This week, we just have a handful of ERISA decisions to report on, and no case of the week. It seems all the excitement is at the polls.

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

 Attorneys’ Fees

Second Circuit

Caccavo v. Reliance Standard Life Ins. Co., No. 19-CV-6025 (KMW), 2022 WL 16631101 (S.D.N.Y. Nov. 2, 2022) (Judge Kimba M. Wood). After prevailing in a lawsuit brought against it challenging its decision to reduce an insured’s disability benefits, defendant Reliance Standard Life Insurance Company concurrently moved in the Second Circuit and in the district court for an award of attorney’s fees and costs. The Second Circuit affirmed the summary judgment order in Reliance’s favor but denied its motion for fees pursuant to ERISA Section 502(g)(1). Given the court of appeals’ denial, plaintiff not only opposed an award of fees in the district court, but also argued that res judicata precludes Reliance from bringing its fee motion. The court disagreed with plaintiff’s preclusion argument, finding that the two motions did not arise from the same cause of action because the work performed during the two stages of litigation were distinct. The court thus evaluated the motion on its merits. To begin, the court was satisfied that Reliance’s summary judgment win, upheld in the Second Circuit, constituted some degree of success on the merits for Reliance to be eligible for an award of fees. Nevertheless, the court was adamant that the Chambless factors, which “very frequently suggest that attorney’s fees should not be charged against ERISA plaintiffs,” weighed against an award in this case. The court did not agree with Reliance that plaintiff acted in bad faith by bringing his action, concluding, to the contrary, that plaintiff had a colorable claim despite not ultimately prevailing. Furthermore, the court was unwilling to deter or discourage valid claims brought by plan participants by granting the motion. Finally, the court declined to comment on the reasonableness of the requested fees, having already concluded that Reliance’s motion for attorney’s fees and costs should be denied.

Ninth Circuit

San Jose Healthcare Sys. v. Stationary Eng’rs Local 39 Pension Tr. Fund, No. 21-cv-09974-SVK, 2022 WL 16637995 (N.D. Cal. Nov. 2, 2022) (Magistrate Judge Susan Van Keulen). San Jose Healthcare System is an acute care hospital in California that commenced this action in 2021, moving to vacate an arbitration award assessed against it for unpaid contributions for its employees in an ERISA-governed multiemployer pension plan. On June 15, 2022, the court issued an order granting San Jose Healthcare’s motion to vacate and denying the pension fund’s motion to confirm the arbitration award. Before the court was a motion filed by San Jose Healthcare for attorney’s fees and costs brought under ERISA Section 502(g)(1) and LMRA. As the court stated, the “only issue in this litigation was whether the arbitration award should be vacated or confirmed, and [San Jose Healthcare] won on that issue.” Accordingly, the court concluded that the employer met the threshold requirement of success on the merits to be eligible for an award of fees under ERISA. Regardless, the court reminded itself of “ERISA’s purposes that should be liberally construed in favor of protecting participants in employee benefits plans,” and accordingly assessed the Hummell factors as weighing against an award. Because the court found the pension fund did not act in bad faith, the court declined to award San Jose Healthcare fees under both ERISA and LMRA and so denied the motion.

ERISA Preemption

Seventh Circuit

State of Illinois ex rel. Miller v. Am. Nat’l Ins. Co., No. 3:22-cv-00501-GCS, 2022 WL 16553189 (S.D. Ill. Oct. 31, 2022) (Judge Gilbert C. Sison). Plaintiff Zeb Miller sued American National Insurance Company, Standard Life & Accident Insurance Co., American National Life Insurance Company of Texas, and Garden State Life Insurance Company on behalf of the State of Illinois under the Illinois False Claims Act alleging that defendants defrauded the state of millions of dollars of premium tax revenue by failing to pay annual state privilege taxes on the premiums collected from employers sponsoring ERISA-governed employee benefit plans, and by failing to report stop-loss insurance premiums. Defendants removed the complaint, which was brought in state court, to the federal district court of the Southern District of Illinois alleging the action against them was completely preempted by ERISA. Plaintiff moved to remand. Plaintiff argued the court lacks subject matter jurisdiction and ERISA does not preempt the action because the Illinois False Claims Act is a state law that regulates insurance, meaning the claim falls under ERISA’s savings clause. In response, the insurance companies argued that the claim relates to and is connected with the administration of self-funded ERISA plans and that the privilege tax does not fall under the savings clause. The court decided that it didn’t need to reach a conclusion on the applicability of the savings clause because defendants were “operating under the conflict preemption provisions,” which the court stated, “may serve as a defense to Plaintiff’s [Illinois False Claims Act] claim, [but] does not serve as the basis for federal jurisdiction.” Concluding that it also lacked diversity jurisdiction, the court granted the motion to remand. Nevertheless, the court held that defendants had an objectively reasonable basis for removal and so declined to award plaintiff attorneys’ fees and costs.

Ninth Circuit

California Surgery Ctr. v. UnitedHealthcare, Inc., No. CV 19-02309 DDP (AFMx), 2022 WL 16700377 (C.D. Cal. Nov. 3, 2022) (Judge Dean D. Pregerson). Healthcare providers commenced this lawsuit against UnitedHealthcare, Inc. and UnitedHealthcare Insurance Co., asserting state law causes of action to seek payment of medical bills for treatments and surgeries they provided to an insured patient. Defendants moved to dismiss plaintiffs’ fifth amended complaint, arguing the claims are preempted by ERISA. Central to the providers’ claim was the fact that United terminated the coverage of the patient, which plaintiffs argued they did to avoid paying the claims at issue. Because of this detail, plaintiffs argued that there are factual questions that need to be answered, including whether the termination of the patient’s coverage was proper, whether United had the ability to terminate the coverage, and whether the patient was insured during the relevant period. The court, however, concluded that the answers to the questions could not be reached without interpreting the ERISA plan, and the state law claims therefore have significant connections to the plan itself. Accordingly, the court agreed with the United defendants that the claims were preempted. Thus, the court granted the motion to dismiss the fifth amended complaint and did so with prejudice.

Tenth Circuit

IHC Health Servs. v. Meritain Health Inc., No. 2:19-cv-861, 2022 WL 16701908 (D. Utah Nov. 3, 2022) (Judge Howard C. Nielson, Jr.). A healthcare provider, IHC Health Services, Inc. d/b/a Primary Children’s Medical Center, sued Meritain Health, Inc., a subsidiary of Aetna, asserting claims for unjust enrichment and breach of contract in connection with unpaid medical bills for an insured patient treated at the hospital in 2013. The parties filed cross-motions for summary judgment. Meritain argued first that the state law claims were preempted by ERISA. The court disagreed. Because this action does not affect the relations among the primary ERISA entities and because IHC Health is asserting a claim for damages for a breach of the contract between it and Anthem, the court held the case did not fall under the ERISA preemption umbrella. Having decided this initial matter, the court proceeded to the merits of IHC’s breach of contract claim and concluded that it satisfied all the elements of the claim under Utah law. Accordingly, the court granted summary judgment in favor of IHC on its breach of contract claim and awarded damages and interest. Finally, the court awarded summary judgment in favor of Meritain on the unjust enrichment claim, which requires the absence of an enforceable contract and thus was pled in the alternative to IHC’s breach of contract claim.

Disability Benefit Claims

Ninth Circuit

Cameron v. Sun Life Assurance Co. of Can., No. 2:21-cv-02092 JLS (AFM), 2022 WL 16635235 (C.D. Cal. Nov. 2, 2022) (Judge Josephine L. Staton). Plaintiff Duane Cameron worked as a radiology administrator for USC Verdugo Hills Hospital until a series of cardiological conditions left him unable to continue working and he applied for disability benefits. In this action Mr. Cameron challenged defendant Sun Life Assurance Company of Canada’s decision to terminate his long-term disability benefits. Upon de novo review of the administrative record the court concluded that Mr. Cameron was disabled as defined by his policy from the date of termination until January 29, 2020. The court reasoned that the medical evidence and the conclusions of Mr. Cameron’s treating physicians supported this conclusion, especially considering the high-stress environment of his hospital workplace and its effect on his heart. However, the court went on to find that Mr. Cameron, who would suffer a heart attack and undergo a coronary angioplasty in early March 2020, did not qualify for disability benefits beyond January 29, 2020, because Mr. Cameron’s physician, who examined Mr. Cameron on that date, “gave no indication he believed Plaintiff continued to be disabled” in his visit notes. Therefore, despite his heart attack a month later, the court concluded that in “February 2020, there is no evidence that Plaintiff…continued to suffer cardiac-related issues.” Having drawn these conclusions, the court awarded Mr. Cameron benefits through January 29, 2020, as well as prejudgment interest, but held off awarding costs or attorney’s fees until briefing has been submitted.

Life Insurance & AD&D Benefit Claims

Fifth Circuit

Rushing v. Sun Life Assurance Co. of Can., No. 22-cv-1454, 2022 WL 16579789 (W.D. La. Nov. 1, 2022) (Magistrate Judge Mark L. Hornsby). Plaintiff Katie Rushing brought suit against Sun Life Assurance Company of Canada after her claim for benefits under her late husband’s accidental death and dismemberment policy was denied. Sun Life denied the claim on the grounds that his death, the result of a car crash, did not meet the policy’s definition of an accident. After this lawsuit challenging the denial was brought, Sun Life switched its grounds for denial, arguing that the results of Mr. Rushing’s toxicology report provided additional grounds for denial. Sun Life moved to stay and to remand for administrative review on this new basis for denying the claim. Ms. Rushing opposed the motion. She argued that Sun Life had the toxicology report when it conducted the administrative review process and that it should not be allowed to get a second chance at denying the claim on new grounds. The court agreed with Ms. Rushing, stating that it did not wish to give Sun Life an opportunity to improve its situation after the fact. “Remand may be appropriate to provide a remedy to a claimant who has been denied a full and fair opportunity to address an issue during the administrative process, but it is not appropriate for the plan or insurer to wait until a case is in federal court and then seek remand to build a new basis for denial that it reasonably could have developed during the administrative process.” Defendant’s motion was thus denied.

Pleading Issues & Procedure

Ninth Circuit

Johnson v. Carpenters of W. Wash. Bd. of Trs., No. C22-1079-JCC, 2022 WL 16699170 (W.D. Wash. Nov. 3, 2022) (Judge John C. Coughenour). Union carpenters in Washington, Idaho, Montana, and Wyoming who were participants in two collectively bargained multiemployer plans, the Carpenters Individual Account Pension Plan of Western Washington, and the Carpenters Retirement Plan of Western Washington, filed this putative ERISA class action challenging the management of plans by defendants, the Carpenters of Western Washington Board of Trustees, Callan LLC, and individual board members. Specifically, plaintiffs allege that these fiduciaries invested “in highly speculative indexes, which incurred over $250 million in losses.” The individual board member defendants moved for declaratory judgment and indemnification, seeking to establish that the board is responsible for indemnifying them in this action. The board for its part sought to stay this judgment or to limit the scope of indemnification. Plaintiffs opposed the indemnification request and additionally moved to strike the indemnification claims in individual board member defendants’ answers. In this decision the court found the matter could be decided without staying the action and issued this order granting the motion for declaratory judgment and indemnification and denying plaintiffs’ motion to strike. The court held that the indemnification provisions within the trust agreements require the trust to indemnify the individual trustees and this action falls within the indemnification clauses’ scope. The court was also satisfied that the indemnification provisions and their terms were consistent with ERISA, and clarified a limitation within the provisions, holding that should the court issue a final decree finding the individual trustees personally liable for breaching their fiduciary duties, the trustees would be required to repay any indemnification payment made to them by the board. Finally, the court stated that plaintiffs’ opposition and motion to strike failed for lack of standing. The court concluded that under Thole plaintiffs did not have a “personal stake in the outcome” of the motion for indemnification or an injury in fact to satisfy the standard for standing.