It was a slow week for ERISA cases in the federal courts last week, with no standout decision. However, the courts did touch on some interesting topics, including whether a health insurance plan has a fiduciary duty to negotiate with providers (Mejia v. Credence Management Solutions), whether a potential beneficiary under a life insurance plan is required to exhaust administrative remedies if they are sued in interpleader (Morgan v. Barrera), whether an arbitration provision in a profit sharing plan can be enforced against an employee who retired and was fully vested before the provision was added to the plan (Parrott v. International Bank of Commerce), and how a court should organize a lawsuit by a medical provider alleging underpayment of 1,000 claims for 366 patients under 100 different plans totaling over $10 million (DaSilva v. Empire).
The courts also addressed the issue of whether it’s okay for plan fiduciaries to loot plans, commingle plan funds with general assets, and fail to make contributions on behalf of plan participants (Chavez-DeRemer v. Christy and Micone v. iProcess Online). You will be shocked to learn that this is not allowed under ERISA, and that you don’t get to be a fiduciary anymore if you do these things.
We’ll be back next week with more ERISA goodness!
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Arbitration
Fifth Circuit
Parrott v. International Bank of Commerce, No. 5:24-cv-1263-DAE, __ F. Supp. 3d __, 2025 WL 1176523 (W.D. Tex. Apr. 16, 2025) (Judge David Alan Ezra). Plaintiff Paul Parrott brings this putative class action under ERISA against International Bank of Commerce, International Bancshares Corporation, and the International Bancshares Corporation Profit Sharing Plan Committee, alleging they breached their fiduciary duties pertaining to the International Bancshares Corporation Employees’ Profit Sharing Plan and Trust by failing to prudently invest plan assets for the exclusive benefit of plan participants. Defendants responded to Mr. Parrott’s class action by filing a motion to compel individual arbitration pursuant to the plan’s 2024 arbitration provision. Mr. Parrott opposed. He argued that the arbitration provision was not valid for two reasons. First, he maintained that he did not consent to arbitrate as he had already separated from the company and ceased participation in the plan at the time of the arbitration agreement, and never assented to the agreement through continued employment or plan participation. Second, Mr. Parrott argued that the arbitration amendment is invalid because it prevents the effective vindication of statutory rights under ERISA by barring plan-wide relief and claims brought in a representative capacity on behalf of the plan. He further argued that the arbitration amendment “waters down the standard by which fiduciaries will be evaluated.” Because the court agreed with Mr. Parrott’s first argument, it did not even get to his second. Mr. Parrott relied on Casey v. Reliance Tr. Co., No. 4:18-CV-424, 2019 WL 7403931 (E.D. Tex. Nov. 13, 2019), to support his position that he did not consent to the 2024 amendment to the plan which added the arbitration provision. In Casey the plaintiffs had similarly already left their employment and were fully vested in their plan benefits prior to the addition of the arbitration amendment. The court held that there was no valid arbitration agreement because neither the employer nor the plan gave the plaintiffs anything in exchange for the amended arbitration clause. As a result, the court concluded that the retroactive arbitration agreement did not bind individuals who had ceased participation in the plan and whose cause of action accrued prior to the amendment. The court agreed with Mr. Parrott that Casey was on point. “As alleged, Plaintiff is a ‘former’ Participant in the Plan and already received his full distribution from the Plan. Therefore, as in Casey, the Court finds that there was no consideration under Texas law for the Amended Arbitration agreement because this was not a situation where an at-will employee received notice of an employer’s arbitration policy and continued working with knowledge of the policy.” Accordingly, the court found that defendants failed to meet their burden to establish that the arbitration agreement was valid and enforceable. Given this holding, the court did not reach the issue of the application of the effective vindication doctrine. The court therefore concluded that it could not compel arbitration and denied defendants’ motion.
Breach of Fiduciary Duty
Sixth Circuit
Parker v. Tenneco Inc., No. 23-cv-10816, 2025 WL 1173011 (E.D. Mich. Apr. 22, 2025) (Judge Judith E. Levy). Participants of the DRiV 401(k) Retirement Savings Plan and the Tenneco 401(k) Investment Plan bring this putative class action against the plans’ fiduciaries for violations under ERISA. This lawsuit already has quite the procedural history, including, most notably, a decision denying defendants’ motion to compel individual arbitration, which was affirmed in the Sixth Circuit. Defendants petitioned the Supreme Court to take up the arbitration issue, but the Supreme Court denied their writ of certiorari. Presently before the court was plaintiffs’ motion for leave to file a second amended complaint and defendants’ motion to dismiss. The court granted in part and denied in part plaintiffs’ motion for leave to amend and denied as moot defendants’ motion to dismiss. Plaintiffs seek leave to amend “to bring the factual allegations and claims up to date and amend and expand upon them based on new information learned since Plaintiffs filed their last pleading in a different court over two years ago, and to provide additional and more-specific allegations to address alleged technical deficiencies.” Defendants opposed and argued that amendment would be futile because the proposed second amended complaint violates the pleading requirements of Rule 8 and 10 and rests on formulaic recitations and conclusory allegations in violation of the pleading standards of Twombly and Iqbal. Additionally, defendants contend that certain claims are time-barred. As an initial matter, the court disagreed with defendants that the proposed amended complaint fails to satisfy Rule 8 and Rule 10. The court found defendants had adequate notice of the claims against them and the grounds upon which the claims rest, satisfying Rule 8, and the presentation of the claims does not create any clarity issues under Rule 10 that render amendment futile. Defendants found more success with their assertion that the proposed complaint fails to comply with the pleading requirements in Twombly and Iqbal. Their objection broke down into four parts: (1) the complaint does not provide the factual basis for plaintiffs’ claim that all defendants were fiduciaries of both plans; (2) the claims for relief in the amended complaint recite the elements of co-fiduciary liability without explaining how each defendant is liable as a co-fiduciary; (3) the claims for breach of the fiduciary duty to monitor likewise fail to identify which defendant failed to monitor which other defendants; and (4) the new claims related to forfeited employer contributions are not supported by factual allegations related to each defendant. The court agreed, at least in part, with the first three arguments. The court held that plaintiffs could not rely on the assertion that two defendants, Lynette Vollink and Jeff Bowen, have fiduciary status solely because they signed Form 5500s. However, as a general matter, the court was satisfied that the complaint alleges far more with regard to the fiduciary status of all other defendants and thus mostly disagreed with defendants on this point. That being said, the court stipulated that not all defendants are alleged to be fiduciaries of both plans, and the court took issue with the proposed second amended complaint to the extent that it relies on the assertion that certain fiduciaries are defendants with respect to plans they did not administer or oversee. The court also agreed with defendants that the proposed amended complaint does not meet the pleading requirements of Twombly and Iqbal with regard to the co-fiduciary and failure to monitor claims, as it found plaintiffs fail to state a claim for relief based on co-fiduciary liability and failure to monitor beyond reciting the elements of such claims. Accordingly, plaintiffs’ motion for leave to amend was denied with respect to these claims. Beyond these holdings, however, the court disagreed with defendants that plaintiffs’ proposed amendments would be futile. With respect to their forfeited employer contribution claims, the court stated that other district courts have found similar allegations sufficient to survive challenges at the pleadings and therefore disagreed with defendants that adding such claims would be futile. Moreover, because plaintiffs allege that defendants’ actions relating to employer contributions are ongoing, the court declined to deny leave to amend them based on arguments that they are time-barred. Accordingly, the court granted plaintiffs’ motion for leave to file their second amended complaint, with certain exclusions explained above, and in light of that decision, denied defendants’ motion to dismiss as moot.
Ninth Circuit
Mejia v. Credence Management Solutions, No. 2:23-cv-02028-MEMF-MRW, 2025 WL 1167349 (C.D. Cal. Apr. 21, 2025) (Judge Maame Ewusi-Mensah Frimpong). Plaintiff Clarisol Mejia sued her ERISA-governed health care plan and its administrator seeking the vast difference between the costs they paid for two surgeries, $1,606.60, and the total amounts billed, $101,046.00. In her operative complaint Ms. Mejia alleges claims for failure to pay plan benefits under Section 502(a)(1)(B) and breach of fiduciary duty under Section 502(a)(3). Defendants moved for judgment on the pleadings as to the fiduciary breach claim. They also filed a request for judicial notice. The court addressed this first. Defendants requested the court judicially notice two documents: a declaration and the health benefits plan. The court took judicial notice of both, concluding that the declaration is public record, and that the plan is incorporated by reference in Ms. Mejia’s complaint, and she did not oppose defendants’ request for judicial notice. Accordingly, the court granted defendants’ request for judicial notice in its entirety. It then discussed the motion for judgment on the pleadings. Defendants argued that Ms. Mejia failed to state her claim for two reasons. First, they argued that a failure to negotiate with medical providers cannot give rise to a claim for fiduciary breach. Second, defendants maintained that Ms. Mejia seeks inappropriate, duplicative relief. The court was not persuaded by either argument. Ms. Mejia’s counsel argued that there is a fiduciary duty to attempt to negotiate. The court agreed, “insofar as Defendants owe fiduciary duties to act in the best interest of Plan participants and beneficiaries—including Mejia—and reading the allegations and drawing reasonable inferences in the light most favorable to Mejia, Defendants have a fiduciary duty to attempt to negotiate with the Medical Providers.” The court therefore denied defendants’ motion as to the first ground. Regarding the second ground for the motion, the court found that Ms. Mejia may pursue both monetary relief, i.e.,the payment of her bill under the plan, and equitable relief, i.e., an order compelling defendants to attempt a negotiation with the providers. The court disagreed with defendants’ argument about a potential windfall. They asserted that paying the full cost of services is not a benefit that is provided to Ms. Mejia under the plan. The court replied that although defendants are correct that the plan provision Ms. Mejia cites does not necessarily provide that they must pay the full amount sought, the court stated that the language does not preclude such a remedy either. Moreover, the court emphasized that Ms. Mejia’s requested relief under Section 502(a)(1)(B) and Section 502(a)(3) are alternative theories, and not duplicative of one another. For these reasons, the court denied defendants’ motion with respect to Ms. Mejia’s requests for monetary and equitable relief under her fiduciary breach claim, and, by extension, denied their motion for judgment on the pleadings.
Class Actions
Third Circuit
Cockerill v. Corteva, Inc., No. 21-3966, 2025 WL 1159519 (E.D. Pa. Apr. 21, 2025) (Judge Michael M. Baylson). This class action lawsuit stems from the 2019 spinoff by chemical company DuPont into three separate business organizations: DuPont de Nemours Inc., Dow Inc., and Corteva, which disrupted the retirement benefits of many DuPont employees. The workers sued under ERISA seeking the early and optional retirement benefits they lost the ability to apply for and obtain following this corporate restructuring. After a bench trial which took place in the summer and fall of 2024, the court issued a liability decision finding in favor of the plaintiffs. (Your ERISA Watch covered that decision in our January 1st edition of this year). The case has since proceeded to its remedies phase. Before the court here was defendants’ motion to dismiss the optional retirement class breach of fiduciary duty claim, as well as the claims of one of the named plaintiffs, for lack of subject matter jurisdiction based on a purported lack of Article III standing. Additionally, defendants moved to decertify the optional retirement class. The court denied both motions in this order, stating that defendants were improperly attempting to relitigate liability issues already decided in favor of plaintiffs. The decision discussed standing first. As an initial matter, the court rejected defendants’ assertion that plaintiffs’ injury was premised on “subjective confusion.” On the contrary, the court explained that the optional retirement class members were concretely injured by the breach of fiduciary duties because defendants’ failure to provide clear and accurate information prevented the class members from knowing where they stood with respect to their pensions and prevented them from taking any action to prevent or mitigate this loss of benefits. Moreover, the court held that plaintiffs’ injuries were concrete, not merely statutory violations, as defendants argued. By way of example of a bare statutory violation, the court offered the hypothetical of an incorrect zip code. “But, in no way can the harms experienced by Plaintiffs be conceptualized as equivalent to an incorrect zip code.” Rather, the court agreed with plaintiffs that the incomplete, inconsistent, and contradictory information communicated (and not communicated) to them by defendants went far beyond a mere technical violation of the statute. “The injury to the Early and Optional Retirement Class Members is one of the very specific injuries that ERISA was enacted to prevent—the inability to know where exactly one stands with respect to his pension benefits and Plan resulting from the miscommunication or omission of material information.” As a result, the court was confident that the optional retirement class plaintiffs satisfied the injury-in-fact requirement for Article III standing. And the court was also confident that plaintiffs’ injuries were traceable to defendants’ actions as those actions directly deprived them of the opportunity to pressure defendants or challenge defendants’ erroneous interpretation of the plan. The court then spoke to defendants’ motion to decertify the optional retirement class. The court declined to adopt defendants’ position that this case is not appropriately treated as a class action, stating that to do so “would defeat the purpose of class actions entirely.” The court further rejected the idea that even to the extent that resolution of the optional retirement class claims requires determining individualized financial harm evaluations, the case could not proceed as a class action. Next, the court maintained that the optional retirement class satisfies Rule 23(a)’s typicality and adequacy retirements. The court found that one of the named plaintiffs was an adequate class representative regardless of the release he signed, and that another named plaintiff was an adequate representative despite being laid off after the spin-off and testifying that he planned for an unreduced retirement benefit. For these reasons, the court denied defendants’ partial motion to dismiss and their motion to decertify. The decision ended with a discussion of why the court was deciding that it could and should award the optional retirement class retroactive recovery as of the date of the spin-off, should class members elect such recovery. The court distinguished the present action from Cottillion v. United Ref. Co., 781 F.3d 47 (3d Cir. 2015), a case in which the Third Circuit found retroactive relief too speculative because the plan participants knew of their eligibility to elect benefits but chose not to because of misleading plan communications about actuarial reductions. The court stated that the optional retirement class members’ denial of benefits was materially different from the Cottillion plaintiffs because they failed to apply for optional retirement benefits due to defendants’ silence about those benefits being cancelled and because of the lack of information necessary to assert those rights in the first place. “Cottillion does not foreclose this type of relief. Rather, Cottillion underscores the distinction between participants who were given the option to elect benefits and chose not to, and those who were deprived of the option altogether. Accordingly, the Court finds that retroactive recovery is appropriate for the Optional Retirement Class under Count II. This remedy is permissible… and necessary to place class members in the position they would have been in had the Plan been administered in accordance with its terms and ERISA’s requirements.” Thus, the court ended its order by formalizing its decision that it would permit the optional retirement class members to elect retroactive benefits under the fiduciary breach claim.
Disability Benefit Claims
Second Circuit
Rappaport v. Guardian Life Ins. Co. of Am., No. 1:22-cv-08100 (JLR), 2025 WL 1156760 (S.D.N.Y. Apr. 21, 2025) (Judge Jennifer L. Rochon). In 1994 plaintiff Jason Rappaport co-founded a mortgage banking company, Industrial Credit of Canada Mortgage Services (“ICC”). In addition to being a mortgage broker, Mr. Rappaport was also a 50% owner of ICC. In about 2004 or 2005, ICC applied for a group disability insurance policy from Guardian Life Insurance Company of America through ICC’s insurance broker. There was some confusion about whether the policy included or excluded bonuses and commissions in its earnings definition, though it was clear that the parties discussed this, and that ICC wished to include them. Notwithstanding that communicated desire, Guardian ultimately issued the long-term disability policy with an earnings definition that excluded bonuses and commissions. Cut ahead ten years to 2015 and Mr. Rappaport was diagnosed with a severe form of leukemia. On August 17, 2015, Mr. Rappaport informed Guardian that he was unable to continue working, and on September 15, 2015, he applied for long-term disability benefits. Since he applied for disability benefits, Guardian has had questions regarding how Mr. Rappaport was paid, including whether he was paid by ICC on a W-2 or as a shareholder, and whether he had a set salary or was paid based on the company’s earnings and profits through K-1 earnings. To clear up this confusion Mr. Rappaport’s attorney confirmed that prior to his disability Mr. Rappaport’s salary was calculated based on both salary and profits, including his K-1 earnings. It took a bit of back and forth, but ultimately Guardian approved Mr. Rappaport’s claim and began paying him the maximum long-term disability benefit of $10,000 per month effective October 13, 2015. Guardian paid these benefits through August 2020. This litigation arises from Guardian’s termination of Mr. Rappaport’s long-term disability benefits. At first, Guardian informed Mr. Rappaport that it was terminating his monthly benefits because it had not received ongoing proof of claim from his medical providers. But this was during the height of the COVID-19 pandemic and Mr. Rappaport convincingly argued that he had difficulty acquiring outstanding medical information from his providers given the epidemic. On December 21, 2020, he successfully submitted the outstanding medical records to Guardian. Nevertheless, Guardian maintained that he no longer qualified for disability payments, but for a different reason – he was capable of earning more than the maximum allowed while disabled (more than 80% of his indexed insured earnings). Moreover, Guardian claimed that it had overpaid him hundreds of thousands of dollars based on its recalculation of his earnings while disabled, and requested reimbursement of $326,889.05 by March of 2021. This action followed. Mr. Rappaport asserted a claim for wrongful denial of benefits under Section 502(a)(1)(B) as well as a claim for an alternative equitable remedy of reformation of the plan so that insured earnings would include bonuses and commissions, as ICC had always intended. Mr. Rappaport also sought attorneys’ fees and costs under Section 502(g)(1). Guardian meanwhile asserted counterclaims against Mr. Rappaport for restitution and set-off. In a previous order the court held that a de novo standard of review applied to the benefits claim and that Mr. Rappaport’s reformation claim was not time barred. The court also entered summary judgment in favor of Mr. Rappaport as to Guardian’s counterclaim for restitution. The parties subsequently consented to a bench trial on the stipulated record. Both parties agree that the central question before the court is whether the term “insured earnings,” as used in the plan, includes Mr. Rappaport’s K-1 earnings from his position at ICC. In this decision, the court found it does and that Guardian’s benefit denial was erroneous because it did not apply this more inclusive insured earnings definition. The court thus entered judgment for Mr. Rappaport. First, the court determined that K-1 earnings are not bonuses or commissions because this income was not discretionary, like a bonus, or dependent on a particular sale, as a commission would be. The court said that K-1 earnings were not extra compensation, but regular income. Thus, it concluded that “based on the Plan’s plain language… Rappaport’s K-1 income unambiguously falls within the ambit of the Plan’s insured-earnings definition.” However, the court added that even if the plan language was ambiguous on this point, extrinsic evidence also supported Mr. Rappaport’s position that both ICC and Guardian intended insured earnings to encompass his K-1 income from the company, including Guardian’s own documents and Mr. Rappaport’s financial submissions when he applied for benefits. The court therefore held that the plan’s definition of insured-earnings encompasses Mr. Rappaport’s K-1 earnings in addition to his W-2 salary earnings. Second, the court agreed with Mr. Rappaport that even though the K-1 earnings were not bonuses, commissions, or any other form of extra earnings, those earnings should still be included in the plan’s definition of insured earnings and the policy should be reformed to reflect the most expansive definition of insured earnings, as the parties intended all along. “Other than pointing to the ultimate policy language that mistakenly does not contain ‘including bonuses and commissions,’ Guardian has not identified any evidence in the record, despite searching, where the parties agreed to a definition that excluded bonuses and commissions. Rather, all the evidence in the record demonstrates that ICC consistently expressed its intent to procure an earnings definition that included bonuses and commissions and that Guardian knew and confirmed that election. Reformation of the Plan’s language, which did not ultimately reflect that mutual agreement, is therefore appropriate.” This left only the issue of the appropriate remedy. The parties agreed, and the court did too, that if it were to find K-1 earnings included in insured earnings it should remand to Guardian to engage in a benefit determination based on an income and medical assessment and to determine if any potential set-off is appropriate. Finally, the court allowed Mr. Rappaport time to file a motion for attorneys’ fees and costs.
ERISA Preemption
Ninth Circuit
Sagebrush LLC v. Cigna Health and Life Ins. Co., No. 8:24-cv-00353-MEMF-JDE, 2025 WL 1180696 (C.D. Cal. Apr. 23, 2025) (Judge Maame Ewusi-Mensah Frimpong). Plaintiff Sagebrush LLC is a healthcare provider that delivers medically necessary behavioral health services to its patients. In this action Sagebrush alleges that Cigna Health and Life Insurance Company has not properly reimbursed it for the care it has provided to Cigna policyholders. Sagebrush asserts state law causes of action for breach of implied-in-fact contract, unfair business practices under the California Unfair Competition Law, unjust enrichment, quantum meruit, and account stated. Cigna moved for judgment on the pleadings. It argued that Sagebrush failed to state its claim and that to the extent any claim for reimbursement is governed by a self-funded ERISA-governed employee benefit plan those claims are preempted by ERISA. The court granted in part Cigna’s motion, with leave to amend. It concluded that Sagebrush either sufficiently pleaded its state law claims or that the proposed amendments would be sufficient. The court refrained from reaching the issue of preemption at this time stating that the pleadings do not indicate that there are any ERISA plans at issue. Should the existence of an ERISA plan be later revealed by the pleadings, the court stipulated that Cigna may raise the issue again at the summary judgment stage.
Life Insurance & AD&D Benefit Claims
Second Circuit
Daus v. Janover LLC Cafeteria Plan, No. 19-CV-6341, 2025 WL 1167816 (E.D.N.Y. Apr. 22, 2025) (Judge Frederic Block). Plaintiff Paul Daus has been a public accountant since 1996. From 2011 until 2016 Mr. Daus worked for Janover, LLC as a senior tax manager. He lost that position after he became disabled from a medical condition and was terminated. Following his termination from Janover Mr. Daus filed a charge with the Equal Employment Opportunity Commission (“EEOC”) alleging disability discrimination and retaliation by his employer. On January 9, 2018, Mr. Daus, along with his counsel, participated in an EEOC mediation session with Janover during which the parties signed a settlement agreement wherein Janover paid Mr. Daus $35,000 in exchange for a general release. That release expressly provided that Mr. Daus was executing the release on his own behalf and behalf of his heirs, executors, successors and beneficiaries, and that he waived all claims for alleged lost wages and benefits, including claims under ERISA. The settlement agreement also provided that Mr. Daus could consider the agreement for 21 days and that he had 7 days to revoke it after signing. Mr. Daus did not do so. Then Mr. Daus lost his life insurance coverage under Janover’s group policy. He alleges that Janover failed to notify him that he had the right to convert his coverage under the group policy to an individual policy, for which no premiums would be due because he was totally disabled. Mr. Daus, along with his wife, Traci Daus, then initiated this litigation against Janover asserting breach of fiduciary claims under ERISA in connection with the lost life insurance benefits. Janover and the Dauses cross-moved for summary judgment. The central question before the court was whether plaintiffs’ claims under ERISA were waived in the EEOC settlement agreement. The court found they were. Accordingly, the court granted Janover’s motion for summary judgment and denied plaintiffs’ motion. To get there, the court considered the Second Circuit’s six Laniok-Bormann factors to determine the knowledge and voluntariness of the waiver. First, the court concluded that Mr. Daus, a savvy senior tax manager, had the requisite sophistication and business experience to enter into the contract knowingly. Second, the court found that the amount of time he had to review the agreement, coupled with the period he had after the agreement to revoke it, meant that Mr. Daus signed the agreement only after giving it due consideration. Third, the court agreed with Janover that Mr. Daus and his counsel played at least some role in negotiation and deciding the terms of the agreement. Fourth, the court concluded that the terms of the agreement were clear and specific, and that these terms expressly announced that Mr. Daus agreed to waive claims under ERISA. Fifth, there was no question that Mr. Daus was represented by legal counsel. The only factor that complicated the picture somewhat was the sixth and final one – whether the consideration given in exchange for the waiver exceeded employee benefits to which the employee was already entitled by contract or law. Here, there was no question that the $35,000 settlement payment was meager relative to the right of the couple to $500,000 in life insurance benefits at no premium cost. Nevertheless, the court determined that this factor did not strongly disfavor enforcement when considered in tandem with the others. Thus, the court held that Mr. Daus knowingly and voluntarily waived ERISA claims against Janover. The court then took a moment to consider Mr. Daus’s most substantial argument against enforcement – that on the day of the mediation he was in serious pain, recovering from spinal surgeries, and that his doctor had changed his prescription medication just one day before. Though the court acknowledged that Mr. Daus recounted serious pain, stress, and discomfort on the day of the settlement, even accepting this account, it simply felt that the proffered evidence was insufficient to overcome the presumption of his competency because the symptoms he described are “not of the sort that suggests he was unable to willingly and voluntarily enter into the Settlement Agreement.” Finally, the court agreed with Janover that Traci Daus’s claims would ultimately fail too as they were encompassed by the waiver. For these reasons, the court found that all of the couple’s ERISA claims were validly encompassed by the EEOC settlement agreement provisions that released Janover from liability from all claims under ERISA in connection with Mr. Daus’s termination. Thus, the court entered judgment in favor of Janover.
Fifth Circuit
Morgan v. Barrera, No. 21-20497, __ F. App’x __, 2025 WL 1157549 (5th Cir. Apr. 21, 2025) (Before Circuit Judges Richman and Ho). This case involves a dispute over the life insurance benefits of Janie Barrera, and whether she had properly designated Christine and Denise Morgan as her beneficiaries before she died or if the proceeds should instead pass to her sisters under the plan’s default provisions. Prudential sought interpleader relief, stating it couldn’t determine the proper beneficiary to the death benefit. The district court ruled in favor of the Morgans. The sisters appealed that decision to the Fifth Circuit. In this order the Fifth Circuit affirmed. Appellants argued that the district court erred in granting the Morgans’ summary judgment motion for two reasons: (1) they lack standing under ERISA and (2) they did not substantially comply with the change of beneficiary requirements. The court of appeals did not agree. The Barrera sisters’ standing argument was two-fold. First, they contended that the Morgans failed to exhaust administrative remedies. Although the Fifth Circuit requires exhaustion, the appeals court held that this requirement is not applicable in the interpleader context because the concerns addressed by the exhaustion requirement are simply not present in these types of cases. Thus, it found that non-exhaustion does not defeat standing in the present matter. Next, the court of appeals disagreed with the sisters that the Morgans are not beneficiaries with the ability to sue under ERISA. “As our sister circuit has emphasized, in cases in which the insurance company has properly asserted an interpleader action, ‘it does not matter whether [claimants themselves] have standing to assert an ERISA cause of action.’ The Morgans have standing as potential beneficiaries and as claimants in the interpleader action.” The Fifth Circuit then addressed the Barreras’ second argument that their sister Janie did not substantially comply with the policy requirements to change her beneficiary. Here, it was clear that Janie intended to change her beneficiary designation and that she took active steps to effectuate that change. In fact, Prudential even appeared to have accepted the attempted change as evidenced by the fact it sent a letter to the Morgans after Janie’s death confirming the change of beneficiary and inviting them to begin the claim process. For these reasons, the court of appeals determined that the district court did not err in rendering judgment for the Morgans and thus affirmed.
Medical Benefit Claims
Seventh Circuit
Leo K. v. Anthem Blue Cross Blue Shield, No. 24-CV-1625, 2025 WL 1169054 (E.D. Wis. Apr. 22, 2025) (Magistrate Judge Nancy Joseph). Plaintiffs Leo and Donna K. sued their ERISA health benefits plan and its administrator, Anthem Blue Cross Blue Shield, after the plan denied coverage for their minor child’s mental health treatment at a residential facility which resulted in them paying over $40,000 in out-of-pocket costs. Plaintiffs sued for recovery of benefits under Section 502(a)(1)(B) and for equitable relief under Section 502(a)(3) for violation of the Mental Health Parity and Addiction Equity Act. Defendants moved to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The court denied the motion to dismiss in this decision. The court addressed each cause of action in turn. First, it held that plaintiffs asserted a viable claim under Section 502(a)(1)(B) for recovery of benefits because they were able to point to plan language which potentially provides coverage for the facility’s services: “Plaintiffs assert that M.L.K.’s treatment at Blue Ridge met all of the requirements of a ‘covered service’” as that term is defined in the plan. The crux of defendants’ argument was that the plan contains language specifically excluding certain forms of wilderness therapy treatment from coverage. But the court noted that plaintiffs contest this and argue that the version of the plan document they had and used when making treatment decisions for their child contained no such exclusion. Given this dispute, and plaintiffs’ allegations in the complaint that the operative plan document does not contain the language on which defendants rely, the court declined to dismiss the claim for benefits. Next, the court discussed the Parity Act allegations. Plaintiffs alleged that the plan offered comparable benefits for medical and surgical treatments that were analogous to the benefits it excluded at Blue Ridge for their child’s residential inpatient treatments. Moreover, they alleged that the plan does not exclude coverage for medically necessary medical or surgical care based on the location, facility type, provider specialty, or other criteria in the manner that it excludes the mental health treatment at Blue Ridge. “Plaintiffs further allege that the Plan contains exclusions for behavioral and mental health disorders and substance abuse that are not imposed on medical/surgical benefits and thus imposes more restrictive treatment limitations on mental health conditions.” Based on these allegations, the court found that the complaint sufficiently alleges that the plan applies separate and more restrictive treatment limitations to mental health services versus other types of medical and surgical services and therefore it properly alleges a claim under the Mental Health Parity Act. Accordingly, the court denied defendants’ motion to dismiss plaintiffs’ complaint, leaving plaintiffs with both of their causes of action.
Pleading Issues & Procedure
Fifth Circuit
The Expo Group LLC v. Purdy, No. 3:23-CV-2043-X, 2025 WL 1170319 (N.D. Tex. Apr. 22, 2025) (Judge Brantley Starr). This case concerns benefits under two plans: an ERISA-governed plan, the Expo Group’s Leadership Equity Incentive Plan, and a non-ERISA plan, the Long-Term Incentive Plan. Plaintiff Torbejorne Purdy disputes benefit calculations under both plans. The case is set for a jury trial on the state law claims under the long-term plan, followed by a bench trial on the ERISA claims under the equity plan. Mr. Purdy moved to exclude expert testimony of two of the Expo Group’s designated experts: Terese Connerton, designated to testify as the applicable Top Hat classification under ERISA of both plans, and rebuttal expert Robert Cavazos, designated to testify regarding damages calculations under both plans, including the Expo Group’s valuation as of Purdy’s termination date. In this brief order the court granted in part and denied in part the motion to exclude. To begin, the court granted the motion to exclude Ms. Connerton’s testimony as to the claims brought under the long-term plan because Expo Group has since stipulated that the long-term plan is not subject to ERISA, making her testimony no longer relevant as to that plan. However, the court denied the motion to exclude the expert testimony of Ms. Connerton as to the claims under the ERISA-governed equity plan. The court also denied Mr. Purdy’s motion to exclude the expert testimony of Mr. Cavazos. The court stated that Mr. Purdy’s disputes about the valuation and benefit calculation dates go to the weight of the evidence, not the relevance of the expert’s opinion. The court added that Mr. Purdy will have the opportunity to cross-examine Mr. Cavazos before the jury and to present his own expert, as well as advance his arguments on issues of fact before the court with regard to the ERISA claims. The court thus held that Mr. Cavazos’s testimony is relevant and admissible.
Ninth Circuit
Chavez-DeRemer v. Christy, No. CV-24-02640-PHX-DWL, 2025 WL 1169163 (D. Ariz. Apr. 22, 2025) (Judge Dominic W. Lanza). United States Secretary of Labor Lori Chavez-DeRemer filed this action against the trustees and fiduciaries of the Han Robert Christy, D.D.S., P.C. Profit Sharing Plan, alleging they attempted to loot assets from the plan and otherwise failed to properly administer it or distribute retirement funds to eligible employee participants. Before the court here was the Secretary’s motion for a preliminary injunction. Defendants did not file a response to the Secretary’s motion, which, as the court noted, is a sufficient reason alone to grant the motion. However, the court stated it was independently inclined to support the motion on the merits. “[T]he Court agrees with and adopts the Secretary’s arguments as to why the Secretary has established a likelihood of success on the merits, why irreparable harm will result in the absence of preliminary injunctive relief, why the balance of equities favors issuing a preliminary injunction, and why a preliminary injunction is in the public interest. The Court also notes that other courts have granted similar requests for preliminary injunctive relief in analogous cases.” The court broadly agreed that the fiduciaries must be removed from their positions so as not to risk further harm to the plan and its participants during the pendency of this litigation. Thus, the court removed defendants from their roles as trustees, fiduciaries, and administrators of the plan, appointed AMI Benefit Plan Administrators as the independent fiduciary of the plan, and placed the retirement plan assets into an account at Charles Schwab subject to AMI’s exclusive control.
Provider Claims
Second Circuit
DaSilva Plastic and Reconstructive Surgery, P.C. v. Empire HealthChoice HMO, Inc., No. 22-cv-07121 (NCM) (JMW), 2025 WL 1181588 (E.D.N.Y. Apr. 23, 2025) (Judge Natasha C. Merle). Da Silva Plastic & Reconstructive Surgery, P.C. is an emergency plastic surgery practice that provides medically necessary reconstructive surgery to patients in hospitals. It sued Empire HealthChoice HMO, Inc., alleging that the insurer systematically reimbursed it at rates lower than it was required to pay. Da Silva originally asserted claims under both state law and ERISA, seeking over $10 million in reimbursement relating to over 1,000 medical claims for services provided to 366 patients. On January 17, 2025 the court issued an order dismissing plaintiff’s second amended complaint and granting defendants’ motion to sever plaintiff’s claims should the provider file a third amended complaint. The court concluded that the claims had been improperly joined. It concluded that it was implausible that a majority of more than 1,000 claims on behalf of 366 individual patients, subject to more than 100 different plans issued by different plan sponsors, “arose out of the same transaction or occurrence.” Moreover, the court observed that in its opinion no single overarching legal question could resolve all of these diverse claims. Accordingly, the court determined that severance was justified due to the immense record and the vast makeup of the provider’s claims, and would serve the goals of Rule 21, especially judicial efficiency. Da Silva and Empire HealthChoice each filed competing proposals as to how to sever plaintiff’s claims. In this decision the court adopted defendant’s proposal and granted Da Silva leave to file a third amended complaint for medical reimbursement claims under a single ERISA-governed healthcare plan for a single year. The court agreed with Empire HealthChoice that its proposal takes into consideration the fact that the terms of various health plans vary year to year, as do the relevant claims administrators. The court was convinced that narrowing the subset in this way best serves the interests of judicial economy and ensures that the claims that will continue forward are logically related to one another. The court disagreed with Da Silva’s argument that fewer lawsuits necessarily promote judicial efficiency. It stated that it was not clear how plaintiff’s convoluted proposed grouping of claims, severing its medical reimbursement claims into at least six separate lawsuits, “yields the efficiencies contemplated,” because plaintiff’s proposal would not fundamentally answer questions which turn on the provisions of the specific health plans each claim was brought under. “A more tailored grouping – such as grouping together reimbursement claims whose timeliness or recoverability can be determined by reference to the same health plan terms – would better serve judicial efficiency and permit plaintiff’s claims to be resolved by ‘overarching’ legal or factual questions.” Circling back to its observation that the medical claims in plaintiff’s original complaint have no common nucleus, the court stated that each claim for reimbursement “arose out of a distinct factual scenario, including the specific services a patient received, when they received treatment, the specific health plan they received benefits under, and what administrative remedies were pursued.” Thus, the court concluded that only defendant’s proposal adequately factors in this reality. The court therefore adopted that proposal and required plaintiff to file a third amended complaint solely for those claims involving one single ERISA healthcare plan in a single year.
Remedies
Fourth Circuit
Micone v. iProcess Online, Inc., No. 24-61-BAH, 2025 WL 1158885 (D. Md. Apr. 21, 2025) (Judge Brendan A. Hurson). Acting Secretary of Labor Vincent Micone brought this action against a Baltimore payroll processing company, iProcess Online, Inc., the company’s ERISA-governed 401(k) Plan, and the head of day-to-day operations of the plan, Michelle Leach-Bard, for breaches of their fiduciary duties and prohibited transactions under ERISA. The Secretary alleged that from approximately 2014 to 2021, the fiduciary defendants consistently withheld employee contributions from their paychecks for the purpose of remitting the money into their plan accounts but failed to do so, and instead allowed the money to remain unsegregated in the company’s general operating account and commingled it with the company’s assets. Moreover, plaintiff maintains that the fiduciary defendants failed to ensure that all employer matching contributions for employees were made to the plan. In a memorandum order issued on December 2, 2024, the court held that plaintiff established liability and violations of §§ 1103, 1104, and 1106, but failed to adequately support the damages request. Plaintiff supplemented the record and provided additional documentation to support the damages request shortly after that decision. In light of the updated record, the court found it could now determine damages and accordingly amended its order and awarded plaintiff the requested relief. As a preliminary matter, the court sealed the exhibits plaintiff filed relating to the calculation of damages which included employee paystubs and documentation of the 401(k) plan accounts provided by the workers which contained sensitive details including financial account numbers, home addresses, and pay and savings information. Then, relying on this information in the relevant exhibits, as well as the submitted declaration of a labor department investigation, the court concluded that plaintiffs’ requested monetary relief was at this point well documented. The court thus awarded plaintiff the $100,239.54 in monetary damages sought and ordered defendants to pay this amount to the plan. Additionally, the court granted the Secretary’s request that it remove defendants as fiduciaries of the plan and enjoin them from any future service as a fiduciary for an ERISA-governed plan. Finally, the court appointed AMI Benefit Plan Administrators, Inc. to serve as an independent fiduciary of the plan.
Statute of Limitations
Second Circuit
Robinson v. Guardian Life Ins. Co. Grp. Long Term Disability Claim, No. 3:24-cv-994 (BKS/MJK), 2025 WL 1191317 (N.D.N.Y. Apr. 24, 2025) (Judge Brenda K. Sannes). Pro se plaintiff Michelle Robinson filed this action against Guardian Life Insurance Company Group Long Term Disability Claim to challenge Guardian’s denial of her claim for long-term disability benefits. Guardian moved to dismiss the complaint under Rule 12(b)(6). As an initial matter, Guardian asked the court to consider two documents outside the complaint: the certificate of coverage for the group long-term disability policy and a letter dated July 7, 2021 upholding the denial of Ms. Robinson’s claim for long-term disability benefits. The court concluded that it may consider the former but not the latter, as only the certificate of coverage was incorporated by reference and integral to the complaint. The court then discussed Guardian’s principal argument – that Ms. Robinson’s claim for benefits is time-barred under the terms of the plan. The certificate of coverage states that no legal action may be brought against the plan after three years from the date of final benefit determination. The court found this time period reasonable, and agreed with Guardian that Ms. Robinson’s action was filed two days too late. “However, given Plaintiff’s pro se status, and her statement in her response that she ‘was corresponding with Guardian Life up until July 3, 2024,’ the Court grants her leave to amend her complaint to give her an opportunity to allege equitable tolling.” Accordingly, the court granted Guardian’s motion to dismiss, but dismissed the complaint without prejudice and with leave for Ms. Robinson to amend.