Another slow week in ERISA World, sadly. We do expect things to pick up, as the Civil Justice Reform Act reporting period expires at the end of the month. As always, however, even though the numbers are down, the cases are still interesting. Read on for no fewer than three separate cases discussing application of the Mental Health Parity and Addiction Equity Act, the latest installment in a class action alleging ESOP skulduggery at the Casino Queen Hotel & Casino in St. Louis, and whether a prisoner can sue an insurer for inflicting emotional distress by mishandling his life insurance claim, among other decisions.

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

Attorneys’ Fees

Tenth Circuit

K.D. v. Anthem Blue Cross & Blue Shield, No. 2:21-CV-343-DAK-CMR, 2024 WL 840659 (D. Utah Feb. 28, 2024) (Judge Dale A. Kimball). In September of 2023, the court ruled that defendant Anthem abused its discretion in denying the plaintiffs’ claim for mental health benefits for residential treatment, and remanded the case to Anthem for further evaluation. (This decision was Your ERISA Watch’s case of the week in our September 27, 2023 edition.) The court also invited plaintiffs to file a motion for attorney’s fees, which was decided in this order. Plaintiffs’ counsel Brian S. King asked the court to award him his national rate of $600/hour, while Samuel Martin Hall, an associate in Mr. King’s office, requested a rate of $325. The court chose to reduce both rates, ruling that “this District has consistently determined that the application of a local rate is appropriate in ERISA cases,” and “a $500 per hour rate is now appropriate for Mr. King’s skill and experience level in an ERISA case in the Salt Lake City legal market.” As for Mr. Hall, he was previously awarded $250/hour by other courts in the district, but “he has gained three years of experience since those prior cases and with that increased experience and skill working on ERISA cases, the court finds that an hourly rate of $300 is appropriate for Mr. Hall.” The court also reduced, without objection, the number of hours counsel expended by 5.7 because that time was billed prior to the drafting of the complaint. As a result, Mr. King was awarded 63 hours at $500 per hour, while Mr. Hall was awarded 33.6 hours at $300 per hour, for a total of $41,580. Plaintiffs also recovered $400 in costs. The court then “administratively close[d] the case pending the conclusion of the remand process.”

Class Actions

Eleventh Circuit

Lopez v. Embry-Riddle Aeronautical Univ., Inc., No. 6:22-CV-1580-PGB-LHP, 2024 WL 775213 (M.D. Fla. Feb. 26, 2024) (Judge Paul G. Byron). Plaintiff Guillermina Lopez is a participant in Embry-Riddle Aeronautical University’s retirement plan. She alleges in this putative class action that Embry violated its fiduciary duties under ERISA by paying excessive recordkeeping fees and expenses to the plan’s third-party administrator, TIAA. She filed a motion for class certification, which Embry opposed on the grounds that (1) Lopez did not have standing, (2) her claims conflicted with other class members, (3) her claims were not typical, and (4) she lacked adequate knowledge to represent the class. The court agreed that Lopez did not have standing, ruling that she “fails to articulate in her Motion any injury in fact that she sustained.” Furthermore, the Court noted that Lopez did not respond to declarations from Embry stating that Lopez’s allegations were incorrect because Embry did not pay per-participant recordkeeping fees, Lopez herself was not economically harmed because she had not paid the fees alleged in the complaint, and she had not invested in any of the challenged funds. The court also agreed with Embry that because it calculated plan fees with an asset-based approach instead of on a per-participant basis, the claims of Lopez’s proposed class were antagonistic to the claims of other plan participants who paid different fees or who may have benefited under the current system. Having decided these issues against Lopez, the court dispensed with addressing Embry’s other arguments and denied Lopez’s class certification motion.

Disability Benefit Claims

Fifth Circuit

Black v. Unum Life Ins. Co. of Am., No. 3:22-CV-2116-X, __ F. Supp. 3d __, 2024 WL 873536 (N.D. Tex. Feb. 29, 2024) (Judge Brantley Starr). Plaintiff Catherine Black successfully applied for long-term disability benefits under an employee benefit plan insured by defendant Unum Life Insurance Company of America, but after several years of payments, Unum terminated her benefits in 2021, determining she was no longer disabled. Black sued and the parties filed cross-motions for summary judgment. Black contended that she did not receive a full and fair review, as required by ERISA, because Unum “denied her claim based on a medical judgment, but it failed to consult with a qualified health professional on appeal.” Unum argued that its denial “was not based on a medical judgment; rather, it denied Black’s claim because she no longer had any restrictions that prevented her from performing sedentary work.” The court, relying on a Fifth Circuit decision, agreed with Black that Unum’s determination was based on a medical judgment because “Unum consulted Black’s doctors in order to assess her medical conditions and her capability to perform sedentary work.” The court stated that Unum’s attempt to distinguish the appellate decision “just splits hairs.” The court further agreed with Black that Unum “failed to consult with a health care professional who had appropriate training and experience in the field of medicine involved in the medical judgment when deciding Black’s administrative appeal.” Unum violated this requirement because its reviewing nurse “essentially gave deference to the initial denial of Black’s claim,” and “was not a qualified health care professional to perform the consultation.” Unum contended that the nurse was merely summarizing the opinions of Black’s own physicians and was not making her own medical determination. However, the court ruled that in doing so “Unum relied on the same physicians to initially deny Black’s claim and to deny her appeal. ERISA requires more. Unum must consult a different physician on appeal than those it relied upon during its initial denial. Otherwise, the administrative appeal process is prejudicial.” Because Unum did not give Black a full and fair review, the court ruled that Unum’s decision was procedurally non-compliant. However, “[P]rocedural violations of ERISA generally do not give rise to a substantive damages remedy.” Thus, the court remanded the case to Unum “to conduct a full and fair review of Black’s disability claim consistent with ERISA’s procedural requirements as explained in this order.”

ERISA Preemption

Fourth Circuit

Davis v. Horton, No. CV PJM-23-0078, 2024 WL 839045 (D. Md. Feb. 27, 2024) (J. Peter J. Messitte). Plaintiff Bryant Davis is an inmate at Jessup Correctional Center, a prison in Maryland. He brought this action against numerous defendants in connection with the death of his wife. He alleged claims for intentional infliction of emotional distress (IIED) and deprivation of constitutional rights in connection with his inability to arrange for the burial of his wife. Davis alleged that two of the defendants, Hartford Life and Accident Insurance Company and Fidelity Workplace Services, failed to respond to his expedited request for claim forms for life insurance benefits, which added to his distress. The defendants all filed motions to dismiss. The court ruled that Davis’ IIED claim was not plausible because “[t]he conduct alleged in the complaint consists of the refusal to allow Davis access to a telephone over a matter of weeks and the failure to process forms,” which was not “outrageous” or “extreme” enough to constitute IIED under Maryland law. Furthermore, Davis’ IIED claim against Hartford and Fidelity was preempted by ERISA because it “derives from their alleged mishandling of his claim for his wife’s life insurance policy,” which was an employee benefit plan sponsored by Davis’ wife’s employer, General Dynamics. As a result, the court granted the defendants’ motions to dismiss.

Medical Benefit Claims

Second Circuit

M.R. v. United Healthcare Ins. Co., No. 1:23-CV-4748-GHW, 2024 WL 863704 (S.D.N.Y. Feb. 29, 2024) (Judge Gregory H. Woods). Plaintiff M.R., individually and on behalf of M.R.’s stepdaughter, J.S., brought this action alleging that defendant United unlawfully denied M.R.’s claims for health insurance benefits after J.S.’s stay at a wilderness therapy program. M.R. sought payment of benefits and contended that the denial violated the Mental Health Parity and Addiction Equity Act. M.R. also sought statutory penalties under ERISA against defendant Pfizer Inc. for its failure to provide plan documents upon request. Defendants filed a motion to dismiss, which Magistrate Judge Gary Stein recommended that the court deny, except to the extent the statutory penalty claim was asserted against any party other than Pfizer. (Your ERISA Watch covered this report in our December 6, 2023 edition.) Defendants were unhappy with the report and recommendation and filed objections which were decided in this order. The court agreed with the report that M.R.’s complaint was timely, even though it was filed after the expiration of the plan’s contractual limitation period, because United failed to comply with ERISA regulations requiring it to notify M.R. of the limitation. Defendants contended that M.R. knew of the time limit and thus was not entitled to equitable tolling of the deadline, but the court ruled that the concept of equitable tolling did not apply: “equitable tolling is not ‘an obstacle, or even relevant, to [the plaintiff’s] claim.’” Instead, defendants’ regulatory violation waived the deadline and thus it was unenforceable. Next, the court ruled that M.R. had properly stated a Parity Act violation. M.R. “adequately pleaded the third element of her Parity Act claim by alleging that ‘a mental-health treatment is categorically excluded while a corresponding medical treatment is not.’” Specifically, M.R. alleged that, in practice, United’s “experimental or investigational” exclusion created “a categorical exclusion ‘for even state-licensed wilderness therapy programs but not for analogous forms of inpatient medical/surgical treatment.’” The court disagreed with United’s argument that the court could find as a matter of law that wilderness therapy is not analogous to skilled nursing facilities for the purpose of the Parity Act. That question “is an issue of fact” and thus could not be a basis for dismissing M.R.’s claim. Finally, the court rejected Pfizer’s argument for dismissing the statutory penalty claim. Pfizer contended that M.R. sent the request to the “plan sponsor,” not the “plan administrator,” but the court agreed with the magistrate judge that these were the same entity and thus this was a “hyper-technical” distinction without a difference. As a result, the court “accepts and adopts the thorough and well-reasoned R&R in its entirety[.]”

Tenth Circuit

S.B. v. BlueCross BlueShield of Tex., No. 4:22-CV-00091, 2024 WL 778054 (D. Utah Feb. 26, 2024) (Judge David Nuffer). Plaintiff S.B. is a participant in an ERISA-governed medical benefit plan and the father of R.B., who was admitted to Solacium Sunrise, a residential treatment center (RTC) for adolescent girls with mental health, behavioral, and substance abuse problems. Plaintiffs submitted claims for these benefits to the plan’s insurer, defendant BlueCross, which denied them on the ground that Sunrise did not have 24-hour on-site nursing, which the plan requires for RTCs. Plaintiffs filed this action alleging two claims, one for plan benefits under ERISA and another for violation of the Mental Health Parity and Addiction Equity Act. BlueCross responded with a motion to dismiss both claims. Plaintiffs argued that the plan’s nursing requirement did not apply to RTCs for children and adolescents, but the court ruled that this interpretation was not plausible because it was “directly contradicted by the express terms of the plan,” which applied the nursing requirement to all RTCs. Plaintiffs also contended that they did not receive a full and fair review from BlueCross. The court found these allegations plausible, but ruled that they were irrelevant because the plan’s nursing requirement barred coverage and thus there was no prejudice. The court was slightly more sympathetic to plaintiffs’ Parity Act claim. Plaintiffs contended that the plan exceeded generally accepted standards of care (GASC) with its RTC nursing requirement, but did not impose the same requirement on comparable medical and surgical facilities, and thus there was a parity violation. The court ruled that this was sufficient to get past the pleading stage. However, the court noted that plaintiffs’ Parity Act claim was on thin ice, because BlueCross had submitted a document from the American Academy of Child & Adolescent Psychiatry setting forth GASC for RTCs stating that one of the two ways RTCs can conform with GASC is by having 24-hour onsite nursing. Thus, if on-site nursing is an element of GASC, the plan did not exceed GASC by requiring it for RTCs, and the Parity Act claim would fail. However, the court refused to consider this document in ruling on the motion because it was outside the pleadings. Thus, the court granted BlueCross’ motion to dismiss plaintiffs’ claim for benefits, but “Plaintiffs’ Count II Parity Act claim survives” for now.

J.W. v. United Healthcare Ins. Co., No. 2:23-CV-193-DAK-DBP, 2024 WL 840714 (D. Utah Feb. 28, 2024) (Judge Dale A. Kimball). Plaintiff J.W. is a participant in an ERISA healthcare plan that denied claims for coverage of his child’s mental health treatment at two inpatient facilities: Open Sky Wilderness Therapy and Waypoint Academy, the former because it was determined to exclude experimental and investigational treatment and the latter because it was determined not to qualify as residential treatment. J.W. sued his employer, S&P Global Inc. (“SPGI”), the plan itself, and United Healthcare Inc. (“United”), the claims administrator, asserting three claims: (1) a claim for benefits; (2) a claim for violation of the Mental Health Parity Act; and (3) a claim for penalties for failure to provide requested plan documents. Defendants moved to dismiss, and the court partially granted and partially denied the motions. Turning first to United’s motion to dismiss the claim for penalties, the court determined that because United was not the plan administrator, the claim for penalties was not properly asserted against it. It thus dismissed United as a defendant with respect to this count, but declined to dismiss the claim on the merits to the extent it was asserted against the administrator. But that presented a separate problem, as the plaintiff had failed to assert the claim against the named plan administrator – the U.S. Benefits Committee. Instead, the plaintiff insisted that because the Committee was an informal subdivision of SPGI, it was sufficient that he had named SPGI as a defendant. The court disagreed, holding that neither SPGI nor the plan were proper defendants as to this claim, just as United was not. However, the court granted plaintiff 30 days to amend to name the Committee as the defendant with respect to the claim for penalties. As to the claim for benefits, the court held that because SPGI did not control the administration of the plan or its benefits, it was not a proper defendant for that claim and the court accordingly granted SPGI’s motion to dismiss it as defendant on this claim. Turning finally to the Parity Act claim, the court dismissed SPGI as a defendant based on plaintiff’s concession that this claim was not properly asserted against the company. The court, however, disagreed with the plan’s contention that the claim was duplicative of the benefits claim, noting that plaintiff sought injunctive relief with respect to that claim, but agreed with the plan that the complaint did not specifically address whether it was asserting a facial or as-applied challenge. Again, however, the court granted plaintiff the opportunity to amend the complaint to more clearly articulate “his Parity Act claims against the Plan.”             

Pension Benefit Claims

Seventh Circuit

Hensiek v. Bd. of Dirs. of Casino Queen Holding Co., No. 20-cv-377-DWD, 2024 WL 773633 (S.D. Ill. Mar. 6, 2023) (Judge David W. Dugan). On several occasions, Your ERISA Watch has previously reported on developments in this putative class action brought by former employees of the Casino Queen Hotel & Casino, a riverboat casino, challenging the creation of and subsequent transactions involving the Casino Queen’s employee stock ownership plan (“ESOP”). The facts are complicated and were covered at length when we wrote about two prior decisions declining to dismiss the complaint in our March 15, 2023 edition. In a nutshell, plaintiffs allege that the owners of the company came up with the idea of creating an ESOP to buy the company after trying unsuccessfully for six years to sell the company to unaffiliated third parties. They did so in several stages. First, in October 2012, they created a holding company for Casino Queen. Then, the selling shareholders exchanged their Casino Queen Stock for the holding company’s stock and placed themselves on the newly formed board of the holding company. Two months later, in December 2012, the shareholders and the holding company established the Casino Queen ESOP and facilitated the terms of the ESOP stock purchase of the holding company’s outstanding stock for $170 million. In order to finance this transaction, the ESOP borrowed $130 million from Wells Fargo, $15 million from an unnamed third party, and $25 million from the defendants at the “draconian interest rate” of 17.5%. Following the 2012 stock purchase, the ESOP proceeded to sell all of the Casino Queen’s real estate to a third party gambling company, Gaming and Leisure Properties, Inc., for $140 million. Plaintiffs alleged that the real value of these assets totaled only about $12.1 million. Then, Casino Queen leased back the property it had just sold for $140 million for the hyper-inflated price of $210 million, to be paid over 15 years (for more annually than what plaintiffs claimed the properties were worth). In any event, following the court’s denial of the motion to dismiss, the plaintiffs filed an amended complaint adding several new defendants whom they claim were former shareholders of the company and parties-in-interest for purposes of ERISA’s prohibited transaction provisions. Two of the original defendants moved to dismiss the complaint again as untimely, but this time asserted that the untimeliness was jurisdictional. The district court, however, disagreed and concluded that the statute of limitations in ERISA Section 1113 was not jurisdictional. Moreover, the court agreed with plaintiffs that it should not consider additional evidence submitted by the two moving defendants or convert their motion to dismiss into a motion for summary judgement but should instead allow plaintiffs more time for discovery into whether the fraud or concealment exception to ERISA’s general six-year statute of limitations applies. Another of the original defendants moved for judgment on the pleadings based on more than two dozen documents he attached to his answer. Agreeing with plaintiffs that the documents had not been authenticated and might not even be relevant, the court refused to consider them. Moreover, even if it were to consider them, the court held that these documents were insufficient to establish “beyond doubt” that plaintiffs could not prove any set of facts to support their claims and thus did not support judgment on the pleadings for this defendant or that the court should convert the motion to a motion for summary judgment. Finally, the court dismissed, without prejudice, the motions to dismiss filed by certain third-party defendants, granting leave to refile by March 27. So, it appears that this lawsuit will proceed full steam ahead.

Pleading Issues & Procedure

Second Circuit

Cudjoe v. Bldg. Indus. Elec. Contractors Ass’n, No. 21-CV-05084 (DG) (ST), 2024 WL 866070 (E.D.N.Y. Feb. 28, 2024) (Judge Diane Gujarati). Plaintiff Martin Cudjoe is a participant in a number of multi-employer (Taft-Hartley) plans (the “Benefit Funds”), which include a pension fund, an annuity fund, a welfare benefit fund, and an apprenticeship fund. He claimed that under both the Taft-Hartley Act and ERISA the Benefit Funds were required to be jointly administered by an equal number of union and management trustees, but were instead operated only by management-side trustees. He also claimed that the Trustees had mismanaged the Benefit Funds by paying themselves over $1 million in plan assets, in violation of ERISA’s prohibited transaction rules. He brought a six-count putative class action complaint against various union entities and individuals asserting claims under both the Taft-Hartley Act and ERISA. Defendants filed motions to dismiss under both Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). Addressing the 12(b)(1) motion, the court held that Mr. Cudjoe failed to establish Article III standing and therefore dismissed the complaint in its entirety. Specifically, the court found that Mr. Cudjoe failed to establish an injury in fact by asserting, without more, that had it not been for the mismanagement of Fund assets, the participants, himself included, would have received richer benefits. The court found the Supreme Court’s decision in Thole v. U.S. Bank N.A., 140 S. Ct. 1615 (2020) to be “instructive, but not dispositive.” The court concluded that even with respect to one plan, the Annuity Fund, which was a defined contribution pension plan, Mr. Cudjoe’s claim should still be dismissed because the complaint did not explain how “the alleged mismanagement necessarily affected Plaintiff’s benefits with respect to” that Fund. The court therefore granted the motion to dismiss without leave to amend as plaintiff had previously been afforded the opportunity to do so.

Fourth Circuit

Nordman v. Tadjer-Cohen-Edelson Assocs., Inc., No. DKC 21-1818, 2024 WL 895122 (D. Md. March 1, 2024) (Judge Deborah K. Chasanow). Plaintiff, a former employee of Tadjer-Cohen Edelson Associates (TCE) filed suit against TCE and others seeking additional benefits under multiple TCE-sponsored retirement plans, including the PS Plan, the TCE Employee Stock Ownership Plan (ESOP), and a profit sharing plan. TCE is the administrator of these plans with full discretionary authority. In 1988, plaintiff signed waivers of his rights to receive pension benefits under the PS Plan and under a profit sharing plan. The court previously dismissed some of the eight counts and two of the plaintiffs. Plaintiff missed his deadline for filing a motion for summary judgement and a little over a week later filed a motion for leave to file a motion to extend the deadline for filing and then filed the motion, requesting a one-month extension, all of which defendants opposed. Even so, Plaintiff filed a motion for partial summary judgment, albeit a day late even assuming his requested extension was granted. Defendants also cross-moved for summary judgment, apparently in a timely fashion, and, after defendants filed a reply to plaintiff’s opposition, plaintiff also filed a motion to file a sur-response (and then filed motions to extend the briefing on this). With respect to plaintiffs’ motions to extend, the court found equities in both directions and ultimately granted the motions, finding no utility to striking plaintiff’s partial summary judgment motion as untimely because it covered the same ground as defendants’ motion. However, the court was not so lenient with respect to the motions regarding the sur-reply, which the court denied. The court also considered all of the documents attached by plaintiff to his motion, with the exception of a handwritten note, the contents of which he could not authenticate and which he did not claim to have written. Clearing these procedural hurdles, the court proceeded to consider summary judgment, which largely turned from the defendants’ perspective, on whether plaintiff had the right to revoke the waiver and whether he did so by applying for and being accepted as a participant. The court concluded that the cited evidence appeared to conflict both on whether the waivers are revocable and on whether plaintiff later joined the plans. Consequently, the court found a material dispute on this issue and refused to grant summary judgment to either side on this basis. The court turned to Count IV of the complaint, which requests $394,900 in penalties for alleged failures and delays in providing requested documents. The court found that plaintiff had never made written requests for some of the documents, and that with respect to the 2016-17 PS Plan document and ESOP SARs, defendants produced them in a timely manner upon written requests. However, the court found that defendants did not prove that they met their obligations to produce these documents for the 2017-18 and 2018-19 plan years after plaintiff made a written request, and thus granted summary judgment as to liability on this part of Count IV, but deferred imposition of a monetary penalty until final disposition of the whole case. Finally, the court concluded that this count was timely asserted because the most analogous statute of limitations in Maryland was the three-year period, not the one-year period for which defendants had advocated.  

Provider Claims

Eleventh Circuit

Griffin v. Blue Cross Blue Shield Healthcare Plan of Ga., Inc., No. 22-14187, __ F. App’x __, 2024 WL 889560 (11th Cir. Mar. 1, 2024) (Before Circuit Judges Rosenbaum, Grant, and Black). W.A. Griffin is a dermatologist, proceeding pro se. This is one action among many she has filed in which she contends that various defendants have breached their fiduciary duties under ERISA by underpaying medical benefit claims. The district court granted defendants’ motion for summary judgment, concluding that “(1) all of the patient plans at issue contained valid anti-assignment provisions; (2) ERISA permits, as a matter of federal common law, such provisions regardless of any state laws to the contrary; and (3) Griffin lacked statutory standing to bring her suit because she was not a beneficiary under her patients’ plans.” In this unpublished per curiam decision, the Eleventh Circuit affirmed. Citing a recent Eleventh Circuit decision in which Dr. Griffin was also the plaintiff, the court stated, “We have repeatedly rejected identical or nearly identical arguments by Griffin in published and unpublished opinions.” The court ruled that there were “valid unambiguous anti-assignment provisions in each plan document, so the district court did not err in finding those provisions barred Griffin’s patients from assigning their entitlement to plan benefits to her.” Griffin argued that this conclusion was “at odds” with two Supreme Court cases, Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985), and Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003). However, the Eleventh Circuit noted that its precedents upholding anti-assignment provisions post-dated those cases and thus Griffin’s arguments were “foreclosed by the prior panel precedent rule.” In any event the court ruled that these two cases did not help Griffin, because both involved analyzing when a state law is an insurance regulation for the purposes of ERISA preemption, which was not the issue here. Thus, the Eleventh Circuit affirmed the judgment against Griffin.

Severance Benefit Claims

Seventh Circuit

Pool v. The Lilly Severance Pay Plan, No. 1:23-cv-00631-JMS-MKK, 2024 WL 866580 (S.D. Ind. Feb. 29, 2024) (Judge Jane Magnus-Stinson). Scott Pool, a participant in a severance plan sponsored by his former employer Eli Lilly, sued Lilly and the plan claiming he had been underpaid benefits from the plan and that the company had breached its fiduciary duties in miscalculating his benefits. The dispute centered around the meaning of the term “Service” in the plan, and, in particular, whether only Mr. Pool’s second period of employment counted in calculating his years of service. Essentially, applying a deferential standard of review to Lilly’s interpretation of the plan language, the court found it reasonable that Lilly interpreted the term “Service” to include “only years of continuous employment after the date of reemployment,” as the plan apparently expressly stated. Nor did Lilly breach its fiduciary duty by calculating and paying Mr. Pool benefits in accordance with this definition. Therefore, the court granted summary judgment in favor of defendants.