Tiara Yachts, Inc. v. Blue Cross Blue Shield of Mich., No. 24-1223, __ F. 4th __, 2025 WL 1453273 (6th Cir. May 21, 2025) (Before Circuit Judges Murphy, Davis, and Bloomekatz)

Allegations of opaque and self-dealing fee schemes have long been part of ERISA pension litigation. More recently, as plan sponsors and others begin to peel back the layers of health care fee and reimbursement structures, litigation challenging these practices has followed. This case involves one such suit.

Tiara Yachts, a boat manufacturing company that sponsors a self-funded ERISA healthcare plan for its employees, contracted with Blue Cross Blue Shield of Michigan (BCBSM) to administer the plan. Under the contract, BCBSM was responsible for nearly all aspects of plan administration, including interpreting plan terms, calculating benefits, deciding whether to grant or deny claims, and ultimately paying claims from an account that Tiara Yachts periodically funded. Tiara Yachts’ authority was limited to contesting paid claims within 60 days and requesting audits from BCBSM for the preceding 24 months.

Tiara Yachts terminated its relationship with BCBSM in 2018, and several years after that filed this action alleging that BCBSM breached its fiduciary duties regarding several of its payment practices. Specifically, Tiara Yachts challenged a practice referred to by the parties as “flip logic” under which BCBSM improperly paid out-of-state providers whatever they charged rather than the far lower allowed amount such providers would be paid by the Blue Cross entity in their states. Moreover, Tiara Yachts alleged that the claims processing platforms used by BCBSM contained processing errors that allowed providers to improperly code their claims and overbill for services.

Rather than correct these problems BCBSM profited from them, according to Tiara Yachts, by recouping overpayments through a “Shared Savings Program” (SSP) under which BCBSM retained 30% of recovered amounts (and amounts that it prevented itself from overpaying in the future). Tiara Yachts alleged that these practices constituted fiduciary breaches and self-dealing, and “sought damages, restitution, disgorgement, and a declaratory judgment that BCBSM had breached its fiduciary duties under ERISA.”

The district court, however, granted BCBSM’s motion to dismiss for failure to state a claim. The court found that “Tiara Yachts had not plausibly alleged that BCBSM acted as an ERISA fiduciary, either when paying providers based on flip logic or when paying itself through the SSP.” The district court further held that ERISA did not provide the relief that Tiara Yachts requested.

The Sixth Circuit reversed. It reasoned, first, that because Tiara Yachts had the power of the checkbook with regard to the payment of claims, it had “control” over plan assets and was therefore a fiduciary under ERISA. Thus, the court of appeals concluded that “BCBSM acted as a fiduciary when it controlled – and then ‘fail[ed] to preserve’ – Plan assets.”

The court rejected the district court’s reasoning that the claims processing issues were not actionable under ERISA because they were matters of contract. To the contrary, the court of appeals noted that plan administrators “often operate under contract,” and can and sometimes do breach their fiduciary duties by breaching their contracts. “The same goes here,” according to the Sixth Circuit. Indeed, quoting the Secretary of Labor’s amicus brief, the court held that a contrary rule “that an administrator like BCBSM insulates itself from ERISA liability because a contract governs its relationship with its customer would ‘gut ERISA’s fiduciary provisions.’”

The court likewise rejected BCBSM’s argument that its practice of “systematically overpaying providers did not give rise to ERISA fiduciary status” because it was a system-wide business decision that it applied to all plans, not just the Tiara Yachts plan. Again, the court recognized that accepting this argument would “yield untenable results” by immunizing fiduciary breaches so long as they were widespread enough.

In so holding, the court distinguished a prior Sixth Circuit decision in which it had held that negotiating reimbursement rates for a wide array of healthcare consumers did not constitute plan management or administration. Unlike in that case, the court reasoned that “Tiara Yachts’ complaint focuses on BCBSM’s wasting Plan assets in its role ‘making discretionary eligibility determinations’ and paying out claims, not on any actions it took as a ‘distributor of health-care services.’” The court also distinguished a decision from the First Circuit holding that Blue Cross Blue Shield of Massachusetts did not act as a fiduciary in engaging in the mechanical act of writing checks as a third-party administrator for a healthcare plan where the plan sponsor, and not the Blue Cross entity, had the final authority to decide claims.

The court then turned to the question whether BCBSM acted as a fiduciary with respect to the SSP. As an initial matter, the court addressed and rejected BCBSM’s assertion that the heightened pleading standard of Federal Rule of Civil Procedure 9(b) was applicable. The Court reasoned that “Tiara Yachts does not need to plead that BCBSM acted fraudulently here, as the elements of common law fraud do not overlap with elements of an ERISA self-dealing claim.”

On the merits of the fiduciary status issue, the Sixth Circuit noted that “if a contract grants a plan administrator discretion as to its compensation, using that discretion is a fiduciary act.” The Court then found it clear under the facts alleged “that BCBSM exercised discretion in setting its compensation for the SSP,” because “BCBSM controlled the number and amount of overpayments the Plan made because under the ASC, BCBSM decided which claims to pay, determined how much to pay for them, and then wrote the checks. In short, BCBSM’s control over the claims-processing apparatus meant it also exercised discretion in setting its compensation under the SSP.”

Finally, the Sixth Circuit disagreed with the district court that Tiara Yachts could not recover under either ERISA Section 502(a)(2) or under Section 502(a)(3). To the contrary, the appellate court held that both offered appropriate channels of relief.

First, although the complaint did not specify that it sought recovery for the plan, the court concluded that Tiara Yachts “did specify that it sought recovery in its capacity as the Plan’s sponsor” for losses to the plan. Indeed, the court noted that the “crux of the complaint is that BCBSM breached its fiduciary duties to the Plan by squandering assets, then wrongfully kept a portion of overpaid Plan assets as administrative fees,” and found that “the complaint alleges harm both to Tiara Yachts and to the Plan.”

Similarly, the court found that “two forms of relief that Tiara Yachts seeks – restitution and disgorgement – both were typically available in courts of equity.” Thus, the court concluded therefore that “Tiara Yachts seeks ‘equitable relief’ under § 1132(a)(3).”

The court did caution that “Tiara Yachts cannot recover under § 1132(a)(3) for BCBSM’s overpayments to providers that BCBSM never clawed back – that is, for funds that providers still possess.” In this regard, the court agreed with BCBSM that “to receive equitable relief ‘in the universe of transferred assets,’ a plaintiff generally must be able to trace the award ‘back to particular funds or property in the defendant’s possession.’” Thus, the court concluded that “to the extent that Tiara Yachts seeks restitution of funds BCBSM overpaid and never subsequently recovered, those funds are not in BCBSM’s possession and thus are not recoverable under § 1132(a)(3).”

In contrast, the court noted that it had not “expressly held that claims for disgorgement must satisfy the traceability requirement.” In any event, the court found that “Tiara Yachts has alleged that BCBSM retained specific funds it collected for the SSP.” Thus, the court concluded that “[n]one of BCBSM’s arguments convince us that this relief is unavailable.”

All in all, it looks like Tiara Yachts was able to flip the district court’s logic and, at least for the time being, it is blue skies and smooth sailing ahead.

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

Breach of Fiduciary Duty

Fourth Circuit

Bokma v. Performance Food Grp., Inc., No. 3:24-cv-686 (DJN), 2025 WL 1452042 (E.D. Va. May 20, 2025) (Judge David J. Novak). In this putative class action, the participants of the Performance Food Group, Inc.’s ERISA-governed welfare plan allege that Performance Food Group breached its fiduciary duties of prudence and loyalty and violated ERISA Section 702(b) by imposing a discriminatory tobacco surcharge on plan participants. Defendant sought dismissal of plaintiffs’ class action complaint, but in this decision the court denied its motion. As a preliminary matter, the court discussed defendant’s standing argument. The company argued that the plaintiffs failed to allege a concrete injury because they did not attest that they participated in, or would have participated in, the tobacco cessation program the plan offered. The court disagreed with this framing. Instead, it found that defendant caused the plaintiffs, and others like them, a monetary loss by imposing an allegedly unlawful $600 annual tobacco surcharge, and that this injury is fairly traceable to the challenged conduct “because absent Defendant’s alleged administration of its non-compliant wellness program, Plaintiffs would not have had to pay an unlawful surcharge.” Moreover, the court held that “the monetary harm suffered by Plaintiffs and similarly situated class members constitutes a redressable injury, as the requested relief under ERISA can remedy that harm.” The court therefore found that plaintiffs sufficiently established Article III standing, and therefore proceeded to analyze the merits of their claims as challenged by Performance Food Group. In large part, defendant argued that plaintiffs’ complaint fails because they are alleging violations of Department of Labor regulations, which it believed the court was free to disregard in light of the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo. The court was not persuaded by this argument, particularly at this early stage of litigation. It stated that defendant’s reading of Loper Bright was far too broad, and did not see Loper Bright as standing for the proposition that all regulations promulgated by federal agencies are to be tossed aside and disregarded. “At this stage in the litigation, Defendant identifies no valid reason why the Court must determine that the applicable DOL regulatory requirements, which have existed without amendment for more than a decade, should no longer apply.” Having found that Loper Bright does not warrant dismissal, the court proceeded to review the fiduciary breach claims. It determined that plaintiffs plausibly alleged fiduciary acts in connection with administering the plan and managing plan assets related to the tobacco surcharge, and also that in performing those fiduciary acts defendants allegedly breached their duties under ERISA. “Plaintiffs allege that Defendant collected and held Plan assets, in the form of unlawful tobacco surcharges, ‘in its own accounts’ and failed ‘to contribute as much of its own assets to the Plan.’ Plaintiffs also allege that Defendant ‘prioritiz[ed] its financial interests over the interests of plan participants’ by retaining the surcharges without administering retroactive refunds.” The court further found that plaintiffs sufficiently pled a loss to the entire plan by alleging that the members of the class lost millions of dollars in the form of unlawful surcharges that were deducted from their paychecks. Finally, the court agreed with plaintiffs that the complaint plausibly outlined violations of 29 U.S.C. § 1182(b)’s anti-discrimination provision by failing to provide a full retroactive reward through reasonable alternatives to the wellness program, and by failing to provide the required notice of a compliant reasonable alternative standard. Based on the foregoing, the court determined that plaintiffs adequately stated all three of their claims, and thus denied defendant’s motion to dismiss.

Ninth Circuit

Anderson v. Intel Corp. Investment Policy Committee, No. 22-16268, __ F. 4th __, 2025 WL 1463295 (9th Cir. May 22, 2025) (Before Circuit Judges Berzon, Miller, and VanDyke). Plaintiff-appellant Winston R. Anderson brought this putative class action under ERISA against the trustees and fiduciaries of the Intel Corporation’s 401(k) Savings Plan and the Intel Retirement Contribution Plan. Mr. Anderson alleged that defendants breached their duty of prudence by investing the funds’ assets in poorly performing and costly hedge funds and private equity funds, and that they breached their duty of loyalty by steering retirement funds to companies in which Intel’s venture capital arm, Intel Capital, was investing. The district court dismissed Mr. Anderson’s claims. It concluded that he failed to plausibly allege a breach of the duty of prudence because he did not provide a sound basis for comparison of investments with the same risk strategy. Further, the district court concluded that Mr. Anderson had not stated a claim of disloyalty, but simply presented the potential for conflicts of interest, with nothing more. Mr. Anderson appealed the district court’s dismissal. In this order the Ninth Circuit affirmed. The panel stressed that ERISA’s duty of prudence “is a standard of conduct rather than results,” and thus the actions of fiduciaries are properly evaluated prospectively, based on the methods the fiduciaries employed, rather than in hindsight. The court of appeals noted that the complaint suggests that the fiduciaries’ choices “had their intended effects.” The fiduciaries adopted a strategy designed to mitigate risk which they always knew would not have very high returns during periods when the markets were performing well. The decision stated that “the district court correctly determined that Anderson did not plausibly allege that Intel’s funds underperformed other funds with comparable aims.” Mr. Anderson countered that the aims themselves were problematic and not designed with the best interests of the participants. He also offered that there are no good comparators for the fiduciaries’ decision here because the approach the Intel trustees adopted “was unusual, if not unparalleled.” He contended that it was wrong for defendants to give up the long-term benefit of investing in equity, which delivers superior returns. But both the district court and the court of appeals rejected these arguments. The courts responded that ERISA fiduciaries are not required to increase returns by adopting “a risker strategy,” and held that ERISA fiduciaries are not violating the duty of prudence by seeking to minimize risk. Mr. Anderson, however, insisted that what he is challenging here is not a strategy of risk minimization in general, but the implementation of the strategy the Intel fiduciaries adopted specifically. He argued that hedge funds and private equity funds are actually inherently risky and that prudent investors with the same aims would not have invested in them, especially not in the proportions these trustees did. He maintained that it was imprudent to invest in these investment options when contemporaneous reports showed they had poor returns and exorbitant expenses, and that other fiduciaries recognized these well-documented risks. The Ninth Circuit was not persuaded. It stated that Mr. Anderson’s challenge to the hedge funds and private equity investments overlooked how these investments related to the portfolio as a whole and that the individual riskiness of particular investments can be managed through the diversification of investment assets. Notably, the Supreme Court rejected this proposition in its decision in Hughes v. Northwestern. The highest court decisively held that a fiduciary cannot neutralize imprudent investment options in a plan by also offering prudent investment options with reasonable fees and performance results alongside them. Putting this issue aside, the Ninth Circuit added that Mr. Anderson simply failed to offer anything other than “general arguments about the riskiness and costliness of hedge funds and private equity funds without providing factual allegations sufficient to support the claim that the investments that were actually made were ill-suited to the Intel funds.” And while the appellate court acknowledged that there is no heightened pleading standard for ERISA fiduciary breach claims beyond Rule 8’s notice pleading, it nevertheless adopted its own heightened pleading standard by reasoning that ERISA plaintiffs have access to extensive disclosures and annual report information which gives them the opportunity to use that data to show that a prudent fiduciary in like circumstances would have acted differently. The Ninth Circuit added that it is appropriate for district courts to extensively pick apart differences between the challenged investments and the plaintiff’s chosen comparators even at the pleading stage. The court of appeals therefore agreed with the district court’s dismissal of the breach of the duty of prudence claim. It did so for Mr. Anderson’s breach of the duty of loyalty claim as well. Spending considerably less energy on this count, the court of appeals breezily affirmed the district court’s holding that Mr. Anderson failed to plausibly allege that defendants acted disloyally while discharging their fiduciary duties. It agreed with the lower court that Mr. Anderson presented only evidence of the potential for conflicts of interest. For these reasons, the panel affirmed the district court’s dismissal. Circuit Judge Berzon also offered her own concurring opinion. Judge Berzon wrote separately to clarify that investment-to-investment comparisons are not the only way to plead plausible claims of fiduciary breaches. Judge Berzon stated that a plaintiff could instead directly show that a fiduciary’s method, process, or objectives were imprudent or could alternatively plead that the inherent risk of the category of the underlying investment was so severe as to be obviously imprudent. By way of example, Judge Berzon said a plaintiff could “almost certainly plead a duty-of-prudence claim” attacking a process where a fiduciary picked investments entirely at random by writing the ticker symbol for each publicly traded U.S. company on a bingo ball and then drawing ten to invest in at random. Judge Berzon also suggested that allocating a significant portion of the plan’s assets in a new type of security backed by lottery tickets would also be plausibly imprudent. However, Judge Berzon’s examples are so extreme as to be disconnected from reality. Plan fiduciaries are simply not investing plan assets in lottery ticket securities, nor are they selecting investments entirely at random by drawing bingo balls. The concurring opinion also stated that courts could infer imprudence not only from meaningful investment-versus-investment comparisons but also from plan-versus-plan comparisons. And while these examples are not exhaustive, Judge Berzon wished to convey that just as there are multiple ways to skin a cat, there are multiple ways for a plaintiff to plausibly support an inference that a fiduciary acted imprudently or disloyalty that are sufficient at the pleading stage. Here, though, Judge Berzon was in agreement with the rest of the panel that Mr. Anderson failed to plead facts that support his claim any which way, either directly or inferentially.

Eleventh Circuit

Roche v. TECO Energy, Inc., No. 8:23-cv-1571-CEH-CPT, 2025 WL 1446379 (M.D. Fla. May 20, 2025) (Judge Charlene Edwards Honeywell). Plaintiff Alejandro Roche worked for TECO Energy, Inc. for approximately 33 years and was a participant in its pension plan. As a grandfathered participant, Mr. Roche was entitled to benefits under an older formula for calculating benefits and could choose to receive his pension in the form of a life annuity or lump sum. In early September 2022, Mr. Roche requested an estimate of his pension benefits and requested information about the specific methodology the plan used to calculate lump sum payments. His employer informed him that if he retired on December 1, 2022, his lump sum payment would be $482,970.55, but if he retired just one month later, on January 1, 2023, his lump sum payment would be $396,600.67 – about $82,000 less. Mr. Roche elected a lump sum payment and selected the December 1st retirement date. However, adhering to the policy in the plan that a retirement application must be received at least 90 days before the start of retirement benefits, TECO concluded that Mr. Roche’s retirement date was in January 2023, and therefore Mr. Roche received the much lower lump sum payment. Based on this harm, Mr. Roche sued his former employer and the retirement plan under ERISA Sections 102 and 404 on behalf of a putative class of similarly situated retirees. In an order dated August 28, 2024, the court dismissed Mr. Roche’s original complaint. The court found that Section 102 does not require the summary plan description to disclose the method of calculating benefits to warn plan participants about the effect of rising interest rates. The court dismissed this claim with prejudice as it found amendment would be futile. Next, the court concluded that TECO did not breach its fiduciary duty under Section 404(a) by failing to include the method of calculating lump sum benefits in the summary plan description. Instead, the court observed that the complaint needed to allege that TECO misled Mr. Roche, despite knowing of his confusion, or made some sort of other misrepresentation to him. The court dismissed count two without prejudice. Mr. Roche subsequently amended his complaint. Instead of focusing on the summary plan description, he revised his fiduciary breach claim to assert that TECO had an affirmative obligation to disclose information to him under two theories. First, Mr. Roche argued that his communications with TECO put it on notice of his confusion about the plan. Second, he argued that it had an affirmative duty to warn plan participants about material information that could reduce their benefits and to proactively allow them to maximize their benefit outcomes. Defendants filed a renewed motion to dismiss Mr. Roche’s complaint. In this order the court granted defendants’ motion to dismiss, this time with prejudice. The court addressed Mr. Roche’s first theory first. Although Mr. Roche argued that TECO only resolved his confusion after it was too late for him to choose an earlier retirement date, rendering TECO’s explanations belated, the court pointed out that by the time he inquired about his benefits it was already too late for him to choose a 2022 retirement date. “Accordingly, this theory does not state a claim for breach of fiduciary duty.” The court then discussed Mr. Roche’s other theory about TECO’s affirmative duty to warn participants about circumstances that might reduce their benefits. While sympathetic to the circumstances Mr. Roche found himself in, the court was unwilling “to expand the fiduciary duty of an ERISA plan administrator so far beyond its current state.” Mr. Roche’s position, the court concluded, was akin to individualized advice which “seems to equate plan administrators with investment advisors.” The court added that the material information at issue here was not even a feature of the plan itself, but an external factor – rising interest rates. Accordingly, the court determined that the amended complaint failed to allege that defendants made misrepresentations or misleading communications to the putative class members or that they were on notice of the need to disclose under the circumstances at issue here. Thus, the court concluded that Mr. Roche failed to state a claim for breach of fiduciary duty under Section 404(a) and therefore granted defendants’ motion to dismiss.

Disability Benefit Claims

Third Circuit

Gavin v. Eaton Aeroquip Inc. Short Term Disability Plan, No. 23-433, 2025 WL 1479509 (E.D. Pa. May 22, 2025) (Judge Kelley B. Hodge). Plaintiff Troy Gavin suffered a stroke and was hospitalized from April 29, 2021 to May 1, 2021. After he was discharged from the hospital he submitted a claim for short-term disability benefits under the benefit plan offered by his employer and administered by Sedgwick Claims Management Services. Although Sedgwick approved benefits at first, it terminated Mr. Gavin’s benefits beyond August 9, 2021, meaning he did not receive the maximum short-term disability benefits under the plan which would have extended until the end of October. After exhausting his administrative appeals process, Mr. Gavin commenced this action against the plan to challenge its decision to terminate his benefits. Mr. Gavin moved for summary judgment on his wrongful denial of benefits claim. Because the plan grants Sedgwick with discretionary authority, the court applied the arbitrary and capricious standard of review. The court denied Mr. Gavin’s motion for summary judgment because it identified at least two genuine disputes of material facts as to whether Sedgwick arbitrarily and capriciously terminated Mr. Gavin’s short-term disability benefits: (1) whether Sedgwick’s reviewer sufficiently considered Mr. Gavin’s job description and medical documents in its decision to deny benefits, and (2) whether Sedgwick’s examination did, in fact, consider appropriate evidence and attribute the appropriate weight to certain medical and non-medical documents.

ERISA Preemption

Second Circuit

Cigna Health and Life Ins. Co. v. BioHealth Lab., Inc., No. 3:19-CV-01324 (JCH), 2025 WL 1450727 (D. Conn. May 20, 2025) (Judge Janet C. Hall). Cigna Health and Life Insurance Company filed suit against a group of three toxicology labs in Florida – defendants Epic Reference Labs, Inc., BioHealth Medical Laboratory, Inc., and PB Laboratories, LLC – alleging that they had engaged in improper billing practices and performed medically unnecessary services in order to enrich themselves. The case proceeded to an eight-day jury trial, and on November 4, 2024, the jury returned a verdict in favor of Cigna and against the labs. The jury awarded $2.4 million in damages to Cigna against each of the three defendant labs. One month later, on December 4, 2024, the labs moved for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b). Defendants had two pending defenses to Cigna’s unjust enrichment claim, which the court had determined it would decide after the jury trial. First, the labs asserted that the unjust enrichment claim is time-barred under the doctrine of laches. Second, to the extent Cigna seeks to recoup payments it made to the labs under ERISA-governed benefit plans, the labs alleged that Cigna’s claim is preempted by ERISA. Upon review of the labs’ motion, the court observed that it did not mention either of the labs’ pending defenses of laches or ERISA preemption. The court instructed the labs to submit additional briefing if they wished to assert these defenses, and failure to do so would lead the court to deem the defenses abandoned. The labs filed additional briefing on ERISA preemption, but not in response to their laches defense. As a result, in this decision the court concluded that the labs abandoned their previously asserted defense of laches. The court further found that ERISA preemption doesn’t bar Cigna’s unjust enrichment claim. The court agreed with Cigna that its claim is not preempted by ERISA because it is not premised on the terms of the ERISA plans, but instead on the labs’ misconduct. Beginning with its examination of whether Cigna’s claim has an impermissible “connection with” ERISA-governed plans, the court explained “that Cigna’s claim does not endanger the national uniformity of plan administration,” as it does not affect the core entities that ERISA governs, but rather involves a dispute between out-of-network providers and a health insurance company. The court then discussed the “reference to” prong of Section 514. Although the court noted that “the nature of its proof renders it a close question in this case,” because Cigna consistently argued that it was not just unfair or inequitable for the labs to retain these payments but also that the services were not covered under the terms of its plans, the court nevertheless ultimately held that Cigna’s unjust enrichment claim doesn’t depend on the written terms of Cigna’s ERISA plans. The jury in fact reached its verdict without referencing the terms of the ERISA plans. Accordingly, the court agreed with Cigna that the language of the ERISA plans was not a critical factor in establishing liability here. Thus, the court concluded that Cigna’s unjust enrichment claim was not preempted by ERISA. The court also addressed the labs’ remaining arguments that Cigna lacked standing and that it could not prove damages, and explained why it found both without merit. For these reasons, the court denied the labs’ motion for judgment as a matter of law, and by extension, upheld the verdict of the jury.

Seventh Circuit

Northwestern Memorial Healthcare v. Anthem Blue Cross and Blue Shield LLC, No. 24 C 2777, 2025 WL 1455823 (N.D. Ill. May 21, 2025) (Judge LaShonda A. Hunt). Plaintiff Northwestern Memorial Healthcare sued Anthem Blue Cross and Blue Shield in state court for breach of implied contract and quantum meruit for failing to fully reimburse it for medical services it rendered to participants under benefit plans it administers. Anthem removed the case to federal court based on diversity jurisdiction and then filed a motion to dismiss Northwestern’s complaint as preempted by ERISA. The court granted the motion to dismiss in this decision. The court fundamentally agreed with Anthem that Northwestern is attempting to recoup payments for claims that were denied as medically unnecessary, and that these claims cannot be resolved without reference to the terms of the ERISA benefit plans the patients have with Anthem. The court stressed that “whether Northwestern is entitled to damages depends on what benefits and payments for medically necessary services are owed under the ERISA-governed benefit plans.” Moreover, the court adopted the Ninth Circuit’s logic from Bristol SL Holdings, Inc. v. Cigna Health & Life Ins. Co., 103 F.4th 597 (9th Cir. 2024), to conclude that Northwestern’s state law claims have an impermissible connection with ERISA. “Like the claims in Bristol, Northwestern’s theories of liability would legally bind an insurer to make payment every time a plan administrator verifies coverage in routine pre-treatment communications. This ‘Catch-22,’ where administrators must abandon either their plan terms or their preauthorization programs, functions as a regulation of ERISA plans…because it binds plan administrators to particular choices and precludes uniform administrative practice. This proposed binding enforcement regime is the exact kind of intrusion on plan administration that ERISA’s preemption provision seeks to prevent.” Accordingly, the court found that the state law claims Northwestern asserts impermissibly “relate to” and have a “connection with” the ERISA-governed benefit plans, and are therefore conflict-preempted by Section 514. The court disagreed with Northwestern that its action is better understood as a “rate of payment” case than a “right to payment” one. Rather, the court concluded that Northwestern’s claims involve the “right to payment” under ERISA plans because the claims were either denied or underpaid after Anthem deemed them medically unnecessary under the patients’ healthcare plans. Thus, the court explained, “the crux of this dispute hinges on Northwestern’s entitlement to payment for covered services under an ERISA plan, not whether HealthChoice remitted the correct discounted rate under the Contract.” Accordingly, the court agreed with Anthem that both Northwestern’s breach of implied contract and quantum meruit claims are preempted by ERISA and the court therefore granted Anthem’s motion to dismiss the complaint. The court dismissed the complaint without prejudice and granted Northwestern leave to file an amended complaint consistent with this ruling.

Staffing Services Assoc. of Ill. v. Flanagan, No. 23 C 16208, 2025 WL 1475493 (N.D. Ill. May 22, 2025) (Judge Thomas M. Durkin). Several temporary staffing agencies and trade associations brought this action against the Director of the Illinois Department of Labor to enjoin the enforcement of several amendments made to the Illinois Day and Temporary Labor Services Act (“DTLSA”) as preempted by ERISA. Plaintiffs asked the court to preliminarily enjoin the enforcement of the new Sections 42(b) and (c). Because the court found that plaintiffs cannot show they are likely to succeed on the merits it denied their motion for a preliminary injunction in this order. Broadly speaking, the challenged amendments, signed into law in 2023, are aimed at enhancing protections for the labor and employment rights of temporary workers in the state of Illinois. “Section 42 guarantees temporary workers ‘[e]qual pay for equal work’ and covers both wages and benefits.” Section 42(b) requires an agency to provide temporary workers benefits that are substantially similar to those of directly hired employees or pay the hourly average cash equivalent to the cost of those benefits. Section 42(c) requires third party clients to timely disclose all necessary information related to job duties, working conditions, pay, seniority, and benefits it provides to the similarly situated directly hired employees so that agencies can meet their obligations under Section 42. Before the court engaged with the agency plaintiffs’ arguments about preemption, it held that they did not have standing to challenge Section 42(c), as it imposes no obligation on them. The court thus considered only whether plaintiffs made an adequate showing that ERISA preempts Section 42(b). It found that they did not. Plaintiffs argued that Section 42(b) is preempted by Section 514 in four ways: (1) it references ERISA plans by tethering the statutory obligation to the value of ERISA plans; (2) it connects with ERISA plans by impeding the agencies’ ability to administer their plans in a uniform way; (3) it imposes the creation of an ERISA plan by requiring agencies to require an ongoing administrative scheme with individualized decision-making regarding benefits; and (4) it creates an alternative enforcement scheme that competes with ERISA. The court determined that plaintiffs are not likely to succeed on any of these bases. To begin, the court disagreed that Section 42(b) ties its statutory obligations to ERISA plans, and found that to the contrary it is indifferent about whether benefits are offered through ERISA plans or not. Next, the court held that Section 42(b) doesn’t require the agencies to structure their plans in any particular way, as they can comply with the statute by paying workers the cash value of the cost of the benefits provided by the client and leave the existing ERISA plans as they are. Although the law guarantees a minimum level of compensation, comprising both wages and benefits, it does not compel any change to what is covered, how beneficiaries are designated, the way benefits are disbursed under ERISA plans, or impose any additional recordkeeping or disclosure requirements on ERISA plans. The court did not agree with plaintiffs that either the statutory language or the factual record show “that the cash option is not a real option.” Thus, the court was not convinced that plaintiffs are likely to succeed on their ERISA preemption claim based on an impermissible “connection with” ERISA plans. Nor was the court persuaded that Section 42(b) will create ERISA plans. While there will need to be ongoing administrative schemes in order to comply and provide the cost equivalent of the benefits, the court found that payment of these costs out of an employer’s general assets will not create ERISA plans. Finally, plaintiffs argued that ERISA preempts Section 42(b) because of the ways it can be enforced against agencies. This argument was not well taken by the court given that the present action is a facial preemption challenge and does not present any cause of action arising under the DTLSA. “Whether a cause of action arising under the DTLSA is an ‘end run around’ ERISA’s enforcement scheme will depend on the nature of that cause of action, including who is asserting it and whether it involves an ERISA plan.” Based on the foregoing, the court found that plaintiffs are not likely to succeed on the merits, and therefore declined to address the other elements of the preliminary injunction analysis. Instead, it simply denied plaintiffs’ motion.

Pleading Issues & Procedure

Second Circuit

Snyder v. Neurological Surgery Practice of Long Island, PLLC, No. 24-CV-06911 (JMW), 2025 WL 1434032 (E.D.N.Y. May 19, 2025) (Magistrate Judge James M. Wicks). Plaintiff Brian J. Snyder, M.D. is a neurosurgeon who was employed at Neurological Surgery, P.C. d/b/a NSPC Brain & Spine Surgery (“NSPC”). Dr. Snyder brought this action against his former employer seeking to recover payment of benefits under its Employee Stock Ownership Plan (“ESOP”) which he was allegedly deprived of by wrongful termination after his stage-four lung cancer diagnosis. Dr. Snyder seeks damages and declaratory relief and alleges claims for violations of ERISA Sections 502 and 510, along with state law breach of contract claims. Defendants moved to dismiss the complaint. In this decision the court granted the motion, dismissing the ERISA claims with prejudice and the state law claims without prejudice. The court began with the ERISA claims. It concluded that the complaint adequately makes its case that defendants engaged in conduct that Section 510 of ERISA was designed to prevent. However, the court went on to state that, “[n]otwithstanding Plaintiffs’ adequate pleading of the ERISA claims, there is an impenetrable obstacle that was created by Dr. Snyder himself that prevents him from seeking relief under ERISA.” This obstacle was that Dr. Snyder was not a participant in the plan by virtue of his decision to receive a $3.4 million payout when he sold his shares and made a 1042 election. The court stressed that the plan and the U.S. Tax Code both clearly prevent plan participation once a 1042 election is made. Moreover, the court disagreed with Dr. Snyder that there is any clear evidence in either his amended complaint or moving papers that defendants intentionally waived the express language of the ESOP that entitles him to receive plan benefits. And because the court found that Dr. Snyder was not a plan participant, it agreed with defendants that irrespective of his otherwise well-pleaded ERISA claims, he is barred from bringing such claims both under 26 U.S.C. § 409(n) and § 3.9 of the ESOP, and the claims under ERISA must be dismissed. The court accordingly granted the motion to dismiss the ERISA claims, and as this deficit is not curable, the court dismissed the ERISA causes of action with prejudice. The court then declined to exercise supplemental jurisdiction over the state law causes of action, and instead opted to dismiss them without prejudice to Dr. Snyder filing a complaint in state court.

Eleventh Circuit

Smith v. Corteva, Inc., No. 5:25-cv-00030-TES, 2025 WL 1462569 (M.D. Ga. May 21, 2025) (Judge Tilman E. Self, III). Dorothy Jean Morton was an employee of DuPont. On or about August 22, 2000, Ms. Morton submitted a beneficiary designation for her 401(k) plan identifying four charities, United Way of Delaware, Inc., the Salvation Army, CARE, and Peninsula-Delaware Conference of the United Methodist Church, as her four intended beneficiaries. Ms. Morton later died, and on January 27, 2025, plaintiff Bonnie Michelle Smith filed this action acting as the administrator of her estate against Corteva, Inc. arguing that the beneficiary form is invalid because it existed only as to Ms. Morton’s plan with DuPont, not with its successor company, Corteva. Under Ms. Smith’s theory, Ms. Morton did not have a valid beneficiary form with the Corteva Plan, and her estate is the proper beneficiary, not the four charities listed on the DuPont designation form. Corteva responded to Ms. Smith’s action by filing a motion to dismiss. It argued that Ms. Smith lacks standing under ERISA as she is not a participant or beneficiary. The court agreed. It explained, “There is no requirement – at least that the Court can find – that ERISA requires a new beneficiary form each time a plan is transferred to a new administrator. Plaintiff does not contend that Morton ever attempted to change the beneficiaries she named – rather, Plaintiff argues that the plan transfers changed the beneficiary designations sua sponte. But, Plaintiff failed to point to any law to support that logic. Instead, it makes much more sense that once a plan participant completes a beneficiary-designation form, that form controls through plan transfers unless the participant specifically revokes that designation or changes the designation through the process required by the plan. That didn’t happen here, and Plaintiff’s arguments otherwise are unavailing.” Under this logic, the court agreed with Corteva that Ms. Smith does not have standing to sue under ERISA, and therefore the court granted the motion to dismiss the complaint, closing the case.

Provider Claims

Second Circuit

Abira Med. Lab., LLC v. Cigna Health & Life Ins. Co., No. 24-2837, __ F. App’x __, 2025 WL 1443016 (2d Cir. May 20, 2025) (Before Circuit Judges Calabresi, Parker, Jr., and Nardini). Plaintiff-appellant Abira Medical Laboratories, LLC brought this suit against Cigna Health and Life Insurance Company alleging that Cigna systematically failed to reimburse laboratory services Abira provided to insured patients. Originally, Abira asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent and negligent misrepresentation, equitable and promissory estoppel, unjust enrichment, violations of Connecticut’s Unfair Trade Practices Act and Connecticut’s Unfair Insurance Practices Act, a claim under the Families First Coronavirus Response Act (“FFCRA”), violation of the CARES Act, and finally, a claim for payment of benefits under ERISA Section 502(a)(1)(B). The district court dismissed Abira’s claims with prejudice. Abira concedes that a recent decision out of the Second Circuit forecloses its FFCRA and CARES Act claims. Additionally, Abira withdrew its fraudulent and negligent misrepresentation claims. Accordingly, Abira’s appeal challenges only the district court’s dismissal of its ERISA and remaining state law claims. To begin, the Second Circuit concluded that Abira failed to allege that it formed either an express or implied agreement with Cigna. Abira’s failure to allege contract formation defeated its breach of contract, Connecticut Unfair Trades Practices Act, Connecticut Unfair Insurance Practices Act, and implied covenant of good faith and fair dealing claims. The court of appeals affirmed the dismissal of these claims. And, for a similar reason, it also affirmed the district court’s dismissal of Abira’s promissory estoppel claim, as a fundamental element of such a claim is the existence of a clear and definite promise, which the Second Circuit determined that Abira failed to allege. As for the laboratory’s unjust enrichment claim, the court of appeals held that in the health insurance context, providers cannot bring unjust enrichment claims against insurance companies based on healthcare services provided to its insureds. Finally, the Second Circuit affirmed the dismissal of Abira’s ERISA claim because Abira did not challenge the district court’s finding that it failed to adequately allege any valid assignment of claims from its patients. Abira’s only remaining argument was that the district court improperly dismissed its action with prejudice. However, the court of appeals found this argument unpersuasive given Abira’s failure to file a formal motion requesting leave to amend and its failure to provide details regarding what new facts it would allege to cure the pleading deficiencies identified by the district court. As a result, the Second Circuit concluded that the district court acted within its discretion to dismiss the complaint without leave to amend. For these reasons, the appeals court affirmed the judgment of the district court in its entirety.

Healthcare Justice Coalition DE Corp. v. Cigna Health and Life Ins. Co., No. 3:23-cv-01689 (KAD), 2025 WL 1424905 (D. Conn. May 15, 2025) (Judge Kari A. Dooley). Plaintiff Healthcare Justice Coalition DE Corp. is a corporate debt collector which works with emergency healthcare providers to pursue unpaid or underpaid insurance claims from insurance companies. In this action Healthcare Justice Coalition alleges that Cigna Health and Life Insurance Company has violated the terms of Connecticut’s Surprise Billing Law and avoided paying over $5.3 million in payments to two out-of-network hospitals which assigned plaintiff their reimbursement rights. Plaintiff asserts claims against Cigna under the Connecticut Unfair Trade Practices Act, premised on these violations, as well as for unjust enrichment, quantum meruit, and declaratory relief. The court previously granted Cigna’s motion to dismiss plaintiff’s original complaint without prejudice. Plaintiff subsequently filed an amended complaint. And Cigna once again filed a motion to dismiss. It argued that the claims are preempted by ERISA, and moreover, that the complaint fails to state a claim for relief. The court addressed the issue of ERISA preemption first. Cigna maintained that ERISA preempts plaintiff’s claims because Cigna’s obligation to pay the healthcare providers can only be determined by reference to the terms of ERISA plans. The court disagreed. It found that ERISA preemption does not apply in this case because the state laws at issue here do not “act exclusively on ERISA plans or require ERISA plans to operate in any particular manner,” and instead “reach a much broader scope of conduct than the administration of ERISA plans.” Additionally, the court noted that none of the state law claims in this action govern a central matter of plan administration, interfere with nationally uniform plan administration, or involve relationships between the core ERISA entities. Rather, the right to payment here derives from state law, namely Connecticut’s Surprise Billing Law, and as a result does not turn on, rely on, or reference the terms of the ERISA plans. For these reasons, the court concluded that plaintiff’s claims are not preempted by ERISA. The court then addressed whether plaintiff plausibly alleged any of its substantive causes of action. Unfortunately for plaintiff, the court found it did not. Its unjust enrichment and quantum meruit claims both failed for the same reason: the court concluded that Cigna did not receive a benefit from the hospitals. “Cigna’s duty to its insureds is not to furnish necessaries, i.e. medical care, but to cover the cost of those necessities after the fact. If Cigna had a duty to provide medical care, an unjust enrichment claim would lie – since it has no such a duty, it does not.” As a result, the court concluded that the complaint failed to plead these two claims and therefore granted the motion to dismiss them. The court then discussed the Connecticut Unfair Trade Practices Act claim. As an initial matter, the court referred to a recent decision from the Connecticut Supreme Court which held that a Connecticut Surprise Billing Law violation cannot serve as a predicate for an Unfair Trade Practices Act claim. “Thus, Cigna is correct that if HJC’s CUIPA allegations fail, it ‘cannot fall back on alleged SBL violations to save its CUTPA claim.’” The court then went on to conclude that the allegations did fail because the complaint does not plausibly allege “general business practices,” and instead offers bare assertions and conclusory allegations that Cigna owes it money for treating emergency room patients and has failed to pay up. The court therefore granted the motion to dismiss this cause of action too. Finally, the court agreed with Cigna that plaintiff’s request for declaratory judgment cannot survive absent a valid underlying claim of some sort. Thus, the court granted Cigna’s motion to dismiss and dismissed the complaint with prejudice.

Ninth Circuit

Fortitude Surgery Center, LLC v. Aetna Health Inc., No. CV-24-02650-PHX-KML, 2025 WL 1432906 (D. Ariz. May 19, 2025) (Judge Krissa M. Lanham). Plaintiff Fortitude Surgery Center LLC brings this action under ERISA and state law against Aetna Health, Inc. and Aetna Life Insurance Company seeking to recover payment for healthcare services it provided to patients insured under Aetna plans. Aetna moved for dismissal of all of Fortitude’s claims. Because the court found that Fortitude failed to identify both the ERISA health plans and the non-ERISA health plans at issue, the court granted the motion to dismiss on that basis, with limited leave to amend. Broadly, the court agreed with Aetna that the complaint as currently stated “provides few meaningful details regarding the basis for Fortitude’s claims.” Notably, it does not detail the individual patients it provided medical care to, the services it provided to them, or information about the healthcare plans they are covered under, let alone the terms of coverage of those plans. Instead, the court concluded that the complaint “consists of vague and conclusory allegations regarding interactions between Fortitude and Aetna,” which it held are insufficient to state plausible claims for relief under either federal or state law. Because the complaint, even viewed in the light most favorable to Fortitude, lacks these necessary details to sufficiently allege claims for relief, the court agreed with Aetna that the vague allegations made by Fortitude could not survive a motion to dismiss in their current form. Nevertheless, as these shortcomings are not clearly incurable through amendment, the court did not dismiss the complaint with prejudice, but rather allowed Fortitude the opportunity to amend its claims (except for its claim under Arizona’s Prompt Pay Act, as the statute does not confer a private right of action).

Statute of Limitations

Tenth Circuit

J.H. v. Anthem Blue Cross Life and Health Ins., No. 24-4052, __ F. 4th __, 2025 WL 1450609 (10th Cir. May 21, 2025) (Before Circuit Judges Hartz, Moritz, and Rossman). Plaintiff J.H. sued her health insurance provider, Anthem Blue Cross Life and Health Insurance Company, under Section 502(a)(1)(B) of ERISA to challenge its denial of her claim for benefits for her son’s yearlong stay at a residential mental health treatment center. J.H.’s policy states that legal or equitable actions to recover from the plan must be brought within “three years from the time written proof of loss” must be furnished to Anthem, and also that civil actions under ERISA Section 502(a) must be brought “within one year of the grievance or appeal decision.” J.H. filed her complaint one year and nine months after she exhausted the appeals process. Anthem moved to dismiss J.H.’s action on the ground that her claim for benefits was time-barred under the plan’s one-year limitations period for Section 502(a) actions. The district court agreed and granted Anthem’s motion. It rejected J.H.’s argument that the three-year limitations period also contained in the plan applied. J.H. appealed the district court’s decision to the Tenth Circuit Court of Appeals. J.H. did not dispute the reasonableness of the plan’s limitations period. Instead, J.H. argued that the plan is ambiguous as to whether the one-year or three-year limitation period applies. Given this ambiguity, she argued, she is entitled to the more generous three-year period because ambiguities must be construed in her favor. The Tenth Circuit was not persuaded. It disagreed with J.H. that the two limitation provisions are contradictory. To the contrary, the appeals court held that J.H.’s Section 502(a)(1)(B) suit was subject to both periods and there is no problem or conflict between the two provisions. “The three-year provision warns the insured to file suit within three years of when the proof of loss had to be furnished to Anthem. The one-year provision simply adds another deadline; it warns the insured to file suit within a year of the grievance or appeal decision. If the insured files suit after either deadline, the claim is barred.” In sum, the appellate court found the provisions to be a both/and situation rather than an either/or situation, stating, “[t]here is no conflict or inconsistency here, because the two deadlines are triggered by different events.” The court added that the two limitations periods are just like any other conditions placed on a claim, and thus all the conditions must be met. “If there are four conditions, the fact that three conditions are met does not mean that the fourth condition can be ignored. Nor does it mean that the fourth condition is inconsistent with the other three.” The bottom line, according to the court of appeals, is that both provisions apply at the same time, and because a reasonable person would have understood that they needed to bring a Section 502(a) action within one year of the appeal decision, there is no ambiguity present. Because J.H. did not file her lawsuit within that one-year window, the Tenth Circuit agreed with the district court that her action was time-barred. Accordingly, the lower court’s dismissal was affirmed by the Tenth Circuit.

Venue

Third Circuit

Baker v. 7-Eleven, Inc., No. 2:24-cv-1360, 2025 WL 1456916 (W.D. Pa. May 21, 2025) (Judge William S. Stickman IV). Plaintiff Barbara A. Baker filed this putative class action against her former employer, 7-Eleven, Inc., alleging that the annual $720 tobacco surcharge it imposes on employees who use tobacco products violates ERISA. Before the court here was a motion to transfer filed by 7-Eleven. The company sought to move the case to the Northern District of Texas based on the terms of the forum selection clause in its plan. The Northern District of Texas is also where 7-Eleven is headquartered and where it administers its employee benefit plans. The court concluded that the forum selection clause “is reasonable under the circumstances and, therefore, is valid.” The court further held that forum selection clauses are permissible in the ERISA plan context and that they do not make it unduly inconvenient for the plaintiff to litigate or have access to the courts. Finally, the court determined that there is no evidence that the forum selection clause was procured by fraud or undue influence. Thus, the court found the forum selection clause “fundamentally fair” and by extension valid and enforceable. Having determined that the forum selection clause is valid and enforceable, the court quickly addressed whether any extraordinary circumstances were present here which weighed against enforcing it. It found none. To the contrary, the court determined that the Northern District of Texas is in just as good a position as the Western District of Pennsylvania to resolve the federal ERISA issues raised in this putative class action that will apply to plan participants nationwide. For these reasons, the court granted 7-Eleven’s motion to transfer.