It appears that the winter holidays are truly over now, as the pace has picked up and the federal courts have issued more ERISA-related decisions. No one case in particular stood out this week, but there were plenty of entertaining facts and issues. Read on to learn about (a) potential transgender discrimination in medical benefits, (b) a $2.6 million settlement of a proton beam therapy class action, (c) a suit demanding that medical insurers in New Mexico pay for cannabis treatment, (d) whether the widow of a supermarket chain’s CFO can recover accidental death benefits arising from the CFO’s plane crash, and, perhaps most interesting for plaintiff’s attorneys such as yours truly, (e) whether an employee benefit plan can recover an overpayment from a claimant’s counsel (spoiler: maybe, but not this time!).

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

Breach of Fiduciary Duty

Seventh Circuit

Abel v. CMFG Life Ins. Co., No. 22-CV-449-WMC, 2024 WL 307489 (W.D. Wis. Jan. 26, 2024) (Judge William M. Conley). Three employees of CMFG Insurance Company brought this putative class action alleging that defendants, who were responsible for investing assets in CMFG’s 401(k) plan, “imprudently retained investments in ‘BlackRock LifePath Index Funds’ despite their poor performance and the availability of other, better-performing, target date funds.” Defendants moved to dismiss. The court largely skipped over defendants’ standing argument, finding that at a minimum plaintiffs had standing to bring their breach of fiduciary duty claim. The court focused instead on the merits, and ruled that plaintiffs’ allegations that CMFG’s funds compared poorly to other identified funds were insufficient. “In short, plaintiffs ask this court to infer with the benefit of hindsight unavailable to the Committee that defendants committed a breach of their fiduciary duty simply because the BlackRock TDFs ultimately underperformed in comparison to the Comparator TDFs.” The court found that plaintiffs’ comparator funds were not “meaningful benchmarks” under Seventh Circuit precedent because some of those funds were actively managed, as opposed to the passively managed CMFG funds, and because they were designed to invest “through retirement” rather than “to retirement.” Also, plaintiffs selected an unduly short time frame for comparison, the CMFG funds were not always underperformers during that period, and the CMFG funds offered lower fees. The court thus granted defendants’ motion to dismiss, but gave plaintiffs leave to amend to address the identified deficiencies.

Ninth Circuit

Chea v. Lite Star ESOP Committee, No. 1:23-CV-00647-JLT-SAB, 2024 WL 280771 (E.D. Cal. Jan. 25, 2024) (Magistrate Judge Stanley A. Boone). Plaintiff Linna Chea, a former employee of B-K Lighting, Inc., brought this action under ERISA on behalf of the Lite Star Employee Stock Ownership Plan (ESOP) against several defendants, contending that they “violated ERISA through the ESOP’s purchase of stock” in December of 2017 and through “the failure of the Plan’s fiduciaries to remedy fiduciary violations in the ESOP Transaction, and the resulting loss of millions of dollars by the ESOP and its participants.” The defendants brought three separate motions to dismiss, raising numerous arguments, all decided in this order. In a lengthy decision, the magistrate judge ruled that (1) plaintiff had standing to bring her claims because she “adequately pleads that her (and the ESOP’s) economic injury is the direct result of the Defendants’ failure to properly evaluate and take into account problems with the Company’s operations, management, and financial reporting,” (2) plaintiff was allowed to sue one of the individual defendants as a “legal successor” of a deceased company officer, (3) plaintiff’s allegations were sufficient to establish that defendants were fiduciaries under ERISA, and (4) plaintiff adequately pled claims under ERISA for prohibited transactions, breach of fiduciary duty, failure to monitor, and co-fiduciary liability. However, the court did find that plaintiff’s claim for breach of fiduciary duty relating to indemnification provisions between the ESOP and its fiduciaries was time-barred because the provisions were adopted more than six years ago, in 2016. Apart from this one issue, however, the magistrate judge recommended denying all three motions to dismiss in all respects.

Tenth Circuit

Schissler v. Janus Henderson US (Holdings) Inc., No. 22-CV-02326-RM-SBP, 2024 WL 233141 (D. Colo. Jan. 22, 2024) (Judge Raymond P. Moore). This is a putative class action by participants in the Janus Henderson defined contribution employee 401(k) benefit plan alleging that defendants “breached their fiduciary duty of prudence by offering inappropriate investment options and their fiduciary duty of loyalty by benefiting from the Plan at Plaintiffs’ expense.” Defendants filed a motion to dismiss, which was referred to a magistrate judge. The magistrate judge ruled that (a) plaintiffs had standing to bring their claims, (b) writing and amending the plan were settlor functions, and thus plaintiffs could not bring a fiduciary breach claim against defendants based on those actions, (c) plaintiffs adequately pled a fiduciary breach claim for “failing to remove underperforming funds or to employ a reasonable selection process for investment options,” and (d) the plan’s advisory committee was a proper defendant because it was a fiduciary with respect to the offering of the funds at issue. Both sides filed objections to the magistrate judge’s decision, which were addressed by the district court judge in this ruling. Plaintiffs were largely satisfied with the magistrate judge’s decision, but objected “to the extent it suggests that the acts of selecting and monitoring the investments in a 401(k) plan are not subject to ERISA’s fiduciary standards.” The district court clarified that the ruling “does not state or suggest that selecting and monitoring the Plan’s investment options are not fiduciary functions,” only that the ruling drew a distinction between settlor functions in establishing the plan and administrative functions pertaining to how the plan was managed. The former could not be challenged while the latter could be, which is what the magistrate’s decision allowed. As for defendants, they raised numerous objections, all of which were overruled by the district court. The district court upheld the magistrate judge’s rulings that (a) the committee was a fiduciary with respect to the funds at issue, (b) the plan’s mandate regarding certain funds did not override ERISA’s duties of prudence and loyalty, (c) the company acted as both a settlor and a fiduciary at different times, exposing it to liability for breach of fiduciary duty, (d) plaintiffs provided meaningful benchmark funds for comparison, and (e) plaintiffs had standing to pursue their claims because under ERISA they were “entitled to represent the interests of other injured participants in a derivative capacity.” Thus, the district court upheld the magistrate judge’s recommendation in its entirety and largely denied defendants’ motion to dismiss.

Class Actions

Third Circuit

Molloy v. Aetna Life Ins. Co., No. CV 19-3902, 2024 WL 290283 (E.D. Pa. Jan. 25, 2024) (Judge Cynthia M. Rufe). This is a class action alleging that Aetna breached its fiduciary duty under ERISA by improperly denying requests for proton beam therapy (PBT) under health insurance plans it administered. On July 12, 2023, the court certified a settlement class, preliminarily approved a settlement, and scheduled a hearing regarding final approval of the settlement. The court held a fairness hearing on December 19, 2023, and issued this order approving the final settlement. The court ruled that all class action requirements were met because there were numerous plaintiffs (139), there were common issues of law and fact because all plaintiffs suffered from head, neck, or brain cancer and had their claims for PBT denied by Aetna on the ground that the treatment was experimental or investigational, and the named plaintiffs’ interests were in alignment with the class. Notice had been duly given to all class members. The court ruled that the settlement was fair, reasonable, and adequate because the parties had vigorously litigated the case, including through two motions to dismiss, the parties had conducted extensive discovery and reviewed significant claims data, plaintiffs had consulted with experts, and settlement negotiations took over two years. Furthermore, over half of the class had submitted valid claim forms, there were no objections, and only one person opted out. The parties had also addressed the court’s previous concern over a proposed cy pres award, which the court had indicated was too large, by reducing it and increasing the amount paid to class members. As a result, the court approved the settlement in the amount of $2,588,329.62, $1,750,224.96 of which will be paid directly to class members. Each class member will receive a payment between $20,000 and $40,000. The cy pres award to NRG Oncology, Inc. totaled $828,104.66. The court also approved plaintiffs’ request for $1,407,099.25 in attorneys’ fees, which will be paid separately.

Sixth Circuit

Davis v. Magna Int’l of Am., Inc., No. 20-11060, 2024 WL 280645 (E.D. Mich. Jan. 25, 2024) (Judge Nancy G. Edmunds). In March of 2023, the court denied the plaintiffs’ motion for class certification in this action alleging breach of fiduciary duty in the management and administration of the Magna Group Companies Retirement Savings 401(k) Plan. The court ruled that the two named plaintiffs were not adequate class representatives, and gave counsel time to find better ones. Counsel did so, filed an amended complaint, and conducted expedited discovery and briefing related to the new plaintiffs. They then filed a new motion for class certification, which was granted by the court in this order. Because the court had already considered the issues of class numerosity, commonality, and typicality in its previous order, and ruled in plaintiffs’ favor on those issues, it limited its analysis to the adequacy of the new representatives. The court found that the new plaintiffs had invested time and effort in the litigation, maintained contact with counsel, indicated that they understood their role in representing the class, and, most importantly, did not have criminal records like the prior representatives. The court also rejected defendants’ argument that the new plaintiffs had conflicts with the rest of the class: “All claims relate to mismanagement across all Plan investments, and all relief is tied to Plan losses, not to the loss of any individual fund. Neither the claims nor the relief sought pit investors against one another.” As a result, the court granted plaintiffs’ motion and certified the class.

Disability Benefit Claims

Fifth Circuit

Domino v. Guardian Life Ins. Co. of Am., No. CV 22-1760, 2024 WL 278984 (E.D. La. Jan. 25, 2024) (Judge Ivan L.R. Lemelle). Douglas Domino, Sr., who was employed by Gulf Coast Express Carriers, Corp. as a commercial truck driver, brought this action seeking benefits against Guardian, the insurer of Gulf Coast’s disability benefit plan. Guardian approved Domino’s short-term disability claim, but denied his claim for long-term disability benefits. The parties filed cross-motions for summary judgment which were decided in this order. In its motion, Guardian contended that benefits were not payable because Domino did not have coverage. Specifically, the case turned on whether Domino was “considered to be in ‘active full-time service’ within the meaning of the policy while on sick leave after exhausting his paid time off.” The court agreed with Guardian that any covered disability did not arise until after Domino had exhausted his PTO, at which time his coverage had terminated because he was no longer “actively at work” as defined by the policy. As a result, the court granted Guardian’s summary judgment motion, and denied Domino’s.

Seventh Circuit

Treslley v. The Guardian Life Ins. Co. of Am., No. 22-CV-494-WMC, 2024 WL 262812 (W.D. Wis. Jan. 24, 2024) (Judge William M. Conley). Plaintiff Jo Treslley was a director of financial operations for a non-profit organization who suffered from numerous medical issues, including diabetes, stress, cognitive issues, kidney disease, eye floaters, and orthopedic problems with her back, shoulder, and hand. Based on these issues, she stopped working and submitted a claim for long-term disability benefits to Guardian, the insurer of her employer’s benefit plan. Guardian denied Treslley’s claim on the ground that she did not “provide objective evidence that preclude[d] [her] ability to work in [her] own occupation throughout the elimination period and beyond.” Treslley appealed, but Guardian upheld its decision, so she brought this action. In this order the court resolved the parties’ cross-motions for summary judgment. The court ruled that (1) any error by Guardian in its vocational analysis of Treslley’s job was inconsequential, (2) the evidence regarding Treslley’s cognitive issues was mixed, which meant that the court was required to defer to Guardian under the arbitrary and capricious standard of review, and (3) Treslley’s other medical conditions, either individually or collectively, did not prevent her from returning to her own occupation because they were either stable or improving. Treslley argued that Guardian misrepresented facts about her condition, but the court ruled that “any inaccuracies are insufficient to undermine the conclusion that defendant’s determination was supported by the record.” The court also found that any procedural errors in the handling of Treslley’s claim were not prejudicial. Ultimately, “although a different decision on plaintiff’s claim could have been justified on this record, this court’s inquiry is more limited as a matter of law…[T]he inquiry is whether defendant’s decision was arbitrary and capricious, and the undisputed evidence shows that it was not.” The court thus granted Guardian’s summary judgment motion and denied Treslley’s.

Ninth Circuit

Gray v. United of Omaha Life Ins. Co., No. 2:23-CV-00630-MCS-PLA, 2024 WL 324899 (C.D. Cal. Jan. 29, 2024) (Judge Mark C. Scarsi). Plaintiff Kandice Gray brought this action seeking benefits under her employer’s ERISA-governed group disability benefit plan. Gray was a supervisor and mental health therapist for a community services organization who suffered from back pain as well as pain in her arms and hands. United of Omaha approved short-term disability benefits for a period, but terminated them and denied Gray’s claim for long-term benefits as well, contending that she did not meet the plan definition of disability. Gray sued, and the action proceeded to trial under de novo review. The court upheld United of Omaha’s decision, noting that Gray’s treatment history was “sparse,” her doctors did not have a specialty relevant to her orthopedic claims, the detail in her treatment notes was “thin,” her doctors did not “connect their findings to their opinions on Plaintiff’s functional limitations,” and “virtually all” of the supportive evidence in the record “rests on subjective reports by Plaintiff.” The court found United of Omaha’s medical reviews more persuasive because they were by relevant specialists and identified objective measures that could have been performed to corroborate Gray’s complaints but were not provided. The court further found that Gray’s receipt of state disability benefits, while supportive, was insufficient because she only submitted evidence of payment; she “neither cites nor offers documentation confirming a finding of disability or stating the grounds upon which that finding rests.” As a result, the court ruled that Gray had not met her burden of proving disability and entered judgment in United of Omaha’s favor.


Seventh Circuit

Van Bergen v. Fastmore Logistics, LLC, No. 21 C 5796, 2024 WL 230950 (N.D. Ill. Jan. 22, 2024) (Magistrate Judge Jeffrey T. Gilbert). Plaintiff Paul Van Bergen is a former employee of Fastmore Logistics who seeks in this lawsuit to recover unit appreciation rights (UAR) benefits under Fastmore’s Equity Appreciation Plan. Van Bergen has also asserted a claim for interference with his benefits in violation of ERISA. Van Bergen contends that when he attempted to redeem his UAR benefits upon his resignation, Fastmore’s owner “advised Van Bergen that his UARs had not appreciated in value since the date they were issued, and therefore, he was not entitled to any payment for them.” Van Bergen alleges that defendants “arbitrarily manipulated” the value of his UARs, and filed a motion to compel seeking discovery from defendants regarding how the UARs were, and should be, calculated. The court concluded that the circumstances in this case “give rise to a conflict of interest” because the Fastmore owner, who denied Van Bergen’s claim, was the sole member/shareholder of Fastmore, the sole manager of the plan, and “benefited financially from denying Van Bergen any redemption value for his vested UARs.” Therefore, the court ruled that Van Bergen was entitled to conduct discovery. However, the court also noted that the Seventh Circuit “disfavors extensive discovery in ERISA cases.” Thus, while the court allowed Van Bergen to take the two depositions he sought, including of the owner, it limited the scope of the depositions such that Van Bergen could not ask questions about the valuation or sale of Fastmore one year before his redemption request. The court also did not agree with Van Bergen that he was entitled to greater leeway in discovery because of his interference claim. The court ruled that this claim “relies on the same conduct and seeks the same relief as his Section 502(a)(1)(B)” claim and thus additional discovery was unnecessary. The court further denied Van Bergen’s request for attorney’s fees in connection with his motion because the motion was only “partially successful,” and because defendants’ opposition “was substantially justified given the developing law in this area.”

ERISA Preemption

Tenth Circuit

New Mex. Top Organics-Ultra Health, Inc. v. Blue Cross & Blue Shield of New Mex., No. 1:22-CV-00546-MV-LF, 2024 WL 260935 (D.N.M. Jan. 24, 2024) (Magistrate Judge Laura Fashing). Plaintiffs brought this action in New Mexico state court against Blue Cross & Blue Shield of New Mexico and other insurer defendants seeking damages and declaratory relief that “would compel health plans and health insurance issuers in New Mexico to pay for the cost of cannabis distributed under [New Mexico’s] Lynn and Erin Compassionate Use Act.” Defendants removed the case to federal court, contending that the court had original jurisdiction under the federal Class Action Fairness Act, and that the claims of at least two plaintiffs were preempted by ERISA. Plaintiffs filed a motion to remand, which was decided in this order. The magistrate judge agreed that defendants met their burden to establish that the court had original jurisdiction over the case under CAFA. As for ERISA, the magistrate judge found that the two plaintiffs at issue were covered under ERISA-governed benefit plans, and were seeking benefits in the action under those plans. In order to adjudicate these claims, the court ruled that it needed to interpret the benefit plans at issue “to determine what benefits the plans afford for medical cannabis, what cost sharing the plans impose on medical cannabis, and whether Cigna and True Health have failed to provide the benefits afforded by the plans.” As a result, their claims “related to” ERISA and were preempted by it. Plaintiffs contended that they had “carved out” any ERISA claims in their first amended complaint, which they filed after removal, but the court ruled that the amended complaint was irrelevant: “the Court can only consider the complaint at the time of removal in deciding whether removal was proper and whether the case should be remanded.” In short, the plaintiffs could not “amend away federal jurisdiction.” As a result, the magistrate judge recommended that the court deny plaintiffs’ motion to remand.

Eleventh Circuit

Silverman v. Sun Life & Health Ins. Co., No. 1:22-CV-22339, 2024 WL 262531 (S.D. Fla. Jan. 24, 2024) (Judge Darrin P. Gayles). Plaintiff Cheryl Silverman, who already had individual disability insurance with MetLife, bought a group disability policy from a predecessor insurer of defendant Sun Life. Silverman alleges that she was seeking supplemental coverage, and consistent with that desire she was informed that the two policies did not offset each other. However, Silverman’s original policy was replaced with a new policy that did contain an offset provision. When she became disabled, Sun Life, invoking the offset provision, only paid her the minimum benefit. Silverman filed suit in Florida state court for fraudulent inducement, negligent misrepresentation, and violations of the Illinois Consumer Protection Act and Connecticut Unfair Trade Practices Act. Sun Life removed the case to federal court, contending that Silverman’s claims were preempted by ERISA, and filed a motion to dismiss. In this order the court ruled that Silverman’s claims were not preempted because she was not challenging the terms of the benefit plan or seeking an interpretation of the plan. Instead, she was challenging the insurer’s representations made before the formation of the plan. The insurer was not acting “in its capacity as an ERISA entity. Rather, it was acting as the seller of an insurance product.” As a result, “at this stage of the litigation, the Court finds that Plaintiff’s claims do not ‘relate to’ an ERISA plan and, therefore, are not defensively preempted.” The court thus denied Sun Life’s motion.

Life Insurance & AD&D Benefit Claims

Second Circuit

Sarno v. Sun Life & Health Ins. Co., No. 2:22-CV-00968-JMA-LGD, 2024 WL 291624 (E.D.N.Y. Jan. 25, 2024) (Magistrate Judge Lee G. Dunst). Nicholas Sarno was an employee of Nikon, Inc. for nearly 35 years and a participant in Nikon’s employee group life insurance benefit plan, which was insured by defendant Sun Life. The policy had an accelerated death benefit for those suffering from terminal illnesses, and gave participants the right to convert their group coverage to individual coverage. Unfortunately, Mr. Sarno was diagnosed with stage IV pancreatic cancer and began a disability leave of absence. During this time Mr. Sarno had several conversations with Nikon, who allegedly never informed him of the accelerated benefit. He also had several conversations with Sun Life about converting his coverage, but Sun Life allegedly gave him misinformation about how to do so, and therefore he missed the deadline. After Mr. Sarno died, plaintiff Cathleen Sarno filed a claim for benefits, which Sun Life denied. She then filed this action against Nikon and Sun Life, alleging three claims: (1) breach of fiduciary duty for failure to adequately inform of the accelerated benefit; (2) breach of fiduciary duty for failure to adequately inform of conversion rights; and (3) a claim for benefits. The Nikon defendants filed a motion to dismiss, which was decided in this order. The magistrate judge recommended “granting the Nikon Defendants’ Motion to dismiss Count 3 for lack of standing under Article III of the U.S. Constitution and to dismiss Counts 1 and 2 as duplicative of Count 3.” Specifically, the court ruled that plaintiff could not pursue a claim for benefits because she “fails to plead an adequate line of causation between her alleged injury and the Nikon Defendants’ actions… Plaintiff does not and cannot allege that the Nikon Defendants had any role in the conversion process nor any role in determining the eligibility of the Accelerated Benefit. It is undisputed that Sun Life was responsible for that.” The court noted that plaintiff had not alleged that Nikon ever spoke to Mr. Sarno about the accelerated benefit or any conversion deadlines, and thus “no causal connection exists between the Nikon Defendants’ conduct and Plaintiff’s injury.” As for the breach of fiduciary duty claims, because plaintiff sought to recover the accelerated death benefit under those claims, and relied on the same facts to support her claims, the court ruled that those claims were “duplicative…repackaged claims for the same benefits” and recommended that they be dismissed as well.

Ninth Circuit

Mueller v. Lincoln Nat’l Life Ins. Co., No. 2:23-CV-00919-WBS-JDP, 2024 WL 307789 (E.D. Cal. Jan. 26, 2024) (Judge William B. Shubb). Kenneth Mueller was the CFO of the supermarket chain Raley’s. On September 4, 2022, he was flying in a private twin-engine aircraft with Raley’s chief pilot. The purpose of the flight was for Mr. Mueller to learn how to operate the plane, as he was not yet qualified to fly it by himself. The plane crashed, killing both men. Mr. Mueller’s wife, plaintiff Brigitte Mueller, submitted a claim for accidental death benefits to defendant Lincoln, the insurer of Raley’s group life insurance employee benefit plan. Lincoln denied the claim, contending that Mr. Mueller’s death fell under the plan’s aircraft exclusion. Ms. Mueller sued, and the case was tried under de novo review. Ms. Mueller argued that Lincoln should pay benefits because Mr. Mueller’s death satisfied an exception to the aircraft exclusion, which allows coverage if the insured is “traveling as a passenger in any aircraft that is owned or leased by or on behalf of the Sponsor.” Lincoln responded that Mr. Mueller was not a “passenger” under this exception because he was a student pilot. The court reviewed case law regarding the difference between passengers and pilots, ultimately concluding that after “examining the policy as a whole and construing the exception to the aircraft exclusion broadly…a student pilot such as decedent qualifies as a ‘passenger.’” At a minimum, the undefined term “passenger” was ambiguous, which “would require the court to adopt the interpretation favoring coverage, leading to the same result.” However, the court sided with Lincoln on the issue of whether the aircraft was “owned or leased by or on behalf of” Raley’s. The parties agreed that Raley’s did not own the plane, and there was no evidence in the record of who did, or that Raley’s had leased it in the traditional sense. As a result, Ms. Mueller failed to meet her burden of proving that the exception to the exclusion applied. The court entered judgment for Lincoln.

Medical Benefit Claims

Third Circuit

Doe v. Independence Blue Cross, No. CV 23-1530, 2024 WL 233216 (E.D. Pa. Jan. 22, 2024) (Judge Timothy J. Savage). Plaintiff Jane Doe is a transgender woman who sued her health insurance provider, defendant Independence Blue Cross (IBX), under several state and federal laws after IBX denied her coverage for facial feminization surgeries as treatment for gender dysphoria. On November 21, 2023, the court granted defendant Independence Blue Cross’ motion to dismiss several of plaintiff’s claims, leaving her only two: one for medical benefits under ERISA, and the other for violation of the Affordable Care Act (“ACA”) and Title IX for impermissible gender stereotyping. IBX subsequently filed a motion for summary judgment, which was decided in this order. The court identified the primary issue in the ACA and Title IX claims as “whether IBX intentionally discriminated against Doe on the basis of her nonconformity to a gender stereotype.” The court ruled that a jury could reasonably find discrimination because “IBX representatives repeatedly cited the gender stereotyping language throughout Doe’s appeal.” As for plaintiff’s ERISA claim, the court found there was “an issue of fact as to whether IBX’s interpretation was ‘reasonably consistent’ with the text of the cosmetic procedure exclusion” in the benefit plan. The conflicting interpretations of IBX’s own reviewers showed that the exclusion was ambiguous and thus “a reasonable fact finder could find that IBX applied a physical defect requirement and ignored Doe’s impaired social and occupational functioning in a way that is not ‘reasonably consistent’ with the plan’s text.” The court did, however, rule that plaintiff was not entitled to punitive or emotional distress damages as a matter of law under any of her claims. Other than this ruling on remedies, the court denied IBX’s summary judgment motion in its entirety.

Tenth Circuit

S.T. v. United Healthcare Ins., No. 4:21-CV-00021-DN-PK, 2024 WL 233328 (D. Utah Jan. 22, 2024) (Judge David Nuffer). This is yet another Utah case challenging a denial of medical benefits for residential mental health treatment. The plaintiffs, S.T. and his son J.T., seek benefits for J.T.’s treatment at Ashcreek Ranch Academy. United Healthcare, the insurer of the employee medical benefit plan under which J.T. had coverage, denied plaintiffs’ claims on the ground that his treatment was not “medically necessary,” as that term is defined by the plan. Plaintiffs filed suit, alleging one claim for plan benefits and one claim alleging that United’s plan violated the Parity Act. The parties filed cross-motions for summary judgment, which were decided in this order under de novo review. The court began by admitting into evidence Ashcreek’s billing records and claim submissions, ruling that these documents were relevant to determining whether the treatment at issue was medically necessary. The court then reviewed the time period at issue and ruled that United’s denial was incorrect for a 25-day period from December 30, 2017 to January 23, 2018. During this period J.T. “reported two attempts to commit suicide to a therapist during the week of January 3, 2018” and “it was reported that J.T. was hallucinating on January 2, 2018, and January 12, 2018.” As a result, J.T. met the requirements for medical necessity at that time. However, for the remaining dates at issue – December 13-29, 2017 and January 24, 2018 to March 31, 2019 – the court ruled in United’s favor. During these times the court found that plaintiffs failed to cite to pertinent treatment notes or support in the administrative record, or the documents in the record did not show that J.T.’s condition was serious enough to warrant residential treatment. As for plaintiffs’ Parity Act claim, the court ruled that plaintiffs had standing to pursue it, but rejected it on the merits because plaintiffs did not establish that United’s criteria for mental health treatment were more restrictive than its criteria for other health conditions.

Pension Benefit Claims

Sixth Circuit

Hill v. Cleveland Bakers & Teamsters Pension Fund, No. 1:22-CV-2073, 2024 WL 262252 (N.D. Ohio Jan. 24, 2024) (Judge J. Philip Calabrese). In 2021, David Hill, Sr., contemplating retirement, applied to his pension fund for benefits and received approval. However, he died only weeks later, before the fund paid any benefits. When his son, plaintiff David Hill, Jr., submitted a posthumous claim for benefits, the fund denied his claim, and he brought this action. The parties filed cross-motions for judgment which were decided in this order. The case turned on the language of the plan, which provided for a two-month waiting period between the date a retiree submits an application for a pension and the date benefits are first paid. The court ruled that because the father had passed away during the waiting period, he never became entitled to a benefit under the terms and conditions of the plan, and thus the fund was not arbitrary and capricious in denying his son’s claim. The son argued that while his father may have passed away before benefits were scheduled to begin, under the plan his eligibility for those benefits occurred earlier, before he died. However, the court rejected this interpretation, ruling that even if the son’s argument was plausible, he could not prevail: “Defendants’ interpretation of the Plan represents a principled reasoning process, does not render the provisions of the Plan meaningless or internally consistent, and is not arbitrary or capricious.” The court thus issued judgment in the fund’s favor.

Subrogation/Reimbursement Claims

First Circuit

Cutway v. Hartford Life & Accident Co., No. 2:22-CV-00113-LEW, 2024 WL 231453 (D. Me. Jan. 22, 2024) (Judge Lance E. Walker). Plaintiff Kevin Cutway began receiving long-term disability benefits in 2016 under an ERISA-governed employee benefit plan insured by defendant Hartford. Several years later, Hartford discovered that it had failed to offset Mr. Cutway’s monthly payments by the correct amount of disability benefits he was receiving from the Social Security Administration. It notified Cutway that it would stop making future payments until it had recouped $52,000 in overpayments. Cutway filed suit under 29 U.S.C. § 1132(a)(3), arguing that Hartford should be equitably estopped from exercising its contractual right to recoupment because the overpayments were the result of its own negligence. At the start of the case, the court granted Cutway’s request for a preliminary injunction ordering Hartford not to reduce his benefit while the litigation proceeded. The parties then filed cross-motions for judgment, which were decided in this order. The court was “not persuaded that the equities support a judicial decree that Hartford forfeited its right under the policy to offset against future payments the ‘overpayments’ associated with Mr. Cutway’s receipt of social security income benefits.” The court ruled that Hartford properly applied the terms of the plan, which were not contested by Cutway, that Cutway “was informed of and understood or should have understood that he was being overpaid LTD benefits due to his ongoing receipt of both unreduced LTD payments and monthly social security benefits,” and Hartford made repeated efforts to obtain accurate information from Cutway about his Social Security benefits. The court agreed that Hartford was “not entirely blameless” in its calculation of and pursuit of the overpayment, but this “relative lack of care in administration did not exceed Mr. Cutway’s own lack of care in the management of his funds.” As a result, the court rejected Cutway’s claim for equitable relief under ERISA, lifted the preliminary injunction, and entered judgment in Hartford’s favor.

Verizon Sickness & Accident Disability Benefit Plan for New Eng. Assoc. v. Rogers, No. 1:21-CV-00110-MSM-PAS, 2024 WL 323057 (D.R.I. Jan. 29, 2024) (Judge Mary S. McElroy). Defendant Jacqueline Rogers, an employee of Verizon, received $44,962.40 in benefits from plaintiff, Verizon’s ERISA-governed disability benefit plan. Her disability was due in part to an automobile accident, which resulted in her receiving a settlement of $100,000, $31,617.60 of which went to her attorney, co-defendant Richard Sands. Verizon sought reimbursement from Rogers pursuant to the terms of the plan, but she “apparently disappeared” and was never served. As a result, Verizon sought to recover from Sands. On summary judgment, the court ruled that Verizon’s lien was potentially enforceable against Sands, but did not grant Verizon’s motion because an issue of fact remained, i.e., whether Sands had dissipated the settlement proceeds so that they could not be traced by Verizon. (Your ERISA Watch covered this ruling in its March 22, 2023 edition.) The action proceeded to trial, where Sands produced an affidavit in which he asserted that the settlement funds were used to pay his operating expenses and thus Verizon could not trace them or equitably recover them. The court first discussed the burden of proof: whose burden was it to prove whether the funds had been dissipated? The court stated, “One would think that this question would be easily answered, but one would be wrong. The Court has not found, and the parties have not cited, any controlling authority clearly stating where the burden of proof lies on the dissipation issue.” The court ultimately concluded that logic, and language from Supreme Court precedent, suggested that the burden should be placed on Verizon. The court ruled that because Verizon was seeking an equitable remedy regarding an existing asset, it should be obligated to prove that the asset still exists. The court further found that Verizon did not meet this burden. The court noted that Verizon had presented no evidence on this issue and had made little effort during litigation to ascertain the contents of Sands’ bank accounts. Thus, because Verizon failed to meet its burden of showing that the funds had not been dissipated, Sands was entitled to judgment in his favor.