It was another slow-ish week in ERISA-land, so we have no notable decision to highlight. However, read on to learn more about how (1) a wrongful death claim prompted by an astronomical increase in the price of an asthma inhaler is not preempted by ERISA (Schmidtknecht v. OptumRx Inc.), (2) pharmacy benefit managers have temporarily stopped enforcement of Arkansas legislation attempting to rein them in (Express Scripts Inc. v. Richmond), and (3) moving to Mexico, although it sounds nice, can jeopardize your disability benefits (Archer v. Unum Life Ins. Co. of Am.). Of course, we have other cases as well involving various claims by plan participants, medical providers, and insurance companies for your reading pleasure.
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Breach of Fiduciary Duty
Eighth Circuit
Chirinian v. Travelers Companies, Inc., No. 24-cv-3956 (LMP/DTS), 2025 WL 2147271 (D. Minn. Jul. 29, 2025) (Judge Laura M. Provinzino). Plaintiff Charlie Chirinian filed this putative class action alleging that Travelers Companies Inc. and the administrative committee of its employer-sponsored healthcare plan are imposing a tobacco surcharge which is in violation of ERISA and the requirements of 29 C.F.R. § 2590.702(f)(4). In her first cause of action Ms. Chirinian asserts that defendants illegally surcharged her and other plan participants for their tobacco use in violation of ERISA’s nondiscrimination rule in 29 U.S.C. § 1182. Additionally, Ms. Chirinian alleges that Travelers breached its fiduciary duties to plan participants by “administering a Plan that does not conform with ERISA’s antidiscrimination provisions,” “acting on behalf of a party whose interests were averse to the interests of the Plan and the interests of its participants,” and “by failing to act prudently and diligently to review the terms of the Plan and related plan materials.” Her fiduciary breach claims are brought under Section 502(a)(2). Defendants moved to dismiss the complaint. They argued that Ms. Chirinian lacks Article III standing to pursue her claims, her claims are entirely time-barred under the plan, and putting those issues aside, her complaint fails to state a claim upon which relief can be granted. In this order the court granted in part and denied in part defendants’ motion to dismiss. The court addressed the threshold issue of standing first, and largely concluded that Ms. Chirinian has standing to press her claims, though not insofar as she seeks to pursue prospective injunctive relief. As a former plan participant, the court agreed with defendants that Ms. Chirinian cannot allege a real or imminent threat of ongoing or future harm based on the conduct regarding the tobacco surcharge. Moreover, because Ms. Chirinian personally lacks standing to seek prospective injunctive relief, the court concluded that she also could not seek such relief on behalf of the plan. More broadly, however, the court rejected defendants’ standing arguments. It concluded that Ms. Chirinian suffered a concrete harm when she was required to pay the tobacco surcharges that Travelers was allegedly not legally authorized to levy. This harm, the court added, is traceable to Traveler’s decision to levy the tobacco surcharge, and it can be redressed by a refund of money to the participants who were illegally charged. As a result, the court found that Ms. Chirinian has standing to pursue her action. Next, the court concluded that Ms. Chirinian’s claims are not time-barred. The plan’s limitation period requires that a participant bring a lawsuit within one year of the act or omission that gives rise to the claim. The court concluded that Travelers “acted” each time it imposed an allegedly unlawful tobacco surcharge on Ms. Chirinian. It then determined that, “Chirinian filed suit on October 17, 2024, meaning that Chirinian may challenge the tobacco surcharges imposed since October 17, 2023. Because Chirinian paid tobacco surcharges until August 3, 2024, she is not time-barred from challenging the tobacco surcharges Travelers levied on her from October 17, 2023, to August 3, 2024.” Having ruled on these threshold issues, the court proceeded to analyze the merits of Ms. Chirinian’s claims. It tackled the claim alleging violations of the antidiscrimination rules first. Ms. Chirinian asserts that Travelers’ tobacco cessation program fails to meet the requirements of 29 C.F.R. § 2590.702(f)(4) in three ways. First, she takes issue with the program’s timing restrictions and the fact that the individuals participating in the tobacco cessation program must enroll by March 31 of the plan year and complete the program by December 15 of that same plan year. The court did not agree that this provision was problematic. To the contrary, it found that the plan complies with 29 C.F.R. § 2590.702(f)(4)(i) because it offers participants the opportunity to qualify for the reward under the program at least once per year. The court stated that “ERISA requires nothing more of Travelers.” The court therefore rejected Ms. Chirinian’s first theory of how the program violates ERISA’s requirements. It rejected her second theory as well, wherein she argued that the plan materials do not disclose the availability of a legally compliant reasonable alternative standard. It noted that this argument was premised on Ms. Chirinian’s argument that Travelers failed to offer participants the full reward. But the court did not agree and found the complaint failed to plausibly allege as much. Ms. Chirinian had better luck with her third and final argument challenging the plan’s compliance with ERISA’s antidiscrimination rules. She alleges that the plan materials do not include a statement that recommendations of an individual’s personal physician will be accommodated as required by 29 C.F.R. § 2590.702(f)(4)(v). Taking a look at the plan, the court agreed. It therefore denied the motion to dismiss the antidiscrimination claim. “Because Chirinian has plausibly alleged that the Plan does not satisfy “all” of the requirements of 29 C.F.R. § 2590.702(f)(4), Chirinian has plausibly alleged that Travelers violated ERISA’s antidiscrimination rules by imposing a tobacco surcharge.” Finally, the court addressed the breach of fiduciary duty claims. The court granted defendants’ motion to dismiss these claims as it agreed with Travelers that Ms. Chirinian fails to plausibly allege that the plan suffered any losses as a result of the alleged breaches having to do with the tobacco surcharge. In fact, the court considered that the opposite was likely true – that the alleged breaches likely served to benefit the plan because the plan’s assets were increased by the allegedly unlawful tobacco surcharges. Based on the foregoing the court dismissed without prejudice the two fiduciary breach claims.
Disability Benefit Claims
Ninth Circuit
Archer v. Unum Life Ins. Co. of Am., No. 2:23-cv-01128-LK, 2025 WL 2107491 (W.D. Wash. Jul. 28, 2025) (Judge Lauren King). Before the onset of her disability, plaintiff Pamela Archer was a nurse. Her employers included the U.S. Army during the first Gulf War, and later Providence Health & Services. In late 2012, Ms. Archer stopped working due to a combination of ailments. She began receiving long-term disability benefits under an ERISA-governed policy insured by Unum the following year. In October of 2019, Ms. Archer moved to Mexico. A year later she informed Unum of her living situation in response to a form the insurer sent her inquiring about her condition. Then a year and a half later, in April of 2022, Unum suspended Ms. Archer’s benefits. Unum informed Ms. Archer that her eligibility for benefits had ended in April 2020 after six months of her living in Mexico, because her policy contained an out-of-country provision which explains that benefits will stop if a claimant resides outside of the United States for a total period of 6 months in any given year. “Unum further notified Archer that its payment of benefits over a period when she was no longer eligible, i.e., between April 20, 2020 and April 27, 2022, resulted in an overpayment of $62,893.14 which Unum sought to recover.” Ms. Archer challenged the termination of her benefits. Following an unsuccessful administrative appeal she filed an action under ERISA alleging Unum wrongfully terminated her ongoing disability benefits and violated its fiduciary duties by failing to inform her of the international residency provision. Although Ms. Archer concedes that she did not comply with the policy’s U.S. residency requirement, she maintains that she was unable to do so because of travel challenges surrounding the COVID-19 pandemic. Unum responded to Ms. Archer’s action by filing its own counterclaim for overpayment of benefits. The parties submitted competing motions for judgment on the record pursuant to Rule 52. Applying de novo review, the court found in favor of Unum regarding Ms. Archer’s claim for benefits and breach of fiduciary duty. To begin, the court determined that Unum lawfully terminated the benefits, because its decision was consistent with the unambiguous terms of the plan. As the policy required Ms. Archer to spend more than 50% of any 12-month period in the United States, it was clear to the court that there was no dispute Ms. Archer did not do so, and as such that she was in violation of a requirement for benefit eligibility under the policy. Furthermore, the court determined that it was not impossible for Ms. Archer to comply with the international residency provision because she was a U.S. citizen who could have traveled back to her home country at any time, even during the height of the COVID travel restrictions and lockdowns. Indeed, the court noted that the record clearly establishes that regardless of the pandemic it was Ms. Archer’s intent to make Mexico her primary residence for more than six months out of the year. Moreover, the court was unpersuaded that Ms. Archer could not safely fly during this time period, and noted that she did so, traveling throughout Mexico and even into the United States. For these reasons, the court declined to waive Ms. Archer’s noncompliance with the policy provision based on her assertion of impossibility, and found that Unum properly terminated her continuing benefits based on the plain language of the plan. The court then held that Unum’s failure to warn Ms. Archer about the international residency provision did not amount to a breach of fiduciary duty. “Even crediting Archer’s plausible but unsupported assertion that she was subjectively unaware of the international residency provision, she does not assert that Unum failed to provide her with the relevant Plan or Policy documents in the first instance. And the Policy language regarding when a beneficiary is considered to reside outside the United States is conspicuous, plain, and clear.” The court added that this was true for the overpayment provision in the plan as well and that she therefore had constructive notice of the relevant plan provisions. Additionally, the court disagreed with Ms. Archer that Unum’s 18-month delay in enforcement constituted a breach of fiduciary duty or that a delay could otherwise waive enforcement of a plan provision. Accordingly, the court found that Ms. Archer was not entitled to equitable relief based on a breach of fiduciary duty. The court thus entered judgment in favor of Unum on both of Ms. Archer’s claims. However, the court did not reach a decision on Unum’s counterclaim. Instead, it ordered supplemental briefing on the issue of the appropriate termination date and the meaning of the language regarding the timing of payment cessation. Until it has this briefing, the court deferred resolution of the overpayment claim and a decision on the amount of repayment Ms. Archer owes.
Tenth Circuit
Ramos v. Schlumberger Grp. Welfare Benefits Plan, No. 22-CV-0061-CVE-JFJ, 2025 WL 2098102 (N.D. Okla. Jul. 25, 2025) (Judge Claire V. Eagan). Plaintiff Ramon Ramos filed this action to challenge the denial of his claim for short-term disability benefits by the Schlumberger Group Welfare Benefit Plan. Mr. Ramos argued that he had documented psychiatric, neurological, and cognitive limitations that prevented him from working in his position as an environmental specialist. In an earlier order the court remanded the case for clarification of the plan administrator’s decision to deny plaintiff’s second voluntary appeal. The plan administrator issued the required clarification of its previous decision during the remand, although Mr. Ramos argued that it failed to do so within 30 days of the court’s ruling. The court reopened the case for new briefing on the merits of the ERISA claim, but rejected Mr. Ramos’ argument that the plan administrator’s decision on remand was untimely. The parties then filed their briefing on the merits of the plan administrator’s denial, and the court agreed that the ERISA claim was ready for adjudication. Accordingly, the court issued this decision, which constituted its final review of the adverse decision. As an initial matter, the court addressed the parties’ dispute over the applicable standard of review. The court determined that the proper standard of review was arbitrary and capricious as the plan clearly grants the administrator discretionary authority and because it found that the “alleged procedural irregularities in this case are not of the same type or severity that would warrant de novo review of plaintiff’s ERISA claim.” The court added that the errors Mr. Ramos cited as reasons to alter the standard of review have been “rejected in previous rulings by the Court or are substantive in nature, and the Court finds no reason to vary from the standard of review typically applicable to ERISA claims when the decision maker has the discretionary authority to make benefits determinations.” The court therefore assessed the denial under deferential review. Mr. Ramos argued that he produced a substantial amount of medical evidence that supported his symptoms. The plan responded that Mr. Ramos could not meet his burden to prove that its contrary interpretation of the medical evidence was an abuse of discretion and maintained that it was not required to defer to his treating physician’s findings that he had functional limitations that prevented him from working. The court first held that it was reasonable for the plan’s reviewing doctors to discount the results of plaintiff’s poor neurocognitive testing because they reasonably explained their position that he feigned an impairment and put an intentional lack of effort into the testing. Mr. Ramos next argued that there were problems with the plan’s independent medical examination of him. He noted that the plan administrator failed to provide the doctor performing the test with certain critical pieces of medical information. In addition, Mr. Ramos called into question how independent the independent medical examination was given Cigna’s role in setting up the exam and “dictat[ing] the focus” of it. The court, however, disagreed. It found the plan’s failure to provide the doctor with the relevant medical reports immaterial, harmless, and ultimately having “had no bearing on the results” of the test. The court was not persuaded by Mr. Ramos’ suggestion that the doctor’s findings would have been affected had he been provided with these documents. As to Cigna’s involvement in the independent medical examination, the court concluded that Mr. Ramos failed to demonstrate that Cigna “participated” in the exam “or directed” its outcome. Moreover, although the court acknowledged that it appeared to be unfair that Cigna set up the exam, it stated that Mr. Ramos could not show that it resulted in bias on the part of the doctor performing it, or that the results would have been different if the administrator did not directly set up the test. The court further rejected Mr. Ramos’ argument that the plan administrator disregarded the medical findings of his treating physicians as merely his own self-reporting of his symptoms. Rather, the court found that the plan administrator’s conclusion that the evidence did not support a finding of any functional limitation caused by mental impairments to be supported by substantial evidence. Finally, the court stipulated that in its view the parties’ dispute over the consideration of “objective medical evidence” had no bearing on the outcome of Mr. Ramos’ claim for benefits. Thus, based on the foregoing, the court concluded that the plan administrator had not acted arbitrarily or capriciously when it determined that the medical evidence did not establish that Mr. Ramos was disabled under the terms of the plan. The court therefore affirmed defendant’s decision to deny Mr. Ramos’ claim for short-term disability benefits.
ERISA Preemption
Seventh Circuit
Schmidtknecht v. OptumRx Inc., No. 25-CV-93, 2025 WL 2096866 (E.D. Wis. Jul. 25, 2025) (Judge Byron B. Conway). This wrongful death action arose after a young man, Cole Schmidtknecht, suffered a deadly asthma attack on January 15, 2024. Cole had suffered from asthma all his life. His asthma was treated with a prescribed inhaler that was covered through his insurance with United Healthcare. On January 10, 2024, Cole went to his local Walgreens pharmacy to refill his prescription. It was then that the pharmacist told him that his insurer no longer covered his inhaler and that his prescription would cost him $539.19. Cole only had enough money for his typical co-pay, which was less than $70. He had received no advanced warning of this coverage change, and Walgreens made no effort to assist him in obtaining an alternative covered treatment. Unable to afford the cost of the prescription, Cole left without his inhaler. Five days later, Cole experienced a severe asthma attack. By the time his roommate got him to the hospital, Cole was unconscious, pulseless, and blue. Cole was immediately put onto a ventilator, but sadly he did not recover. He was pronounced dead six days later. After their son’s death, Cole’s parents, Shanon and William, filed this wrongful death action against Optum Rx, Inc. and Walgreens. They allege that Optum Rx violated a Wisconsin law requiring that it give notice to Cole that his prescription would no longer be covered. Plaintiffs maintain that the pharmacy benefit manager chose to stop covering Cole’s prescribed inhaler not because of any legitimate medical reason, but based purely on its own financial incentives. Optum Rx moved to dismiss the family’s complaint. It argued that the wrongful death action is preempted by both Sections 514(a) and 502(a) of ERISA. The court disagreed and denied the motion to dismiss. At the outset, the court stated that plaintiffs are not attempting to assert a claim directly under the Wisconsin laws which regulate pharmacy benefit managers, but rather that they point to the state statutes “as establishing the duties that Optum Rx owed to the Cole and thus as a foundation for a wrongful death claim.” By contrast, the court found that the ERISA plan is not the foundation of the parents’ claim, nor a necessary component of it. “Optum Rx has not shown that the plaintiffs’ claim will require the court to cross the line into interpretation or application of the terms of the plan. Rather, in relation to the plaintiffs’ claim as pled in the amended complaint, the facts related to the plan appear to be undisputed, secondary, and superficial. The plan provides merely the context for the dispute akin to how a plan may provide the foundation for a fraud or misrepresentation claim.” The court emphasized that plaintiff’s theory of harm is not premised on Optum Rx’s denial of benefits, but instead focuses on an argument that the pharmacy benefit manager was negligent because it failed to give Cole notice that it would no longer be covering his medication and that his out-of-pocket costs would skyrocket as a result. This theory, the court determined, is not necessarily preempted by ERISA, given that “Optum Rx has failed to demonstrate that either ERISA or the plan documents address whether a participant is entitled to notice regarding changes to prescription drug benefits or the nature and extent of any such notice.” Accordingly the court concluded that the wrongful death claim may be viable in some form. As a result, the court denied Optum Rx’s motion seeking the claim’s dismissal.
Eighth Circuit
Express Scripts Inc. v. Richmond, No. 4:25-CV-00520-BSM, 2025 WL 2111057 (E.D. Ark. Jul. 28, 2025) (Judge Brian S. Miller). A group of pharmacies and pharmacy benefit managers filed this action alleging that a new Arkansas law, Act 624, which restricts pharmacy benefit managers’ ability to own and operate pharmacies in the state, violates the Commerce Clause, the Privileges and Immunities Clause, the Supremacy Clause because it is preempted by TRICARE, ERISA, Medicare, the Bill of Attainder Clause, the Takings Clause, and the Equal Protection Clause. Plaintiffs moved for a preliminary injunction, enjoining Act 624 from taking effect on January 1, 2026. In this order the court granted the motion and blocked the law during the pendency of the case. The court concluded that Act 624 “likely violates the Commerce Clause and it is likely preempted by TRICARE.” With regard to the Commerce Clause, the court was inclined to agree with plaintiffs that the law overtly discriminates against them as out-of-state companies and that the state has failed to show that it has no other means to advance its interests. As for the federal TRICARE program which provides health insurance plans to service members of the U.S. armed forces, the court determined that it is likely the Act is both explicitly and impliedly preempted by the statute. It stated that Act 624 conflicts with TRICARE’s health care delivery provision because it prohibits pharmacies owned by pharmacy benefit managers “from delivering healthcare to Arkansas patients. This prohibition is inconsistent with the TRICARE program that has existing contracts with some of the plaintiffs.” Moreover, the court noted that Act 624 “frustrates the ‘stability,’ ‘uniform[ity],’ and ‘national’ character of TRICARE.” Although the court concluded that plaintiffs are likely to prevail on their Commerce Clause and TRICARE preemption claims, this sentiment did not carry over to all of plaintiffs’ claims. “Plaintiffs, however, are unlikely to prevail on their Privileges and Immunities, ERISA preemption, Medicare preemption, Bill of Attainder, Takings, and Equal Protection claims.” Examining ERISA preemption specifically, the court found that Act 624 does not have an impermissible connection with ERISA as it does not regulate the pharmacy benefit managers “in their capacity as employee benefit plan administrators. Rather, it merely regulates the requirements for obtaining a retail pharmacy license.” The court stated that the Arkansas regulation will certainly affect ERISA plans’ shopping decisions and have an indirect economic influence on the plans, but these downstream effects would “not bind plan administrators to any particular choice and thus function as a regulation of an ERISA plan itself.” In addition to ascertaining that plaintiffs are likely to prevail on two of their eight claims, the court also determined that the pharmacies and pharmacy benefit managers would suffer irreparable harm if a preliminary injunction were not issued because they face the threat of unrecoverable economic loss. Further, the court concluded that the balance of equities and public interest also favor plaintiffs and that no harm could come from enjoining the enforcement of an unconstitutional law. Accordingly, while not all of plaintiffs’ arguments were ultimately persuasive to the court, it nevertheless agreed with them that it is necessary to enjoin Arkansas Act 624 from taking effect.
Ninth Circuit
Stapleton v. United Healthcare Benefits Plan of CA, No. 1:25-cv-00351-SAB, 2025 WL 2142349 (E.D. Cal. Jul. 29, 2025) (Magistrate Judge Stanley A. Boone). Pro se plaintiff Jackie Stapleton sued United Healthcare Benefits Plan of California in the small claims division of California state court alleging that it owes her damages for its refusal to cover the full cost of her medically necessary ambulance ride which occurred on July 1, 2022. United removed the matter to federal court after it realized that the healthcare plan at issue is governed by ERISA. Arguing that the state law claims are completely preempted by ERISA Section 502(a) and that the court has federal question jurisdiction over this matter, United moved for dismissal of Ms. Stapleton’s complaint. Ms. Stapleton moved to remand her action. Magistrate Judge Stanley A. Boone issued this decision recommending that the court deny plaintiff’s motion to remand and grant United’s motion to dismiss with leave to amend. Both conclusions hinged on Judge Boone’s preemption analysis. Judge Boone viewed Ms. Stapleton’s action as one seeking to recover the cost of the ambulance bill that she believes should have been covered in full under the terms of her ERISA-governed health insurance plan. Thus, he agreed with United that this case is plainly about a denial of benefits, and that it therefore clearly could have been brought as a claim under Section 502(a)(1)(B). Furthermore, Ms. Stapleton’s challenge to United’s interpretation of the plan, and by extension its coverage determination, presents no independent legal duty divorced from ERISA. Because Judge Boone concluded that both prongs of the Davila preemption test are satisfied, he found that the state law claims at issue are completely preempted by ERISA and that removal under Section 502(a) was proper. It was therefore Judge Boone’s recommendation that the court deny the motion to remand. By the same token, the Magistrate concluded that dismissal of the preempted state law claims was appropriate and that United’s motion to dismiss should be granted. However, it was also Judge Boone’s opinion that Ms. Stapleton should be afforded the opportunity to amend her complaint to assert a new cause of action under ERISA. Accordingly, while he recommended that the court dismiss the complaint, he advised that it do so without prejudice and with leave to amend.
Medical Benefit Claims
Ninth Circuit
Cal. Spine & Neurosurgery Institute v. Zoetis, Inc., No. 24-cv-06528-NW, 2025 WL 2097481 (N.D. Cal. Jul. 25, 2025) (Judge Noël Wise). Plaintiff California Spine and Neurosurgery Institute filed this ERISA action against defendants Zoetis Inc., United Healthcare Services, Inc., and United Healthcare Insurance Company after the surgery center was reimbursed 2.1% of the billed costs for surgery services it provided to an insured patient. In its action, California Spine asserts two causes of action: (1) failure to pay ERISA plan benefits under Section 502(a)(1)(B) and (2) breach of fiduciary duties of loyalty and due care in violation of Section 502(a)(3). Defendants moved to dismiss the complaint. They argued that the provider is barred from suing under ERISA based on the plan’s anti-assignment provision, and that regardless the complaint fails to state claims for benefits or fiduciary breach. Moreover, defendants argued that United Healthcare Insurance Company is an improper party. The court addressed the anti-assignment provision first. Although as a general matter anti-assignment provisions in ERISA plans are valid and enforceable, the court emphasized that there are exceptions that render them unenforceable. Here, California Spine argued that United waived the anti-assignment provision. Plaintiff alleged that although United was aware during the administrative claims process that it was acting as its patient’s assignee it never asserted the assignment provision as the basis for the denial or even mentioned its existence. Under Ninth Circuit precedent, the court concluded that these facts were sufficient to allege that United waived its anti-assignment provision defense. Next, the court assessed whether California Spine adequately stated a claim for ERISA benefits. It concluded that it had as the complaint identifies the specific ERISA plan, and alleges that a United representative confirmed in advance of the surgery that the plan would cover the surgical services and that “co-insurance would be at 90% of usual and customary and the Provider’s co-insurance would be at 60% and not based on a Medicare Fee schedule.” Additionally, the court found plaintiff adequately stated a claim for breach of fiduciary duties by alleging “Defendants misrepresented coverage, misrepresented reimbursement rates, and issued deficient explanations of benefits.” Further, plaintiff asserted that these actions were not undertaken with the care of a prudent administrator and that it suffered damages as a result of United’s failure to honor the rates it quoted prior to the surgery, which it had relied on. Finally, the court denied defendants’ motion to dismiss United Healthcare Insurance Company as a defendant. The court noted that plaintiff pointed to an authorization for the surgical services that was issued by United Healthcare Insurance Company and alleges that both United defendants are third-party administrators of the plan. The court found these allegations sufficient to adequately plead a connection between United Healthcare Insurance Company and the conduct at issue in the case. For these reasons, the court denied the motion to dismiss.
Fifth Circuit
Columbia Medical Center of Plano Subsidiary, L.P., v. Anthem Blue Cross Life and Health Ins. Co., No. 4:24-cv-137, 2025 WL 2107996 (E.D. Tex. Jul. 28, 2025) (Judge Amos L. Mazzant). Plaintiffs in this action are hospitals in Texas that serve the Plano and Dallas metropolitan area. The hospitals entered into an agreement with Blue Cross and Blue Shield of Texas which provided that they would treat patients with Blue Cross health plans and then be reimbursed for those treatments. Plaintiffs allege that they rendered medically necessary services to three patients with Blue Cross healthcare plans, that they submitted the claims to Blue Cross, and that Blue Cross rejected the claims and denied the appeals because preauthorization was purportedly not obtained prior to providing service. Blue Cross has currently not paid anything on the claims at issue. Accordingly, the hospitals filed this action seeking the payments. They assert claims under ERISA and contract law. Blue Cross moved to dismiss the claims. The court analyzed the ERISA claim first. Blue Cross urged the court to dismiss the ERISA claim pursuant to Rule 12(b)(1), arguing that the providers failed to plausibly allege valid assignments of benefits which deprives them of standing to bring claims under ERISA. In response, the hospitals argued that the court should assess the issue of assignments pursuant to Rule 12(b)(6). The court found that “Defendant’s argument carries the day. Defendant’s Motion, as to Count I, must be analyzed under Rule 12(b)(1) because standing under ERISA invokes the Court’s subject matter jurisdiction.” The court then determined that Blue Cross’s attack on the assignments was factual. “Here, Defendant has launched a factual attack because it has challenged the underlying facts supporting the Complaint – whether the assignments exist at all – rather than merely challenging the allegations on their face.” Accordingly, the court expressed that plaintiffs needed to put forth evidence of valid and enforceable assignments of benefits from the patients rather than just allege their existence in order to survive the Rule 12(b)(1) motion to dismiss for lack of jurisdiction. As a result, the court dismissed the ERISA claim, but without prejudice. As for the contract claims, the court denied Blue Cross’s motion to dismiss finding that the complaint states plausible claims for relief and meets the elements to state its claims. Therefore, defendant’s motion to dismiss the contract claims pursuant to Rule 12(b)(6) was denied. Should they choose to do so, plaintiffs were given leave to amend their complaint to address the deficiency in their allegations regarding the assignments. Accordingly, the motion to dismiss was granted in part without prejudice, and otherwise denied.
Pleading Issues & Procedure
First Circuit
Turner v. Liberty Mutual Ret. Benefit Plan, No. 20-11530-FDS, 2025 WL 2108841 (D. Mass. Jul. 28, 2025) (Judge F. Dennis Saylor IV). Plaintiff Thomas Turner was hired by Safeco Insurance Company in 1980. He worked for Safeco for the next 28 years, until it was acquired by Liberty Mutual Insurance Company in 2008, at which time he became an employee of Liberty Mutual. At the center of this putative class action is Liberty Mutual’s calculation of cost-sharing obligations for post-retirement medical benefits, and its decisions regarding whether to credit workers’ pre-merger years of service with Safeco. Mr. Turner has always maintained that after the acquisition of Safeco by Liberty Mutual, he was repeatedly advised that he would receive cost-sharing credit for his retiree health benefits based on a calculation of his years of service with both Safeco and Liberty Mutual. However, when he retired in 2018, Liberty Mutual made him choose between his Safeco and Liberty Mutual benefits. Mr. Turner challenged this determination of his post-retirement medical benefits and argued that Liberty Mutual was required to credit his years of service to both Safeco and Liberty Mutual. When it did not do so, Mr. Turner turned to litigation. On August 14, 2020, he filed this action against the Liberty Mutual defendants on behalf of himself and others similarly situated. He asserted four causes of action which included a claim for determination of plan terms and clarification of benefits, a claim for equitable relief based on allegations of fiduciary breach, a claim alleging defendants failed to provide plan documents, and a claim for failure to disclose plan limitations. On summary judgment, the court concluded that Mr. Turner’s post-retirement medical benefit under the Liberty Mutual plan was not a vested benefit, and that the unambiguous terms of the plan did not provide cost-sharing credit for his year with Safeco. The court also granted summary judgment in favor of defendants on the failure to provide plan documents and failure to disclose plan limitations claims. Despite finding in favor of defendants on counts one, three, and four, the court denied their motion for summary judgment on the fiduciary breach claim for equitable relief. It found that there were triable issues of fact regarding precisely what representations Liberty Mutual had made to Mr. Turner concerning whether his years of service with Safeco would be credited to him for the purpose of calculating his cost-share obligations under the Liberty Mutual retiree health plan. As a result, litigation continued. Mr. Turner subsequently filed a motion for class certification. On July 15, 2024, the court denied the motion for certification on the ground that the proposed class was based in part on a newly asserted claim that Mr. Turner was denied benefits under both the Safeco and the Liberty Mutual plans. “The initial complaint had alleged that plaintiff was denied benefits under only the Liberty Mutual plan; according to the initial complaint, plaintiff’s benefits under the Liberty Mutual plan were to be calculated based on the credit that he accrued – that is, his total years of employment – at both Safeco and Liberty Mutual. However, it did not allege that plaintiff was entitled to and denied benefits under both plans.” Mr. Turner now seeks leave to amend his complaint to address the pleadings concerning the combined-benefits theory, based on an assertion that he was improperly denied both his grandfathered Safeco benefits and his earned Liberty Mutual benefits. The court denied Mr. Turner’s request for leave to amend in this decision. First, the court held that the motion was unduly and unjustifiably delayed as it was filed five years after Mr. Turner initially brought this action. In the time since, discovery has closed and the court has ruled on two summary judgment motions and a motion for class certification. The court held that “[s]uch a significant delay is alone sufficient to deny the motion.” In addition to the motion’s lack of timeliness, the court also determined that allowing Mr. Turner to amend his complaint at this juncture would impose substantial and unfair prejudice on the defendants. Even assuming without deciding that the amendment would not entail significant or extensive new discovery, the court said that “amendment would nevertheless be unfairly prejudicial, as it would likely meaningfully affect defendants’ litigation strategy.” Consequently, the court concluded that the combined delay and prejudice cautioned against granting the motion for leave to amend the complaint. For these reasons, the court denied the motion.