Alford v. The NFL Player Disability & Survivor Benefit Plan, No. 1:23-cv-00358-JRR, 2024 WL 1214000 (D. Md. Mar. 20, 2024) (Judge Julie R. Rubin)

For faithful readers of Your ERISA Watch, the basic contours and scathing judicial critiques of the operation of the NFL Player Disability and Survivor Benefit Plan, previously known by the catchier title “The Bert Bell/Pete Rozelle NFL Retirement Plan,” are well known. Just last week, we reported on the last gasp of the Cloud case, in which Judge James E. Graves, Jr. dissented from the denial of rehearing en banc of a Fifth Circuit decision in favor of the plan. In that decision, the Fifth Circuit overturned a district court’s judgment in favor of a disabled NFL player after a week-long bench trial, but acknowledged at the same time that the NFL plan was “a lopsided system aggressively stacked against disabled players.” 

NFL players have not given up. Ten former players, including All-American running back Willis McGahee, filed this putative class action asserting claims for wrongful denial of benefits under ERISA Section 502(a)(1)(B), violations of ERISA’s claim processing provision, Section 503, and breaches of fiduciary and co-fiduciary duty. The players asserted these claims on behalf of the putative class and separately on behalf of the plan. Defendants, which included the plan, the board overseeing the plan, and various individuals, including NFL Commissioner Roger Goodell, moved to dismiss the complaint in its entirety on various bases, each of which the court addressed in this order.

First, the court refused to dismiss the players’ benefit claims for failure to exhaust administrative remedies. The court concluded that plaintiffs’ argument that it would be futile to do so could not be resolved at this stage given the “robust backdrop of alleged malfeasance and nonfeasance” spelled out in the complaint. This backdrop included an alleged “systematic pattern that the more the Defendants compensate their hired physicians, the higher the likelihood that those physicians will render flawed, inadequate, result-oriented opinions adverse to benefits applicants,” as well as a practice of providing “inaccurate,  misleading, and deceptive information about the Plan to Plaintiffs and absent Class members.”  

On the other hand, the court granted defendants’ motion to dismiss all benefit claims outside Maryland’s three-year statute of limitations applicable to such claims, finding that plaintiffs had failed to allege facts supporting equitable tolling. In this regard, the court found that nothing in the complaint “suggests the existence of Defendants’ trickery or efforts to induce Plaintiffs not to file action following a benefits denial, or any other extraordinary circumstance that might warrant tolling of the statutes of limitations.” 

For benefit claims within the statutory period, however, the court rejected defendants’ argument that plaintiffs had failed to state a claim. Instead, the court viewed defendants’ arguments as essentially merits-based and inappropriate for resolution on the pleadings. “Construed in the light most favorable to Plaintiffs (and taken as true), Plaintiffs plausibly allege that the Board acted inconsistently with the Plan’s purpose and goal, did not consider the entire record, inappropriately relied on Neutral Physicians’ conclusions, provided interpretations inconsistent with Plan provisions and ERISA requirements, failed to provide reasoned decisions, and that bad faith motives and bias influenced their decisions.”

As for the claims for fiduciary and co-fiduciary breaches on behalf of the class members asserted under ERISA Section 502(a)(3), the court agreed with the defendants that these claims were impermissibly repackaged benefit claims. The court stated that in the Fourth Circuit such claims were required to be dismissed as duplicative, even at the pleading stage, to the extent that the wrong they seek to remedy can be adequately redressed under Section 502(a)(1)(B), which the court found to be the case. The court thus dismissed plaintiffs’ Section 502(a)(3) claim.

The court reached the opposite result with regard to the Board of Trustees’ argument that the fiduciary claim against it brought under Section 502(a)(2) should be dismissed. To the contrary, the court held that “Plaintiffs adequately allege breaches of fiduciary duties by (and against) the Board: failure to act in accordance with the Plan and failure to act in sole/best interest of the Plan participants,” and further held that their allegations even met the heightened requirements for pleading fraud under Federal Rule of Civil Procedure 9(b).

The court also allowed the plaintiffs’ counts alleging violations of Section 503 to go forward, even though it acknowledged that not all courts have recognized that participants have a right of action under this provision. Moreover, the court also found that a remedy with respect to these claims would be duplicative of the claim for benefits, but only if plaintiffs were to prevail on that claim. However, the court found that if plaintiffs did not succeed on their benefit claims, the court could still mandate a remand for full and fair review as a remedy for any Section 503 violations. In short, because the court saw some daylight between the count alleging wrongful denial of benefits and the counts alleging violation of ERISA’s claim processing provision, the court refused to dismiss the Section 503 claims.

Finally, with respect to the claims against the Board members and Commissioner Goodell as individuals, the court found that “Plaintiffs here do not set forth allegations to support a conclusion that the Trustees or the Commissioner, as opposed to the Board, had adequate control over the Board.” Accordingly, the court granted the motions to dismiss these individual defendants.

After several relatively slow weeks, the winds of change are stirring as the end of the reporting period draws near. Just as parents are hesitant to choose a favorite child (out loud), it was difficult this week to choose the case of the week among the many interesting decisions. But just because we chose one does not mean that you, our readers, have to agree. So, keep reading to discover your own favorite, which might be the case in which the employer promised an employee a Ford F-150 (Johnson v. Dodds Bodyworks, Inc.), or the case involving “a fantastical tale of depravity and abject cruelty that might find a place in Hollywood, were it actually true” (Williams v. Noble Home Health Care, LLC).

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


Eleventh Circuit

Williams v. Shapiro, No. 1:23-cv-03236-VMC, 2024 WL 1208297 (N.D. Ga. Mar. 20, 2024) (Judge Victoria Marie Calvert). This decision is the latest in a recent line of ERISA decisions declining to compel arbitration based on the “effective vindication” doctrine, which allows a court to invalidate arbitration agreements on public policy grounds if they effectively waive a party’s right to seek statutory remedies. The plaintiff, a plan participant, asserts fiduciary breaches and prohibited transactions relating to the creation in 2017 and dissolution in 2019 of an employee stock ownership plan (ESOP). According to the complaint, the 2019 transactions resulted in the former owners of the company obtaining 100% of the company stock for at least $35.4 million less than they should have paid. Although the original ESOP plan document did not contain an arbitration clause, the directors of the company amended the plan in connection with the 2019 transactions to add an arbitration clause, as well as a very broad class action waiver provision that purported to prohibit participants from obtaining any relief “on behalf of any individual or entity” other than themselves, a non-severability provision, and a provision requiring the participant to pay the defendant’s costs, expenses, and attorneys’ fees if the arbitration was unsuccessful. Then, a month after plaintiffs filed suit in 2022, and three years after the ESOP had been terminated and its stock assets liquidated through the sale back to the former owners, the directors again purported to amend the arbitration clause to permit injunctive relief so long as that relief “does not include or result in the provision of additional benefits or monetary relief to any individual or entity other than” the individual plan participant. Based on these amendments, defendants moved to compel arbitration. The district court began its analysis by noting that the Eleventh Circuit has not yet ruled on the arbitrability of ERISA claims. Although the court further noted that numerous other circuit courts have concluded that ERISA claims are generally arbitrable because ERISA does not contain a “contrary congressional command,” this was, in the court’s view, “only the beginning of the ERISA arbitration analysis,” given ERISA’s comprehensive and “enormously complex” nature and the fact that “[a]rbitration is a matter of contract and of consent.” Instead, the court saw the arbitration analysis as turning on four things: (1) whether the particular claim or claims being brought by a participant are properly characterized as belonging to the participant or to the plan; (2) whether the proper party has assented to the arbitration clause; (3) whether the claims are within the scope of the clause; and (4) whether application of the clause would prevent the effective vindication of the participant’s rights under ERISA. With respect to the first issue, the court concluded that the complaint contained both claims under ERISA Section 502(a)(2), which belonged to the plan, and claims for reformation and rescission under ERISA Section 502(a)(3), which the court concluded “are held by the participants generally,” and not the plan. With respect to the second issue, the court concluded that while the participants themselves did not assent to the amendments containing the arbitration clause, the ESOP assented even though it had long since been terminated, because it still held one asset – its claims against the defendants – and thus still maintained a legal existence. With respect to the third issue, the court had no trouble concluding that the broad arbitration clause encompassed all the claims asserted. This brought the court “to the final question, whether the clause at issue prevents the effective vindication of an ERISA right.” This presented a more difficult question given conflicting decisions from other circuits concerning whether the effective vindication doctrine prevents compelled arbitration in the context of a defined contribution plan that contains a class action waiver and a recent Supreme Court decision, Viking River Cruises, Inc. v. Moriana, 596 U.S. 639 (2022), which rejected applicability of the effective vindication doctrine in a case involving California’s Private Attorney General Act. Ultimately, the court determined that the ERISA claims at issue were more like a representative action on behalf of a single principal, the plan, than the joinder of numerous individual claims as in Viking River, and agreed with the courts that have held that materially identical arbitration provisions were invalid because they prevented plaintiffs from obtaining some of the relief that they sought. The court thus held that the arbitration clause was invalid and non-severable.

Attorneys’ Fees

Second Circuit

Graziano v. First Unum Life Ins. Co., No. 21-CV-2708 (PAC), 2024 WL 1175143 (S.D.N.Y. Mar. 19, 2024) (Judge Loretta A. Preska). After prevailing in his action alleging that defendant First Unum Life Insurance Company violated ERISA by improperly terminating his long-term disability benefits, plaintiff Michael Graziano filed a motion for attorney’s fees. The court agreed that he was eligible for fees due to his success on the merits. The court acknowledged that Graziano’s attorneys, Riemer Hess, “specialize in high-stakes ERISA litigation and the Firm is highly regarded in the relevant legal community and by their clients.” The court also noted that Riemer Hess clients were willing to pay the hourly rates requested by the firm, which supported their reasonableness. However, Unum “cites a few cases that give the Court pause in finding the proposed rates reasonable.” Thus, the court imposed a 10% cut, awarding rates for Graziano’s attorneys ranging from $432 to $788 per hour based on their experience, which was “still above the rates found to be reasonable in other recent ERISA cases.” Unum also objected to the time Graziano’s attorneys spent on the case, but “[h]aving closely reviewed the Billing Records and Unum’s objections, the Court finds that most of the time expended is reasonable.” The court did identify some examples of duplicative work, “vague entries,” and administrative work that could have been performed at a lower rate, and determined that a “modest 5% reduction” was appropriate given that these deficiencies were “the exception among the Firm’s hours.” As a result, the court awarded Graziano $187,080.65 in fees, reduced from his request of $221,039.25, and $402 in undisputed costs.

Breach of Fiduciary Duty

Seventh Circuit

Placht v. Argent Tr. Co., No. 21 C 5783, 2024 WL 1254196 (N.D. Ill. Mar. 25, 2024) (Judge Sara L. Ellis). Plaintiff Carolyn Placht is a participant in Symbria Inc.’s Employee Stock Ownership Plan who successfully obtained class certification in this action against the plan’s trustee, Argent Trust Company. She contends Argent violated its fiduciary duties under ERISA when it oversaw the 2015 purchase by the plan of all of Symbria’s stock shares. Placht filed a motion for summary judgment, asking the court to rule that Argent’s actions constituted a prohibited transaction under ERISA Section 406, while Argent moved for summary judgment as to the entire case. Addressing Placht’s motion first, the court considered Argent’s objection that Placht was attempting “piecemeal adjudication” of one of the issues in the case, but the court ruled that Placht’s motion was acceptable under Federal Rule of Civil Procedure 56. Next, Argent admitted that under Section 406 it was a fiduciary, the selling shareholders were parties in interest, and the sale to the plan constituted “a direct or indirect sale or exchange, or leasing, of any property between the plan and a party in interest.” However, Argent argued that Placht’s motion failed because she did not show that Argent “subjectively intended to benefit a party in interest through the transfer.” The court rejected this argument, ruling that Section 406 should be read “broadly” and “subjective intent” was not an element of proof. Thus, the court granted Placht’s motion and ruled that the ESOP sale met Section 406’s definition of a prohibited transaction. The court then turned to Argent’s motion, which argued that even if the sale was a prohibited transaction, it fell within one of Section 408’s exemptions because the plan received “adequate consideration.” Both Placht and Argent presented expert witness reports with voluminous exhibits explaining why the transaction was or was not fair, and whether Argent conducted due diligence in overseeing it. The court ruled that it could not sort this issue out on summary judgment. “[F]actual questions exist as to whether Argent acted prudently…Placht’s claims and Argent’s defenses with respect to the ESOP Transaction must proceed to trial.” Argent had more success on its duty of loyalty argument. The court ruled that Placht had not provided “any evidence that would suggest that Argent acted to further its own interest or had any other type of conflict of interest that would support” such a claim. Finally, the court addressed Placht’s request that the court declare Argent’s indemnification agreement with Symbria void under ERISA Section 410, which prohibits agreements that relieve fiduciaries from their responsibilities under ERISA. The court ruled in Argent’s favor on this issue as well, finding that the agreement’s carve-out did not allow for indemnification for the alleged violations, and thus it did not violate ERISA. Thus, Placht’s Section 406 claim will go trial, subject to any Section 408 exemptions provable by Argent.

Eighth Circuit

Dionicio v. U.S. Bancorp, No. 23-CV-0026 (PJS/DLM), 2024 WL 1216519 (D. Minn. Mar. 21, 2024) (Judge Patrick J. Schiltz). This is a putative class action alleging that U.S. Bank and related defendants breached their fiduciary duties in the administration of U.S. Bank’s 401(k) employee benefit plan. Plaintiffs made three claims: (1) defendants breached their duty of prudence by incurring excessive recordkeeping and administrative fees; (2) defendants breached their duty of prudence by incurring excessive fees for managed-account services; and (3) U.S. Bank and its board failed to monitor the committees responsible for overseeing these fees. Defendants filed a motion to dismiss all three claims, which the court addressed in turn in its order. The court denied U.S. Bank’s motion on the first claim, ruling that the seven comparator plans cited by plaintiffs in their complaint were sufficiently similar to the U.S Bank plan. The court noted that U.S. Bank’s plan was “huge,” with “more assets than 99.99% of other defined-contribution plans.” Thus, plaintiffs could not be faulted for not finding exact matches: “Under defendants’ approach, plaintiffs suing exceptionally large or exceptionally small plans would face a nearly insurmountable pleading hurdle.” The other plans cited by plaintiffs were also “mega plans,” and thus were “viable comparators.” Defendants also complained that plaintiffs’ comparisons were not “apples to apples” because they did not “identify the particular services used by each plan.” However, the court noted that plaintiffs had alleged that basic recordkeeping services were “fungible” and “materially indistinguishable” from plan to plan, which was supported by case law finding such allegations plausible. As for plaintiffs’ second claim regarding managed-account service fees, plaintiffs identified six comparator plans, but the complaint was “devoid of even basic information” about those comparators, “such as the number of participants or total assets.” The complaint also did not address the fee schedules of the comparator plans, or explain what specific services they offered or how they differed from the services available in U.S. Bank’s plan. Thus, the court granted defendants’ motion on this claim. Plaintiffs’ third claim, for failure to monitor, was derivative of their other claims, and thus, consistently with its above rulings, the court denied defendants’ motion to dismiss this claim as to the recordkeeping fees but granted it as to the managed-account service fees.

Ninth Circuit

Lucas v. MGM Resorts Int’l, No. 2:20-cv-01750-JAD-NJK, 2024 WL 1199514 (D. Nev. Mar. 19, 2024) (Judge Jennifer A. Dorsey). Eboni Lucas, a former employee of MGM Resorts and a participant in MGM’s 401(k) benefit plan, brought this class action lawsuit challenging the prudence of both the investment fees associated with the chosen share-classes of mutual funds for the plan, as well as the recordkeeping fees paid by the plan. Following certification of a class of plan participants, MGM moved for summary judgment with respect to the share-class imprudence claim and to exclude as unreliable the opinion of plaintiff’s expert. By way of factual background, the court explained that in 2018 the plan began using “a separate, fixed-percentage fee that was charged to all participants’ individual accounts for recordkeeping and other administrative expenses,” and at the same time ceased using any portion of the mutual share-class fees as “revenue sharing” to pay for the recordkeeping, and instead began to credit back the revenue sharing dollars to participants’ individual accounts on a pro rata basis. The court found that plaintiffs’ expert employed a flawed methodology by not fully accounting for the revenue sharing and thus excluded this evidence as unreliable. Because defendants’ expert opined that, once the revenue sharing was accounted for, the share-classes chosen for the plan provided it “with net benefits, not net losses,” the court concluded that plaintiff had failed to meet her burden of showing losses associated with the investments and thus MGM was entitled to summary judgment on the claims based on share-class selection and retention. The court, however, denied MGM’s motion to seal the summary judgment and Daubert motion briefing and exhibits, finding that MGM’s filing of these documents under seal was “improper and certainly overkill,” and resulted “in a docketing mess.” Thus, only the claims relating to recordkeeping fees will proceed to trial.

Miguel v., Inc., No. 20-CV-01753-MMC, 2024 WL 1222092 (N.D. Cal. Mar. 20, 2024); Miguel v., Inc., 2024 WL 1221934 (N.D. Cal. Mar. 20, 2024) (Judge Maxine M. Chesney). Plaintiffs, former Salesforce employees, allege that Salesforce and related defendants breached their fiduciary duties in the administration of Salesforce’s 401(k) employee benefit plan. Plaintiffs made four claims: (1) defendants only offered an institutional share class of JPMorgan target date retirement funds instead of lower cost share classes; (2) defendants retained nine actively managed JPMorgan funds instead of transitioning to passively managed collective investment trusts (CITs); (3) defendants failed to substitute certain Fidelity mutual funds with CITs; and (4) defendants failed to monitor the committee overseeing the plan. Defendants filed a motion for summary judgment. On the institutional share class claim, defendants argued that the institutional shares had revenue sharing, which actually made it cheaper on a net cost basis than the lower cost share classes advanced by plaintiffs. However, the court noted that plaintiffs’ expert had disputed this, arguing that the revenue sharing did not directly offset the expense ratio because “revenue sharing ‘reduces the investment returns plan participants receive’ and ‘makes recordkeeping and administrative costs interdependent with plan participant returns.’” (In the companion order linked above, the court denied defendants’ motion to exclude plaintiffs’ expert, ruling that defendants’ criticism of his experience “goes to the weight of any opinions he may offer, not their admissibility.” Furthermore, defendants’ challenges to the expert’s methodology were “primarily directed at ‘the merits of’ plaintiffs’ claims,” and not the admissibility of his testimony.) Thus, the court ruled that there were disputed facts which precluded summary judgment on plaintiffs’ first claim. As for plaintiffs’ CIT claims, the court noted that it was undisputed that the mutual funds had higher average expense ratios than the CITs. Defendants argued that Salesforce’s delay in transitioning to CITs was “within the range of reasonable judgments” because of a lack of third-party evaluations of the CITs, different regulatory regimes, and a shorter available track record for the CITs. Defendants also cited the available revenue sharing in the mutual funds. Plaintiffs responded that “a prudent fiduciary would not consider either the lack of publicly available information regarding CITs or the differing regulatory regimes sufficient reason to exclude CITs from consideration,” and quoted defendants’ investment consultant, who had agreed that the trusts and mutual funds had “similar investment profiles and strategies.” Again, the court concluded that it could not resolve these factual disputes on summary judgment and denied defendants’ motion on these claims. The court also addressed damages. Defendants contended that plaintiffs’ damages calculations did not include a number for its claim regarding the failure to transition to CITs, but the court stated that on summary judgment the burden was on defendants to show that plaintiffs suffered no damage, which it had not done. Finally, the court ruled that because there were triable issues of fact as to plaintiffs’ duty of prudence claims, their derivative claims for failure to monitor survived as well. The court thus denied defendants’ summary judgment motion in its entirety.

Class Actions

Second Circuit

Collins v. Anthem, Inc., No. 20-CV-01969 (SIL), 2024 WL 1172697 (E.D.N.Y. Mar. 19, 2024) (Magistrate Judge Steven I. Locke). This is a putative class action alleging that defendants Anthem, Inc. and Anthem UM Services, Inc. (1) breached their fiduciary duties under ERISA, (2) unreasonably denied requests for residential behavioral mental health treatment, and (3) violated the Mental Health Parity and Addiction Equity Act of 2008. Plaintiffs filed a motion for class certification, and refined the definition of their proposed class during briefing. The court first ruled that plaintiffs had standing. Anthem agreed that plaintiffs had standing to seek declaratory relief, but argued that they could not seek injunctive relief because they did not show that they would be wronged again in the future in a similar way. The court agreed, but ruled that plaintiffs still had standing to pursue retrospective injunctive relief in the form of a reprocessing remedy. Anthem argued that a reprocessing remedy would not redress plaintiffs’ injuries, which were monetary, but the court ruled that “ultimate monetary recovery is unnecessary to show redressability.” Next, the court addressed the Federal Rules of Civil Procedure’s class action requirements. The putative class contained “at least” 358 people, satisfying the numerosity requirement, and there was commonality because “each Plaintiff and putative class member was injured because Anthem denied coverage for residential behavioral health treatment based on ‘Guidelines that were in direct conflict with [putative class members’] plans and flouted the Parity Act.’” The court ruled that plaintiffs did not have to “demonstrate that the relevant Guideline was applied to his or her claim in an identical way to establish commonality, because each denial resulted from ‘a unitary course of conduct,’” i.e., application of the guidelines. The court acknowledged that Anthem’s peer reviewers applied clinical judgment in evaluating claims, but this did not defeat commonality because Anthem’s claims manual was “emphatic that the Guidelines and Medical Policies must be applied during the medical necessity analysis.” The court further found that plaintiffs’ claims were typical of the class because even if Anthem’s guidelines did not affect every class member in the same way, they were applied in a uniform manner. The court also ruled that the named plaintiffs were adequate representatives and the class was ascertainable because it was defined based on objective criteria. The court then ruled that the class met Rule 23(b)’s requirements because Anthem acted on grounds generally applicable to the entire class and plaintiffs’ alleged injuries could be redressed through a single retrospective reprocessing order. Finally, the court appointed plaintiffs’ attorneys as class counsel, noting their “significant experience litigating ERISA class actions involving health insurance companies.” The court thus granted plaintiffs’ class certification motion, but “only as to the Plaintiffs’ claims for a retrospective injunction in the form of reprocessing, and for declaratory relief.”

Disability Benefit Claims

Third Circuit

Randall v. Plasterer’s Union Local 8 Benefit Fund, No. 3:22-CV-00243-PGS-RLS, 2024 WL 1197861 (D.N.J. Mar. 20, 2024) (Judge Peter G. Sheridan). Plaintiff Donald Randall Jr. was a member of the Plasterers’ and Cement Masons Union Local 8 and a participant in its pension plan. He became injured in 2016 and applied for Social Security disability benefits. The Social Security Administration (SSA) approved his claim, but used a benefit start date in 2018 based on his request. Randall submitted a disability claim to the pension plan as well, the terms of which explained that a “Disability Retirement Benefit shall begin effective as of the first day that he is eligible to commence receiving a disability benefit under the Social Security Act.” The plan acknowledged the SSA award and agreed Randall was disabled. However, the plan denied his claim for benefits because he “last worked in Covered Employment in February 2016, and was found to be disabled by the SSA as of October 8, 2018,” i.e., after his coverage ended. Randall sued and the parties filed cross-motions for summary judgment. At the hearing, the court asked why, if Randall alleged he was disabled in 2016, did he request that his SSA benefits begin in 2018. Randall explained in a subsequent letter brief that the SSA had told him he could not receive any benefits from 2016-18 because he received workers’ compensation benefits during that time period. Thus, he had amended his application to reflect a 2018 start date. With this information, the court ruled that there were genuine issues of material fact regarding the start date of Randall’s disability and denied both parties’ motions. In doing so, the court ruled that the plan “acted arbitrarily and capriciously by failing to investigate the reason for the change in Randall’s disability onset date when evaluating Randall’s application.” The court stated that the plan had based its decision on that change and “should have inquired why Randall’s onset date was changed and taken that information into consideration in its deliberations.” Because the plan had not conducted an adequate examination of Randall’s claim, the court ordered that “this matter be remanded to the Pension Plan for further review.”

Fourth Circuit

Learn v. The Lincoln Nat’l Life Ins. Co., No. 6:20-CV-00060, 2024 WL 1183676 (W.D. Va. Mar. 19, 2024) (Judge Norman K. Moon). Plaintiff Robert Learn was the Regional Director of Outpatient Rehabilitation at Centra Health, Inc. in Lynchburg, Virginia when he stopped working in 2017 due to symptoms of thyroid disease. He applied for benefits through Centra Health’s long-term disability employee benefit plan, which was insured by defendant The Lincoln National Life Insurance Company. Lincoln approved Learn’s claim, but terminated his benefits in 2019, asserting that he no longer met the plan’s definition of disability. Learn unsuccessfully appealed to Lincoln and then filed this action. The parties filed cross-motions for summary judgment which were decided in this order. The parties agreed that the appropriate standard of review was abuse of discretion because the plan conferred discretionary authority on Lincoln to determine benefit eligibility. Under this standard, the court ruled that Lincoln did not adequately consider the evidence presented by Learn. Learn presented evidence from several doctors demonstrating objective decline in his cognitive abilities due to his “wildly fluctuating” thyroid levels, but none of these doctors’ names appeared in the denial, nor did Lincoln describe any of their assessments of Learn’s diagnoses, impairments, and ability to work. Lincoln also did not address multiple affidavits submitted by Learn from his friends and family attesting to his decline, which it had failed to provide to its reviewing physicians. The court further dismissed Lincoln’s argument that it focused on objective evidence, noting that Lincoln itself had told Learn that objective evidence was not required. In any event, Learn had provided “ample objective evidence” in the form of neurocognitive test results showing “impaired sustained attention and mnestic dysfunction.” Lincoln criticized that testing for lacking validity measures, but the court found “there is no evidence of symptom exaggeration or suboptimal effort by Mr. Learn.” As for whether Lincoln’s decision-making process was “reasoned and principled,” the court ruled that Lincoln “arbitrarily walled off” consideration of Learn’s appeal from the prior time period when Lincoln had approved benefits. Lincoln’s physicians only reviewed records from after the denial date even though Learn’s thyroid fluctuations prior to that date “contributed to lasting and sustained objective cognitive decline” afterward. In short, “Lincoln did not engage with Mr. Learn’s evidence and medical opinions that his wildly fluctuating thyroid levels over years caused permanent cognitive decline.” Lincoln’s decision was thus not the result of a “fair and searching process.” The court granted Learn’s summary judgment motion, denied Lincoln’s, ordered Lincoln to pay Learn back benefits, and permitted Learn to file an application for costs and reasonable attorney’s fees.

Sixth Circuit

Akans v. Unum Life Ins. Co. of Am., No. 3:23-cv-79, 2024 WL 1200301 (E.D. Tenn. Mar. 20, 2024) (Judge Travis R. McDonough). Jeffrey Akans formerly worked as an equipment manager for Harrison Construction and participated in a long-term disability (LTD) plan sponsored by Harrison and insured by Unum Life Insurance Company of America. Akans ceased working in 2018 and submitted a claim for LTD benefits based on his relapsing-remitting multiple sclerosis. Unum approved his benefits beginning in September 2018 under the plan’s “own occupation” provision, notifying Akans that he would be subject to continuing review. In April 2019, Akans’ claim for Social Security disability benefits was approved. In November 2021, following its second review of Akans’ disability status. Unum informed him that it had determined that he was not disabled from performing his own occupation and it was terminating his benefits. Akans appealed, submitting letters of support from two of his treating physicians and additional testing. Unum upheld its decision to terminate benefits and Akans filed suit and moved for judgment on the administrative record. Applying a de novo standard of review of Unum’s decision, the court found that the record demonstrated that Akans could not perform his light-work occupation due to his multiple sclerosis and associated symptoms of “extreme fatigue and dominant spasticity,” which prevented him from functioning safely cognitively or physically. The court found that Akans’ treating neurologist had issued opinions to this effect both before and after Unum terminated his benefits, and that testing supported that his cognitive abilities had declined. The court quite rightly pointed out that opinions from a urologist and a retinal specialist that Akans was not disabled from a urological or optical standpoint were irrelevant to his “fatigue, muscle spasticity, cognitive issues and gait disturbances, which are the reasons he went on disability.” And the court quite logically gave greater weight to the opinion of Akans’ treating neurologist than to the opinions of the doctors whose specialties were so mismatched to the issue at hand. The court was also unpersuaded by the opinions of Unum’s reviewing doctors and disagreed that the record evidence supported their conclusions that Akans’ “symptoms on a good day demonstrate that Akans can work on any day.” The court also faulted Unum for questioning “the validity of the opinions of Akans’s testing as well as his self-reported symptoms,” noting that although “Unum was not required to examine Akans, this lack of examination renders Unum’s claim reviewers’ criticism of his symptoms and testing less persuasive.” Accordingly, the court granted judgment in favor of Akans, concluding that he had met his burden of proving that he was disabled, and that Unum had incorrectly terminated his benefits.

Parks v. Lincoln Nat’l Life Ins. Co., No. 22-12814, 2024 WL 1228968 (E.D. Mich. Mar. 21, 2024) (Judge Shalina D. Kumar). Plaintiff Angie Parks worked as a sales representative in a call center and had a history of anxiety and depression. She stopped working in July of 2020 and submitted a claim for benefits to defendant Lincoln National Life Insurance Company, the insurer of her employer’s long-term disability benefit plan. Lincoln paid benefits for a short period but then terminated them, contending that Parks no longer met the definition of disability. Parks unsuccessfully appealed and then brought this action. The parties filed cross-motions for judgment, which the court decided under the default de novo standard of review. The court first determined “the scope of this dispute.” Lincoln denied Parks’ claim because “the medical evidence did not support restrictions and limitations rendering Parks unable to perform the main duties of her occupation,” but in its briefing Lincoln raised “new reasons” for why Parks’ claim was properly denied. It contended that Parks did not personally visit her doctor – she had telehealth appointments – and thus she did not have the “regular care of a physician” under the plan. Lincoln also argued that the Social Security Administration’s denial of Parks’ application for disability benefits showed that she was “not totally disabled,” and that Parks “never identified ‘specific functional limitations’ from her mental health condition or ‘delineated each of [her occupation’s] Main Duties’ that her mental health condition precluded her from performing.” The court rejected all of these arguments because Lincoln did not assert them in its denial letter. The court then turned to the evidence in the record and found by a preponderance of the evidence that Parks had met her burden of proving disability. The symptoms from which she suffered while Lincoln was paying her claim continued after Lincoln stopped. She continued having “intense depression, anxiety, and mood swings, and even developed new symptoms such as panic attacks and loss of appetite.” Lincoln argued that Parks reduced her psychiatric appointments to once per month, which showed she improved. However, the court stated there was “no basis for the Court to conclude factually that one cannot both have a work-precluding psychiatric condition and rather infrequent treatment changes. Nor does Lincoln provide any basis for the idea that the severity of a psychiatric condition positively correlates with the frequency and intensity of psychiatric treatment.” The court also cited Parks’ low GAF score, mental status findings, and persistence of symptoms despite medication as support for her claim. The court further rejected Lincoln’s argument that Parks submitted insufficient objective evidence, noting that the plan did not require it and Parks’ condition was not susceptible to it. Thus, the court granted Parks’ motion, denied Lincoln’s, and ordered Lincoln to pay back benefits. It also allowed Parks to file a motion for attorney’s fees.

Vandivier v. Corning Inc. Benefits Comm., No. 5:23-CV-71-KKC, 2024 WL 1197868 (E.D. Ky. Mar. 20, 2024) (Judge Karen K. Caldwell). Plaintiff Lee Vandivier worked for Corning Inc. for about 25 years before stopping in 2019 due to deep vein thrombosis. He eventually went through three amputation procedures on his left leg, and suffered from other medical conditions as well. He submitted claims under Corning’s employee short-term and long-term disability benefit plans, which were both approved by the insurer of the plans, Metropolitan Life Insurance Company. However, MetLife denied Vandivier’s claim for “total and permanent disability benefits” under Corning’s pension plan, which required him to be “unable to engage in any substantial gainful activity.” Vandivier sued and filed a motion for judgment, as well as a motion to strike defendants’ supplement to the administrative record. The court addressed the motion to strike first. Vandivier argued that defendants supplemented the record hours after he filed his motion for judgment, and thus he was prejudiced in the preparation of his motion. The court disagreed and denied the motion, ruling that there was no prejudice because Vandivier had the documents at issue (the short-term and long-term disability claims files) before he even filed his complaint. Furthermore, Vandivier himself could have moved to supplement the record with the claim files, but chose not to. The court then addressed the merits of Vandivier’s total and permanent disability claim under the “arbitrary and capricious” standard, which the parties agreed was the appropriate standard. Vandivier argued that even if the court accepted the findings of MetLife’s reviewing physician, it should still rule in his favor because that physician’s restrictions and limitations were not even compatible with the Social Security Administration’s definition of sedentary work capacity. However, the court stated that the SSA “itself recognizes that ‘a finding that an individual has the ability to do less than a full range of sedentary work does not necessarily equate with a decision of ‘disabled.’’” Thus, lack of sedentary work capacity “does not necessarily render him totally and permanently disabled under this ERISA plan.” This left the issue of what work Vandivier could perform. Vandivier contended that MetLife’s analysis of this issue was flawed because it did not hire a vocational expert. The court ruled that MetLife was not required to do so, and noted that Vandivier did not offer a vocational report in support of his claim either. Furthermore, the court stated, “The objective medical evidence indicates that Vandivier can sit a whole day and stand and walk for up to one hour per day. He can climb stairs, and he can lift, carry, push, and pull up to five pounds.” This was consistent with a determination that “Vandivier’s physical limitations do not create ‘such a broad impairment as to preclude [him] from engaging in other suitable occupations.’” Vandivier cited to medical records from his treating physicians opining that he “could not stand or walk at all during an eight-hour workday and could not lift or carry anything,” but the court rejected them because MetLife’s review was more recent and considered additional evidence. Furthermore, none of Vandivier’s doctors responded to MetLife when it provided its report to them for comment. As a result, “the Court finds that MetLife’s decision resulted from a deliberate, principled reasoning process and was supported by substantial evidence,” and thus denied Vandivier’s motion.

Eighth Circuit

Conti v. Lincoln Nat’l Life Ins. Co., No. Civ. 22-1579 (JWB/JFD), 2024 WL 1216386 (D. Minn. Mar. 21, 2024) (Judge Jerry W. Blackwell). Plaintiff Christina Conti filed suit against Lincoln National Life Insurance Co., the insurer and administrator of the disability benefit plan in which she was a participant, after Lincoln terminated her long-term disability (LTD) benefits. Applying a de novo standard of review, the court concluded that “it is more likely than not that Conti remained unable to perform her job in the months after her benefits were terminated” and that Lincoln therefore improperly terminated her benefits. As an initial matter, the court rejected Lincoln’s argument that Conti was required to supply continuous proof of her inability to work, finding no such requirement in the plan. This mattered because “Lincoln never told Conti what proof of her physical limitations she failed to supply,” nor did Lincoln “require Conti to undergo a functional capacity or similar examination of her physical abilities, even though the Plan authorizes such a demand and Conti’s refusal would be grounds to terminate her claim.” The court found that “Lincoln impermissibly converted Conti’s disability process into a ‘guessing game,’” which was “not reasonable under the circumstances and weighs against denying benefits.” Weighing the totality of evidence, the court found that “Conti’s fibromyalgia, multiple arthralgias, and small fiber neuropathy, her repeated reports of symptoms and limitations consistent with those conditions, and Dr. Palguta’s years-long acceptance of Conti’s reports as precluding her ability to work make it more likely than not that Conti remained unable to perform her job” as of the date that Lincoln terminated her benefits. Moreover, the court noted that none of Conti’s providers found her not credible and none opined that her mental condition was the reason she could not work. Nor did her failure to follow every recommended treatment undermine her credibility. Moreover, the court found that the fact that she went camping or traveled to see medical providers in other states did not mean she could sustain that level of activity continuously. The court also found credible Conti’s treating physician, who had diagnosed her with severe fibromyalgia in 2019 after she reported extensive pain and showed tenderness in all eighteen trigger points used to diagnose the condition. Indeed, the court pointed out that the reviewing doctors failed to appreciate that “Conti’s history of normal and unremarkable examination results reinforced fibromyalgia as the likely culprit.” The court additionally found Conti’s disability supported by her award of Social Security disability benefit award and by Lincoln’s previous award of benefits based on information related to her fibromyalgia that did not significantly change between Lincoln’s award and termination of her benefits. Despite the court’s nuanced analysis of Conti’s condition and its many criticisms of Lincoln’s own analysis, the court remanded to Lincoln to determine whether Conti also qualified for benefits under the “any occupation” plan standard applicable after 24 months of benefits. The court noted that it would assess attorney’s fees and the exact amount of interest to be awarded for the months in which Conti was wrongfully denied benefits after the parties submitted briefs or reached an agreement on these matters.

Whitehouse v. Unum Life Ins. Co. of Am., No. CV 22-1736 (JWB/ECW), 2024 WL 1209230 (D. Minn. Mar. 21, 2024) (Judge Jerry W. Blackwell). This second disability benefit ruling by Judge Blackwell this week involves Sara Whitehouse, who is a licensed physician and a full-time addiction medicine specialist at a hospital in St. Paul, Minnesota. The hospital was a COVID-19 patient deployment center, and in March of 2020 Whitehouse contracted COVID. She returned to work shortly thereafter but continued having difficulty with breathing and extreme fatigue. She left work again and kept treating with her physicians. During this time she was diagnosed by the Mayo Clinic as meeting criteria for chronic fatigue syndrome and central sensitization disorder. Eventually she progressed through a part-time return to work program and was able to return to work full-time in 2022. Whitehouse submitted claims for short-term and long-term disability benefits under her employer’s disability benefit plan, which was insured by defendant Unum Life Insurance Company of America. Unum approved her short-term claim but only approved partial benefits for her long-term claim. Whitehouse unsuccessfully appealed and then brought this action, where the parties filed cross-motions for judgment. Under de novo review, the court criticized the report by Unum’s doctor, Scott Norris. The court stated that his credibility was questionable because he accepted subjective symptom reports when they favored Unum but rejected them when they favored disability. Dr. Norris also failed to analyze Whitehouse’s symptoms collectively, focused too strictly on a lack of specific work restrictions, and “dismissed certain materials as ‘not time-relevant,’” which was “hardly a full and credible evaluation of Whitehouse’s claim.” Furthermore, Dr. Norris inappropriately faulted Whitehouse for “failing to provide objective evidence to verify symptoms that Unum defines as unverifiable, and relies on her history of normal test results despite Whitehouse being diagnosed with a condition that accounts for individuals with a normal test history.” The court then examined the medical records and determined that they supported Whitehouse’s claim that she suffered from chronic pain and severe fatigue throughout the disability period. Her symptoms were consistently documented, her physicians agreed that she had restrictions and limitations, and she complied with all prescribed treatment, including the pain management treatment program that allowed her to finally return to work. The court thus determined that Whitehouse was disabled and entitled to benefits, and granted her motion. Finally, the court addressed ancillary matters, ruling that (1) Whitehouse’s Time Off Time Away earnings functioned as accumulated sick leave under the policy, not as disability earnings, and thus they could be deducted from the benefits owed; (2) Whitehouse was entitled to prejudgment interest; and (3) Whitehouse could file a motion for attorney’s fees, which would likely be successful because “a prevailing ERISA plaintiff rarely fails to receive fees.”

Eleventh Circuit

Cottingim v. ReliaStar Life Ins. Co., No. 8:22-CV-1235-CEH-CPT, 2024 WL 1156483 (M.D. Fla. Mar. 18, 2024) (Judge Charlene Edwards Honeywell). Plaintiff Kevin Cottingim was Vice President of Human Resources for EmployBridge, LLC. He stopped working in 2020 based on a primary diagnosis of vascular dementia with behavioral disturbance and submitted a claim for short-term and long-term disability benefits under EmployBridge’s benefit plans, which were insured by defendant ReliaStar. ReliaStar denied Cottingim’s claims and this action ensued, in which the parties filed cross-motions for summary judgment. ReliaStar denied Cottingim’s claim because neuropsychological testing showed that although he had some deficits he performed “within normal limits,” and he did not pursue treatment recommended by his providers. Cottingim responded that ReliaStar’s decision did not account for the demands of his occupation, which required higher than average cognitive functioning, and did not acknowledge his cognitive decline after 2019. The court applied the Eleventh Circuit’s six-step Blankenship test. Cottingim argued that ReliaStar did not have discretionary authority in interpreting the plan, and thus the court should give its decisions no deference. However, the court determined that Cottingim did not get past the first step of the test, which required him to prove that ReliaStar’s decision was “de novo wrong,” and thus declined to address his standard of review argument. The court ruled that ReliaStar appropriately used the “e-DOT” vocational resource to determine Cottingim’s occupation, and that he had not demonstrated he was unable to perform that occupation. The court found that Cottingim’s brain scans were “essentially unchanged,” his neuropsychological testing was largely normal, and “medical records regarding his memory loss and inability to focus appear primarily related to his making a disability claim, as opposed to any ongoing regular treatment and care.” As a result, “the medical evidence submitted shows that his condition stayed the same or improved…and failed to reflect disabling restrictions or limitations.” The court dismissed statements from Cottingim’s co-workers, noting that they were not still employed by EmployBridge, and emphasized that Cottingim had not submitted any documents from EmployBridge showing a decline in performance. The court also suggested that any difficulties Cottingim might have had at work were due to alcoholism, which he had refused to treat, thus separately justifying the denial of his claims. As a result, the court granted ReliaStar’s motion for summary judgment and denied Cottingim’s.

Life Insurance & AD&D Benefit Claims

Seventh Circuit

Wojcik v. Metropolitan Life Ins. Co., No. 22-CV-06518, 2024 WL 1214570 (N.D. Ill. Mar. 21, 2024) (Judge Sharon Johnson Coleman). Jerold Wojcik had accidental death insurance through an ERISA-governed employee benefit plan when he died in August of 2019. He was found in his car, which had caught on fire. He was “in a pugilistic stance” with a vaping device in his hand; next to him was an open gasoline can and an empty bottle of Prozac. The medical examiner ruled that Mr. Wojcik died of “thermal and inhalation injuries due to a car fire,” and had “a higher than therapeutic level of Prozac in his blood,” but the “manner of death” was “undetermined” because it was unclear if the fire had been set intentionally. Mr. Wojcik’s wife, plaintiff Sharon Wojcik, submitted a claim for benefits to the insurer of the plan, MetLife, but MetLife denied it, contending that there was no proof that Mr. Wojcik’s death was an “accident” as defined by the plan. Ms. Wojcik filed this action and the parties filed cross-motions for summary judgment. The court applied the “arbitrary and capricious” standard of review because the plan granted MetLife discretionary authority to determine benefit eligibility. MetLife contended that Ms. Wojcik had the burden of submitting written proof that Mr. Wojcik’s death happened by accident, and she did not meet that burden because she did not submit anything in support of her claim, even after she was given multiple extensions to appeal. Thus, MetLife stated that it was reasonable to rely on the medical examiner’s report, which stated that the manner of death was “undetermined.” The court agreed: “Plaintiff never submitted evidence, even though the Plan required her to do so, which showed the death happened by accident.” Ms. Wojcik argued that MetLife had a duty to collect additional evidence showing that the death was an accident, but she cited no authority for this proposition, and the court stated it was “well settled in this circuit that an insurance company may reasonably rely on its administrative records in the absence of additional evidence when determining coverage.” The court also ruled that MetLife’s conflict of interest was insufficient to tip the balance in Ms. Wojcik’s favor. Thus, the court granted MetLife’s summary judgment motion and denied Ms. Wojcik’s.

Pension Benefit Claims

Ninth Circuit

Mills v. Molina Healthcare, Inc., No. 2:22-cv-01813-SB-GJS, 2024 WL 1216711 (C.D. Cal. Mar. 20, 2024) (Judge Stanley Blumenfeld, Jr.). In this case, participants in a defined contribution pension plan sponsored by their employer and the plan’s administrator, Molina Healthcare, challenged certain indexed target date funds (TDFs), claiming that Molina and other Molina-related fiduciaries, as well as the plan’s investment advisor, flexPath Strategies LLP, breached their duties in selecting and retaining these TDFs. Ultimately, after the court granted in part and denied in part motions to dismiss and certified a class of all participants invested in any of these indexed TDFs sponsored by flexPath, the case proceeded to a bench trial. In this decision, the court issued a final judgment in defendants’ favor because plaintiffs failed to prove that the plan suffered a loss and therefore failed to prove damages. The court was persuaded that the flexPath TDFs did not cause plan losses because they outperformed all three comparator benchmark TDFs selected by defendants’ expert, Dr. John Chalmers, as well as most other to-retirement TDFs. The court found unreliable the opinion of plaintiffs’ expert, Dr. Gerald Buetow, who concluded that the plan had suffered significant losses based on his selection of four other indices that, as it turned out, were the top four TDF performers during the period. Among other reasons for rejecting Dr. Buetow’s opinion, the court found his analysis unreliable because, although Dr. Buetow performed quantitative analysis to determine the likely top performers during the relevant period using data points available at the beginning of the period, he did not then select the indices that received top scores using his own calculations. Nor could he explain to the court’s satisfaction why he rejected the top scorers. Therefore, relying on Dr. Chalmers’ opinion, the court found that the plan suffered no losses. On this basis, the court saw no need “to determine whether any Defendant breached its fiduciary duties of prudence, loyalty, or compliance with plan documents or engaged in a prohibited transaction, whether any such breach or prohibited transaction occurred within the repose period, or whether any defendant may be vicariously liable for a co-defendant’s breach.” The court did briefly address the other remedy, disgorgement, that the plaintiffs sought in addition to damages. The court found that plaintiffs failed to explain or quantify what exactly they were seeking in this respect other than the fees that flexPath received in connection with the challenged investments, and failed to show that the investment management fees were linked specifically to the challenged investments or obtained through the use of plan assets.   

Plan Status

Third Circuit

Verdone v. Rice & Rice, PC, No. 23-CV-04224-RMB-AMD, 2024 WL 1191981 (D.N.J. Mar. 20, 2024) (Judge Renée Marie Bumb). This decision begins, “Sibling squabbles can get downright nasty.” Plaintiff Catherine Verdone and defendant Nancy Rice are sisters and lawyers. Rice established the law firm Rice & Rice with the assistance of Verdone, who was employed by the firm. Rice also established a real estate holding company called CTARP, which Verdone alleged was created “to provide tuition assistance and retirement income” to the firm’s employees, including Verdone. Verdone alleged that she invested in CTARP and had an oral agreement with Rice that she would receive 35% of its net profits when she retired. When Verdone informed Rice she was planning on retiring earlier than planned, a dispute arose between the sisters regarding their rights and obligations relating to CTARP. Their relationship at work deteriorated as well, with Verdone accusing the firm of questionable billing and accounting practices. Eventually the firm terminated Verdone, and she filed this action in New Jersey state court “raising claims ranging from whistle-blower retaliation under CEPA to anticipatory repudiation of the Retirement Agreement to unjust enrichment.” Defendants, which included Rice, the law firm, Rice’s law partner, and CTARP, removed the case to federal court asserting federal question jurisdiction under ERISA and diversity jurisdiction. Verdone filed a motion to remand and defendants filed a motion to dismiss, both of which were decided in this order. The court first addressed whether Verdone’s claims were preempted by ERISA. The court determined that the retirement agreement involving CTARP was not an ERISA benefit plan. The court agreed with defendants that ERISA benefit plans could be created through oral representations, and there were “some facts suggesting Rice created an ERISA retirement plan for Verdone’s benefit.” However, this was not enough because “no reasonable person could ascertain the procedures for receiving the benefits under the Retirement Agreement.” There were “no allegations on how the retirement income would be paid to Verdone,” and no explanation for how Verdone could challenge a benefit denial decision. Furthermore, the alleged retirement plan had no ongoing administrative scheme, the assets were not held in trust, and there was no evidence that the plan had named fiduciaries or procedures for amendment, all of which were required by ERISA. In short, “Defendants’ request for removal based on ERISA’s complete preemption has a lot of blanks that they have not filled in.” The court further ruled that it did not have diversity jurisdiction because of the forum defendant rule; Verdone had named Rice’s law partner as one of the defendants and she was a New Jersey citizen. The court rejected defendants’ argument that the partner had been fraudulently joined, finding her to be a reasonable defendant under Verdone’s state law claims. Thus, the court determined that it had no jurisdiction over the matter. It granted Verdone’s motion to remand and denied defendants’ motion to dismiss as moot, but declined to award Verdone fees relating to the removal.

Sixth Circuit

Johnson v. Dodds Bodyworks, Inc., No. 2:23-CV-741, 2024 WL 1254125 (S.D. Ohio Mar. 25, 2024) (Judge Edmund A. Sargus, Jr.). Plaintiff Harold Jeffery Johnson worked for defendant Dodds Bodyworks for more than 30 years. He alleged he was injured in an auto accident in 2021, after which he informed Dodds that he needed a six-week medical leave of absence to recover. Dodds then terminated him. Johnson contended that upon termination he was entitled to an incentive bonus, retirement benefits, and a Ford F-150 truck, and that Dodds failed to pay up. The claim for retirement benefits was based on an oral conversation between Johnson and one of Dodds’ owners, who assured Johnson that “a written agreement was unnecessary” because “her word was golden.” Johnson filed this action in Ohio state court alleging nine state law causes of action. Dodds removed the case to federal court, citing ERISA preemption, and moved to dismiss Johnson’s breach of contract claim. The court determined that it did not have jurisdiction over the action because ERISA did not apply. “Here, the only benefit Johnson seeks which could even be remotely characterized as a ‘benefit plan’ would be the alleged oral agreement for the Retirement Payment, where he would receive 25% of Dodds’ business value upon retirement or termination. This is not a ‘benefit plan’ under ERISA.” The court explained that Johnson’s “one-time” retirement payment “does not require any administrative procedures, is not ongoing, and requires Dodds ‘[t]o do little more than write a check,’” which was insufficient to qualify as a benefit plan under ERISA. The court thus did not reach the merits of Dodds’ motion and denied it as moot. It declared the removal improper and remanded the case to state court for further proceedings.

Pleading Issues & Procedure

Sixth Circuit

McKee Foods Corp. v. BFP, Inc., No. 23-5170, __ F. App’x __, 2024 WL 1213808 (6th Cir. Mar. 21, 2024) (Before Circuit Judges McKeague, Readler, and Davis). The Sixth Circuit pithily introduced this action as follows: “McKee Foods Corporation (‘McKee’) maintains that appellee BFP, Inc. d/b/a Thrifty Med Plus Pharmacy (‘Thrifty Med’) has engaged in a three-year campaign to get reinstated into McKee’s Prescription Drug Program (‘PDP’) pharmacy network – a campaign that has included Thrifty Med filing multiple administrative complaints against McKee and actively lobbying to change Tennessee pharmacy laws in its favor.” McKee filed this action, contending that it was entitled to injunctive and declaratory relief under ERISA because ERISA preempts Tennessee’s “any willing pharmacy” laws, which arguably required McKee to include Thrifty Med in its approved network of pharmacies, which it did not want to do. However, in February of 2023 the district court dismissed McKee’s action as moot because Tennessee had amended its laws to “effectively nullify the actual controversy that supported the origination of this case.” (Your ERISA Watch reported on this decision in our February 15, 2023 edition.) McKee appealed. The Sixth Circuit agreed with McKee that the new amendments “did not render its claims moot because the new law did not substantially and materially amend the pertinent statutory language[.]” The court ruled that “both provisions state that [pharmacy benefit managers] or covered entities shall not interfere with a patient’s right ‘to choose a contracted pharmacy or contracted provider of choice[.]’” The amendments were more specific as to how covered entities were prohibited from interfering, but these changes were only “relatively minor adjustments” which “do not move the needle as it relates to harm.” McKee also challenged the district court’s ruling that its claims were moot under the “voluntary cessation” doctrine. Again, the Sixth Circuit agreed. Thrifty Med argued that Tennessee had dismissed its administrative complaints and it had stipulated that it had no “current plans” to seek reinstatement in McKee’s plan. However, the court noted that “the burden to demonstrate mootness through voluntary cessation is substantial,” and “Thrifty Med’s argument falls short. Read liberally, its stipulations suggest a suspension of conduct, not the termination of conduct.” The Sixth Circuit examined Thrifty Med’s actions in pursuing relief and concluded that Thrifty Med was simply not credible: “Thrifty Med’s timing in ceasing its efforts to obtain reinstatement raises suspicion that it may not be genuine.” Most notably, Thrifty Med only contended it was not planning on seeking reinstatement after Tennessee passed amendments “explicitly applicable to ERISA plans,” which “would seemingly benefit its cause” and thus “renders the timing suspect.” Thus, the Sixth Circuit reversed the district court’s mootness ruling and remanded for further proceedings in which the district court will presumably address McKee’s preemption argument.

Seventh Circuit

Williams v. Noble Home Health Care, LLC, No. 2:23-CV439-PPS/JEM, 2024 WL 1193630 (N.D. Ind. Mar. 20, 2024) (Judge Philip P. Simon). Plaintiff Lynette Williams worked for defendant Noble Home Health Care, which terminated her in 2019. She alleges that when she was fired Noble failed to offer her continuation of her health insurance coverage in violation of ERISA’s COBRA provisions. Noble filed a motion to dismiss in which it did not challenge the substantive adequacy of Williams’ claims, but instead argued that Williams’ complaint violated Federal Rule of Civil Procedure 8, which requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” In a brief order, the court denied the motion, ruling that Williams’ complaint “passes the ‘two easy-to-clear hurdles’ imposed by Rule 8(a)(2) in that the pleading provides sufficient detail to give Noble fair notice of her claims and the basis for them, and plausibly suggests that Williams has a right to relief.” Noble complained that Williams used “conclusory, inflammatory, and accusatory” language in her complaint, but the court considered this to be a “startling irony” because Noble was “throwing stones from a glass house.” For example, Noble contended that Williams “presents a fantastical tale of depravity and abject cruelty that might find a place in Hollywood, were it actually true.” Indeed, the court considered Noble to be “the worse offender, using expressions such as ‘wildly offensive,’ ‘wild-eyed allegations,’ and ‘utter nonsense of the highest order.’” The court cautioned that “a party’s argument is never enhanced by unnecessary vehemence.”

Provider Claims

Fourth Circuit

Innovations Surgery Ctr., P.C. v. UnitedHealthcare Ins. Co., No. 8:21-CV-2680-PX, 2024 WL 1214003 (D. Md. Mar. 21, 2024) (Judge Paula Xinis). Plaintiffs Innovations Surgery Center and Center for Gyn Surgery challenge defendant UnitedHealthcare’s denials and partial payment of benefit claims arising from nearly 600 gynecological and surgical procedures that plaintiffs performed on an out-of-network basis on 277 patients insured by United. Plaintiffs asserted a host of state law and ERISA-based claims. Among these were claims for failure to pay benefits in violation of ERISA and a claim for statutory penalties under ERISA. Previously, United filed a motion to dismiss, which the court partially granted. In its order the court directed the parties to exchange informal discovery “to ascertain which of the 590 disputed claim lines were covered by ERISA versus non-ERISA Plans, and whether the Insureds had assigned recovery rights to Plaintiffs.” United ultimately agreed to produce “60 representative Plans which covered some, but not all, of the 590 claim lines that are the subject of this case.” Defendants then filed a new motion to dismiss which was decided in this order. The court granted United’s motion as to plaintiffs’ direct claims under state law because United had not been unjustly enriched and there was no implied-in-fact agreement between plaintiffs and United. As for the claims assigned to plaintiffs by their patients, the court ruled that plaintiffs had not alleged any “specific representations, inducements, or statements on which the Insureds relied” which might form a basis for fraudulent conduct in violation of the Maryland Consumer Protection Act. On the ERISA claims, United argued that plaintiffs had not exhausted their administrative remedies, but the court ruled that it was premature to rule on this defense. The court noted that plaintiffs had alleged their efforts in pursuing their claims, “which included pursuing Defendants’ ‘internal appeals mechanism’ and informal channels such as letters, emails, phone calls, and proposed meetings.” Furthermore, not all plan documents had been produced, which made it difficult to determine if their procedures had been followed. Next, United argued that it could not be held liable for statutory penalties under ERISA. The court agreed, ruling that such claims could only be made against plan administrators, not claim administrators like United. Furthermore, the court ruled that plaintiffs could not pursue statutory penalties because the patient assignments did not include a right to pursue such penalties; it only authorized plaintiffs to seek payment of benefits. In the end, only plaintiffs’ claims for breach of contract under non-ERISA plans and unlawful denial of benefits under ERISA plans survived. The remaining claims were dismissed, although the court left open the possibility that plaintiffs could amend their complaint on a subset of their claims if discovery warranted it.

Seventh Circuit

Affiliated Dialysis of Joliet, LLC v. Health Care Serv. Corp., No. 23 CV 15086, 2024 WL 1195607 (N.D. Ill. Mar. 20, 2024) (Judge Lindsay C. Jenkins). Plaintiff Affiliated Dialysis of Joliet, LLC provides dialysis treatment to patients, some of whom are insured by defendant HCSC. Affiliated had a contract with HCSC, which it terminated in 2020, although it continued to provide treatment to HCSC insureds. According to Affiliated, after 2020, instead of reimbursing Affiliated at out-of-network rates, HCSC continued reimbursing Affiliated at the lower rates in the terminated contract, even though Affiliated sought and received authorization for all of the services it provided. Affiliated brought this action in Illinois state court alleging violation of implied contract, or, in the alternative, quantum meruit. HCSC removed the case to federal court based on ERISA preemption and Affiliated moved to remand. The court noted that HCSC had paid Affiliated for its services, and thus “[t]he dispute here is whether HCSC paid Affiliated enough for those services… Courts have consistently held that an insurer’s alleged failure to adequately pay a medical provider constitutes a separate, independent legal duty that is incompatible with ERISA preemption[.]” HCSC contended that its contract with Affiliated controlled the correct rate. However, “the Agreement, which is focused on payment rates for specific services, has nothing to do with the ERISA plan. HCSC’s legal duty to adequately pay Affiliated is separate from its legal duty to cover the treatment as required under the ERISA plan.” In short, “Because this is a dispute over the rate of payment as opposed to the right of payment,” the court granted Affiliated’s motion and remanded the case. However, the court determined that even if HCSC’s removal was incorrect, it was reasonable, and thus refused to award Affiliated fees, noting that “the distinction between the right to payment and rate of payment has not been thoroughly explained in this district, nor explicitly adopted by the Seventh Circuit.”