The federal courts issued numerous ERISA-related decisions over the last week, but none stood out, so we are not highlighting a particular ruling. The cases ran the gamut, however, so you will definitely find something that tickles your fancy below.
For example, read on to learn about (1) the (almost) end of the ten-year-old McCutcheon v. Colgate-Palmolive case, in which the court awarded class counsel $96.28 million (!) in attorney’s fees; (2) another fruitless effort by a health care provider to enforce arbitration awards under the No Surprises Act (SpecialtyCare v. Cigna, SpecialtyCare v. UMR); (3) a Texas court allowing a challenge to the tobacco surcharge in 7-Eleven’s employee health plan (Baker v. 7-Eleven); (4) whether prevailing defendants in unpaid contribution cases can be awarded attorney’s fees (Johnson v. Crane Nuclear); and (5) a published decision from the Second Circuit addressing how to calculate withdrawal liability when employees switch unions and join a new plan (Mar-Can v. Local 854). We’ll see you next week!
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Attorneys’ Fees
Second Circuit
McCutcheon v. Colgate-Palmolive Co., No. 16-CV-4170 (LGS), 2026 WL 444748 (S.D.N.Y. Feb. 17, 2026) (Judge Lorna G. Schofield). This massive hard-fought ten-year-old class action is finally nearing completion. It has been up to the Second Circuit twice, where the class plaintiffs were victorious both times. At issue in the case was the calculation of benefits under Colgate-Palmolive Company’s retirement plan. (For more details on the complicated math involved, see our coverage of the 2023 and 2025 appellate rulings.) The case has now settled, and before the court here was class counsel’s motion for attorneys’ fees and expenses, settlement administration costs, and a service award for the class representative. The court noted that there were no objections from any class members to the requests. The petition sought $96.28 million in attorneys’ fees, which was 29% of the $332 million common fund, $2.9 million in litigation expenses, $150,000 in settlement administration costs, and a $10,000 service award for plaintiff Rebecca M. McCutcheon. The court first established a baseline fee amount by examining “other ERISA cases that generated very large common funds (in the $200-$350 million range) and that were litigated to judgment and defended on appeal or were otherwise of comparable magnitude, duration, and complexity,” and determined that the 29% requested here was reasonable in comparison. The court then subjected the request to the Second Circuit’s Goldberger factors, examining “(1) the time and labor expended by counsel; (2) the magnitude and complexities of the litigation; (3) the risk of the litigation; (4) the quality of representation; (5) the requested fee in relation to the settlement; and (6) public policy considerations.” The court noted that class counsel litigated the case for over a decade, defending the judgment twice on appeal and opposing a petition for certiorari in the Supreme Court. The litigation involved significant work and investment, with over 27,000 hours spent by class counsel. The case was challenging due to an IRS letter supporting Colgate and the “substantial number of defenses” asserted by Colgate. The court stressed that the settlement represented nearly 98% of the total residual annuities claimed by the class, reflecting high-quality representation. The court also emphasized the importance of setting fees that encourage counsel to undertake future risks for the public good. The court then conducted a lodestar cross-check to ensure the percentage fee was reasonable. The court found that the attorneys’ hours and rates were supported, approving rates that “range from $900 to $1,150 per hour for partners, $700 to $800 per hour for senior associates and $250 per hour for senior paralegals.” The result was “an overall lodestar of approximately $19.5 million and an effective lodestar multiplier of 4.92,” which the court deemed reasonable. Finally, the court found the litigation expense reimbursement request of $2.9 million and the $150,000 in settlement administration costs reasonable and adequately documented, and approved a $10,000 service award for McCutcheon.
Sixth Circuit
Johnson v. Crane Nuclear PFT Corp., No. 3:23-CV-00273, 2026 WL 474865 (M.D. Tenn. Feb. 19, 2026) (Judge Aleta A. Trauger). Here at Your ERISA Watch we typically give only light coverage to unpaid contribution and withdrawal liability cases. However, sometimes unusual issues pop up that are worth discussing, and this case involved one of them: when is a prevailing defendant in an unpaid contributions case (under 29 U.S.C. § 1145) allowed to recover its attorney’s fees? Here defendants Crane Nuclear Corporation and Chris Mitchell prevailed when the Plumbers & Steamfitters Local No. 43 benefit funds sued them; on summary judgment the court ruled that the defendants were not contractually obligated to contribute to the funds. Defendants filed a motion for attorney’s fees, requesting $196,632.10. The funds opposed, making four arguments: (1) defendants cannot recover attorney’s fees under Section 1145; (2) the court should exercise its discretion to deny fees; (3) the requested fees were excessive; and (4) the court should “offset any award against the amount the defendants owe plaintiffs.” The funds acknowledged the lack of case law in support of their Section 1145 argument, “candidly conced[ing] that they are aware of only two cases – both district court cases – even considering the question of a whether a prevailing defendant in an action under 29 U.S.C. § 1145 may be awarded attorney’s fees. But they also argue that they are aware of no cases, in the Sixth Circuit or elsewhere, that have awarded attorney’s fees to a prevailing defendant in a § 1145 case.” The court examined Section 1145 and Section 1132(g)(1), which both discuss fee awards, and ruled that “the plain language of [Section 1132(g)] clearly authorizes a prevailing defendant in a § 1145 action to seek attorney’s fees. Subsection (g)(1) authorizes the court to award attorney’s fees to either party ‘[i]n any action under this subchapter,’ ‘other than [in] an action described in paragraph (2).’” Paragraph 2 does refer to Section 1145 cases, but only those brought by a fiduciary; in such cases fee awards are mandatory to a prevailing plan. However, “subsection (g)(2) says nothing about § 1145 enforcement actions in which judgment is not awarded in favor of the plan.” Thus, Section 1132(g) was the operative statute and allowed fees to be awarded to either side, including defendants. Thus, the court turned next to whether it should exercise its discretion to award fees, using the Sixth Circuit’s King factors. The court found no evidence of bad faith or culpable conduct by the funds and noted that awarding fees would be detrimental to plan beneficiaries. The court also determined that further deterrence was unnecessary, as a similar case had been dismissed following the summary judgment ruling in this case. In any event, the deterrence factor “always weighs strongly against awarding fees against an ERISA fund, because ‘[a]warding fees in such a case would likely deter beneficiaries and trustees from bringing suits in good faith for fear that they would be saddled with their adversary’s fees in addition to their own in the event that they failed to prevail.’” As a result, the court concluded that “[t]he fact that the defendants prevailed…is not sufficient to overcome the weight of the other factors against it,” and thus exercised its discretion to deny defendants’ fee motion.
Breach of Fiduciary Duty
First Circuit
Steer v. The Charles Stark Draper Laboratory, Inc., No. 24-CV-13105-AK, 2026 WL 444637 (D. Mass. Feb. 17, 2026) (Judge Angel Kelley). Barry Steer is a former employee of The Charles Stark Draper Laboratory, Inc., a government contractor and research firm. He brought this putative class action against Draper and the committee at Draper responsible for overseeing Draper’s two retirement plans, the Charles Stark Draper, Inc. Retirement Plan for Draper Employees (the Retirement Plan) and the Charles Stark Draper, Inc. Supplemental Retirement Annuity Plan (the SRAP). Steer contends that the investment options in both plans “underperformed and charged unreasonably high fees, and that Defendants breached their fiduciary duty by failing to monitor the Plans’ investments and permitting underperforming investments and high fees.” Steer also contends that TIAA, the plans’ recordkeeper, charged unreasonable fees and engaged in prohibited transactions under ERISA, which the defendants failed to monitor. Defendants filed a motion to dismiss, challenging Steer’s constitutional and statutory standing, focusing on the fact that Steer was not a participant in the SRAP. Defendants also moved for a more definite statement as to the prohibited transactions at issue. Addressing constitutional standing first, the court ruled that “plaintiff has sufficient personal stake in the adjudication of the class members’ claims” because he alleged that “Defendants treated Plaintiff and other Class members consistently and managed the Plans jointly and uniformly as to all Participants.” Because “Plaintiff alleges that Defendants engage in uniform practices across the Plans that violate ERISA,” he “has standing to challenge these uniform practices, even though he was not a participant in the SRAP.” As for statutory standing, the court ruled that Steer “fall[s] ‘within the class of plaintiffs whom Congress has authorized to sue’” because he was a participant in one of the plans, and ERISA Sections § 1132(a)(2) and (3) both permit “participant[s]” to bring civil actions. Again, the fact that Steer was not an SRAP participant was irrelevant; “Requiring a named plaintiff to have identical claims as other class members ‘would render superfluous the Rule 23 commonality and predominance requirements.’” Finally, the court denied defendants’ request for a more definite statement, noting that Steer had identified “‘contract[s] for services, like recordkeeping and the provisions of investments, from service providers like TIAA’ as prohibited transactions for which Defendants are responsible.” The court concluded that Steer had not engaged in “shotgun pleading” by alluding to other transactions, and that he “need not plead with greater specificity under ERISA.” As a result, the court denied defendants’ motion in its entirety.
Fourth Circuit
Enstrom v. SAS Institute Inc., No. 5:24-CV-105-D, 2026 WL 459258 (E.D.N.C. Feb. 12, 2026) (Judge James C. Dever III). The plaintiffs in this case are former employees of SAS Institute Inc., a data services company based in North Carolina. In 2024 they filed this action alleging that SAS and related defendants violated ERISA in their management of the company’s defined contribution retirement plan. In their first complaint, plaintiffs took aim at the plan’s investment decisions, arguing that defendants breached their fiduciary duty of prudence by selecting and continuing to offer underperforming funds in the plan. The court granted defendants’ motion to dismiss, ruling that plaintiffs’ claims were not plausible as to the plan’s investment in the JPMorgan Chase Bank (JPM) Target Date Funds, and that plaintiffs lacked standing to challenge the plan’s investment in another fund. (Your ERISA Watch covered this order in our March 12, 2025 edition.) Plaintiffs retrenched and filed a new complaint. In their updated allegations, plaintiffs once again challenged the plan’s investment in the JPM funds, and added a new claim attacking SAS’ use of forfeitures to reduce its contributions to the plan rather than reduce plan expenses. Defendants once again filed a motion to dismiss. The court addressed plaintiffs’ claim regarding the JPM funds first. Plaintiffs alleged that the JPM funds underperformed compared to other similar target date funds, the S&P Target Date Index, and a composite benchmark. Plaintiffs also claimed that defendants violated the plan’s investment policy statement (IPS) by retaining the JPM funds because the funds did not meet performance objectives. However, the court ruled that plaintiffs’ comparator funds were not meaningful benchmarks because the JPM funds followed a “to” retirement glidepath, while the comparators followed a “through” glidepath, and thus the plans minimized risk at different times and were too dissimilar. Furthermore, even if plaintiffs’ funds were comparable, the JPM funds were “within one-to-two percentage points,” and “[u]nderperformance of this magnitude does not plausibly suggest a duty of prudence violation.” In response, plaintiffs relied on the IPS, but the court rejected this argument for the same reason it rejected it in its ruling on the first motion to dismiss; plaintiffs “cite no IPS provision that any defendant violated by adding the JPM funds to the plan.” Turning to plaintiffs’ claim that defendants breached their duty of loyalty in handling forfeitures, the court “agrees with the weight of authority,” citing numerous recent cases holding that “[w]hen (1) a plan document gives a plan fiduciary discretion in how to use forfeitures and (2) participants otherwise receive everything guaranteed by the plan’s terms, plan fiduciaries do not violate their duty of loyalty merely by declining to use forfeitures to cover administrative expenses.” Put simply, “Plaintiffs do not allege that they received less than what the Plan promised. The duty of loyalty does not require that defendants offer more than that.” For similar reasons, the court held that using forfeitures to reduce future contributions did not violate ERISA’s anti-inurement provision because “[u]sing forfeitures to pay Plan participants benefits participants.” Furthermore, “plaintiffs do not allege that defendants ever contributed less than the Plan required.” Finally, the court dismissed the failure to monitor claim because it was dependent on the success of the other claims, which the court had dismissed. The court thus granted defendants’ motion to dismiss, this time with prejudice.
Fifth Circuit
Baker v. 7-Eleven Inc., No. 3:25-CV-01609-X, 2026 WL 473252 (N.D. Tex. Feb. 19, 2026) (Judge Brantley Starr). Barbara Baker filed this putative class action against her former employer, 7-Eleven Inc., contending that the company’s health insurance plan violates ERISA. Specifically, she challenges the plan’s Tobacco-Free Wellness Program. The program “provided a reward of reduced medical plan premiums to participants who self-reported to not use tobacco products. Participants who reported tobacco use were offered an alternative means to qualify for the same reward.” The alternative varied, requiring participants to either state they would try to quit tobacco or complete a tobacco-cessation course. Baker did not participate in the alternative program and did not receive the lower medical premium reward. 7-Eleven filed a motion to dismiss, arguing that Baker did not have standing and she failed to state a claim. 7-Eleven contended that Baker had no standing because she did not participate in the Wellness Program, but the court found this argument “misses the point. Participation in the Program is irrelevant – neither ERISA nor Article III requires a plaintiff to enroll in an unlawful program to establish standing.” The court found that 7-Eleven’s deduction of a $27.70 premium from each of her paychecks was “a concrete, traceable monetary injury caused by 7-Eleven’s allegedly uncompliant Program which is redressable by the Court.” The court also rejected 7-Eleven’s argument that her injury was “informational” only. “ERISA disclosure violations can support standing when the omission interferes with a participant’s ability to understand and exercise plan rights, and standing is denied only where no actual loss was shown.” The court found that the “allegedly deficient notice is directly connected to Baker’s monetary loss.” The court also ruled that Baker had standing even though she was no longer an employee, reserving “any questions regarding the ultimate scope of relief” for the class-certification stage. Next, the court addressed the plan itself, and ruled that Baker had plausibly alleged that it was not compliant with ERISA. The court acknowledged that “federal courts have reached differing conclusions” on other tobacco wellness programs, but concluded that (a) a tobacco-use surcharge constitutes health-factor discrimination under ERISA, (b) Baker properly alleged that the program “failed to comply with the statutory requirement of offering the full reward to all similarly-situated participants,” and (c) Baker plausibly pled that the program “failed to comply with the statutory requirement of disclosing the reasonable alternative standard in all plan materials.” The court interpreted 29 U.S.C. § 1182 as including tobacco use as a “health status-related factor,” and thus “[c]harging higher premiums to tobacco users is therefore facial health-factor discrimination.” The court further agreed with Baker that “7-Eleven’s Program does not offer the full reward because it limits the retroactive relief available to some participants.” Instead, in some scenarios the program only allowed for prospective relief, depending on the timing of when a participant satisfied the alternative. The court further agreed that Baker could plead that 7-Eleven violated notification requirements because it omitted from its summary plan descriptions a statement that the recommendations of a participant’s physician would be accommodated. The court then turned to Baker’s claims under ERISA Sections 1104 and 1106. The court again ruled in Baker’s favor, ruling that she sufficiently alleged that 7-Eleven acted as a fiduciary and engaged in prohibited transactions by “collecting tobacco surcharges and refusing to retroactively reimburse participants who completed the Tobacco Cessation courses after the March 31st deadline.” As a result, the court denied 7-Eleven’s motion to dismiss in its entirety.
Class Actions
Fourth Circuit
Fisher v. GardaWorld Cash Service, Inc., No. 3:24-CV-00837-KDB-DCK, 2026 WL 482960 (W.D.N.C. Feb. 20, 2026) (Judge Kenneth D. Bell). Plaintiffs Jonathan Fisher and Blair Artis brought this putative class action against GardaWorld Cash Service Inc. seeking to represent current or former employees of GardaWorld who participated in GardaWorld’s ERISA-governed employee health plan. Plaintiffs contended that the plan “imposed monthly surcharges on employees who used tobacco or were not vaccinated against COVID-19,” and that the plan violated ERISA because it “did not disclose a ‘reasonable alternative standard’ or state that physician recommendations would be accommodated, as required by ERISA’s wellness-program regulations. Plaintiffs also allege the Plan unlawfully failed to offer retroactive refunds for employees who satisfied requirements after the cutoff date but before the end of the Plan year, thereby denying participants the ‘full reward’ contemplated by regulation.” GardaWorld filed a motion to dismiss, which the court granted in part, rejecting plaintiffs’ breach of fiduciary duty claims. (Your ERISA Watch covered this ruling in our September 3, 2025 edition.) The parties then began discovery, and unfortunately for plaintiffs, GardaWorld quickly discovered that neither Fisher nor Artis were participants in the plan during the relevant time period. As a result, plaintiffs filed a motion to amend their complaint to substitute three new representative plaintiffs who had participated in the plan. GardaWorld opposed and filed a motion to dismiss for lack of jurisdiction. In this order the court denied plaintiffs’ motion and granted GardaWorld’s. The court emphasized that without jurisdiction it could not proceed with the case, and that jurisdiction “must exist from the moment the complaint is filed.” In class actions, the standing inquiry focuses on the class representatives, who must allege an injury in fact that is concrete, particularized, and actual or imminent. Thus, “the Fourth Circuit has long held that a representative plaintiff must be a member of the proposed class and must have suffered the injury alleged.” Here, plaintiffs’ motion “confirms that neither class representative participated in the Plan at the center of this litigation and never suffered the injury alleged.” As a result, “they could not have suffered an ERISA injury under the facts alleged, and they therefore lacked III standing from the moment the action was filed. When standing is absent at the outset, federal jurisdiction never attaches.” The court acknowledged it was “mindful of the efficiencies that might be gained by permitting amendment.” However, “it is equally compelled to consider the constitutional consequences of allowing plaintiffs to cure a jurisdictional defect through substitution. Accepting such a theory would erode Article III’s limits by enabling litigants to initiate putative class actions with individuals who suffer no injury, secure the Court’s involvement, and then – after the absence of standing is exposed – find and substitute a plaintiff with an actual stake in the controversy. Constitutional jurisdiction cannot be manufactured in this manner.” Thus, the court granted GardaWorld’s motion to dismiss for lack of jurisdiction, denied plaintiffs’ motion to amend as moot, and closed the case.
Disability Benefit Claims
Second Circuit
Weiss v. Lincoln Nat’l Life Ins. Co., No. 2:24-CV-00591-CR, 2026 WL 483280 (D. Vt. Feb. 20, 2026) (Judge Christina Reiss). In a rare ERISA case out of your editor’s home state, the court considered whether Carl Weiss qualified for short-term disability (STD) and long-term disability (LTD) benefits under an ERISA-governed employee benefit plan. Weiss was hired by Verista, Inc. in August of 2021 as a software engineer, working remotely from home. Weiss’ medical history included treatment for anxiety, depression, attention deficit disorder (ADD), and other conditions, as well as regular cannabis use. He also received the COVID vaccine. During his employment, Weiss reported improvements in his condition and was functioning well at his job. He was terminated in February of 2022 because “his engagement ended with his client.” However, just prior to his termination he visited his doctor, complaining of fatigue, and after his termination he sought medical attention for various symptoms, including fatigue, brain fog, and photophobia, which he attributed to long COVID. During this time Weiss was approved for Social Security disability benefits. Weiss filed a claim for STD and LTD benefits, but Verista denied his STD claim, stating that his date of disability was after his termination date, and he did not provide sufficient evidence to support his claim. Lincoln also denied his LTD claim, citing insufficient medical evidence to substantiate disability prior to his termination date and throughout the elimination period. Weiss’ appeals were ineffective, and thus he brought this action against both Verista and Lincoln. In this order the court ruled on the parties’ cross-motions for judgment, applying two different standards of review. The court noted that the STD plan did not contain a discretionary clause granting Verista authority to interpret the STD plan, which would ordinarily result in de novo review. However, Verista argued that the administrative services agreement (ASA) between it and Lincoln conveyed discretionary authority. The court questioned this argument, noting the “consensus” of district courts, which was that “an ASA is not an ERISA plan document and, therefore, a [p]lan beneficiary is not bound by its terms.” However, it chose not to rule on this issue, and used the default de novo standard, because “Plaintiff’s claim does not survive the ‘even the broader de novo review[.]’” As for the LTD claim, the court used the arbitrary and capricious standard of review because the LTD plan contained a discretionary clause, and Indiana law, which governed the plan, did not prohibit such clauses. The court also considered whether it could consider new reasons for denial in litigation, and concluded that under Second Circuit precedent it could do so with respect to the STD claim because the standard of review was de novo, but not with respect to the LTD claim under the arbitrary and capricious standard. Finally, the court tackled the merits. It noted that credibility is important in assessing self-reported symptoms and found that due to inconsistencies in his reports and lack of medical support, Weiss was not particularly credible. “Although the court finds no evidence that Plaintiff was intentionally deceitful, it finds he is not a reliable source of information due to his conflicting statements, self-described poor memory, psychiatric symptoms, and extensive marijuana use.” The court also discounted the Social Security award because its findings (such as no substance abuse) were contradicted by Weiss’ medical records (which showed heavy use of marijuana). Ultimately, the court found that Weiss was not disabled for STD purposes because there was no evidence he was unable to perform the responsibilities of his job. He did not complain of COVID or long COVID before his termination date, seemed to be in good health, was able to work without missing any days up until his termination, and did not report any illness to Verista. The court ruled in Lincoln’s favor on Weiss’ LTD claim for similar reasons. There was no evidence, other than self-reports, of a COVID infection, and Weiss’ medical records provided little support, evidencing limited examinations, normal test results, and no sign of cognitive impairment. The court acknowledged that Lincoln had a structural conflict of interest as both claim administrator and payor, but “[b]ecause Lincoln took steps to reduce potential bias and promote accuracy in rendering its decision on Plaintiff’s LTD claim, because this is not a close call, and because Plaintiff has not shown that Lincoln’s structural conflict of interest affected its decision, Lincoln’s conflict is accorded no weight.” As a result, the court granted Verista’s and Lincoln’s motions for judgment, and denied Weiss’.
Seventh Circuit
Lehnen v. Unum Life Ins. Co., No. 23-CV-192-WMC, 2026 WL 444692 (W.D. Wis. Feb. 17, 2026) (Judge William M. Conley). Kent A. Lehnen was a senior account executive for Beacon Health Options, a job which required extensive computer use and high cognitive function. In 2015 he took a leave of absence due to persistent postural perceptual dizziness (PPPD), anxiety, depression, and attention deficit disorder (ADD). Lehnen was able to return to work with accommodations, but in 2019 his health deteriorated again, when he suffered from “bouts of dizziness, sleeping difficulties, neck pain, hand pain, and anxiety about his job performance.” Lehnen reduced his hours, then returned to full-time work, and then had to stop entirely in 2020. Lehnen submitted a claim for benefits to Unum Life Insurance Company of America, the insurer of Beacon’s long-term disability employee benefit plan. Unum approved benefits from July 2020 through February 2022, but denied further benefits on the ground that medical records no longer supported his disability. Lehnen appealed, providing additional evidence of his disability, including PPPD, cognitive impairment, sleep disorders, degenerative joint disease, and carpal tunnel syndrome. Unum relented slightly, extending benefits to July 2022, but no further, because the plan has a “lifetime cumulative maximum benefit period” of 24 months “for all disabilities due to mental illness and disabilities based primarily on self-reported symptoms.” Unum would not pay past that date because “his residual functional capacity did not exceed the physical demands of his regular occupation.” Lehnen filed this action challenging Unum’s denial. Unum responded with a counterclaim to recover an overpayment of benefits due to Lehnen’s receipt of Social Security Disability Insurance (SSDI) benefits retroactive to April 2020. In its decision, the Social Security Administration ruled that Lehnen was “primarily disabled due to ‘Disorders of the Skeletal Spine’ and that his mental disorders were secondary.” The parties filed cross-motions for judgment which the court adjudicated in this order. The court employed the de novo standard of review because the plan did not give Unum discretionary authority to determine benefit eligibility. The court ruled in Lehnen’s favor on his disability claim, finding that the medical evidence supported his claims of physical disability, which were consistent with his symptoms corroborated by diagnostic and clinical testing. The court found that Lehnen’s physical impairments, including PPPD, cognitive inefficiency, hand pain, neck pain, and sleep disorders, collectively contributed to his inability to perform job-related duties. The court was further persuaded by Lehnen’s SSDI award, as it was bolstered by additional evidence presented by Lehnen, including an occupational therapy assessment and letters from treating physicians. As a result, the court ruled that Lehnen remained disabled under the plan and was entitled to judgment in his favor and payment of benefits, at a prejudgment interest rate of 7.47%, retroactive to July 2022. It was not a total win for Lehnen, however, because the court also ruled that he was required to repay Unum under his reimbursement agreement because of his SSDI award. Lehnen argued that Unum was not entitled to an equitable lien under ERISA Section 502(a)(3) because “it cannot prove that the funds remain in his possession and cannot, therefore, attach a lien.” However, the court ruled that the agreement granted Unum the right to impose a lien on any real or personal property, and thus it was entitled to “set off or withhold” benefits to recover the overpayment. The court ordered Lehnen to provide an accounting within 30 days to determine the appropriate offset, after which Unum will file a motion regarding the precise amount owed. The court reserved ruling on attorneys’ fees and costs for both sides until a later date.
Eighth Circuit
Hudson v. Principal Life Ins. Co., No. 24-1308 (JRT/ECW), 2026 WL 496683 (D. Minn. Feb. 23, 2026) (Judge John R. Tunheim). Kim Hudson was hired by Consumer Cellular, Inc. on June 6, 2022 as a customer service representative. She stopped working on October 14, 2022, contending in this action that she was disabled due to symptoms of coccydynia (chronic pain in the coccyx, or tailbone). Hudson applied for benefits under Consumer Cellular’s employee long-term disability benefit plan, which was insured by Principal Life Insurance Company, claiming her disability arose from a motor vehicle accident in May of 2021. Hudson’s physician, Dr. Jonathan Landsman, submitted an attending physician statement which asserted that Hudson was unable to work due to “low back pain.” Principal denied Hudson’s claim, citing a pre-existing condition exclusion in the governing insurance policy. Principal also denied her appeal, and this action ensued. The parties filed cross-motions for summary judgment which were decided in this order. The court began with the standard of review. The court acknowledged that the Principal policy contained a delegation of discretionary authority to Principal, but agreed with Hudson that the policy was governed by Oregon law which prohibits such delegations. As a result, de novo review was the correct standard. The court then addressed the merits, identifying two issues: “The first is whether Hudson was treated for her disabling condition during the lookback period such that the pre-existing condition exclusion bars LTD coverage. The second is whether Hudson is disabled under the terms of the policy.” The court did not reach the second issue because it ruled that the pre-existing condition exclusion applied. The policy defined “pre-existing condition” as “any sickness or injury…for which a Member: a. received medical treatment, consultation, care, or services; or b. was prescribed or took prescription medications; in the three month period before he or she became insured under the Group Policy.” The court identified the relevant three-month lookback period as May 9, 2022 through August 8, 2022, because although Hudson first became eligible for coverage as a new hire on August 1, 2022, she was out of work from August 1-8, 2022, and thus coverage was delayed until August 9, 2022. The court found that during this lookback period Hudson received treatment for chronic right-sided low back pain with right-sided sciatica, which was documented in a telehealth visit on May 18, 2022, and a lumbar spine MRI on July 11, 2022. Hudson contended that neither of these events referred to the coccyx or sacral region of the spine and thus her condition was not preexisting. Principal responded that this was irrelevant because “these documents show that she was treated for ‘low back pain’ – the same condition Dr. Landsman found to be disabling.” The court agreed with Principal: “Because Hudson’s disability was based on her low back pain and she was treated for low back pain during the lookback period, the pre-existing condition exclusion squarely applies.” The court further noted that when Principal spoke with Hudson in May of 2023 she “confirmed that she was ‘out of work due to low back pain.’” Finally, the court ruled that Hudson was not entitled to a waiver of premium on her life insurance coverage with Principal due to her disability because she was over 60 years old at the time of her disability, which was beyond the maximum age in the policy. (Hudson did not challenge this decision on appeal or in litigation.) As a result, the court denied Hudson’s motion for summary judgment and granted Principal’s motion for summary judgment.
Life Insurance & AD&D Benefit Claims
Ninth Circuit
Aloff v. The Prudential Ins. Co. of Am., No. 3:25-CV-05834-DGE, 2026 WL 445565 (W.D. Wash. Feb. 17, 2026) (Judge David G. Estudillo). This case arises from a tragic plane crash in 2024 in which the pilot and co-pilot, both employees of Clay Lacy Aviation, Inc. died. The pilots’ widows, Cheryl Aloff and Kimberly Pulido, filed this action after their claims for benefits under Clay Lacy’s accidental death and dismemberment employee benefit plan were denied by the plan’s insurer, The Prudential Insurance Company of America. Prudential denied the claims based on an “aviation exclusion” in the benefit plan. Plaintiffs brought various claims against both Clay Lacy and Prudential, including recovery of plan benefits under ERISA, breach of fiduciary duties and equitable relief under ERISA, and violations of California’s Unfair Competition Law (UCL) and Washington’s Consumer Protection Act (WCPA). Defendants filed a motion to dismiss. The court first addressed plaintiffs’ claim for benefits under 29 U.S.C. § 1132(a)(1)(B). Prudential argued that plaintiffs had not identified any plan term that entitled them to benefits, while plaintiffs argued that “the aviation exclusion ‘does not apply,’ and if it ‘could apply, it should be stricken and the life insurance policy construed in favor of coverage on multiple legal grounds.’” The court agreed with Prudential, noting that plaintiffs did not “actually allege AD&D benefits ‘were covered under the terms of the relevant plans or describe the plan terms that would support such coverage.’” Thus, the court ruled that plaintiffs failed to state a claim. As for Clay Lacy, the court ruled that it was not a proper defendant on this claim because it had no authority to resolve benefit claims or responsibility to pay them under its agreement with Prudential. Turning to the breach of fiduciary duties claims, the court concluded that while plaintiffs plausibly alleged that Prudential was a fiduciary under the plan, this was not true for Clay Lacy because it made no benefit decisions and was not liable for benefits. However, the court ruled that plaintiffs had not established their breach of fiduciary duty claim against Prudential. Plaintiffs alleged that Prudential breached its duties “by not acting in accordance with the life insurance policy plan and failing to pay AD&D benefits.” However, because the court had already ruled that plaintiffs could not bring their benefits claim as currently formulated, “Plaintiffs’ theory that Defendants breached their fiduciary duties by failing to pay such benefits must also be dismissed for failure to state a claim.” Finally, the court dismissed the state law claims under the UCL and WCPA, finding them preempted by ERISA because they were based on the existence of an employee benefit plan and sought recovery for the loss of benefits under that plan. The court thus granted defendants’ motion to dismiss, although it granted plaintiffs leave to amend to address the identified deficiencies.
Medical Benefit Claims
Third Circuit
Shmaruk v. Liberty Mut. Ins. Co., No. 23-CV-22609 (MEF)(JRA), 2026 WL 446329 (D.N.J. Feb. 17, 2026) (Judge Michael E. Farbiarz). Boris Shmaruk brought this action individually and as guardian ad litem for a child identified as J.S. The dispute centers around a denied insurance claim for growth hormone medication prescribed to J.S. by an advanced practice nurse. The denial was based on guidelines used by the plan to assess claims for growth hormone medication. These guidelines contain a structured set of eligibility criteria to determine medical necessity, which are followed in a prescribed order. The claim was denied pursuant to “question 119,” which asks, “Does the patient have a pretreatment 1-year height velocity of greater than 2 standard deviations (SD) below the mean for age and gender?” The answer to this question was “no,” leading to the denial of coverage. Shmaruk filed suit against Liberty Mutual Insurance Company and CVS Caremark, alleging that the denial violated ERISA. Defendants moved for summary judgment, arguing that the denial was appropriate. Shmaruk opposed, arguing that the answer to question 119 should have been “yes,” which would have resulted in approval of the claim. The crux of the dispute was the term “pretreatment 1-year height velocity” and when to start measuring it. Shmaruk offered a February 2022 medical record showing that J.S. met the requirement over the previous twelve months. However, defendants argued that the one-year pretreatment period could not be measured at any time, but only during the time just prior to starting growth hormone treatment, which was in October of 2022. The court started by stating, “Out of the gate, the Plaintiff seems to have the better of this back-and-forth… [Q]uestion 119 says only that the 1-year period needs to be before treatment got started – it says nothing else about when, in particular, the 1-year period needs to fall.” The court faulted the parties somewhat, noting that “none of the relevant linguistic issues have been meaningfully taken up by the parties to this point,” but also admitted that “grammar is no be-all-and-end-all.” Furthermore, the court noted that the plan gave the administrator discretionary authority to interpret the plan’s terms, which meant that “the question is not whether the administrator’s reading of the plan is the best one, but rather whether it is a reasonable one.” In the end, the court threw up its hands: “there are gaps in the parties’ briefing that make it difficult to reliably decide the pending motion. Basic factual matters…are hard to follow, and key legal arguments (as to language, but also beyond that) are gestured at or assumed, but not meaningfully developed.” As a result, “the Court will require additional briefing from the parties that specifically zeroes in on the issues that have been laid out in this Opinion and Order. A schedule for this briefing will be set by the United States Magistrate Judge.” The court addressed one final issue, which was Shmaruk’s contention that “the guidelines are, themselves, arbitrary and capricious.” The court noted that the benefit plan at issue had delegated to the administrator the power to develop and maintain clinical policies to interpret the plan, and thus the issue was whether the treatment at issue was covered by those guidelines, not whether the guidelines were wise or the best policy. “‘The statutory language speaks of enforcing the terms of the plan, not of changing them’ or assessing their substance.” Thus, “the Plaintiff can argue that the Defendants failed to do what the plan promised they would…[b]ut the Plaintiff cannot win on the theory that the claims administrator-Defendant should have used different eligibility criteria in the first place.”
Seventh Circuit
Allison B. v. BlueCross BlueShield of Illinois, No. 24-CV-06162, 2026 WL 497246 (N.D. Ill. Feb. 20, 2026) (Judge John Robert Blakey). Allison B. was a participant in the Accenture LLP Medical Benefits Plan, and M.B. was a beneficiary; claims under the plan were administered by BlueCross BlueShield of Illinois (BCBSIL). M.B. received treatment at Open Sky Wilderness Therapy and Maple Lake Academy, both licensed mental health treatment facilities in Utah. BCBSIL denied claims for M.B.’s treatment at Open Sky under the plan’s “wilderness program” exclusion and denied claims for M.B.’s treatment at Maple Lake on the ground that Maple Lake “did not meet the minimum BCBSIL requirements of a residential treatment center due to the lack of 24-hour nursing staff.” Allison B.’s appeals were unsuccessful, so she brought this action against the plan and BCBSIL, alleging two claims for relief: one for recovery of benefits under 29 U.S.C. § 1132(a)(1)(B), and one under 29 U.S.C. § 1132(a)(3) for violation of the Mental Health Parity and Addiction Equity Act of 2008. Defendants moved to dismiss for failure to state a claim. The court started with the Parity Act claim against Maple Lake. Plaintiff presented two arguments in support of this claim: (1) the 24-hour onsite nursing requirement is more restrictive than the criteria the plan uses for analogous intermediate levels of medical/surgical services; and (2) the requirement “exceeds the generally accepted standard of care (‘GASC’)…when the Plan does not impose requirements above the GASC for analogous intermediate levels of medical/surgical services.” The court found the first claim sufficient. Defendants argued that analogous skilled nursing facilities (SNFs) also had a 24-hour nursing requirement, but the court found that this requirement was not explicitly in the plan, which only required SNFs to be “duly licensed.” Furthermore, applicable law governing SNFs contained exceptions not present in the plan. The second claim did not pass muster, however, because the American Academy of Child & Adolescent Psychiatry’s “Principles of Care for Treatment of Children and Adolescents with Mental Illnesses in Residential Treatment Centers” contained a 24-hour nursing requirement. Because plaintiff’s Parity Act claim as to Maple Lake survived, her claim for benefits survived as well. As for Open Sky, the court’s findings were similar. The court ruled that plaintiff had properly pled that the plan expressly excluded from coverage “wilderness programs,” but the plan contained no similar exclusion for analogous intermediate-level medical/surgical facilities. Thus, plaintiff had properly pled not just a Parity Act claim, but a claim for benefits as well regarding the Open Sky treatment. As a result, the Court denied defendants’ motion to dismiss in its entirety.
Pension Benefit Claims
Seventh Circuit
Soni v. Paul M. Angell Family Foundation, No. 25 CV 4863, 2026 WL 457332 (N.D. Ill. Feb. 18, 2026) (Judge Sunil R. Harjani). Rupal Soni worked for the Paul M. Angell Family Foundation for seven years and alleges in this action that she was discriminated and retaliated against and eventually terminated based on her race. The focus of this order, however, was on Soni’s claim for breach of fiduciary duties under ERISA. Soni contends that the Foundation and its ERISA-governed 403(b) pension plan failed to properly manage her retirement contributions, which were supposed to be invested but were left unallocated. She contends that she asked both her employer and Charles Schwab, which managed ongoing contributions, how to invest, indicating that she wanted to invest in a target-date fund because it was “set and forget,” but ultimately her contributions were never invested. Soni also contends that she never received annual notices or other required plan disclosures, or any individual account balance statements. Defendants filed a motion to dismiss Soni’s ERISA claim, arguing that she failed to exhaust administrative remedies and did not sufficiently allege a breach of fiduciary duty. Addressing exhaustion first, the court ruled that Soni was not required to exhaust appeals with the plan before filing suit. The court noted that the plan’s “claim procedure applies to claims for, and denials of, benefits, without any reference to claims for breach of fiduciary duties, which is what Plaintiff alleged here. Taking this allegation as true, this shows a lack of access to a review procedure because there was no available process for her to raise her breach of fiduciary duty claim.” Furthermore, the court noted that Soni had inquired with the Foundation before filing suit, and had been told, “We consider the matter closed,” which indicated that “she lacked meaningful access to review procedures.” As for the merits of her claim, defendants tried to “frame Plaintiff’s allegations as a clerical mistake by a Charles Schwab employee in 2016.” However, the court noted that the plan stated, “If you do not make an investment election your account balances will be placed in investments selected by the Plan Administrator.” The court stated that “this language…creates an unusual obligation for the Plan Administrator,” but it was enforceable, and thus Soni’s “allegation that the plan documents place an obligation on Defendants to invest the unelected funds is plausible based on the plain text of the plan.” Finally, the court addressed the remainder of defendants’ arguments, which it characterized as “scatter-shot” and “perfunctory” and therefore were waived. Regardless, the court ruled that (a) Soni’s claims were within the statute of limitations because she filed her claim in 2025, which was within six years of her termination in 2023, (b) defendants could not “pass the buck” to Charles Schwab because “the Foundation has a duty to monitor those it appoints to administer the plan,” and (c) Soni plausibly alleged that she was entitled to equitable relief under ERISA Section 502(a)(3) even if such relief was unavailable on an individual basis under Section 502(a)(2). As a result, the court denied defendants’ motion in full.
Plan Status
Seventh Circuit
Waites v. Rosalind Franklin Univ. of Medicine & Science, No. 1:25-CV-12526, 2026 WL 482187 (N.D. Ill. Feb. 20, 2026) (Judge Sharon Johnson Coleman). James Waites filed a complaint against United of Omaha Life Insurance Company (UOL) in 2024 regarding its denial of his claim for supplemental life insurance benefits. Waites settled with UOL and the action was dismissed in September of 2025. While settlement negotiations were ongoing, in August of 2025, Waites filed this action against Rosalind Franklin University (RFU) in which he alleged that RFU was negligent in the denial of his claim. Specifically, Waites contended that RFU failed to submit evidence of insurability for the decedent to UOL, which was required under the terms of the UOL policy. RFU removed the case to federal court, arguing that the life insurance benefits were part of an employee welfare benefit plan and thus Waites’ claims were preempted by ERISA. Waites disagreed and filed a motion to remand. He contended that the policy fell within ERISA’s “safe harbor” provision, which excludes certain group insurance programs from ERISA coverage if four specific criteria are met. Those criteria are: (1) no contributions are made by the employer; (2) participation is completely voluntary; (3) the employer does not endorse the program and its function is solely “to permit the insurer to publicize the program to employees or members, to collect premiums through payroll deductions or dues checkoffs and to remit them to the insurer”; and (4) the employer receives no consideration other than reasonable compensation for administrative services rendered in connection with payroll deductions. The court emphasized that ERISA “reach[es] virtually all employee benefit plans,” and construed the safe harbor provision “narrowly; only a minimal level of employer involvement is necessary to trigger ERISA.” It ultimately ruled in RFU’s favor because Waites could not establish two of the four factors. On the first factor, RFU admitted that the decedent paid all premiums for the life insurance at issue, but argued that it contributed to the employee benefit plan of which the life insurance was a part, which was enough to escape the safe harbor provision. Relying on Seventh Circuit authority, the court agreed, holding that “when a policy is part of a broader benefits package where ‘many aspects’ of the plan are funded by the employer, in whole or in part, it does not fit within the safe harbor.” On the third factor, RFU contended that it “endorsed” the insurance by performing administrative functions to ensure its operation. The court agreed, noting that Waites’ own complaint refuted his assertion that RFU only performed limited administrative duties: “Waites’ own allegations concede that RFU was responsible for obtaining and submitting evidence of insurability to UOL.” As a result, the safe harbor provision was not met, the plan was governed by ERISA, and thus the court denied Waites’ motion to remand.
Pleading Issues & Procedure
Third Circuit
Board of Trustees of the Greater Pa. Carpenters’ Medical Plan v. QCC Ins. Co., No. 2:24-CV-01047-MJH, 2026 WL 444743 (W.D. Pa. Feb. 17, 2026) (Judge Marilyn J. Horan). This action revolves around Carl Young, a former member of the Greater Pennsylvania Carpenters’ Medical Plan. QCC Insurance Company was the third-party insurer and administrator of claims under the plan, while Union Labor Life Insurance Company (ULLICO) provided stop-loss insurance. In 2021 and 2022 Young incurred extensive medical bills. In 2021 his treatment totaled $242,588.34, and in 2022 it was a whopping $2,587,608.94. As it turns out, Young’s coverage under the plan expired at the end of 2021. Nonetheless, Young’s 2022 bills were paid by QCC and charged to the plan. ULLICO, however, denied reimbursement under the stop-loss policy on the ground that the 2022 services were not covered. Left holding the bag, the plan brought this action naming QCC and ULLICO as defendants, alleging against ULLICO one claim for equitable relief under ERISA Section 502(a)(3) and one for breach of contract. ULLICO filed a motion to dismiss. ULLICO argued that the plan’s ERISA claim failed because ULLICO was not a plan fiduciary and because the plan “seeks legal relief which is not cognizable under ERISA.” The court first ruled that ULLICO’s status was irrelevant; the plan was not required to allege ULLICO’s fiduciary status to plead a claim under ERISA § 502(a)(3). In doing so, the court quoted the Supreme Court’s decision in Harris Trust and Sav. Bank v. Salomon Smith Barney, Inc., in which “the Supreme Court held that while Section 502(a)(3) describes ‘the universe of plaintiffs who may bring certain civil actions,’ it ‘admits of no limit…on the universe of possible defendants’ subject to Section 502(a)(3) liability.” However, regardless of ULLICO’s status, the court agreed that the relief sought by the plan was improper. In its briefing, the plan conceded that “the basis of its claim against ULLICO is contractual and not equitable in nature,” and thus the court ruled that “ERISA Section 502(a)(3) is not the appropriate vehicle against this defendant.” The plan attempted to characterize its ERISA claim as one for “specific performance,” which is an equitable remedy, but “the Amended Complaint clearly seeks reimbursement under the Plan’s contractual terms with ULLICO. Such an action is legal in nature and would not require to the Court to exercise any equitable powers. Therefore, the Plan cannot maintain an action for equitable relief under ERISA § 502(a)(3).” Finally, the court examined the plan’s breach of contract claim and dismissed that as well. The court found that the stop-loss policy only allowed compensation for plan expenses that were “covered and payable,” and here it was clear that Young’s eligibility for benefits terminated at the end of 2021. As a result, the 2022 medical treatment was not covered and the stop-loss protection could not be invoked. The court thus granted ULLICO’s motion to dismiss in its entirety.
Provider Claims
Third Circuit
SpecialtyCare, Inc. v, Cigna Healthcare, Inc., No. CV 24-1378-RGA, 2026 WL 483259 (D. Del. Feb. 20, 2026); SpecialtyCare, Inc. v. UMR, Inc., No. CV 24-1396-RGA, 2026 WL 483233 (D. Del. Feb. 20, 2026) (Magistrate Judge Eleanor G. Tennyson). These two actions were brought by health care provider SpecialtyCare, Inc. against benefit administration giants Cigna Healthcare, Inc. and UMR, Inc. seeking reimbursement for out-of-network services SpecialtyCare provided to patients who were covered by self-funded plans administered by Cigna and UMR. SpecialtyCare alleges that it billed Cigna and UMR for its services, but Cigna and UMR failed to pay or paid less than the full billed amount. SpecialtyCare initiated Independent Dispute Resolution (IDR) proceedings with both under the No Surprises Act. It contends that against Cigna it “obtained 789 IDR determinations in its favor, amounting to a combined $1,360,403 in unpaid fees,” and that against UMR it “obtained 300 IDR determinations in its favor, amounting to $256,427 in unpaid fees[.]” Nevertheless, neither Cigna nor UMR complied with these determinations, “[d]espite the statutory mandate that the IDR determinations ‘shall be binding’ and that payment ‘shall be made’ to the healthcare provider within thirty days.” SpecialtyCare thus brought this action, asserting claims for confirmation of arbitration awards, non-payment of arbitration awards, improper denial of benefits, open account, bad faith, and unjust enrichment. Cigna and UMR filed motions to dismiss, which the assigned magistrate judge reviewed in this order. The defendants argued that the IDR awards were not judicially enforceable and that SpecialtyCare lacked standing to bring its ERISA claim. They also argued that the state law claims were preempted by the No Surprises Act and failed to state a claim. SpecialtyCare contended that it was entitled under the Federal Arbitration Act (FAA) to seek a court order enforcing the IDR determinations, so the court examined whether the No Surprises Act permits such relief. The court concluded that the Act does not because it “expressly prohibits judicial review of IDR determinations except where vacatur is sought under Section 10 of the FAA” – which was not the case here. Agreeing with the Fifth Circuit’s 2025 opinion in Guardian Flight, LLC v. Health Care Serv. Corp. (discussed in our June 18, 2025 edition), and numerous other district court decisions, the magistrate found that Congress deliberately omitted FAA Section 9 relief from the No Surprises Act, indicating no private right of action for enforcement. The court further ruled that the No Surprises Act itself did not create its own private right of action. There was no express right in the statute, and the court refused to imply one because “the ‘robust system of administrative enforcement’ provided by the No Surprises Act creates a ‘strong presumption’ that Congress did not intend to create a personal remedy for SpecialtyCare.” Again, the court agreed with Guardian Flight’s discussion of this issue in ruling that “Congress empowered the Department of Health and Human Services (‘HHS’) – not the courts – to ‘assess penalties against insurers for failure to comply’ with the statute.” As for SpecialtyCare’s ERISA claims, the court ruled that SpecialtyCare “lacks standing to sue under ERISA for failure to pay the amounts due under the IDR determinations” because the plan beneficiaries who assigned their claims to SpecialtyCare did not suffer any concrete injury. The court reasoned that disputes under the No Surprises Act are between providers and insurers; “[b]y design, the No Surprises Act shields plan participants from the out-of-network costs that are the subject of this lawsuit[.]” As a result, “the outcome of this dispute will not affect the plan participants in any way.” Because the patients had no standing, their assignments to SpecialtyCare could not confer it. Finally, the court recommended dismissing SpecialtyCare’s state law claims because the federal claims were non-starters and there was no justification for exercising supplemental jurisdiction over the claims that were left. In short, the magistrate judge recommended granting Cigna’s and UMR’s motions to dismiss all counts of SpecialtyCare’s complaint.
Retaliation Claims
Tenth Circuit
Jewkes v. Orangeville City, No. 4:24-CV-00102-DN, 2026 WL 483333 (D. Utah Feb. 20, 2026) (Judge David Nuffer). Tasha M. Jewkes is a former employee of Orangeville City, Utah who brought this action against the City and its treasurer, Brittney Alger, alleging numerous claims including gender discrimination, retaliation, hostile work environment, wrongful termination, interference with ERISA rights, and defamation. The basis for Jewkes’ ERISA claim was that Orangeville allegedly refused to supply Jewkes with a health insurance stipend. Defendants filed a motion to dismiss, which the court converted into a motion for summary judgment. The court ruled that (a) the undisputed facts showed that Orangeville employed fewer than fifteen employees at the time in question, and thus she could not bring a claim under Title VII; (b) Jewkes could not bring a claim under Utah’s Anti-Discrimination Act because it does not allow a private right of action; and (c) Jewkes failed to provide notice of her claims as required under the Utah Governmental Immunity Act. As for Jewkes’ ERISA claim, Jewkes contended that, “By refusing to supply to Plaintiff the health insurance stipend, and by paying a stipend less than similarly situated employees…Defendant Orangeville interfered with Plaintiff’s protected rights as set forth in 29 U.S.C.A. § 1140.” However, the court found that Jewkes did not “provide any evidence of specific intent to violate ERISA… The undisputed facts demonstrate that Orangeville’s intent was to comply with [Utah law] requiring that these changes be made by ordinance or resolution.” Furthermore, the court relied on Tenth Circuit “de minimis” precedent which holds that “‘Proof of incidental loss of benefits as a result of a termination will not constitute a violation of § 510.’ Here, a $300 discrepancy, absent evidence of interference (termination) to prevent Ms. Jewkes’ from attaining her health insurance stipend, is an incidental loss and not a motivating factor.” As a result, the court converted defendants’ motion to dismiss into a motion for summary judgment and granted it in full.
Statute of Limitations
Second Circuit
Senderowitz v. Hebrew Acad. For Special Child., Therapeutic Servs., Inc., No. 24-CV-00797 (RER) (PCG), 2026 WL 440526 (E.D.N.Y. Feb. 17, 2026) (Judge Ramón E. Reyes, Jr.). Jennifer Senderowitz worked at the Hebrew Academy for Special Children from 2013 to 2021, and in this action asserts numerous claims based on her alleged mistreatment there. In her complaint she alleges discrimination based on religion, gender, and sexuality, as well as misclassification of her employment status, which deprived her of overtime pay and other benefits. She has brought claims against the school and her former supervisor under Title VII of the Civil Rights Act, the New York State Human Rights Law (NYSHRL), the New York City Human Rights Law (NYCHRL), the Fair Labor Standards Act (FLSA), New York Labor Law (NYLL), and ERISA. Defendants moved to dismiss all claims. The court granted the motion in part and denied it in part. The court dismissed Senderowitz’s FLSA misclassification claim because there is “no independent FLSA claim for ‘misclassification’ separate from a claim for violation of the other benefits FLSA provides – e.g., compensated overtime pay.” Senderowitz did not allege such a loss and thus the claim was a non-starter. The court dismissed Senderowitz’s NYLL claim for lack of standing, ruling that “she neither specifies [a material] harm nor makes a causal connection between a lack of accurate wage statements and any concrete injury in the form of unpaid wages or otherwise.” However, the court allowed Senderowitz’s discrimination and retaliation claims under Title VII, NYSHRL, and NYCHRL to proceed. The court found that she adequately pleaded that she was an employee, her claims were not time-barred, she alleged an adverse employment action in the form of a constructive discharge, and her allegations were sufficient to suggest discriminatory motivation based on Senderowitz’s sexual orientation, gender, and religion. As for ERISA, the court dismissed her claim under that statute as untimely. Senderowitz contended that due to defendants’ “intentional misclassification” of her as an independent contractor, she was denied participation in “retirement plans and other benefits comprised by ERISA that were offered to employees who were not misclassified as independent contractors.” The court construed this as a claim for benefits under ERISA section 502(a)(1)(B), which in New York has a statute of limitation of six years, accruing “upon a clear repudiation by the plan that is known, or should be known, to the plaintiff.” The court examined the contracts between Senderowitz and defendants and ruled that Senderowitz “knew or should have known that she would be denied participation in ERISA retirement or other benefits plans based on the terms of the employment contracts she signed.” Because she signed the contracts in 2013, her claims expired in 2019. Thus, her 2024 ERISA claims were time-barred and the court dismissed them.
Subrogation/Reimbursement Claims
Fourth Circuit
Beacon Sales Acquisition, Inc. v. Rodek, No. 1:26-CV-436 (RDA/LRV), 2026 WL 483601 (E.D. Va. Feb. 20, 2026) (Judge Rossie D. Alson, Jr.). Jeanne A. Rodek is insured under Beacon Sales Acquisition, Inc.’s employee health benefit plan. In 2023 she sustained personal injuries in an automobile accident, which resulted in the plan paying $220,194.09 in medical benefits. Rodek retained a law firm and ultimately obtained a settlement of $2.1 million in her tort case. The plan notified Rodek that it was entitled to reimbursement under the plan, but according to Beacon’s complaint in this matter, Rodek “failed to reimburse the Beacon Plan from the proceeds of the settlement and has thereby breached the terms of the Plan and ERISA.” Beacon alleges that Rodek instructed her lawyers “to disburse the remaining settlement funds directly to her in disregard of the plan’s equitable lien against the proceeds of the settlement.” When Beacon contacted the lawyers’ representative, it was told, “I just spoke with our client, and they have advised they will be disbursing all funds to the client, and you are welcome to sue their 75-year old client.” Beacon took them up on the offer and sued Rodek under ERISA Section 502(a)(3), seeking equitable relief. At issue here was Beacon’s motion for a temporary restraining order (TRO) “to maintain the status quo so that Defendant does not dissipate the identifiable settlement funds while this matter is proceeding.” The court considered the relevant TRO factors – whether the plan had a likelihood of success on the merits, whether irreparable harm would occur without a TRO, the balance of equities, and the public interest – and concluded that a TRO was warranted. The court found that Beacon had a likelihood of success on the merits because the plan’s subrogation terms were express and unambiguous, and it sought to recover specifically identifiable funds within the possession of the beneficiary, as authorized by the Supreme Court in Sereboff v. Mid Atlantic Med. Servs., Inc. The court also determined that irreparable harm would occur if the settlement funds were spent, as the plan would lose its right to equitable relief, noting the dissipation concerns raised by the Supreme Court in Montanile v. Board of Trs. of the Nat’l Elevator Indus. Health Benefit Plan. Furthermore, the balance of equities favored the plan, as a TRO would prevent the dissipation of funds without depriving Rodek of the settlement proceeds, and the public interest supported enforcing reimbursement provisions to preserve plan assets for all participants and beneficiaries. Thus, the court granted the TRO and restrained Rodek “from dispersing, disposing, or otherwise dissipating settlement proceeds…so that less than $220,194.09 remain in trust until such time as the Court can hold a preliminary injunction hearing.” The court required Beacon to post a “nominal” $5,000 bond.
Withdrawal Liability & Unpaid Contributions
Second Circuit
Mar-Can Transp. Co., Inc. v. Local 854 Pension Fund, No. 24-1431, __ F.4th __, 2026 WL 452565 (2d Cir. Feb. 18, 2026) (Before Circuit Judges Lohier, Carney, and Pérez). This dispute between an employer and a multiemployer benefit plan involves the interpretation of 29 U.S.C. § 1415, which addresses an employer’s withdrawal liability in the event of a change in the employees’ labor union. In 2020, employees of Mar-Can, a school bus company, voted to leave Teamsters Local 553 and join the Amalgamated Transit Workers (ATW). This meant that Mar-Can withdrew from the Teamsters-affiliated Local 854 Pension Fund (the Old Plan), and began contributing to an ATW-affiliated plan (the New Plan). This of course triggered withdrawal liability under ERISA under the Old Plan, and meant that the Old Plan had to transfer assets and liabilities regarding the departing employees to the New Plan. Finally, and most importantly for this case, ERISA required the Old Plan to “reduce Mar-Can’s withdrawal liability to account for the assets and liabilities transferred from the Old Plan to the New. Under Section 1415(c), the designated reduction was the amount by which the ‘value of the unfunded vested benefits’ transferred exceeded the ‘value of the assets transferred.’” Mar-Can argued that this calculation should have reduced its withdrawal liability by $1.8 million (“the difference between the $5.5 million in Mar-Can-related liabilities and $3.7 million in Mar-Can-related assets that were transferred from the Old Plan to the New”), while the Old Plan contended that no reduction at all was required. The district court sided with Mar-Can, and the Old Plan appealed. The Second Circuit evaluated the district court’s decision de novo because it involved an interpretation of law. It began with a lengthy and educational history lesson about the purpose of ERISA and its multiemployer amendments, and an explanation of how withdrawal liability works. The court noted that “[t]his case presents a novel legal question in this and other Circuits, despite the decades that have passed since the MPPAA’s enactment: to what extent should a plan reduce an employer’s withdrawal liability if the employer withdrew from the plan because its employees have changed their collective bargaining representative? Or, in statutory terms, what is the correct construction of the phrase ‘unfunded vested benefits’ as used in Section 1415(c)?” Mar-Can argued that this meant “the total amount of liabilities transferred by the Old Plan to the New Plan,” which was “fair, because by offloading to the New Plan more liabilities than assets, the Old Plan has effectively recouped the amount of withdrawal liability that it would otherwise be entitled to collect from Mar-Can.” The Old Plan disagreed, arguing that the term “unfunded vested benefits” did not include transferred assets, and thus it was required to subtract those assets a second time in calculating withdrawal liability. The Second Circuit ruled that the term “unfunded vested benefits” was ambiguous, but given the statute’s text, structure, and legislative purpose, Mar-Can had the better reading for two reasons. First, the Old Plan’s interpretation “would create a windfall for the Old Plan and unfairly penalize employers that withdrew from a plan involuntarily because of a change in bargaining representative.” Indeed, it “would have functioned simply to double – not merely account for – the Old Plan’s net gain from the transfers… Given the MPPAA’s overarching aim to ‘ensure[ ] that both plans are funded and avoid[ ] the possibility of double payments by the employer’…we find it implausible that Congress could have intended this outcome.” Furthermore, the court noted that the Old Plan’s interpretation “would treat employers that voluntarily withdraw from a plan more favorably than those that involuntarily withdraw because of a change of bargaining representative,” which was “even more implausible.” Second, Mar-Can’s interpretation was “more consistent with other parts of Section 1415,” while the Old Plan’s interpretation created incongruities with those parts and even “undermined” the part which set a “floor” for withdrawal liability. As a result, the Second Circuit adopted Mar-Can’s interpretation of the statute and affirmed the district court’s ruling.