terms of the policy as he was traveling to Texas for work. She argued that his work assignment included travel to Texas as needed, and that he had decided to fly to Texas for work reasons. Honeywell and National Union Fire did not agree. They took the position that the term “while on assignment by or at the direction of the Policyholder for the purpose of furthering the business of the Policyholder,” means that the employer had to have knowledge of and approved the business travel. Because Mr. Balakrishnan had decided on his own to travel, they felt that his trip did not qualify as an approved business trip and the decedent’s widow and their four-year old daughter were therefore not entitled to benefits under the plan. Ms. Krishna filed this lawsuit to challenge the denial under Section 502(a)(1)(B), seeking benefits, interest, attorneys’ fees, and costs. The parties filed cross-motions for judgment on the administrative record. As an initial matter, they disputed the relevant standard of review. National Union Fire argued that the plan included unambiguous discretionary language triggering deferential review. Ms. Krishna argued that the applicable standard of review should be de novo because National Union Fire had an unauthorized third-party law firm decide her administrative appeal, and because that appeal was untimely under ERISA’s governing regulations. The court excused this “technical noncompliance,” finding they did not rise to “wholesale or flagrant violations” worthy of converting the standard of review from abuse of discretion to de novo. The court then continued its decision with more unfavorable rulings for Ms. Krishna. It concluded that “as needed” travel was not sufficient to qualify for benefits under the clear policy language. Thus, absent evidence that Mr. Balakrishnan was traveling at the direction of Honeywell on his trip to Texas, the court held that Ms. Krishna’s claim failed as a matter of law. Under abuse of discretion review, it held that the denial was a legally correct interpretation of the plan language and that it was supported by substantial evidence provided by Honeywell. Finally, the court stated that under Fifth Circuit precedent National Union Fire was under no duty to investigate or challenge the validity of the information Honeywell provided. Based on the foregoing, the court granted defendant’s motion for judgment and denied Ms. Krishna’s cross-motion for judgment.

Medical Benefit Claims

Eighth Circuit

Shafer v. Zimmerman Transfer, Inc., No. 22-2275, __ F. 4th __, 2023 WL 3857343 (8th Cir. Jun. 7, 2023) (Before Circuit Judges Colloton, Wollman, and Gruender). Plaintiff Darrin Shafer underwent bariatric surgery for medical and weight loss purposes. Shortly after the surgery, Mr. Shafer found employment at Zimmerman Transfer, Inc. and became a participant in the company’s ERISA-governed healthcare plan. A couple of years later, Mr. Shafer was admitted to an emergency room complaining of abdominal pains, nausea, and vomiting. At the hospital, it became clear that Mr. Shafer was experiencing complications from his bariatric surgery. He was transferred to another hospital and informed he needed a second surgery to fix a bowel obstruction. His plan pre-certified the treatment. However, after the surgery took place, the plan denied the claim for benefits, concluding that “the hernia surgery is considered a complication of the patient’s prior bariatric surgery and excluded from coverage.” After an unsuccessful attempt to administratively appeal the denial, Mr. Shafer brought a lawsuit against Zimmerman and the plan’s benefits administrator under ERISA Section 502(a)(1)(B). The district court ultimately granted summary judgment for the defendants under deferential review. Mr. Shafer appealed the district court’s decision to the Eighth Circuit. On appeal, the Eighth Circuit affirmed. The court of appeals first held that Mr. Shafer did not lack standing to sue the former third-party administrator, reasoning that “the fact that a plan participant might not be able to enforce a money judgment against a former third-party administrator does not mean that he lacks standing to sue that defendant.” However, addressing the denial itself, the Eighth Circuit agreed with the district court that it was not an abuse of discretion. The court of appeals stated that Iowa laws about coverage of emergency medical treatment and the emergency treatment regulation of the Affordable Care Act “do not require that a plan cover all emergency services; rather, they require plans that already cover emergency services to satisfy additional requirements like covering out-of-network treatment. Moreover, the provisions state that coverage is subject to a plan’s exclusions.” Thus, the Eighth Circuit disagreed with Mr. Shafer that the plan was obligated to pay for his emergency surgery, as the plan specifically excludes treatment for complications stemming from weight-reduction surgeries. In addition, the appeals court decided that just because the treatment was medically necessary does not automatically make it a “Medically Necessary Covered Expense.” Having come to these conclusions, the Eighth Circuit held that the denial of Mr. Shafer’s claim was not arbitrary and capricious, stating that “the interpretation of the plan was reasonable and the decision to deny benefits was supported by substantial evidence.”

Ninth Circuit

A.H. v. Anthem Blue Cross, No. 22-cv-07660-HSG, 2023 WL 3819367 (N.D. Cal. Jun. 5, 2023) (Judge Haywood S. Gilliam, Jr.). Plaintiff A.H., on behalf of her minor child, B.H., sued her healthcare insurance provider, Anthem Blue Cross, in the District of Utah after Blue Cross denied the family’s claim for reimbursement of B.H.’s stay at a wilderness therapy treatment program for adolescents with mental health, behavioral, and substance use problems. After the case was transferred to the Northern District of California, Blue Cross moved to dismiss the complaint for failure to state a claim. It argued that A.H.’s claim for benefits under Section 502(a)(1)(B) failed on the face of the complaint because the plan does not cover treatment at wilderness programs. In addition, Blue Cross averred that A.H. could not state a claim under the Mental Health Parity and Addiction Equity Act because the plan’s wilderness program exclusion does not distinguish between treatment for mental health or treatment for medical/surgical problems. In this decision the court granted the motion to dismiss the benefits claim but denied the motion to dismiss the Parity Act claim. First, the court agreed with Blue Cross that A.H. had not plausibly alleged that she is entitled to benefits under the terms of the plan, given the unambiguous exclusion for wilderness programs. Nevertheless, at the pleading stage, the court accepted as true A.H.’s assertion that the wilderness program exclusion in the plan is a violation of the Parity Act because Blue Cross applies the exclusion exclusively on claims for substance use and mental healthcare treatment. Thus, viewing the allegations in the light most favorable to A.H., the court found it plausible that the coverage limitation is a violation of the Parity Act, and therefore denied the motion to dismiss the Parity violation claim.

Breitwieser v. Vail Corp., No. 2:21-cv-00568-DJC-KJN, 2023 WL 3853483 (E.D. Cal. Jun. 5, 2023) (Judge Daniel J. Calabretta). Mr. Breitwieser suffered a head injury which landed him in his local emergency room. When he submitted his claim for reimbursement of this stay to his self-funded ERISA healthcare plan, his employer, Vail Corporation, through its third-party plan administrator, denied the claim for emergency care under the plan’s intoxication provision. The medical records from the hospital make clear that Mr. Breitwieser was intoxicated at the time when the injury occurred. His blood alcohol content was .19%, and the treating physicians attested that his injury was likely the result of his intoxication. Mr. Breitwieser brought this action seeking a court review of the denial. Vail Corporation moved for summary judgment. Defendant’s position was simple. It maintained that it did not abuse its discretion in denying the claims for coverage because the plan includes an intoxication exclusion, and the uncontroverted medical evidence established that Mr. Breitwieser was under the influence of a substantial amount of alcohol at the time of the injury. The court agreed. To start, the court concluded that a California insurance law banning alcohol exclusions in healthcare plans was inapplicable here, as this plan is self-insured and therefore exempted from ERISA’s savings clause. Next, although the court agreed with Mr. Breitwieser that Vail Corporation had a structural conflict of interest in its decision-making, and that it should therefore apply a degree of skepticism to its analysis of the benefit determination, the court nevertheless concluded that the specifics of this case did not involve complex or subjective judgment calls making “the determination in the present case highly distinct from other situations that raise the specter of a conflict influencing a final benefits decision.” Overall, the court rejected Mr. Breitwieser’s argument that he was denied a full and fair review. The court held that the medical evidence clearly established that the intoxication exclusion was properly applied, and the denial was therefore reasonable. As a result, the court granted Vail Corporation’s motion for summary judgment.

Pleading Issues & Procedure

Sixth Circuit

Montgomery v. Smith, No. 3:23-cv-00275, 2023 WL 3853947 (M.D. Tenn. Jun. 6, 2023) (Judge Aleta A. Trauger). In this decision, the court screened the complaint of an inmate in Tennessee, pro se plaintiff Gary Montgomery, pursuant to the Prison Litigation Reform Act. Mr. Montgomery filed his complaint against his former wife, her lover, the estate of the judge who presided over his divorce proceedings and gave his ex-wife permission to access his 401(k) account, and nine other defendants, asserting claims under ERISA and Tennessee state law. Mr. Montgomery’s complaint tells a rambling story about a series of misdeeds and thefts involving the assets of his 401(k) Plan. Mr. Montgomery brought ERISA claims for breach of fiduciary duty and prohibited transactions. The court found that the complaint included plausible allegations of fiduciary breaches to state colorable non-frivolous claims under ERISA for the purposes of the required Prison Litigation Reform Act screening. The court therefore allowed the complaint to proceed for further development of these claims. In addition, the court stated that it could not sufficiently determine the scope of the judge’s judicial immunity at this state of litigation, and therefore allowed Mr. Montgomery’s Section 1983 claims against the judge’s estate to proceed. However, to the extent Mr. Montgomery requested that the court open an investigation into alleged criminal activity that he believes the defendants engaged in, the court took the opportunity to inform Mr. Montgomery that it lacks the jurisdiction to do so. Finally, because the court will allow Mr. Montgomery’s ERISA claims to proceed, it decided to exercise supplemental jurisdiction over his state law tort claims.


Ninth Circuit

Dick v. Deseret Mut. Benefit Adm’rs, No. 2:21-cv-01194-HL, 2023 WL 3884550 (D. Or. Jun. 8, 2023) (Magistrate Judge Andrew Hallman). The estate of healthcare plan participant Susan K. Dick brought this ERISA lawsuit against Deseret Mutual Benefit Administrators to recover benefits due under her healthcare plan for three radiation treatments she received in 2020. In a previous decision the court ruled in plaintiff’s favor. The parties now dispute the proper judgment amount. The estate argued that it is entitled to the originally billed amounts of the medical procedures, totaling $229,173.27, “despite some of these amounts being written off by the provider and some amounts being paid by Deseret Mutual.” At first, Deseret Mutual sought recoupment of the payments from the provider, although it never received any reimbursement as the provider refused to return the payments. Defendant now stipulates that it has stopped efforts to recoup these payments. Because of this, Deseret Mutual maintains that plaintiff is only entitled to judgment totaling $43,185.62, for the expenses Ms. Dick incurred for the treatments, and that she is not entitled to the greater amount under the terms of the plan. The court agreed with Deseret Mutual and concluded that plaintiff was only entitled to recovery for the much lower amount. It read the plan to mean that the estate is only entitled to expenses that Ms. Dick incurred that remain due to her. “Ms. Dick did not incur the expenses that were written off by the provider or paid by Deseret Mutual.” Thus, the court entered judgment of $43,185.62 for the outstanding medical expenses plus prejudgment and post-judgment interest and statutory penalties.