This week, Punxsutawney Phil predicted six more weeks of winter, and I’ve heard it said that this January was the longest year on record. It seems ERISA winter is continuing for at least some plan participants, as several noteworthy decisions were issued this week which were unfavorable to ERISA plaintiffs. In Cutrone v. Allstate and Johnson v. Russell Investments Trust Co., courts in the Northern District of Illinois and the Southern District of Florida respectively applied Pizarro v. The Home Depot, Inc., 111 F.4th 1165 (11th Cir. 2024), to enter summary judgment in favor of defined contribution plan fiduciaries, concluding the plaintiffs could not prove the challenged investments and fees were “objectively unreasonable.”

However, in a sign of spring for ERISA plaintiffs, a disability claimant who could not sit due to abdominal pain was awarded long-term disability benefits in Dime v. Metropolitan Life Insurance Company. Attorney Brian King’s winning streak in the District of Utah continued after a district judge found that Blue Cross abused its discretion by failing to meaningfully engage with a family seeking reimbursement for residential mental health treatment of their child in S.B. v. Blue Cross Blue Shield of Illinois. And a judge in the District of Minnesota concluded that the trustees of a union pension plan acted arbitrarily and capriciously by interpreting “Disqualifying Employment” to encompass pre-retirement employment in Grandson v. Western Lake Superior Piping Indus. Pension Plan.

Although no decision was earth-shattering or season-changing in and of itself, we think all seventeen decisions are worth a read this week.

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

Breach of Fiduciary Duty

Seventh Circuit

Cutrone v. The Allstate Corp., No. 20 CV 6463, 2025 WL 306179 (N.D. Ill. Jan. 27, 2025) (Judge Georgia N. Alexakis). On behalf of themselves and all others similarly situated in The Allstate Corporation’s defined contribution retirement plan, seven plaintiffs sued Allstate, the plan’s committees, and the individual committee members for breaches of fiduciary duty and prohibited transactions under ERISA. In their complaint, plaintiffs took issue with the sustained underperformance of the plan’s default target date fund investment options, the excessive costs of the advisory service and professional management service fees, and the alleged kickback fee scheme between two parties in interest, the plan’s service provider, Financial Engines, and the plan’s recordkeeper, Aon Hewitt. Defendants moved for Rule 56 summary judgment on all five counts. In this decision, the court concluded there were no genuine disputes of material fact as to each of plaintiffs’ claims and consequently granted defendants’ motion for summary judgment in full. To begin, the court expressed its view that a “fiduciary’s duty of prudence is both procedural and objective.” The court took this to mean that “no matter how imprudent a fiduciary may be in failing to investigate or evaluate an investment, she cannot be liable if the investment was objectively prudent.” In light of this observation, the court brushed aside plaintiffs’ evidence of procedural imprudence to investigate instead whether any reasonable juror could conclude that defendants made objectively imprudent investment and fee decisions. Upon consideration, the court concluded that counts one and two (imprudence as it relates to the investments and fees) failed on objective prudence grounds. To some extent, the court made light of evidence that the challenged target date funds sometimes underperformed, even when compared to their own wide benchmark of plus-or-minus 20%. While the court acknowledged that the default investment options did broadly underperform peers, it nevertheless observed that objective reasonableness cannot be based on hindsight. The court was also clearly persuaded by the arguments advanced by defendants’ expert, who opined that the Northern Trust target date funds were objectively prudent and economically reasonable investment options for the plan during the relevant period because they provided “an attractive tradeoff between risk and return,” which was the intended investment strategy adopted after the 2008 financial crisis. Moreover, defendants’ expert offered that in his opinion switching investment strategies during a strong market is “ill-advised” as it “comes with the risk of losses if market conditions change.” It was problematic for plaintiffs that their own expert spent much of his testimony speaking to the procedural imprudence of defendants’ processes. According to the court, plaintiffs’ expert did not engage with the basic argument that the challenged funds were objectively imprudent. To the court, there was a clear imbalance between the relative strength of each party’s expert opinions, and while the court was persuaded by many of defendants’ expert’s opinions, it was equally unpersuaded by plaintiffs’ expert. Essentially, to the extent that plaintiffs’ expert attempted to provide evidence of imprudence and underperformance of both the challenged funds and fees, the court found the underperformance on its own insufficient to establish objective imprudence and also fundamentally flawed because it was based on “apples to oranges” comparisons (making it hard to see what ever would qualify as objectively unreasonable or imprudent). The court therefore determined that defendants did not act imprudently and granted summary judgment in their favor on counts one and two. The decision then assessed count three, plaintiffs’ prohibited transaction claim. The court adopted the logic of the Seventh Circuit’s decision in Albert v. Oshkosh Corp., which held that routine payments for plan services are not prohibited transactions within the meaning of Section 1106(a). Taking things one step further, the court took up the reasoning of a district court decision, Baumeister v. Exelon Corp., and concluded that regardless of whether “the price paid for those services was unreasonable based on the separate agreement Aon Hewitt had with Financial Engines makes no difference. Under Albert, routine services payments are excluded from the definition of prohibited transaction altogether.” The court therefore granted defendants’ motion for summary judgment on the prohibited transaction claim as well. (Notably, this aspect of the court’s decision may not hold depending on the outcome of the Supreme Court’s ruling in Cunningham v. Cornell). The court then turned to the derivative co-fiduciary duty and duty to monitor claims. Because these claims depend on underlying breaches, the court concluded that defendants could not be held liable for either of these counts and thus granted summary judgment to defendants on the final two causes of action. Defendants were thus entirely successful in their motion for summary judgment.

Eleventh Circuit

Johnson v. Russell Inv. Mgmt., No. 22-cv-21735, 2025 WL 358197 (S.D. Fla. Jan. 31, 2025) (Judge Robert N. Scola, Jr.). The “objectively unreasonable” standard reared its head for a second time this week, and as in the Cutrone decision above, doomed this fiduciary breach class action as well. This one involves the Royal Caribbean Cruises Ltd. Retirement Savings Plan (the result of a merger between the cruise company’s 401(k) and pension plans). Plaintiff Ann Johnson, representing a certified class of similarly situated participants and beneficiaries, alleges that Royal Caribbean, its administrative and investment committees, and Russell Investment Trust Company lost the participants millions of dollars in retirement as a result of bad and self-interested investment decisions. She argues that defendants breached their respective fiduciary duties by putting Russell and its recordkeeper, Milliman, Inc., in charge of the plan. Despite documented reservations, the committees nevertheless agreed to appoint Russell to manage the plan, and to do so on Russell’s terms – with “pricing on the high end,” a requirement that more than 75% of plan fund offerings be in Russell funds, and engaging its own affiliated company for the recordkeeping services. It appears from evidence presented that even Royal Caribbean quickly had regrets about its decision, acknowledging the possible fiduciary misstep of putting so much into Russell’s target date funds which were consistently underperforming. The plan was also paying between seven and ten basis points more for Russell’s target date funds relative to similarly size clients, and Royal Caribbean was Russell target date funds’ largest investor. Believing the funds to be inferior, the costs to be excessive, and the actions to be fiduciary breaches, Ms. Johnson initiated this action on behalf of the plan. Defendants, on the other hand, believe that there is no genuine issue of material fact that the investment decisions were not objectively imprudent or unreasonable and moved for summary judgment as to all claims against them. The court agreed with the fiduciaries that there were no genuine issues that would warrant a trial in this case and granted their motions for summary judgment. “Johnson has failed to adduce evidence sufficient to establish a genuine issue of material fact requiring a trial on whether the investments at issue were objectively imprudent. The Court also finds that Russell is, in any event, shielded from liability, under the [investment management agreement], for the specific claims in this case.” Specifically, the court concluded that the selection of the Russell funds was not objectively unreasonable because the evidence of underperformance is in hindsight as the funds were performing favorably at the time they were selected. In addition, the court agreed with defendants that plaintiff failed to provide any “‘apples-to-apples comparisons’ from which a reasonable factfinder could conclude that no hypothetical prudent fiduciary would have selected and retained the Russell TDFs.” The court noted the Russell funds’ “hybrid strategy” of investing in a combination of active and passive funds, and extrapolated that this unique characteristic made wholly active or wholly passive investment models fundamentally different and therefore inadequate comparators. Further, the court mentioned the fact the Russell target date funds had a “to retirement” glide path, meaning that they each reached their minimum equity allocation at the expected retirement date. This also differentiated the Russell funds from plaintiff’s comparators. And although Ms. Johnson specifically took issue with the asset allocation of the Russell funds, the court again held that the fact the funds at issue had fundamentally different asset allocations meant they could not be compared to funds with other investment strategies. The court also swept aside all evidence of procedural imprudence, concluding that such evidence does not itself establish “that the resulting investment itself was objectively imprudent.” Finally, rather than end the matter here, the court expressly held that the terms of the investment management agreement unambiguously shielded Russell from liability because it never had discretionary fiduciary authority to select or retain its own funds in the plan. Having set forth these reasons, the court granted defendants’ motions for summary judgment and entered judgment in their favor on all of Ms. Johnson’s claims.

Class Actions

First Circuit

Bowers v. Russell, No. 22-cv-10457-PBS, 2025 WL 342077 (D. Mass. Jan. 30, 2025) (Judge Patti B. Saris). Current and former employees of Russelectric allege that the fiduciaries and selling shareholders of the company’s employee stock ownership plan (“ESOP”) violated ERISA by undervaluing the shares held by the plan at its terminations and by improperly subtracting $65 million in bonuses from the net share price when the company was sold three years later, which reduced the participants’ additional compensation under the plan’s clawback provision. Two weeks ago, Your ERISA Watch reported on a decision in this case denying defendants’ motion to dismiss. This week, the court granted plaintiffs’ motion to certify a class of 394 participants and beneficiaries of the ESOP who received a benefit when the plan was terminated. The court concluded that the proposed class met the requirements of Rule 23(a) as it is sufficiently numerous, united by common questions, and because it will be represented by plaintiffs who are typical of the absent class members and adequate to represent their interests. Contrary to defendants’ assertions, the court found that the “putative class has plenty in common,” as all of its members participated in the same plan, received a pro rata share of the payment the board authorized, and allege underpayment of their shares. Whether defendants were fiduciaries, whether they breached fiduciary duties, and whether they engaged in transactions prohibited by ERISA were all questions the court saw as common to the class and which, “when answered, will drive the resolution of the litigation.” When addressing the overlapping requirements of typicality and adequacy, the court held that plaintiffs were like the absent class members because nearly everyone in the class signed a release in 2018. Moreover, the court reminded defendants that it previously ruled that the 2018 release does not bar this action as it expressly excludes claims related to the clawback payments. The court further found that plaintiffs have adequate working knowledge of this litigation and rejected defendants’ reading of the requirements of Rule 23(a)(4). Plaintiffs, the court wrote, “are not required to have expert knowledge of all the details of a case.” There was seemingly no dispute that plaintiffs’ counsel were adequate to represent the interests of the putative class. Confident that plaintiffs satisfied the requirements of Rule 23(a), the court next discussed Rule 23(b). It concluded that both Rules 23(b)(1)(A) and 23(b)(1)(B) are satisfied here because independent actions by the ESOP participants would risk differing and incompatible standards of behavior for the fiduciaries and because individual adjudications with respective to individual class members would substantially impair or impede the ability of others to protect their interests. For these reasons, the court agreed with plaintiffs that the proposed class meets the requirements of Rule 23 and therefore granted their motion to certify the class.

Disability Benefit Claims

Second Circuit

Li v. First Unum Life Ins. Co., No. 23cv6985 (DLC), 2025 WL 326492 (S.D.N.Y. Jan. 29, 2025) (Judge Denise Cote). Plaintiff Guangyu Li sued First Unum Life Insurance Company under ERISA to challenge its denial of his application for long-term disability benefits. Following a bench trial, the court issued its findings of fact and conclusions of law in this order and entered judgment in favor of First Unum. To begin, the court resolved the parties’ dispute over the applicable standard of review. Agreeing with First Unum, the court concluded that deferential arbitrary and capricious review applies because the plan unambiguously grants First Unum discretion in its Summary Plan Description (“SPD”) and the SPD is expressly incorporated into the plan. Additionally, the court rejected Mr. Li’s argument that de novo review should apply because First Unum violated ERISA’s claims review regulations. Contrary to Mr. Li’s assertions, the court held that First Unum properly consulted with doctors in the appropriate fields of medicine, namely a psychiatrist and a neuropsychologist, and that these professionals appropriately considered all of Mr. Li’s medical records and the opinions of his treating providers, and discussed the basis for disagreeing with their views. After settling on the appropriate review standard, the court dived into the merits. Ultimately, the court agreed with First Unum that substantial evidence supported its conclusions that Mr. Li’s anxiety and depression were not disabling as defined by the plan because they did not preclude him from performing his occupational duties. The court held that First Unum had offered a reasoned analysis of the relevant medical records and that its peer reviewers’ assessments were grounded in the objective medical evidence and a reasonable reading of the record. The court emphasized that First Unum was under no obligation to accord any special weight to the contrary opinions of Mr. Li’s treating healthcare professionals, especially as it provided reasoned explanations for discounting these contradicting opinions. Based on the foregoing, the court held that Mr. Li failed to show that First Unum acted arbitrarily and capriciously when it denied his application of benefits, and therefore upheld its adverse benefit decision. Finally, the court denied Mr. Li’s request to expand the administrative record, concluding that no good cause exists to do so as he had ample time to submit additional materials to bolster his application during the administrative appeals process. Accordingly, the court closed the case and entered judgment in favor of First Unum and against Mr. Li.

Ninth Circuit

Dime v. Metropolitan Life Ins. Co., No. C24-0827-JCC, __ F. Supp. 3d __, 2025 WL 331642 (W.D. Wash. Jan. 29, 2025) (Judge John C. Coughenour). Plaintiff Heather Dime has a long history of abdominal and pelvic issues. Her most recent flare began in July 2023, and persisted even after she underwent surgery to remove a right ovarian cyst. In August 2023, Ms. Dime could no longer sit for any prolonged period and was experiencing significant pain in her right groin area. As a result, she stopped working and applied for long-term disability benefits under her employer-sponsored policy administered by defendant MetLife. MetLife denied her claim, concluding that Ms. Dime could continue working in her sedentary occupation and that there was no documented ongoing treatment. Ms. Dime appealed the denial through MetLife’s procedures, but MetLife ultimately upheld its determination, prompting this action. Ms. Dime and MetLife cross-moved under Federal Rule of Civil Procedure 52 seeking final judgment on the record under de novo standard of review. The court granted Ms. Dime’s motion and denied MetLife’s motion in this decision. The court stated that after its own “‘independent and thorough inspection’ of the record and benefits decision…MetLife incorrectly denied Plaintiff’s LTD claim.” As an initial matter, the court spoke of what it called the Ninth Circuit’s “bright-line rule” that an employee who cannot sit for more than four hours in an eight-hour workday cannot perform sedentary work that mostly requires sitting. Here, MetLife itself concluded that Ms. Dime could not sit for more than four hours per day, and thus the court found Ms. Dime was disabled under MetLife’s own findings. But the court stressed that the facts supporting Ms. Dime were even more clear-cut because she could only sit for a half-hour at most before requiring a one-hour break lying down. “As such, even if Plaintiff could sit for a total of four hours a day, as [MetLife] suggests, it would ultimately take Plaintiff 12 hours just to complete these four hours of seated work.” On top of that, MetLife ignored other facts in the record that demonstrated she could not complete the material duties of her job or otherwise earn 80% of her pre-disability wages. The court rejected MetLife’s “speculative” argument that Ms. Dime impermissibly orchestrated behind the scenes to push conclusions and language onto her doctor. Not only did MetLife offer no evidence for this ad hominem attack, but it was also not the most likely explanation of what actually happened according to the court. Rather than some nefarious conspiracy, the court viewed it as more likely that Ms. Dime’s qualified treating physician “witnessed Plaintiff repeatedly experiencing the same symptoms and felt that using the same language – rather than reinventing the wheel – would be the simplest way to keep record of it.” Thus, the court concluded that the medical records clearly support Ms. Dime and that MetLife improperly denied her long-term disability benefit claim. For this reason, the court declared that Ms. Dime is disabled, as that term is defined in her plan, and entered judgment in her favor.

ERISA Preemption

Ninth Circuit

Emsurgcare v. United Healthcare Ins. Co., No. 2:24-cv-07837-CBM-E, 2025 WL 306225 (C.D. Cal. Jan. 23, 2025) (Judge Consuelo B. Marshall). Emergency medical providers Emsurgcare and Emergency Surgical Assistant sued United Healthcare Insurance Co. in California state court to pursue claims worth tens of thousands of dollars for emergency medical care they provided to an insured patient. United removed the action to federal court, arguing the quantum meruit claim was completely preempted by ERISA. Plaintiff responded by moving to remand. United, for its part, moved to either dismiss the complaint or alternatively to compel arbitration. It also requested the court take judicial notice of several documents and a declaration from United’s senior legal services specialist. Plaintiffs objected to what it categorized as an attempt to incorporate by reference documents which were not mentioned in the complaint. The court agreed with the providers that defendants’ request for judicial notice of the declaration and its exhibits was not proper and thus denied its request. It then addressed the issue of ERISA preemption. Here too the court sided with plaintiffs. It agreed with the providers that their complaint unambiguously asserts state law claims arising out of separate agreements with United which are not preempted by ERISA Section 502(a). The court observed that even in cases where providers have been assigned rights by their patients they are not required to bring suit under ERISA. “While Plaintiffs could have chosen to bring a claim under ERISA as assignees of their patient…they have not.” Instead, this case, according to the court, was a classic example of a healthcare provider seeking “usual, customary, and reasonable value” for their services based on calculations unrelated to what United might pay pursuant to the terms of the ERISA-governed plan. The court accordingly held that neither prong of the two-part Davila preemption test was satisfied and therefore concluded that it does not have federal question jurisdiction over the matter. As a result, the court granted plaintiffs’ motion to remand, and denied as moot defendant’s motion to remand or alternatively to compel arbitration.

Healthcare Justice Coal. CA Corp. v. UnitedHealth Grp., No. CV 24-04715-MWF (SKx), 2025 WL 303950 (C.D. Cal. Jan. 27, 2025) (Judge Michael W. Fitzgerald). In this fairly straightforward preemption decision, the court remanded an action brought by an emergency medical group payment collector against UnitedHealth Group, Inc. and its subsidiaries back to California state court. Contrary to the position of the United defendants, the court concluded that neither prong of the two-part Davila preemption test was satisfied here. The court referred to Ninth Circuit precedent which makes clear that claims for underpaid or unpaid medical benefits “solely based on the Providers’ independent relationship with Defendants…are not preempted by ERISA.” Such was the case here, as the complaint contemplates quasi-contractual and contractual claims arising out of interactions between the parties separate from any derivative ERISA rights or the terms of any ERISA plan. The court was therefore confident that the complaint does not affect any ERISA-governed relationship or seek to enforce any right dependent upon ERISA. Finally, the court quickly dispersed with defendants’ argument that federal law separately governs the claims because Medicare Advantage Plans are at issue and because the complaint alleges that the providers had a duty to provide care under EMTALA (the federal Emergency Medical Treatment and Active Labor Act). The court did not give these arguments much credit, as the complaint itself does not seek to pursue payment under any Medicare benefits, and because the plaintiffs assert that the insurers had a duty to pay them under California law, not federal law. Accordingly, the court granted plaintiff’s motion to remand and sent the case back to Los Angeles County Superior Court.

Medical Benefit Claims

First Circuit

Gillespie v. Cigna Health Mgmt., No. 2:24-cv-00160-NT, 2025 WL 307268 (D. Me. Jan. 27, 2025) (Judge Nancy Torresen). Plaintiff Patrick Gillespie is a double amputee who seeks coverage for a microprocessor prosthetic device prescribed to him by his doctor. Mr. Gillespie participates in an employer-sponsored healthcare benefit plan. On May 12, 2023, defendant Cigna Health Management denied his request for the type of prosthetic device he seeks, stating that the plan “simply does not cover these services, no matter what the reason is that they are being requested.” Indeed, the plan has a blanket exclusion for these types of prosthetic appliances. However, the state of Maine has a law called the Maine Prosthetics Law which requires insurance carriers to cover the prosthetic device determined by the enrollee’s healthcare provider to be the most appropriate model that adequately meets his or her medical need. Thus, the plan’s exclusion is in direct conflict with this law. Mr. Gillespie alleges that his plan is an insured employer-sponsored plan that is regulated by the Maine insurance law and that he is entitled to recover these benefits under his plan pursuant to Section 502(a)(1)(B) of ERISA. Cigna contests this. It argues that the plan is in fact a fully self-insured one which is not regulated by state insurance law and that Mr. Gillespie cannot state a claim for relief. Cigna therefore moved to dismiss the complaint under Rule 12(b)(6). The court was accordingly tasked with answering the only real question before it – whether the plan is self-funded or insured, and by extension whether or not it is subject to state insurance laws. But the court could not answer that question for the time being. Here, the court said, “the Plan is not exactly a model of clarity. For example, the introductory notice states that although the Plan is ‘not insured by Cigna,’ it nonetheless ‘may use words that describe a plan insured by Cigna.’” Given this confusion, the court agreed with Mr. Gillespie that without discovery he lacks the information needed to clarify the dispositive issue of the plan’s funding status. As it is discovery Mr. Gillespie needs, it is discovery he shall get. The court denied Cigna’s motion to dismiss without prejudice, and ordered the parties to conduct discovery solely on the issue of whether the plan is self-funded or insured. Should Cigna believe the evidence supports its position that the plan is self-funded, the court clarified that it may renew its motion to dismiss as a limited Rule 56 summary judgment motion after discovery on this limited topic has concluded.

Seventh Circuit

Brian W. v. Health Care Serv. Corp., No. 24 CV 2168, 2025 WL 306365 (N.D. Ill. Jan. 27, 2025) (Judge Georgia N. Alexakis). A father whose son received residential mental healthcare treatment sued Blue Cross and Blue Shield of Texas for violations of the terms of his ERISA welfare plan and of the Mental Health Parity and Addiction Equity Act after his claims for reimbursement of that treatment were denied. Blue Cross moved to dismiss the complaint for failure to state a claim. The court denied the motion in this decision. The court first examined the wrongful denial of benefits claim. Plaintiff argued that the plan language requiring residential treatment centers to have 24-hour onsite nursing care violates the Parity Act. He further contended that the plan cannot enforce any provision that is unlawful under the Parity Act to deny coverage. The court agreed, and Blue Cross did not argue to the contrary. Instead, Blue Cross argued that the residential treatment center did not carry the proper licensing because it had a license as a youth care facility. The court was skeptical of this position, and declined to “conclude that the presence of a youth care facility license necessarily demonstrates the absence of a residential treatment center license.” Instead, the court accepted the complaint’s well-pleaded facts as true and believed for the purposes of this decision that the facility was properly licensed and an accredited provider of inpatient treatment to adolescents with mental health and substance abuse problems. In addition, the court reminded Blue Cross that it denied the coverage because the facility failed to meet the residential treatment center 24-hour nursing and M.D. access requirement. Additionally, the court agreed with plaintiff that under other provisions of the plan he “adequately alleged that he was wrongfully denied coverage under the plan.” The court therefore denied the motion to dismiss the claim for wrongful denial of benefits. Next, the court addressed plaintiff’s allegations that there were procedural inadequacies in the appeal of his claim. Blue Cross argued that because the plan does not cover the services at issue the alleged procedural inadequacies were irrelevant to the claim. The court was not convinced and found that plaintiff stated a claim that Blue Cross’s review of his claim denial was procedurally inadequate under ERISA. Finally, the court determined that plaintiff stated a claim based on a facial violation of the Parity Act. The court said that it could infer from the complaint that the plan imposed unequal requirements for licensure between residential treatment centers and analogous medical and surgical facilities, and it imposes unequal requirements regarding accreditation of these types of entities too, and that the 24-hour onsite nursing requirement only applied to residential treatment centers, not to analogous facilities that treat non-mental health issues. For these reasons, the court denied entirely Blue Cross’s motion to dismiss.

Tenth Circuit

S.B. v. Blue Cross Blue Shield of Ill., No. 2:22-cv-336-AMA, 2025 WL 327920 (D. Utah Jan. 29, 2025) (Judge Ann Marie McIff Allen). Plaintiff S.B. filed this action to dispute denials relating to residential healthcare treatment received by C.B., S.B.’s child, at two facilities in 2019 and 2020. Defendants Blue Cross Blue Shield of Illinois and Catholic Health Initiatives Medical Plan denied most, but not all, of the care at the two treatment centers concluding that neither care facility met the plan’s definition of a provider. S.B. appealed the denials to no avail and then brought this action. The parties filed competing motions for summary judgment. Plaintiff argued that the denial letters and communications during the appeals process failed to respond to or even address the family’s arguments, but merely reasserted the same denial rationales without any additional dialogue. Blue Cross maintained that neither facility met the plan’s definition of “Residential Treatment Facility.” Before the court addressed the relative merits of each party’s arguments, it took a moment to contemplate the relevant standard of review. Both parties proceeded as though the arbitrary and capricious standard applies, but the court was not so sure. It noted that the plan grants discretion to its administrator, and only grants its claims administrator, Blue Cross, the discretion to determine medical necessity, which was not at issue here. The court was thus hesitant to adopt the parties’ apparent conclusion that deferential review should apply. Nevertheless, the court discussed why it concluded that Blue Cross had acted arbitrarily and capriciously, and since the court concluded that the benefit denials failed even the more deferential review standard, it stated that it didn’t need to discuss further whether the de novo standard should have applied instead. The court then addressed the essential question, i.e., “whether, consistent with ERISA, BCBS in its denial letters adequately and appropriately informed Plaintiff of the reasons why it denied the claims and adequately explained why coverage at RedCliff and Novitas were excluded under the Plan.” The court’s answer was that Blue Cross did not. It found that Blue Cross’s communications fell far short of a meaningful dialogue, and ERISA demands better. The court concluded that “none of BCBS’s denials even mentions, yet alone engages with, Plaintiff’s arguments. Nor did its denial letters clearly explain how it reached its decisions, how it assessed Plaintiff’s evidence on whether RedCliff and Novitas were ‘Providers’ under the Plan, or any reasoned analysis for its unexplained conclusions.” Given this lack of engagement, the court held Blue Cross failed to sufficiently articulate why the claims should be excluded under the plan, and that it acted arbitrarily and capriciously. Accordingly, the court granted summary judgment in favor of plaintiff and against defendants. The one sour note for plaintiff was the court’s decision on the appropriate remedy. Rather than award benefits, the court remanded the matter back to Blue Cross to reassess whether the two treatment facilities fell within the plan’s definition of provider “and why the exclusions cryptically referenced in its denial letters apply.” The court also instructed Blue Cross to actually engage with any counter-evidence or arguments presented by plaintiff this time. Last, the court directed plaintiff to file a motion for attorneys’ fees and costs addressing “why a remand order here amounts to a degree of success on the merits, and why the factors the court should consider in determining whether an award should be issued have been satisfied.”

Pension Benefit Claims

Eighth Circuit

Grandson v. Western Lake Superior Piping Indus. Pension Plan, No. 23-cv-214 (LMP/LIB), 2025 WL 307438 (D. Minn. Jan. 27, 2025) (Judge Laura M. Provinzino). Plaintiff James Grandson is a union member and a participant in the defined benefit Western Lake Superior Piping Industry Pension Plan, which is governed by ERISA and administered by its board of trustees. The pension plan provides for normal retirement benefits at age 62. However, for participating employees who retire after age 62, the plan provides for a late retirement benefit in the form of an actuarial increase from the normal retirement benefit. The plan provides an exception to this rule, however, which states that no actuarial increase will be provided for months in which a participant engages in “Disqualifying Employment.” This is defined as forty or more hours of employment in the same industry covered by the plan in the same geographic area covered by the plan, and in the same trade or craft that the participant was employed, including employment with contributing employers, non-contributing employers, and self-employment. The 2019 SPD further clarifies that “Disqualifying Employment” refers to employment taken “at the time [the participant] commenced [his] benefits.” Well, Mr. Grandson did not commence retirement benefits at age 62; he continued working for his same employer and did not receive payment of any retirement benefits. To date, Mr. Grandson has not retired and has not received any retirement benefits. But he wants to, and after he began contemplating retirement in late 2021 he applied for late retirement benefits that included the actuarial increase. His application for these increased benefits was denied by the trustees, who determined that Mr. Grandson did not qualify for the actuarial increase because he continued working and by doing so engaged in “Disqualifying Employment” under the plan rendering him ineligible for the more generous benefits. Mr. Grandson appealed this adverse determination. The trustees responded that they would only allow Mr. Grandson to submit additional arguments and evidence to support his claim if he would agree not to file suit and their determination on reconsideration would be considered a final determination of all arguments that were or could have been raised. Mr. Grandson rejected these conditions, and the trustees responded by considering Mr. Grandson’s reconsideration request on the arguments and evidence already submitted. They then upheld their adverse decision, sent a final denial letter explaining their decision, and stated that administrative remedies are now exhausted and Mr. Grandson had until February 10, 2023 to file a civil lawsuit to contest the determination in federal court. Mr. Grandson pursued this course of action, and filed this case against the plan and its board of trustees asserting claims for benefits and for breach of fiduciary duty under ERISA. The parties cross-moved for summary judgment. In this decision the court granted Mr. Grandson’s motion and denied defendants’ motion. Defendants argued that Mr. Grandson failed to exhaust administrative remedies, and that the trustees’ interpretation of the plan language was reasonable. Mr. Grandson took the contrary position that defendants abused their discretion in denying him an actuarial increase in benefits contrary to the plain language of the pension plan. The court addressed the exhaustion issue first. It determined that defendants’ argument that Mr. Grandson failed to timely exhaust administrative remedies strained credibility for several reasons. First, the court disagreed with defendants that Mr. Grandson was required to raise a challenge to his retirement benefits when he reached normal retirement age of 62. The court reminded defendants that the dispute centers on whether Mr. Grandson is owed an actuarial increase in benefits, and as to that claim, Mr. Grandson undoubtedly “satisfied the administrative exhaustion requirement in spades.” The fact remains that defendants themselves recognized as much in their final denial letter. Thus, the court was confident that Mr. Grandson did all that was required of him under the plan and the law to seek an administrative resolution of his claim, especially as “all parties behaved as if he had.” Having concluded that Mr. Grandon properly exhausted his administrative remedies, the court segued to its analysis of whether the trustees’ interpretation of the “Disqualifying Employment” language of the plan was an abuse of discretion. It held that it was. On the surface, Mr. Grandson argued, “Disqualifying Employment” could only begin after the participant commences benefits and any other reading of the term is nonsensical. The court readily agreed. “Grandson’s interpretation accords with the plain language of the Pension Plan’s definition of ‘Disqualifying Employment’ in effect at the time Grandson reached the normal retirement age, which explicitly contemplates that an employee engages in Disqualifying Employment only after ‘the participant commenced benefits.” Even under a deferential standard of review, the court was adamant that a plan administrator “cannot contradict the plain language of an ERISA plan to deny benefits,” which was exactly what defendants did here. The court additionally noted that the SPD further supported Mr. Grandson’s logical reading of the plan language. Accordingly, the court agreed with Mr. Grandson that the trustees’ decision to deny him an actuarial increase in benefits based on a conclusion that his continued employment counted as “Disqualifying Employment,” as the term was defined in the pension plan, was arbitrary and capricious. Thus, the court found that Mr. Grandson was entitled to summary judgment in his favor. However, the court declined to award attorneys’ fees and costs, despite Mr. Grandson formally moving for them, because he has yet to submit an affidavit supporting those fees and costs and has not submitted any briefing addressing the relevant factors in the Eighth Circuit to demonstrate success on the merits under Section 502(g)(1). The court therefore deferred consideration of Mr. Grandson’s request for fees and costs until he files a formal motion under Federal Rule of Civil Procedure 54(d).

Pleading Issues & Procedure

Fourth Circuit

T.S. v. Evernorth Behavioral Health Inc., No. Civ. MJM-23-2426, 2025 WL 327239 (D. Md. Jan. 28, 2025) (Judge Matthew J. Maddox). Plaintiffs T.S. and J.S. bring this civil action against Evernorth Behavioral Health, Inc., Cigna Behavioral Health Inc., Evolution Healthcare, Luminare Health Benefits, Inc., and The Paul Reed Smith Guitars Qualified High Deductible Health Plan alleging defendants wrongfully denied medically necessary mental healthcare benefits J.S. required and was entitled to under the plan. J.S. was admitted to a residential treatment facility in Utah in the summer of 2020 to treat severe and complex mental disorders. Prior to being admitted at the facility J.S. had a long history of previous medical interventions to treat suicide attempts, hallucinations, catatonic behavior, delusions, and other multifaceted mental health issues. In order to “help him reach a consistently safe mental health space,” his treating professionals recommended a prolonged stay at a residential treatment center. However, defendants denied the family’s claims for J.S.’s residential treatment, arguing that J.S. could have been safely and effectively treated at a lower level of care. In the spring of 2022, J.S. did step down to a transitional living level of care offered by the same facility. The Cigna defendants then denied J.S.’s lower-level transitional care too, claiming this treatment was non-qualifying custodial care. The family unsuccessfully appealed all of the denied healthcare claims. In this action they seek to recover the over $400,000 in medical expenses they incurred as the result of the denials, plus pre- and post-judgment interest, attorneys’ fees, and costs. Defendant Luminare moved to dismiss the claims against it. Plaintiffs allege that Luminare acted as a fiduciary of the plan under ERISA and failed to provide coverage under the terms of the plan, and further failed to respond substantively to the issues the family raised on appeal. Plaintiffs additionally allege that all defendants failed to comply with their obligations under ERISA to act solely in the interest of the plan participants and for the exclusive purpose of providing benefits to them. Luminare argued that the family cannot sustain their claims asserted against it in this action because it is not the plan, the plan administrator, or responsible for benefits under the plan, and because it did not act as a fiduciary with any discretionary authority. The family disputed this, contending that Luminare may be sued as third-party administrator and fiduciary. However, their arguments proved unconvincing to the court, which granted Luminare’s motion to dismiss in this order. The court viewed plaintiffs’ allegations against Luminare as conclusory and inadequate to establish discretionary decision-making authority over the coverage decision and the denial of benefits. Accordingly, the court agreed with Luminare that plaintiffs failed to state any plausible claim against it under ERISA and therefore granted its motion to dismiss, though it did so without prejudice.

Fifth Circuit

Flores v. Hartford Life & Accident Ins. Co., No. 3:23-CV-2687-X, 2025 WL 346934 (N.D. Tex. Jan. 30, 2025) (Judge Brantley Starr). Plaintiff Julia Flores is the named beneficiary of a life insurance and accidental death & dismemberment policy covering Ivan Gonzalez Hernandez, insured by defendant Hartford Life & Accident Insurance Company. After Mr. Gonzalez Hernandez died in a car accident, Ms. Flores submitted a claim on the policy. Her claim was denied because Hartford concluded that Mr. Gonzalez Hernandez was in the United States illegally. Although she initially brought her lawsuit in state court alleging state law causes of action, Ms. Flores has since amended her complaint to assert claims under ERISA. Broadly, Ms. Flores alleges that Mr. Gonzalez Hernandez was in the country legally, that Hartford denied her claim because of her race and ethnicity, and that it misrepresented the terms of the policy in order to deny benefits. Defendants Hartford and Dan Von Deck moved to dismiss Ms. Flores’s claim under Section 502(a)(3), which it argued was duplicative of her Section 502(a)(1)(B) claim. Mr. Von Deck also sought to be dismissed as a defendant to this action because he argued he is a claims analyst and not a party to the contract or a proper party to any ERISA claim. Defendants also sought to strike Ms. Flores’s jury demand. Defendants’ motion was granted wholly in this decision. The court agreed with defendants that the equitable relief claim was really a repackaged benefits claim. However, the court dismissed the claim without prejudice, allowing Ms. Flores the opportunity to replead her allegations around what she characterizes as defendants’ broader racist practices to include factual allegations that this practice was not limited to her. Should she do so, the court said she may be able to plead a non-duplicative claim under Section 502(a)(3) to enjoin these practices, separate and apart from seeking benefits under Section 502(a)(1)(B). As for Mr. Von Deck, the court agreed with defendants that the complaint fails to inform it of who he is and why he is a party that controls the plan. Again, the court permitted Ms. Flores to replead to cure this deficiency should she wish to. Finally, the court struck Ms. Flores’s jury demand as the Fifth Circuit has consistently held that there is no right to a jury in ERISA cases.

Seventh Circuit

Appvion Ret. Sav. & Emp. Stock Ownership Plan v. Richards, No. 18-C-1861, 2025 WL 346736 (E.D. Wis. Jan. 30, 2025) (Judge William C. Griesbach). In the late 1990s the French conglomerate that owned Appvion Papers, Inc. wanted to sell. The problem was it couldn’t find a buyer for the company, which was struggling in the wake of the internet age. The owners found a solution to their problem in the form of an employee stock ownership plan (“ESOP”). In 2001, the Appvion Retirement Savings and Employee Stock Ownership Plan was created, and the company stock was sold to its employees. The downward trajectory of Appvion continued, despite stock valuations predicting otherwise, and eventually in 2017 the company filed for bankruptcy. As a devastating consequence of the bankruptcy, Appvion employees collectively lost $40 million in ESOP retirement funds. The sole member of the ESOP’s administrative committee, Grant Lyon, initiated this lawsuit on behalf of the plan against seven entities and nineteen individuals alleging claims under state law, federal securities fraud, and, of course, ERISA. Procedurally, this case has a long history and has taken many turns. Most recently, the Seventh Circuit revived much of this lawsuit after the district court entered final judgment pursuant to Federal Rule of Civil Procedure 54(b) in favor of defendants. Our summary of that decision was featured as the case of the week in Your ERISA Watch’s May 1, 2024 newsletter. Unhappy with this result, the ESOP’s first trustee, defendant State Street Bank & Trust Company, moved to dismiss the restored claims asserted against it. The court denied its motion here. Mr. Lyon alleges that State Street violated its fiduciary duties by failing to scrutinize and indeed approving the appraiser’s allegedly inflated stock valuations. He argues that “because the Seventh Circuit found that the SAC stated claims against State Street, State Street’s argument that Plaintiff has failed to state a claim against it is barred by the mandate rule and the law of case doctrine.” The court agreed that the Seventh Circuit explicitly held that plaintiff adequately pleaded claims of imprudence, disloyalty, and co-fiduciary liability. Although the Seventh Circuit did not explicitly or implicitly address causation “because State Street did not raise the issue on appeal,” the court concluded that Mr. Lyon “has plausibly alleged State Street caused harm to the plan.” Although causation “often involves thorny, fact-laden issues not well suited to be decided at the pleading stage,” the court was satisfied that Mr. Lyon plausibly suggests that if State Street had not approved of the $17.55 share price in 2013 and instead realized the stock’s true lack of value, the plan would not have purchased the stock at that price in June 2013. The court declined to resolve State Street’s other arguments as it considered them to be “legal and factual questions.” Based on the foregoing, the court denied State Street’s motion to dismiss and lifted the stay of discovery as to State Street.

Provider Claims

Third Circuit

Abira Med. Labs. v. IATSE Nat’l Benefit Funds Office – Local 1 & Their Affiliates, No. 23-21379 (GC) (JBD), 2025 WL 346670 (D.N.J. Jan. 30, 2025) (Judge Georgette Castner). Plaintiff Abira Medical Laboratories, LLC sued the I.A.T.S.E. National Health and Welfare Fund in New Jersey state court alleging state law causes of action seeking to recover $55,006 defendant allegedly owes for over 720 unpaid claims. Defendant removed the action to federal court, and then moved to dismiss the state law causes of action as completely preempted by ERISA. In this decision the court denied defendant’s motion and remanded the case to the Superior Court of New Jersey, Law Division, Mercer County. Very simply, the court concluded that Abira was not a party that could bring a claim under ERISA because it is not a participant or beneficiary of an ERISA plan, and because it does not have derivative standing through an assignment from an ERISA plan participant or beneficiary, which would not, in any event, be enforceable in light of the anti-assignment provisions defendant itself attached in support of its motion to dismiss. Accordingly, the court held that defendant failed to demonstrate that prong one of the two-part Davila ERISA preemption test was satisfied and therefore concluded that it lacks subject-matter jurisdiction over the seven state law causes of action in Abira’s lawsuit.

Genesis Lab. Mgmt. v. United Health Grp., No. 21cv12057 (EP) (JSA), 2025 WL 325840 (D.N.J. Jan. 29, 2025) (Judge Evelyn Padin). Plaintiff Genesis Laboratory Management LLC brings this action alleging that defendants United Healthcare Services, Inc. and Oxford Health Plans, Inc. failed to pay and underpaid it for COVID-19 testing and other laboratory services it provided to participants and beneficiaries of plans either insured or administered by the defendants. Plaintiff asserts claims under both ERISA and state law. Defendants moved to dismiss the complaint for failure to state claims. The motion to dismiss was almost entirely denied as to the ERISA claims, but granted as to the state law causes of action for various reasons. Regarding ERISA, the court rejected defendants’ arguments that Genesis lacks standing to sue for benefits under the statute, that it failed to plead facts establishing exhaustion of administrative remedies, and that it failed to allege sufficient facts to state claims. First, the court held that Genesis adequately pled derivative standing under ERISA as it alleges it made patients assign their benefits and because it quotes from the language of the assignment of benefits. The court said that more specificity was not required here as this lawsuit pertains to care provided to some 13,000 patients. However, there was one small caveat. The court agreed with defendants that some of the assignments were retroactive and that these assignments could not confer standing after litigation commenced. The court therefore disregarded these retroactive assignments and dismissed the ERISA claim for lack of standing as to the plans from United members whose assignments are retroactive. Next, the court blessed Genesis’s admittedly “sparse” allegations that it regularly appeals denials and underpayments by utilizing United’s appeals process and concluded that this was enough to sufficiently plead exhaustion of administrative remedies for the purpose of surviving a motion to dismiss. Finally, because the gravamen of Genesis’s action is that ERISA plans incorporate the requirements of Congress’s emergency COVID-19 legislation, the FFCRA and the CARES Act, to reimburse it for COVID-19 testing, the court determined that plaintiff did enough to plead claims for reimbursement under Section 502(a)(1)(B). The remainder of the decision discussed the various deficiencies in plaintiff’s state law claims as to the non-ERISA plans. To the extent the motion to dismiss was granted (for the state law claims and for the narrow ERISA dismissal relating to the retroactive assignments), dismissal was with prejudice.

Milione v. Aetna Life Ins. Co., No. 24cv4738 (EP) (AME), 2025 WL 325864 (D.N.J. Jan. 29, 2025) (Judge Evelyn Padin). Dr. Donald P. Milione runs a chiropractic practice in New Jersey. In this ERISA action, Dr. Milione sued Aetna Life Insurance Company seeking $133,410.16 in underpaid or unpaid benefits he alleges are due to fifteen patients under assignments of benefits they each signed. Aetna moved to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). The court granted the motion and dismissed the complaint without prejudice in this decision. The court first agreed with Aetna that fourteen of the fifteen patients were insured under plans with clear and unambiguous anti-assignment provisions, and as a result Dr. Milione lacked derivative standing to sue under ERISA. For the last patient, whose plan did not contain any such anti-assignment language, the court agreed with Aetna that Dr. Milione’s complaint fails to tie his claims for reimbursement to any plan provision or language entitling him to the benefits allegedly due. The court thus dismissed this final claim relating to the one remaining plan for failure to plausibly allege Aetna failed to pay according to the terms of the plan.