Kramer v. American Elec. Power Exec. Severance Plan, No. 24-3174, __ F.4th __, 2025 WL 444923 (6th Cir. Feb. 10, 2025) (Before Circuit Judges Cole, Mathis, and Bloomekatz)

Your ERISA Watch is short-staffed this week, so we won’t be providing our usual comprehensive coverage of all the week’s ERISA-related decisions. Instead, we are highlighting one published decision from the Sixth Circuit which addresses a smorgasbord of issues. On each issue plaintiff Derek Kramer attempted to push the envelope on established ERISA jurisprudence, but the Sixth Circuit would have none of it: “We reject Kramer’s request to change the rules.”

But first, some background. Kramer was hired in 2018 as the Vice President and Chief Digital Officer for American Electric Power. He did not last long; the company terminated him in 2020. During that time, he signed up for the company’s Executive Severance Plan.

Kramer submitted a claim for benefits under the plan when he was terminated. AEP denied his claim, contending that it had terminated him for cause, which under the plan rendered him ineligible for benefits. Specifically, AEP contended that Kramer had repeatedly approved his assistant’s use of a company credit card to charge personal expenses in violation of company policy. AEP also contended that Kramer had remotely wiped his company phone when it tried to investigate this charge.

When AEP denied his appeal, Kramer filed this action. The district court concluded that AEP was entitled to judgment because AEP “offered a reasonable explanation, based on evidence, for their conclusion that Mr. Kramer was terminated for Cause. As such, the adverse benefit determination was neither arbitrary nor capricious.” (Your ERISA Watch covered this decision in its February 14, 2024 edition.)

Along the way, the district court denied Kramer’s request for a jury trial (which we covered in our May 25, 2022 edition), and ruled that the plan was a top hat plan and thus not subject to the fiduciary exception to the attorney-client privilege (which we covered in our April 19, 2023 and August 23, 2023 editions).

Kramer appealed to the Sixth Circuit and raised a number of issues, arguing that the district court erred by “(1) limiting the scope of discovery for his ERISA denial-of-benefits claim; (2) striking [his] jury-trial demand; and (3) granting judgment to AEP and the Plan.”

Kramer made two discovery-related arguments. The first was that he was entitled to communications between AEP and its lawyers because of ERISA’s fiduciary exception to the attorney-client privilege. This exception, which the federal courts have borrowed from trust law, means that a plan fiduciary “must make available to the beneficiary, upon request, any communications with an attorney that are intended to assist in the administration of the plan,” thus trumping the standard privilege.

However, the fiduciary exception only applies if the plan at issue is subject to ERISA’s fiduciary requirements. AEP contended, and the district court agreed, that the severance plan was a top hat plan, i.e., an unfunded plan designed to provide deferred compensation to a select group of managers or highly paid employees. Such plans are exempt from ERISA’s fiduciary requirements.

The parties agreed that the plan was unfunded and was for highly paid employees such as Kramer, so the issue turned on whether the plan provided “deferred compensation.” Kramer contended that the courts should look to tax law in determining the meaning of this term, but the Sixth Circuit stated that the provisions cited by Kramer were not helpful in defining the term. Furthermore, while tax law definitions and regulations “may be useful for interpreting some ERISA provisions…that does not mean ERISA incorporates the entire legislative and regulatory scheme of the Internal Revenue Code.” In short, the court agreed with the district court that the plan provided “deferred compensation,” was not subject to ERISA’s fiduciary rules, and thus the fiduciary exception to the attorney-client privilege did not apply.

Kramer’s second discovery argument was that he should have been entitled to “full discovery,” i.e., discovery beyond the administrative record compiled by AEP in ruling on his benefit claim. Below, the magistrate judge who ruled on Kramer’s discovery motion rejected this argument, although the judge did allow him some discovery beyond the administrative record, specifically “discovery into his allegations of bias and prejudice in the administrative process.” However, the Sixth Circuit ruled that Kramer had waived any arguments that he was entitled to more than this by not objecting to the magistrate judge’s ruling.

Next, the Sixth Circuit addressed whether Kramer was entitled to a jury. Kramer argued that because ERISA contains a cause of action for equitable relief (29 U.S.C. § 1132(a)(3)), and his claim was not raised under that section (under 29 U.S.C. § 1132(a)(1)(B) instead), his claim must be one for legal relief, which allows for a jury. The Sixth Circuit noted that it had already held on more than one occasion that claims like Kramer’s, brought under § 1132(a)(1)(B), are equitable in nature and do not allow for trial by jury. Furthermore, these decisions were not dicta as Kramer contended.

Kramer argued that Supreme Court precedent, namely CIGNA Corp. v. Amara and Montanile v. Board of Trustees of Nat’l Elevator Industry Health Benefit Plan, had “implicitly abrogated these precedents.” However, the Sixth Circuit observed that neither case discussed the right to a jury, and ruled that Kramer’s interpretation of these cases could not be squared with the Sixth Circuit’s prior opinions: “[U]ndoing our precedent based on mere implication – and one that is not clear – would stretch Amara and Montanile too far.”

Finally, the Sixth Circuit reached the merits of the case. Kramer raised four arguments. First, he reiterated his discovery argument, but because the court had already ruled that he was not entitled to the discovery he sought, this argument failed on the merits as well.

Second, Kramer argued that the district court “violated the party-presentation principle by construing the dispositive motion as a motion for judgment on the administrative record, rather than a Rule 56 motion for summary judgment.” The Sixth Circuit disagreed, noting that it had previously decided in Wilkins v. Baptist Healthcare Sys., Inc. that Rule 56 was an inappropriate vehicle for deciding ERISA benefit cases. Furthermore, the district court properly limited itself to the administrative record and used the correct standard of review. Thus, “[o]nly the title – not the substance – of the dispositive motion” changed, which caused no prejudice and did not violate the party-presentation principle.

Third, Kramer argued that the district court erred by following the established procedures for adjudicating ERISA benefit cases previously set forth in Wilkins. Kramer contended that these procedures had been implicitly invalidated by the Supreme Court’s 2022 decision in United States v. Tsarnaev. The Sixth Circuit disagreed, stating that (1) Tsarnaev was not an ERISA case, (2) the rules prescribed by Wilkins were consistent with the Supreme Court’s decision in Firestone Tire & Rubber Co. v. Bruch, and (3) “[t]o the extent that Tsarnaev and Firestone are ‘in tension,’ as one of our colleagues has intimated…the Supreme Court, not this court, must resolve that tension. We must follow existing precedent.”

Fourth, and finally, Kramer argued that he had created a genuine dispute of fact under Rule 56 which precluded summary judgment below. The Sixth Circuit quickly disposed of this contention, reiterating that Rule 56 “does not apply to the adjudication of ERISA denial-of-benefits claims.”

Ultimately, the Sixth Circuit concluded that Kramer “failed to show that the denial of benefits was arbitrary and capricious.” The court emphasized AEP’s audit reports and affidavits, as well as evidence showing that Kramer failed to cooperate with AEP’s investigation, in ruling that substantial evidence supported AEP’s finding that Kramer’s termination was for cause.

In the end, none of Kramer’s long-shot challenges to the way courts adjudicate ERISA benefit cases in the Sixth Circuit paid off and the judgment against him was affirmed. It looks like the wisdom of his arguments will have to be addressed by either the Supreme Court or Congress.

There is something for everyone in this edition of Your ERISA Watch, as the federal courts touched on seemingly every facet of ERISA in the past week.

There are decisions on the merits in cases seeking medical benefits (K.A. v. United Healthcare Ins. Co. and K.K. v. Premera Blue Cross), disability benefits (Smith v. Cox Enterprs.), and severance benefits (Hoff v. Amended & Restated Anadarko Petroleum Corp.).

There are cases regarding the sufficiency of breach of fiduciary duty allegations (Cure v. Factory Mut. Ins. Co. and Hoye v. CHA Gen. Servs., both out of the District of Massachusetts with similar results), and a case explicitly finding a breach of fiduciary duty (or, more accurately, theft, to the tune of $5.7 million in Snow Shoe Refractories LLC v. Jumper).

We also had a slew of procedural orders, including rulings on contractual limitation periods (Semper v. Massachusetts Gen. Brigham), the release of claims by severance agreement (Miller v. Campbell Soup Co. Ret. & Pension Plan Admin Comm.), attorney’s fees (Campbell v. United Healthcare Ins. Co.), who is a proper defendant under COBRA (Forbush v. NTI-CA Inc.), and a class certification ruling (Harmon v. Shell Oil Co.).

We even had cases involving the hot topics of when claims can be compelled into arbitration (Best v. James) and when a plan administrator’s use of forfeitures violates its fiduciary duties (Hutchins v. HP Inc.).

And of course, what edition of Your ERISA Watch would be complete without a good old preemption discussion (Rooney v. Leerink). We hope you find something educational or entertaining below. We’ll be back next week!

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

Arbitration

Sixth Circuit

Best v. James, No. 3:20-cv-299-RGJ, 2025 WL 373451 (W.D. Ky. Feb. 3, 2025) (Judge Rebecca Grady Jennings). On behalf of a proposed class, plaintiffs Nathan Best, Matthew Chmielewski, and Jay Hicks initiated this ERISA action against defendants ISCO Industries, Inc., James Kirchdorfer, and Mark Kirchdorfer alleging claims of fiduciary breach and engaging in a prohibited transaction in connection with ISCO’s Employee Stock Ownership Plan (“ESOP”). Defendants responded to the complaint by moving to dismiss it and to compel individual arbitration. The court granted this motion on September 20, 2022, finding that plaintiffs signed valid individual arbitration agreements and ordered their claims to arbitration. In the years since the court’s decision, arbitration has become a big topic in the ERISA world. Relevant here, in 2024, the Sixth Circuit weighed in on the issue with Parker v. Tenneco, Inc., 114 F.4th 786. Plaintiffs moved for reconsideration of the court’s dismissal and arbitration decision in light of Parker. “Plaintiffs argue that the Sixth Circuit has issued binding precedent making ‘plain that the claims brought on behalf of an ERISA plan – like those here – cannot be forced into individual arbitration.’” The court agreed that Parker represents a change in controlling law which required it to reconsider its previous order. It held that under Parker, “the individual arbitration agreements in both the employment agreement and ESOP are unenforceable because if they were enforceable, they would bar effective vindication of statutory rights.” Accordingly, the court granted plaintiffs’ motion to reconsider and vacated its prior order granting dismissal and ordering arbitration of the claims. Briefly, the court also addressed defendants’ prior motion to dismiss for failure to state a claim, which it had not done previously in light of its arbitration decision. It concluded that plaintiffs’ complaint plausibly alleges both a prohibited transaction and fiduciary breaches, meeting all of the elements set forth for each claim. The court was thus confident that plaintiffs’ claims meet Rule 12(b)(6)’s plausibility standard and denied defendants’ motion to dismiss.

Attorneys’ Fees

Ninth Circuit

Campbell v. United Healthcare Ins. Co., No. 2:23-cv-08823-RGK-E, 2025 WL 409038 (C.D. Cal. Jan. 28, 2025) (Judge R. Gary Klausner). This is an ERISA healthcare case brought by plaintiff Leah Campbell against United Healthcare Insurance Company and Insperity Holdings, Inc. After the case proceeded to a court trial on the briefs, Ms. Campbell succeeded in part on her claim for failure to pay benefits, although her failure to provide plan documents claim was ultimately unsuccessful. The court accordingly remanded the claim back to defendants, who then reevaluated it and paid a much higher rate than the original payment. Both parties then moved for attorneys’ fees. On October 25, 2024, the court denied both motions. In that decision the court found that Ms. Campbell was entitled to fees but that she failed to provide reliable and legible billing records. “Specifically, the description of each time entry was redacted in its entirety, making it impossible to determine what tasks were completed, and numerous entries contained basic arithmetic errors. Accordingly, the Court ordered Plaintiff to file a renewed motion setting forth the number of hours expended and addressing these deficiencies.” Ms. Campbell filed a renewed motion for attorneys’ fees on November 8, 2024. Once again the court denied the renewed motion without prejudice, because although she removed many of the redactions and corrected the arithmetic errors, she appeared to have altered the descriptions of certain time entries without the court’s permission, which cast “doubt upon the accuracy and reliability of the billing records.” Ms. Campbell moved for reconsideration of that order. The court denied her motion for reconsideration here. The court did not seriously entertain Ms. Campbell’s arguments that reconsideration was warranted by a material difference in fact or law because she “‘did not understand that the Court would only accept the original timesheets in support of the motion, and there was no way from looking at the Court’s order to understand such a limitation and so ‘in the exercise of reasonable diligence could not have known’ that it was not complying with the Court’s order’ by submitting altered billing records.” Nor was it moved by her second argument that reconsideration was warranted due to the absence of any special circumstances warranting a denial of her fee motion which she contends represents a manifest showing of failure to consider material facts presented to the court. The court reminded Ms. Campbell of the well-established principle “that a party must provide reliable records to obtain attorneys’ fees, and failure to do so warrants outright denial.” Based on the foregoing, the court denied Ms. Campbell’s motion for reconsideration.

Breach of Fiduciary Duty

First Circuit

Cure v. Factory Mut. Ins. Co., No. 1:23-cv-12399-JEK, 2025 WL 360622 (D. Mass. Jan. 31, 2025) (Judge Julia E. Kobick). Two former employees of the insurance company Factory Mutual Insurance Company bring this action on behalf of a putative class of participants and beneficiaries of the FM Global 401(k) Savings Plan under ERISA alleging its fiduciaries have violated their duties of prudence and monitoring by improperly allowing the plan to pay excessive recordkeeping and administrative fees and imprudently selecting and retaining unperforming investments. Defendants moved to dismiss plaintiffs’ complaint. The court first addressed the fee claims. “The plaintiffs adequately state an imprudence claim against the Retirement Committee for excessive recordkeeping and administrative fees. According to the complaint, the Retirement Committee ‘could have obtained the materially same total [recordkeeping and administrative] services for less’ had it properly solicited bids from competing service providers or effectively leveraged its ‘massive size’ to negotiate lower fees. As a result, between 2017 and 2022, Plan participants allegedly paid an average annual recordkeeping and administrative fee of $120, while comparator plan participants paid approximately $46 each. This amounts to more than a 139% premium per Plan participant since October 17, 2017. These allegations are, as this Court has repeatedly held, sufficient to state a plausible claim.” The court rejected defendants’ argument that plaintiffs inaccurately calculated the plan’s fees, stating that questions over whether plaintiffs’ calculations are sound can only be addressed after discovery. Moreover, the court declined to adopt out-of-circuit principles regarding a requirement to allege meaningful benchmarks, agreeing instead with plaintiffs that it is inappropriate to do so at the pleading stage. Accordingly, the court denied the motion to dismiss with regard to the fee claims. It was more of a mixed picture when it came to the allegations of underperforming investments. Splitting plaintiffs’ allegations in two, the court separately addressed their fiduciary breach claims relating to the American Funds Europacific Growth Fund R6 and the suite of Fidelity Freeform target date funds. The court could not conclude that the inclusion and retention of the former was plausibly imprudent, but it found the allegations of imprudence around the latter plausible. The material difference to the court was plaintiffs’ failure to include any evidence of the American Funds Europacific Growth Fund’s underperformance during the class period or to provide any information that the Committee would have been aware of over this time to indicate imprudence “from the outset, without the benefit of hindsight.” In contrast, the complaint was full of these details with regard to the Fidelity Freeform Funds, and the court was therefore confident that plaintiffs adequately alleged that the offering and retention of this suite of funds was imprudent. As a result, the court granted the motion to dismiss with regard to the imprudence and failure to monitor claims relating to the American Funds Europacific Growth Fund but otherwise denied the motion to dismiss.

Hoye v. CHA Gen. Servs., No. 23-13238-MJJ, 2025 WL 405081 (D. Mass. Feb. 5, 2025) (Judge Myong Jin Joun). Plaintiffs Susan J. Hoye and Leonardo Jimenez are former employees of Cambridge Health. In this putative fiduciary breach fee case plaintiffs allege that the fiduciaries of the Cambridge Health Alliance Partnership 403(b) Plan violated their duties under ERISA by mismanaging the plan. As a result of this alleged mismanagement plaintiffs contend that the participants of the plan paid exorbitant direct and indirect recordkeeping, administrative, revenue sharing, and investment fund fees which resulted in significant reductions in their retirement accounts. They bring their suit pursuant to ERISA Sections 409 and 502. Defendants moved to dismiss the complaint, challenging both plaintiffs’ standing and the sufficiency of their claims. Defendants’ motion to dismiss was denied by the court in this decision. To begin, the court disagreed with defendants’ argument that plaintiffs lacked standing because they did not invest in the challenged funds. The court quoted from another decision from the District of Massachusetts and agreed with its principle “that for the purpose of constitutional standing, a plaintiff need not have invested in each fund at issue but must merely plead an injury implicating defendants’ fund management practices.” It added, “the crux of the standing analysis is not whether the plaintiff invested in certain challenged funds, but whether the plan – in which the plaintiff has invested – suffered an injury implicating the defendant’s conduct in managing all the funds as a group.” Moreover, the allegations were not isolated to the challenged funds but take issue with fiduciary mismanagement more broadly. Accordingly, the court was confident that plaintiffs established constitutional standing to challenge the plan’s investments. The decision then assessed the recordkeeping fee claims. Once again, the court was unmoved by defendants’ reasons for dismissal. They argued that plaintiffs could not show that comparable plans received similar services that lower costs, and that the comparators they offered were not meaningful benchmarks. The court held that these were questions of fact which cannot be resolved at this stage, particularly as inferences must be drawn in favor of the nonmoving party. “I have no basis at this stage to doubt the plausibility of these allegations,” the court said. When it read the complaint as a whole, in the light most favorable to the plaintiffs, the court found that the plaintiffs had plausibly alleged that defendants breached their fiduciary duty of prudence relative to the plan’s recordkeeping fees. Finally, because the court declined to dismiss the underlying fiduciary breach claims, it likewise denied the motion to dismiss the derivative failure to monitor claim.

Third Circuit

Snow Shoe Refractories LLC v. Jumper, No. 4:16-CV-02116, 2025 WL 409665 (M.D. Pa. Feb. 5, 2025) (Judge Matthew W. Brann). Three separate cases developed after defendant John Jumper committed securities fraud by misappropriating approximately $5.7 million from an ERISA-governed employee pension plan. The first was a criminal action brought by the U.S. Attorney for the Middle District of Pennsylvania alleging counts of wire fraud, embezzlement, theft from an employee benefit pension plan, and false statement/concealment of facts in an employee benefit plan records and reports. The second was a Securities and Exchange Commission (“SEC”) lawsuit brought in the Western District of Tennessee alleging the same fraudulent activities. And the third is the present action brought by the administrator of the pension plan, plaintiff Snow Shoe Refractories LLC, alleging a claim for prohibited transaction under ERISA Section 1106(a)(1)(D), as well as state law causes of action for conversion and unjust enrichment. Snow Shoe Refractories moved for summary judgment on all three of its claims against Mr. Jumper. Mr. Jumper did not file a brief in opposition. As an initial matter, the court took judicial notice of the judgments entered against Mr. Jumper in both his criminal case and the SEC lawsuit against him. In the criminal action Mr. Jumper pled guilty to wire fraud. In the SEC case a final judgment was issued against him enjoining him from violating various subsections of the Securities Exchange Act of 1934 and holding him liable for disgorgement of $5.7 million, plus prejudgment interest in the amount of $726,758.79, representing the profits he gained as a result of the fraudulent conduct alleged. Given the outcomes of the two other actions, the court granted plaintiff’s motion for judgment against Mr. Jumper. The court began with the ERISA cause of action brought under Section 1106(a), which the court called a breach of fiduciary duty claim, rather than a prohibited transaction claim. The court concluded that Mr. Jumper acted as a de facto fiduciary by pretending to be one through fraudulent instruments and by exercising discretionary authority and control over the plan assets and directing the investments. “Having established that Jumper was a fiduciary notwithstanding that his transactions were solely accomplished through forgery and fraud, the remaining elements of the breach of fiduciary duty claim are simple to resolve. Jumper caused the [plan] to engage in several transactions using plan assets…These investments were for the benefit of Jumper, himself a party in interest due to his fiduciary status, because they transferred money to companies he held ownership interest in or owned outright…And as Jumper’s guilty plea demonstrates, he knew that he was using plan assets for his own benefit.” The court further observed that these “investments” were not discharged for the exclusive purpose of providing benefits to the participants and beneficiaries of the plan. The court accordingly entered summary judgment in favor of the plan on its ERISA claim against Mr. Jumper. It did so for the plan’s two state law claims as well, concluding that the undisputed facts satisfy the elements of each claim. Finally, the court deferred ruling on the issues of damages and attorneys’ fees until it has further briefing on each. 

Ninth Circuit

Hutchins v. HP Inc., No. 5:23-cv-05875-BLF, 2025 WL 404594 (N.D. Cal. Feb. 5, 2025) (Judge Beth Labson Freeman). In this action plaintiff Paul Hutchins alleges that the technology company HP, Inc. has breached its fiduciary duties under ERISA and engaged in self-dealing when it decided to use forfeited employer contributions to reduce its ongoing employer contributions rather than to pay administrative costs. The court has already dismissed this action. (A summary of its June 17, 2024 order granting HP’s motion to dismiss without prejudice can be found in Your ERISA Watch’s June 26, 2024 edition.) Mr. Hutchins amended his complaint, and HP moved for dismissal again. The court granted the motion to dismiss the amended complaint, and this time did so without leave to amend. “Plaintiff’s theory,” the court wrote, “is that, in broadly stating that forfeitures could be used ‘to reduce employer contributions, to restore benefits previously forfeited, to pay Plan expenses, or for any other permitted use,’…HP effectively intended to create an additional benefit: that in any year in which there were forfeitures, those forfeitures would first be used to reduce administrative expenses for individual Plan participants.” In the court’s view the plan doesn’t require this “categorial increase in benefits provided under the Plan,” and ERISA doesn’t either. To the court, the basic problem with plaintiff’s amended complaint “is that the facts as alleged do not invite a plausible inference of wrongdoing on HP’s part.” Furthermore, the court agreed with HP that “Plaintiff’s arguments ignore ‘decades of settled law’ allowing defined contribution plans to use forfeitures exactly as HP did.” The court also noted the proposed rule from the Treasury Department blessing this use of forfeitures. While this proposed regulation is not in effect, the court stated that it “helps to illustrate the difficulty with Plaintiff’s theory: Plaintiff effectively asserts that the general fiduciary provision of ERISA abrogates these long-settled rules regarding the use of forfeitures in defined contribution plans.” Accordingly, the court concluded that it could not plausibly infer the alleged wrongdoing at the center of this litigation and therefore granted the motion to dismiss, with prejudice.

Class Actions

Fifth Circuit

Harmon v. Shell Oil Co., No. 3:20-cv-21, 2025 WL 366296 (S.D. Tex. Feb. 3, 2025) (Judge Jeffrey Vincent Brown). This class action involves allegations of fiduciary breaches and prohibited transactions brought by the participants of the Shell Oil Company’s 401(k) plan. The court assigned all pre-trial matters in the case to Magistrate Judge Andrew M. Edison. Judge Edison recommended the court certify plaintiffs’ proposed class of all participants and beneficiaries of the Shell Provident Fund 401(k) Plan, and that it deny both parties’ motions for summary judgment and instead resolve all disputes in a bench trial. Defendants opposed the Magistrate’s report and recommendation that the court grant plaintiffs’ motion to certify the class, as well as his recommendation that the court deny their motion for summary judgment. Plaintiffs meanwhile objected to Judge Edison’s summary judgment recommendation as to their cross-motion for partial summary judgment. The court reviewed the parties’ objections to the identified portions of the Magistrate’s report de novo and ultimately concluded that it agreed with the positions of the Magistrate. Accordingly, the court adopted the Magistrate’s report and recommendations as the opinions of the court. Therefore, the court formally certified the class, appointed the class representatives and class counsel, and denied each party’s motion for summary judgment.

Disability Benefit Claims

Fourth Circuit

Smith v. Cox Enters., No. 22-2173, __ F. 4th __, 2025 WL 379876 (4th Cir. Feb. 4, 2025) (Before Circuit Judges Wynn and Rushing, and District Judge Lewis). On September 30, 2022, the district court issued a written opinion granting summary judgment to the Cox Enterprises, Inc. Welfare Benefits Plan in this ERISA disability benefit action brought by plaintiff-appellant Jeremy Smith. In that decision the court held that the plan did not abuse its discretion because it provided Mr. Smith a full and fair review and its decision to terminate the benefits he had been receiving for the past seven years due to lower back radiculopathy was supported by substantial evidence within the administrative record. Mr. Smith appealed this unfavorable decision, and in this order the Fourth Circuit reversed and remanded. The court of appeals agreed with Mr. Smith that the plan violated ERISA’s requirement that plan administrators set forth their basis for disagreeing with a disability determination regarding the claimant made by the Social Security Administration. The Fourth Circuit found that the plan failed to discuss a doctor’s consultative evaluation report, which was part of Mr. Smith’s review for Social Security Disability Insurance. By turning a blind eye to this report and the views of the doctor, the appeals court held that Aetna did not include a sufficient “explanation of the basis for disagreeing…with [the] disability determination…made by the Social Security Administration.” The Fourth Circuit went on to note that it is not an outlier circuit in holding that failure to address evidence of a Social Security award of disability benefits can be an abuse of discretion, and cited cases from the Fifth, Sixth, Seventh, and Ninth Circuits stating the same. Not only did the Fourth Circuit find that the failure to discuss the doctor’s report was a violation of an applicable regulation, but it further stated that the administrator’s failure to address the consultative evaluation, which formed a critical basis for the Social Security Administration’s disability award decision, meant that Mr. Smith was denied a full and fair review and “Aetna did not engage in a deliberate, principled reasoning process.” The court of appeals therefore concluded that Aetna abused its discretion. However, referring to its own precedent that remand is the “most appropriate remedy ‘where the plan itself commits the [plan administrator] to consider relevant information which [it] failed to consider,” the Fourth Circuit determined that the proper remedy is to remand this case to the district court with instructions to remand the matter to Aetna. The remainder of Mr. Smith’s arguments were considered essentially moot by the Fourth Circuit in light of its decision to remand the matter to Aetna, and it declined to address any of them in great detail. The court of appeals also left the matter of attorneys’ fees and costs up to the district court.

ERISA Preemption

First Circuit

Rooney v. Leerink Partners, LLC, No. 1:24-CV-11165-AK, 2025 WL 417785 (D. Mass. Feb. 6, 2025) (Judge Angel Kelley). Plaintiff Mairin Rooney, an investment banker, brought suit against her former employer Leerink Partners and various individuals at Leerink, whom she claims induced her to leave her employment at Goldman Sachs and join Leerink by promising certain deferred compensation and minimum guaranteed bonuses. In addition to asserting a claim under ERISA for the deferred compensation, she asserted numerous state law claims – including for breach of contract, quantum meruit, fraud in the inducement and implied covenant of good faith and fair dealing – and a claim asserting violations of the Massachusetts Wage Act. Defendants moved to dismiss, claiming as relevant here that ERISA preempted all the state law claims and that the ERISA claim for benefits failed on plausibility grounds. In this decision, the court granted the motion in part and denied it in part. The court first addressed the deferred compensation, which Ms. Rooney claimed was an employee benefit plan subject to ERISA. The court agreed that “[i]t is a plan maintained by the employer that ‘results in a deferral of income by employees for periods extending to the termination of covered employment or beyond’” because the “primary purpose of the special deferred grant award is to provide deferred compensation by replacing a similar forfeited award from Rooney’s previous employer.” Moreover, the court reasoned that “to the extent that the state law claims” reference “the special deferred grant award [and] would require interpretation of the ERISA-governed deferred compensation plan,” they are preempted. The court then addressed the deferred guaranteed bonus claims, agreeing with Ms. Rooney that these claims were not subject to ERISA and were therefore not preempted under an exemption in 29 C.F.R. § 2510.3-2(c) for payments under a bonus plan that are not “systematically deferred” to the post-employment period. The court found it “evident” that the bonus payments at issue were only deferred for a “relatively short period of time” while Ms. Rooney was still “an active, full-time employee” and were intended to “incentivize retention and performance, not provide retirement income.” Furthermore, the court found that defendants’ argument that the bonus plan was an ERISA-covered top-hat plan was better suited for determination after discovery. Thus, the court concluded that “on the facts alleged and giving every favorable inference to the Plaintiff, Rooney plausibly states a claim that the minimum guaranteed bonuses fall under the bonus exemption and are thus not subject to ERISA preemption.” With respect to Count III – Plaintiff’s ERISA claim that Defendants improperly failed to pay her claim for deferred compensation – the court rejected defendants’ arguments that this claim should be dismissed based on Ms. Rooney’s failure to exhaust. Because Ms. Rooney plausibly alleged that she was not given notice of her appeal rights, the court concluded that she made a colorable claim that she was excused from exhaustion requirements on this basis. Moreover, the court also concluded that because Ms. Rooney plausibly alleged that two of the individual defendants shared the decision-making authority with the Committee defendant, she “alleged sufficient facts to withstand the individual Defendants’ motion to dismiss” regarding the ERISA benefit claim.    

Medical Benefit Claims

Seventh Circuit

K.A. v. United Healthcare Ins. Co., No. 23 C 15739, 2025 WL 358954 (N.D. Ill. Jan. 31, 2025) (Judge Elaine E. Bucklo). Plaintiff K.A. brought this medical benefits suit on behalf of his minor child seeking reimbursement for a residential mental healthcare stay from the date defendant United Healthcare Insurance Company terminated benefits on October 11, 2021 through the date when the child departed the facility on August 4, 2022. Plaintiff argued that United’s claims handling denied him a full and fair review and that its denial was arbitrary and capricious. In this decision ruling on the parties’ cross-motions for summary judgment, the court agreed with plaintiff. The court emphasized that none of United’s communications, not its initial denial letters nor any of its letters during the internal appeals process, “cite to any portion of L.A.’s medical records.” Many of the child’s treating doctors supplied letters of support stating their view that L.A. could only get well through continued residential care given L.A.’s increasing depression and suicidal ideation despite regular outpatient therapy and medication, including intensive outpatient treatment. United did not grapple with the argument that lower levels of care were inadequate given the child’s risk of harm and history of significant mental health struggles. In fact, United argued that it should not consider L.A.’s medical history and instead should focus on L.A.’s acute condition starting on the date when it denied additional coverage. The court was unconvinced that medical history was irrelevant to the case. The court agreed with K.A. that United failed to substantially satisfy ERISA’s procedural requirement that he be afforded a full and fair review of the benefit denials. Despite L.A.’s medical providers stating their unequivocal views that L.A. continued to require residential treatment, United’s letters did not mention them, let alone “substantively respond to the concerns they raise.” Thus, the court found that United arbitrarily refused to credit reliable evidence that K.A. submitted on appeal. Moreover, the court highlighted the vague and general language United used in its letters, which it said “does not suffice to show that United considered the letters K.A. submitted.” To the court, this lack of engagement rendered United’s decision arbitrary and capricious, particularly as even United’s internal notes suggest that its reviewers did not seriously consider the evidence the family provided, which only underscored “United’s complete disregard of those competing views.” Therefore, the court held that United violated ERISA and granted summary judgment in favor of K.A. and against United. But the decision didn’t stop there. It then went on to award the family full benefits. It did so because  this is a case “where benefits had initially been approved and later terminated under ‘defective procedures,” and the court said that precedent requires remedying those defective procedures through a reinstatement of benefits and restoring the status quo, which was the continuation of benefits.

Ninth Circuit

Forbush v. NTI-CA Inc., No. 22-cv-00141-H-RBB, 2025 WL 405696 (S.D. Cal. Feb. 5, 2025) (Judge Marilyn L. Huff). Plaintiff Michael J. Forbush worked as a full-time employee of NTI Ground Trans for one year from January 2020 to January 2021, at which time he was furloughed. At the time of the furlough, his supervisor promised that the company would continue to provide him with health insurance coverage under the group health plan. Mr. Forbush would come to learn otherwise after he suffered a heart attack in June, which required emergency surgery. Mr. Forbush was billed hundreds of thousands of dollars for the medical services he received. Then, on July 30, 2021, Mr. Forbush received a notice from NTI’s HR manager providing him a Consolidated Omnibus Budget Reconciliation Act (“COBRA”) notice. He never received a notification of his COBRA rights prior to this. On October 22, 2021, the claim administrator for the health plan formally denied the claim for medical bills related to the heart attack and surgery, stating that the coverage was being denied on the grounds that Mr. Forbush was not an eligible plan member at the time. After the plan affirmed its denial, Mr. Forbush filed this action against his former employer and former supervisor alleging claims for failure to provide notification of COBRA rights, failure to provide notification of California COBRA rights, breach of contract, negligence, negligent misrepresentation, intentional misrepresentation, and declaratory relief. Defendants have not appeared in this litigation. As a result, Mr. Forbush moved for default judgment against them. His motion was granted in part and denied in part in this decision. Confident of its jurisdiction and that Mr. Forbush provided proof of proper service to defendants, the court evaluated the ERISA COBRA claim first. Taking a look at the exhibits Mr. Forbush attached to his motion for default judgment the court identified a fundamental problem with his COBRA notice claim: neither defendant was the administrator of the health plan. “Because Anthem and EDIS – not NTI and Kindt – were the administrators of NTI’s health care plan, Plaintiff’s claims against Defendants NTI and Kindt for failure to provide him with notification of his COBRA rights in violation of 29 U.S.C. § 1166 is defective as a matter of law.” The court accordingly denied Mr. Forbush’s motion for default judgment on the COBRA claim, the dependent Cal-COBRA claim, and the request for declaratory relief based on the allegations that defendants failed to timely provide him with notice of his rights under COBRA and Cal-COBRA. The court also concluded that the complaint failed to sufficiently allege facts showing breach of oral contract and intentional misrepresentation. However, the court granted Mr. Forbush’s motion for default judgment against his employer with regard to his claims for negligence and negligent misrepresentation. The same was not true for these claims as alleged against the supervisor. In fact, the court denied plaintiff’s motion for default judgment altogether as to defendant Kindt. As for defendant NTI, the court entered default judgment against it on the claims for negligence and negligent misrepresentation and awarded Mr. Forbush compensatory damages matching his out-of-pocket medical expenses, $649.53 in costs, prejudgment interest of 7% per annum, and post-judgment interest according to the statutory rate in 28 U.S.C. § 1961(a).

K.K. v. Premera Blue Cross, No. 23-35480, __ F. App’x __, 2025 WL 415721 (9th Cir. Feb. 6, 2025) (Before Circuit Judges Thomas, Owens, and Collins). A plan participant, K.K., and her daughter I.B., sought medical benefits under the Columbia Banking System, Inc. Benefits Plan, covering I.B.’s stay and treatment in an inpatient psychiatric residential treatment center. Defendant Premera Blue Cross denied the treatment as not medically necessary, the district court agreed, and the Ninth Circuit affirmed in this short, unpublished decision. The appellate court first addressed the standard of review with regard to the benefit denial and concluded that the district court properly reviewed the denial under an abuse of discretion standard because both the plan and the administrative services contract between Premera and Columbia expressly conferred discretion on Columbia and delegated it to Premera. Moreover, because the plan “states that Premera has ‘adopted guidelines and medical policies that outline clinical criteria used to make medical necessity determinations…Premera’s use of the InterQual criteria to determine the medical necessity of I.B.’s treatment was not unreasonable.” Based on records from another residential facility that had treated I.B. shortly before she entered Eva Carlson Academy, the treatment facility at issue in this case – including treatment notes that stated that she had no suicidal ideation since starting treatment at the previous facility and that her depression had improved dramatically – the court held that Premera did not abuse its discretion in concluding “that I.B. did not meet the InterQual criteria for residential treatment at the time she was admitted to Eva Carlson Academy.” The court rejected plaintiffs’ two contrary arguments. First, with regard to plaintiffs’ contention that “Premera failed to specifically address letters of medical necessity from I.B.’s treating providers,” the court of appeals noted that plan administrators are not required to accord special weight to the opinions of treating physicians and, in any event, “the treating providers wrote their letters of medical necessity one year after I.B.’s admission to Eva Carlson Academy and did not base them on firsthand evaluations of I.B. around the time of her admission.”  Similarly, with regard to plaintiffs’ argument that Premera failed to engage in a “meaningful dialogue” with plaintiffs regarding their claim, the court viewed any such failure as a procedural irregularity and stated that “even if we assume arguendo that such a procedural irregularity occurred, it does not change the outcome of this appeal” because this failure was not “wholesale and flagrant,” and thus did not amount to an abuse of discretion. 

Eleventh Circuit

Marrow v. E.R. Carpenter Co., No. 8:23-cv-02959-KKM-LSG, 2025 WL 385570 (M.D. Fla. Feb. 4, 2025) (Judge Kathryn Kimball Mizelle). On behalf of a putative class, plaintiff Saroya Marrow sued her former employer, E.R. Carpenter Company, alleging that it violated ERISA as amended by the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) by failing to provide sufficient notice of continuing healthcare coverage. Carpenter moved to dismiss Ms. Marrow’s complaint, arguing that she lacks standing and fails to state a claim upon which relief may be granted. The court did not agree and in this decision denied Carpenter’s motion to dismiss. It began by addressing standing. The court agreed with Ms. Marrow that she suffered an injury-in-fact fairly traceable to the allegedly deficient COBRA notice. Specifically, the court accepted as true Ms. Marrow’s allegation that because of the insufficient notice she elected not to continue her health insurance coverage, lost insurance, and incurred medical expenses. “This alleged pocketbook injury qualifies as an injury-in-fact.” The court then determined that the complaint states a claim for relief because it plausibly alleges that the COBRA notice sent by defendant (1) omitted the specific date by which Ms. Marrow had to elect coverage; (2) told her that the sixty-day election period ran from the date of her termination rather than the date of the election notice; (3) contained contradictory statements regarding the due date of the first payment, one of which violated federal law by requiring first payment with the election form; and (4) may not have been written in a manner calculated to be understood by the average plan participant, Ms. Marrow included. The court accepted these allegations, which were supported by the attached COBRA notice, and therefore denied Carpenter’s motion to dismiss.

Pension Benefit Claims

Third Circuit

Miller v. Campbell Soup Co. Ret. & Pension Plan Admin Comm., No. 24-1812, __ F. App’x __, 2025 WL 416090 (3d Cir. Feb. 6, 2025) (Before Circuit Judges Krause, Phipps, and Roth). Plaintiff-appellant Sherry Miller worked for the Campbell Soup Company for almost 30 years, but there was a break in her service. Before the break in 2001, Ms. Miller accrued pension benefits under a traditional pension formula. But after the break, she accrued them under a cash balance formula. In 2015, Ms. Miller retired. At the time she signed a waiver releasing claims against appellee Campbell Soup Company Retirement & Pension Plan Administrative Committee in exchange for 101 weeks of severance pay and medical coverage. Ms. Miller claims she was misinformed about her pension benefits and alleged that she was entitled to over 28 years of benefits under the pension formula instead of only 15 years. Ms. Miller sued the Committee, alleging claims for benefits, misrepresentation, and estoppel. The benefit claim was dismissed at the pleading stage. The parties then filed cross-motions for summary judgment. In the end the district court determined that Ms. Miller’s remaining claims were barred by the release she signed when she retired. Accordingly, it entered judgment in favor of the Committee. Ms. Miller appealed. In this unpublished per curiam order the Third Circuit affirmed. Ms. Miller argued that her claims were not covered by the release because the release did not cover claims arising after it was signed and, she argued, her claim did not accrue until she discovered the misrepresentations in 2017. The court of appeals disagreed. Relying on past precedent holding “that a claim for a breach of fiduciary duty based on misrepresentation was completed and accrued on the date the employee relied on the misrepresentations to her detriment,” the court concluded that the claim the Committee misrepresented her benefits did not arise two years after the release was signed but instead “when Miller signed the release and retired allegedly in reliance on the expected benefits.” The release also expressly mentions that claims of misrepresentation and equitable estoppel are covered by the agreement. To the Third Circuit there was no real question that Ms. Miller’s release was knowing and voluntary based on “the totality of the circumstances.” This was especially true because the release informed Ms. Miller that she would be releasing “any and all claims that you have or may have,” indicating the release relates to claims “that the parties had but may discover later.” For these reasons, the Third Circuit declined to disturb the lower court’s holdings and as such affirmed its judgment.

Severance Benefit Claims

Tenth Circuit

Hoff v. Amended & Restated Anadarko Petroleum Corp., No. 23-1361, __ F. App’x __, 2025 WL 400517 (10th Cir. Feb. 4, 2025) (Before Circuit Judges Tymkovich, McHugh, and Rossman). An ERISA-governed change in control severance plan appealed a district court decision finding in favor of the plaintiff on his claim for benefits to the Tenth Circuit. In this unpublished decision the court of appeals affirmed the award of benefits. Arriving at its decision, the district court made two findings which were challenged on appeal here. First, it concluded that de novo review applied to the administrator’s interpretation of the “Good Reason” clause because the plan only provided for arbitrary and capricious review of any interpretation of ambiguous or unclear terms and neither party argued that the Good Reason clause was ambiguous or unclear. Second, the district court found that plaintiff David Hoff’s job duties had been “materially” and “adversely” diminished after the acquisition as they were starkly reduced from what they were prior to the change in control. By way of example, the court compared the projects he was assigned to pre- and post-acquisition. Before the acquisition, Mr. Hoff’s project had a budget of $450 million, he managed a team of over 300 people, and his position required minimum engineering and project management experience of 10 years. Immediately after the acquisition, Mr. Hoff was assigned to a project with a budget of $600,000, managing a team of less than two dozen people, in a position that required only a year or two of project managing experience. Based on these findings, the district court concluded that the plan wrongfully withheld severance benefits to Mr. Hoff. The Tenth Circuit agreed in this decision. The Tenth Circuit stated that the default standard of review in ERISA cases is de novo “unless the parties have agreed to an arbitrary and capricious standard of review for certain issues.” Here, the court of appeals determined that the plan only provided the company the discretion to interpret or construe “ambiguous, unclear or implied (but omitted) terms,” and that the “Good Reason” clause at issue here was none of those things. Thus, the Tenth Circuit affirmed the lower court’s application of de novo review. Then, applying the plain meanings of the words “material” and “adverse,” material meaning “significant; essential,” and adverse meaning “having an opposing or contrary interest, concern, or position,” the Tenth Circuit affirmed the lower court’s view that the diminishment in Mr. Hoff’s job duties following the acquisition was “significant’ and ‘opposed to’ his interests as a Project Manager of a large company.” The court of appeals therefore upheld the conclusions of the district court, inclding its award of benefits and grant of judgment to Mr. Hoff.

Statute of Limitations

First Circuit

Semper v. Massachusetts Gen. Brigham, No. 1:24-cv-11405-JEK, 2025 WL 360624 (D. Mass. Jan. 31, 2025) (Judge Julia E. Kobick). Pro se plaintiff Christiana Semper alleges that her former employer Massachusetts General Brigham, Inc. and its senior manager on the retirement claims and appeal committee violated ERISA by improperly decreasing its employer contributions to her under the Mass General Brigham and Member Organizations cash balance plan, and by failing to adequately inform her of that change. Defendants moved to dismiss Ms. Semper’s complaint. They argued that her claims are time-barred and that she failed to state a plausible claim. In particular, defendants argued that Ms. Semper’s action was untimely as it was brought after the plan’s two-year contractual limitation period had already expired. Based on the facts alleged in Ms. Semper’s complaint, the court agreed with defendants that her claims are contractually time-barred and therefore granted the motion to dismiss. The court noted that the First Circuit had previously concluded that a two-year contractual limitation period like the one here is reasonable. Thus, the court held that the “contractual limitations period and claim accrual provisions in the Plan are…enforceable.” To the court, it appeared from the complaint that Ms. Semper’s claims accrued on January 1, 2022, i.e., the date on which she alleges she first began to receive the lower employer contributions to her plan. Thus, the court interpreted this as the first date on which she knew or should have known the principal facts on which her claims are based. As a result, the end of the contractual limitation period was January 1, 2024. Because Ms. Semper did not file this lawsuit until May 28, 2024, the court agreed with defendants that her action was filed more than five months after the limitations period expired. Based on these facts, the court determined that both Ms. Semper’s claims for recovery of plan benefits and violation of ERISA’s notice provision under Section 1054(h) seem to be time-barred under the contract. Defendants’ motion to dismiss was accordingly granted by the court. However, the court was not certain with its analysis because Ms. Semper asserted additional facts at the motion hearing which the court agreed may alter the accrual date for her claims, such that they may indeed be timely. “At the motion hearing and in opposition to the motion to dismiss, Semper further contended that the accrual date for her ERISA claims should be January 1, 2023 rather than January 1, 2022. That is so, she argued, because employer contributions to the Plan are deposited for the prior year each January, so she could not have known, or had reason to know, of the change in employer contributions from 15% to 9% of her annual salary until January 2023. Thus, she contends that, under Section 17.12 of the Plan, her claims accrued in January 2023, making the limitations period run until January 2025, and rendering her claims timely.” The court therefore granted Ms. Semper leave to file an amended complaint to try to address this issue and argue that her action is not in fact time-barred.

This week, Punxsutawney Phil predicted six more weeks of winter, and I’ve heard it said that this January was the longest year on record. It seems ERISA winter is continuing for at least some plan participants, as several noteworthy decisions were issued this week which were unfavorable to ERISA plaintiffs. In Cutrone v. Allstate and Johnson v. Russell Investments Trust Co., courts in the Northern District of Illinois and the Southern District of Florida respectively applied Pizarro v. The Home Depot, Inc., 111 F.4th 1165 (11th Cir. 2024), to enter summary judgment in favor of defined contribution plan fiduciaries, concluding the plaintiffs could not prove the challenged investments and fees were “objectively unreasonable.”

However, in a sign of spring for ERISA plaintiffs, a disability claimant who could not sit due to abdominal pain was awarded long-term disability benefits in Dime v. Metropolitan Life Insurance Company. Attorney Brian King’s winning streak in the District of Utah continued after a district judge found that Blue Cross abused its discretion by failing to meaningfully engage with a family seeking reimbursement for residential mental health treatment of their child in S.B. v. Blue Cross Blue Shield of Illinois. And a judge in the District of Minnesota concluded that the trustees of a union pension plan acted arbitrarily and capriciously by interpreting “Disqualifying Employment” to encompass pre-retirement employment in Grandson v. Western Lake Superior Piping Indus. Pension Plan.

Although no decision was earth-shattering or season-changing in and of itself, we think all seventeen decisions are worth a read this week.

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

Breach of Fiduciary Duty

Seventh Circuit

Cutrone v. The Allstate Corp., No. 20 CV 6463, 2025 WL 306179 (N.D. Ill. Jan. 27, 2025) (Judge Georgia N. Alexakis). On behalf of themselves and all others similarly situated in The Allstate Corporation’s defined contribution retirement plan, seven plaintiffs sued Allstate, the plan’s committees, and the individual committee members for breaches of fiduciary duty and prohibited transactions under ERISA. In their complaint, plaintiffs took issue with the sustained underperformance of the plan’s default target date fund investment options, the excessive costs of the advisory service and professional management service fees, and the alleged kickback fee scheme between two parties in interest, the plan’s service provider, Financial Engines, and the plan’s recordkeeper, Aon Hewitt. Defendants moved for Rule 56 summary judgment on all five counts. In this decision, the court concluded there were no genuine disputes of material fact as to each of plaintiffs’ claims and consequently granted defendants’ motion for summary judgment in full. To begin, the court expressed its view that a “fiduciary’s duty of prudence is both procedural and objective.” The court took this to mean that “no matter how imprudent a fiduciary may be in failing to investigate or evaluate an investment, she cannot be liable if the investment was objectively prudent.” In light of this observation, the court brushed aside plaintiffs’ evidence of procedural imprudence to investigate instead whether any reasonable juror could conclude that defendants made objectively imprudent investment and fee decisions. Upon consideration, the court concluded that counts one and two (imprudence as it relates to the investments and fees) failed on objective prudence grounds. To some extent, the court made light of evidence that the challenged target date funds sometimes underperformed, even when compared to their own wide benchmark of plus-or-minus 20%. While the court acknowledged that the default investment options did broadly underperform peers, it nevertheless observed that objective reasonableness cannot be based on hindsight. The court was also clearly persuaded by the arguments advanced by defendants’ expert, who opined that the Northern Trust target date funds were objectively prudent and economically reasonable investment options for the plan during the relevant period because they provided “an attractive tradeoff between risk and return,” which was the intended investment strategy adopted after the 2008 financial crisis. Moreover, defendants’ expert offered that in his opinion switching investment strategies during a strong market is “ill-advised” as it “comes with the risk of losses if market conditions change.” It was problematic for plaintiffs that their own expert spent much of his testimony speaking to the procedural imprudence of defendants’ processes. According to the court, plaintiffs’ expert did not engage with the basic argument that the challenged funds were objectively imprudent. To the court, there was a clear imbalance between the relative strength of each party’s expert opinions, and while the court was persuaded by many of defendants’ expert’s opinions, it was equally unpersuaded by plaintiffs’ expert. Essentially, to the extent that plaintiffs’ expert attempted to provide evidence of imprudence and underperformance of both the challenged funds and fees, the court found the underperformance on its own insufficient to establish objective imprudence and also fundamentally flawed because it was based on “apples to oranges” comparisons (making it hard to see what ever would qualify as objectively unreasonable or imprudent). The court therefore determined that defendants did not act imprudently and granted summary judgment in their favor on counts one and two. The decision then assessed count three, plaintiffs’ prohibited transaction claim. The court adopted the logic of the Seventh Circuit’s decision in Albert v. Oshkosh Corp., which held that routine payments for plan services are not prohibited transactions within the meaning of Section 1106(a). Taking things one step further, the court took up the reasoning of a district court decision, Baumeister v. Exelon Corp., and concluded that regardless of whether “the price paid for those services was unreasonable based on the separate agreement Aon Hewitt had with Financial Engines makes no difference. Under Albert, routine services payments are excluded from the definition of prohibited transaction altogether.” The court therefore granted defendants’ motion for summary judgment on the prohibited transaction claim as well. (Notably, this aspect of the court’s decision may not hold depending on the outcome of the Supreme Court’s ruling in Cunningham v. Cornell). The court then turned to the derivative co-fiduciary duty and duty to monitor claims. Because these claims depend on underlying breaches, the court concluded that defendants could not be held liable for either of these counts and thus granted summary judgment to defendants on the final two causes of action. Defendants were thus entirely successful in their motion for summary judgment.

Eleventh Circuit

Johnson v. Russell Inv. Mgmt., No. 22-cv-21735, 2025 WL 358197 (S.D. Fla. Jan. 31, 2025) (Judge Robert N. Scola, Jr.). The “objectively unreasonable” standard reared its head for a second time this week, and as in the Cutrone decision above, doomed this fiduciary breach class action as well. This one involves the Royal Caribbean Cruises Ltd. Retirement Savings Plan (the result of a merger between the cruise company’s 401(k) and pension plans). Plaintiff Ann Johnson, representing a certified class of similarly situated participants and beneficiaries, alleges that Royal Caribbean, its administrative and investment committees, and Russell Investment Trust Company lost the participants millions of dollars in retirement as a result of bad and self-interested investment decisions. She argues that defendants breached their respective fiduciary duties by putting Russell and its recordkeeper, Milliman, Inc., in charge of the plan. Despite documented reservations, the committees nevertheless agreed to appoint Russell to manage the plan, and to do so on Russell’s terms – with “pricing on the high end,” a requirement that more than 75% of plan fund offerings be in Russell funds, and engaging its own affiliated company for the recordkeeping services. It appears from evidence presented that even Royal Caribbean quickly had regrets about its decision, acknowledging the possible fiduciary misstep of putting so much into Russell’s target date funds which were consistently underperforming. The plan was also paying between seven and ten basis points more for Russell’s target date funds relative to similarly size clients, and Royal Caribbean was Russell target date funds’ largest investor. Believing the funds to be inferior, the costs to be excessive, and the actions to be fiduciary breaches, Ms. Johnson initiated this action on behalf of the plan. Defendants, on the other hand, believe that there is no genuine issue of material fact that the investment decisions were not objectively imprudent or unreasonable and moved for summary judgment as to all claims against them. The court agreed with the fiduciaries that there were no genuine issues that would warrant a trial in this case and granted their motions for summary judgment. “Johnson has failed to adduce evidence sufficient to establish a genuine issue of material fact requiring a trial on whether the investments at issue were objectively imprudent. The Court also finds that Russell is, in any event, shielded from liability, under the [investment management agreement], for the specific claims in this case.” Specifically, the court concluded that the selection of the Russell funds was not objectively unreasonable because the evidence of underperformance is in hindsight as the funds were performing favorably at the time they were selected. In addition, the court agreed with defendants that plaintiff failed to provide any “‘apples-to-apples comparisons’ from which a reasonable factfinder could conclude that no hypothetical prudent fiduciary would have selected and retained the Russell TDFs.” The court noted the Russell funds’ “hybrid strategy” of investing in a combination of active and passive funds, and extrapolated that this unique characteristic made wholly active or wholly passive investment models fundamentally different and therefore inadequate comparators. Further, the court mentioned the fact the Russell target date funds had a “to retirement” glide path, meaning that they each reached their minimum equity allocation at the expected retirement date. This also differentiated the Russell funds from plaintiff’s comparators. And although Ms. Johnson specifically took issue with the asset allocation of the Russell funds, the court again held that the fact the funds at issue had fundamentally different asset allocations meant they could not be compared to funds with other investment strategies. The court also swept aside all evidence of procedural imprudence, concluding that such evidence does not itself establish “that the resulting investment itself was objectively imprudent.” Finally, rather than end the matter here, the court expressly held that the terms of the investment management agreement unambiguously shielded Russell from liability because it never had discretionary fiduciary authority to select or retain its own funds in the plan. Having set forth these reasons, the court granted defendants’ motions for summary judgment and entered judgment in their favor on all of Ms. Johnson’s claims.

Class Actions

First Circuit

Bowers v. Russell, No. 22-cv-10457-PBS, 2025 WL 342077 (D. Mass. Jan. 30, 2025) (Judge Patti B. Saris). Current and former employees of Russelectric allege that the fiduciaries and selling shareholders of the company’s employee stock ownership plan (“ESOP”) violated ERISA by undervaluing the shares held by the plan at its terminations and by improperly subtracting $65 million in bonuses from the net share price when the company was sold three years later, which reduced the participants’ additional compensation under the plan’s clawback provision. Two weeks ago, Your ERISA Watch reported on a decision in this case denying defendants’ motion to dismiss. This week, the court granted plaintiffs’ motion to certify a class of 394 participants and beneficiaries of the ESOP who received a benefit when the plan was terminated. The court concluded that the proposed class met the requirements of Rule 23(a) as it is sufficiently numerous, united by common questions, and because it will be represented by plaintiffs who are typical of the absent class members and adequate to represent their interests. Contrary to defendants’ assertions, the court found that the “putative class has plenty in common,” as all of its members participated in the same plan, received a pro rata share of the payment the board authorized, and allege underpayment of their shares. Whether defendants were fiduciaries, whether they breached fiduciary duties, and whether they engaged in transactions prohibited by ERISA were all questions the court saw as common to the class and which, “when answered, will drive the resolution of the litigation.” When addressing the overlapping requirements of typicality and adequacy, the court held that plaintiffs were like the absent class members because nearly everyone in the class signed a release in 2018. Moreover, the court reminded defendants that it previously ruled that the 2018 release does not bar this action as it expressly excludes claims related to the clawback payments. The court further found that plaintiffs have adequate working knowledge of this litigation and rejected defendants’ reading of the requirements of Rule 23(a)(4). Plaintiffs, the court wrote, “are not required to have expert knowledge of all the details of a case.” There was seemingly no dispute that plaintiffs’ counsel were adequate to represent the interests of the putative class. Confident that plaintiffs satisfied the requirements of Rule 23(a), the court next discussed Rule 23(b). It concluded that both Rules 23(b)(1)(A) and 23(b)(1)(B) are satisfied here because independent actions by the ESOP participants would risk differing and incompatible standards of behavior for the fiduciaries and because individual adjudications with respective to individual class members would substantially impair or impede the ability of others to protect their interests. For these reasons, the court agreed with plaintiffs that the proposed class meets the requirements of Rule 23 and therefore granted their motion to certify the class.

Disability Benefit Claims

Second Circuit

Li v. First Unum Life Ins. Co., No. 23cv6985 (DLC), 2025 WL 326492 (S.D.N.Y. Jan. 29, 2025) (Judge Denise Cote). Plaintiff Guangyu Li sued First Unum Life Insurance Company under ERISA to challenge its denial of his application for long-term disability benefits. Following a bench trial, the court issued its findings of fact and conclusions of law in this order and entered judgment in favor of First Unum. To begin, the court resolved the parties’ dispute over the applicable standard of review. Agreeing with First Unum, the court concluded that deferential arbitrary and capricious review applies because the plan unambiguously grants First Unum discretion in its Summary Plan Description (“SPD”) and the SPD is expressly incorporated into the plan. Additionally, the court rejected Mr. Li’s argument that de novo review should apply because First Unum violated ERISA’s claims review regulations. Contrary to Mr. Li’s assertions, the court held that First Unum properly consulted with doctors in the appropriate fields of medicine, namely a psychiatrist and a neuropsychologist, and that these professionals appropriately considered all of Mr. Li’s medical records and the opinions of his treating providers, and discussed the basis for disagreeing with their views. After settling on the appropriate review standard, the court dived into the merits. Ultimately, the court agreed with First Unum that substantial evidence supported its conclusions that Mr. Li’s anxiety and depression were not disabling as defined by the plan because they did not preclude him from performing his occupational duties. The court held that First Unum had offered a reasoned analysis of the relevant medical records and that its peer reviewers’ assessments were grounded in the objective medical evidence and a reasonable reading of the record. The court emphasized that First Unum was under no obligation to accord any special weight to the contrary opinions of Mr. Li’s treating healthcare professionals, especially as it provided reasoned explanations for discounting these contradicting opinions. Based on the foregoing, the court held that Mr. Li failed to show that First Unum acted arbitrarily and capriciously when it denied his application of benefits, and therefore upheld its adverse benefit decision. Finally, the court denied Mr. Li’s request to expand the administrative record, concluding that no good cause exists to do so as he had ample time to submit additional materials to bolster his application during the administrative appeals process. Accordingly, the court closed the case and entered judgment in favor of First Unum and against Mr. Li.

Ninth Circuit

Dime v. Metropolitan Life Ins. Co., No. C24-0827-JCC, __ F. Supp. 3d __, 2025 WL 331642 (W.D. Wash. Jan. 29, 2025) (Judge John C. Coughenour). Plaintiff Heather Dime has a long history of abdominal and pelvic issues. Her most recent flare began in July 2023, and persisted even after she underwent surgery to remove a right ovarian cyst. In August 2023, Ms. Dime could no longer sit for any prolonged period and was experiencing significant pain in her right groin area. As a result, she stopped working and applied for long-term disability benefits under her employer-sponsored policy administered by defendant MetLife. MetLife denied her claim, concluding that Ms. Dime could continue working in her sedentary occupation and that there was no documented ongoing treatment. Ms. Dime appealed the denial through MetLife’s procedures, but MetLife ultimately upheld its determination, prompting this action. Ms. Dime and MetLife cross-moved under Federal Rule of Civil Procedure 52 seeking final judgment on the record under de novo standard of review. The court granted Ms. Dime’s motion and denied MetLife’s motion in this decision. The court stated that after its own “‘independent and thorough inspection’ of the record and benefits decision…MetLife incorrectly denied Plaintiff’s LTD claim.” As an initial matter, the court spoke of what it called the Ninth Circuit’s “bright-line rule” that an employee who cannot sit for more than four hours in an eight-hour workday cannot perform sedentary work that mostly requires sitting. Here, MetLife itself concluded that Ms. Dime could not sit for more than four hours per day, and thus the court found Ms. Dime was disabled under MetLife’s own findings. But the court stressed that the facts supporting Ms. Dime were even more clear-cut because she could only sit for a half-hour at most before requiring a one-hour break lying down. “As such, even if Plaintiff could sit for a total of four hours a day, as [MetLife] suggests, it would ultimately take Plaintiff 12 hours just to complete these four hours of seated work.” On top of that, MetLife ignored other facts in the record that demonstrated she could not complete the material duties of her job or otherwise earn 80% of her pre-disability wages. The court rejected MetLife’s “speculative” argument that Ms. Dime impermissibly orchestrated behind the scenes to push conclusions and language onto her doctor. Not only did MetLife offer no evidence for this ad hominem attack, but it was also not the most likely explanation of what actually happened according to the court. Rather than some nefarious conspiracy, the court viewed it as more likely that Ms. Dime’s qualified treating physician “witnessed Plaintiff repeatedly experiencing the same symptoms and felt that using the same language – rather than reinventing the wheel – would be the simplest way to keep record of it.” Thus, the court concluded that the medical records clearly support Ms. Dime and that MetLife improperly denied her long-term disability benefit claim. For this reason, the court declared that Ms. Dime is disabled, as that term is defined in her plan, and entered judgment in her favor.

ERISA Preemption

Ninth Circuit

Emsurgcare v. United Healthcare Ins. Co., No. 2:24-cv-07837-CBM-E, 2025 WL 306225 (C.D. Cal. Jan. 23, 2025) (Judge Consuelo B. Marshall). Emergency medical providers Emsurgcare and Emergency Surgical Assistant sued United Healthcare Insurance Co. in California state court to pursue claims worth tens of thousands of dollars for emergency medical care they provided to an insured patient. United removed the action to federal court, arguing the quantum meruit claim was completely preempted by ERISA. Plaintiff responded by moving to remand. United, for its part, moved to either dismiss the complaint or alternatively to compel arbitration. It also requested the court take judicial notice of several documents and a declaration from United’s senior legal services specialist. Plaintiffs objected to what it categorized as an attempt to incorporate by reference documents which were not mentioned in the complaint. The court agreed with the providers that defendants’ request for judicial notice of the declaration and its exhibits was not proper and thus denied its request. It then addressed the issue of ERISA preemption. Here too the court sided with plaintiffs. It agreed with the providers that their complaint unambiguously asserts state law claims arising out of separate agreements with United which are not preempted by ERISA Section 502(a). The court observed that even in cases where providers have been assigned rights by their patients they are not required to bring suit under ERISA. “While Plaintiffs could have chosen to bring a claim under ERISA as assignees of their patient…they have not.” Instead, this case, according to the court, was a classic example of a healthcare provider seeking “usual, customary, and reasonable value” for their services based on calculations unrelated to what United might pay pursuant to the terms of the ERISA-governed plan. The court accordingly held that neither prong of the two-part Davila preemption test was satisfied and therefore concluded that it does not have federal question jurisdiction over the matter. As a result, the court granted plaintiffs’ motion to remand, and denied as moot defendant’s motion to remand or alternatively to compel arbitration.

Healthcare Justice Coal. CA Corp. v. UnitedHealth Grp., No. CV 24-04715-MWF (SKx), 2025 WL 303950 (C.D. Cal. Jan. 27, 2025) (Judge Michael W. Fitzgerald). In this fairly straightforward preemption decision, the court remanded an action brought by an emergency medical group payment collector against UnitedHealth Group, Inc. and its subsidiaries back to California state court. Contrary to the position of the United defendants, the court concluded that neither prong of the two-part Davila preemption test was satisfied here. The court referred to Ninth Circuit precedent which makes clear that claims for underpaid or unpaid medical benefits “solely based on the Providers’ independent relationship with Defendants…are not preempted by ERISA.” Such was the case here, as the complaint contemplates quasi-contractual and contractual claims arising out of interactions between the parties separate from any derivative ERISA rights or the terms of any ERISA plan. The court was therefore confident that the complaint does not affect any ERISA-governed relationship or seek to enforce any right dependent upon ERISA. Finally, the court quickly dispersed with defendants’ argument that federal law separately governs the claims because Medicare Advantage Plans are at issue and because the complaint alleges that the providers had a duty to provide care under EMTALA (the federal Emergency Medical Treatment and Active Labor Act). The court did not give these arguments much credit, as the complaint itself does not seek to pursue payment under any Medicare benefits, and because the plaintiffs assert that the insurers had a duty to pay them under California law, not federal law. Accordingly, the court granted plaintiff’s motion to remand and sent the case back to Los Angeles County Superior Court.

Medical Benefit Claims

First Circuit

Gillespie v. Cigna Health Mgmt., No. 2:24-cv-00160-NT, 2025 WL 307268 (D. Me. Jan. 27, 2025) (Judge Nancy Torresen). Plaintiff Patrick Gillespie is a double amputee who seeks coverage for a microprocessor prosthetic device prescribed to him by his doctor. Mr. Gillespie participates in an employer-sponsored healthcare benefit plan. On May 12, 2023, defendant Cigna Health Management denied his request for the type of prosthetic device he seeks, stating that the plan “simply does not cover these services, no matter what the reason is that they are being requested.” Indeed, the plan has a blanket exclusion for these types of prosthetic appliances. However, the state of Maine has a law called the Maine Prosthetics Law which requires insurance carriers to cover the prosthetic device determined by the enrollee’s healthcare provider to be the most appropriate model that adequately meets his or her medical need. Thus, the plan’s exclusion is in direct conflict with this law. Mr. Gillespie alleges that his plan is an insured employer-sponsored plan that is regulated by the Maine insurance law and that he is entitled to recover these benefits under his plan pursuant to Section 502(a)(1)(B) of ERISA. Cigna contests this. It argues that the plan is in fact a fully self-insured one which is not regulated by state insurance law and that Mr. Gillespie cannot state a claim for relief. Cigna therefore moved to dismiss the complaint under Rule 12(b)(6). The court was accordingly tasked with answering the only real question before it – whether the plan is self-funded or insured, and by extension whether or not it is subject to state insurance laws. But the court could not answer that question for the time being. Here, the court said, “the Plan is not exactly a model of clarity. For example, the introductory notice states that although the Plan is ‘not insured by Cigna,’ it nonetheless ‘may use words that describe a plan insured by Cigna.’” Given this confusion, the court agreed with Mr. Gillespie that without discovery he lacks the information needed to clarify the dispositive issue of the plan’s funding status. As it is discovery Mr. Gillespie needs, it is discovery he shall get. The court denied Cigna’s motion to dismiss without prejudice, and ordered the parties to conduct discovery solely on the issue of whether the plan is self-funded or insured. Should Cigna believe the evidence supports its position that the plan is self-funded, the court clarified that it may renew its motion to dismiss as a limited Rule 56 summary judgment motion after discovery on this limited topic has concluded.

Seventh Circuit

Brian W. v. Health Care Serv. Corp., No. 24 CV 2168, 2025 WL 306365 (N.D. Ill. Jan. 27, 2025) (Judge Georgia N. Alexakis). A father whose son received residential mental healthcare treatment sued Blue Cross and Blue Shield of Texas for violations of the terms of his ERISA welfare plan and of the Mental Health Parity and Addiction Equity Act after his claims for reimbursement of that treatment were denied. Blue Cross moved to dismiss the complaint for failure to state a claim. The court denied the motion in this decision. The court first examined the wrongful denial of benefits claim. Plaintiff argued that the plan language requiring residential treatment centers to have 24-hour onsite nursing care violates the Parity Act. He further contended that the plan cannot enforce any provision that is unlawful under the Parity Act to deny coverage. The court agreed, and Blue Cross did not argue to the contrary. Instead, Blue Cross argued that the residential treatment center did not carry the proper licensing because it had a license as a youth care facility. The court was skeptical of this position, and declined to “conclude that the presence of a youth care facility license necessarily demonstrates the absence of a residential treatment center license.” Instead, the court accepted the complaint’s well-pleaded facts as true and believed for the purposes of this decision that the facility was properly licensed and an accredited provider of inpatient treatment to adolescents with mental health and substance abuse problems. In addition, the court reminded Blue Cross that it denied the coverage because the facility failed to meet the residential treatment center 24-hour nursing and M.D. access requirement. Additionally, the court agreed with plaintiff that under other provisions of the plan he “adequately alleged that he was wrongfully denied coverage under the plan.” The court therefore denied the motion to dismiss the claim for wrongful denial of benefits. Next, the court addressed plaintiff’s allegations that there were procedural inadequacies in the appeal of his claim. Blue Cross argued that because the plan does not cover the services at issue the alleged procedural inadequacies were irrelevant to the claim. The court was not convinced and found that plaintiff stated a claim that Blue Cross’s review of his claim denial was procedurally inadequate under ERISA. Finally, the court determined that plaintiff stated a claim based on a facial violation of the Parity Act. The court said that it could infer from the complaint that the plan imposed unequal requirements for licensure between residential treatment centers and analogous medical and surgical facilities, and it imposes unequal requirements regarding accreditation of these types of entities too, and that the 24-hour onsite nursing requirement only applied to residential treatment centers, not to analogous facilities that treat non-mental health issues. For these reasons, the court denied entirely Blue Cross’s motion to dismiss.

Tenth Circuit

S.B. v. Blue Cross Blue Shield of Ill., No. 2:22-cv-336-AMA, 2025 WL 327920 (D. Utah Jan. 29, 2025) (Judge Ann Marie McIff Allen). Plaintiff S.B. filed this action to dispute denials relating to residential healthcare treatment received by C.B., S.B.’s child, at two facilities in 2019 and 2020. Defendants Blue Cross Blue Shield of Illinois and Catholic Health Initiatives Medical Plan denied most, but not all, of the care at the two treatment centers concluding that neither care facility met the plan’s definition of a provider. S.B. appealed the denials to no avail and then brought this action. The parties filed competing motions for summary judgment. Plaintiff argued that the denial letters and communications during the appeals process failed to respond to or even address the family’s arguments, but merely reasserted the same denial rationales without any additional dialogue. Blue Cross maintained that neither facility met the plan’s definition of “Residential Treatment Facility.” Before the court addressed the relative merits of each party’s arguments, it took a moment to contemplate the relevant standard of review. Both parties proceeded as though the arbitrary and capricious standard applies, but the court was not so sure. It noted that the plan grants discretion to its administrator, and only grants its claims administrator, Blue Cross, the discretion to determine medical necessity, which was not at issue here. The court was thus hesitant to adopt the parties’ apparent conclusion that deferential review should apply. Nevertheless, the court discussed why it concluded that Blue Cross had acted arbitrarily and capriciously, and since the court concluded that the benefit denials failed even the more deferential review standard, it stated that it didn’t need to discuss further whether the de novo standard should have applied instead. The court then addressed the essential question, i.e., “whether, consistent with ERISA, BCBS in its denial letters adequately and appropriately informed Plaintiff of the reasons why it denied the claims and adequately explained why coverage at RedCliff and Novitas were excluded under the Plan.” The court’s answer was that Blue Cross did not. It found that Blue Cross’s communications fell far short of a meaningful dialogue, and ERISA demands better. The court concluded that “none of BCBS’s denials even mentions, yet alone engages with, Plaintiff’s arguments. Nor did its denial letters clearly explain how it reached its decisions, how it assessed Plaintiff’s evidence on whether RedCliff and Novitas were ‘Providers’ under the Plan, or any reasoned analysis for its unexplained conclusions.” Given this lack of engagement, the court held Blue Cross failed to sufficiently articulate why the claims should be excluded under the plan, and that it acted arbitrarily and capriciously. Accordingly, the court granted summary judgment in favor of plaintiff and against defendants. The one sour note for plaintiff was the court’s decision on the appropriate remedy. Rather than award benefits, the court remanded the matter back to Blue Cross to reassess whether the two treatment facilities fell within the plan’s definition of provider “and why the exclusions cryptically referenced in its denial letters apply.” The court also instructed Blue Cross to actually engage with any counter-evidence or arguments presented by plaintiff this time. Last, the court directed plaintiff to file a motion for attorneys’ fees and costs addressing “why a remand order here amounts to a degree of success on the merits, and why the factors the court should consider in determining whether an award should be issued have been satisfied.”

Pension Benefit Claims

Eighth Circuit

Grandson v. Western Lake Superior Piping Indus. Pension Plan, No. 23-cv-214 (LMP/LIB), 2025 WL 307438 (D. Minn. Jan. 27, 2025) (Judge Laura M. Provinzino). Plaintiff James Grandson is a union member and a participant in the defined benefit Western Lake Superior Piping Industry Pension Plan, which is governed by ERISA and administered by its board of trustees. The pension plan provides for normal retirement benefits at age 62. However, for participating employees who retire after age 62, the plan provides for a late retirement benefit in the form of an actuarial increase from the normal retirement benefit. The plan provides an exception to this rule, however, which states that no actuarial increase will be provided for months in which a participant engages in “Disqualifying Employment.” This is defined as forty or more hours of employment in the same industry covered by the plan in the same geographic area covered by the plan, and in the same trade or craft that the participant was employed, including employment with contributing employers, non-contributing employers, and self-employment. The 2019 SPD further clarifies that “Disqualifying Employment” refers to employment taken “at the time [the participant] commenced [his] benefits.” Well, Mr. Grandson did not commence retirement benefits at age 62; he continued working for his same employer and did not receive payment of any retirement benefits. To date, Mr. Grandson has not retired and has not received any retirement benefits. But he wants to, and after he began contemplating retirement in late 2021 he applied for late retirement benefits that included the actuarial increase. His application for these increased benefits was denied by the trustees, who determined that Mr. Grandson did not qualify for the actuarial increase because he continued working and by doing so engaged in “Disqualifying Employment” under the plan rendering him ineligible for the more generous benefits. Mr. Grandson appealed this adverse determination. The trustees responded that they would only allow Mr. Grandson to submit additional arguments and evidence to support his claim if he would agree not to file suit and their determination on reconsideration would be considered a final determination of all arguments that were or could have been raised. Mr. Grandson rejected these conditions, and the trustees responded by considering Mr. Grandson’s reconsideration request on the arguments and evidence already submitted. They then upheld their adverse decision, sent a final denial letter explaining their decision, and stated that administrative remedies are now exhausted and Mr. Grandson had until February 10, 2023 to file a civil lawsuit to contest the determination in federal court. Mr. Grandson pursued this course of action, and filed this case against the plan and its board of trustees asserting claims for benefits and for breach of fiduciary duty under ERISA. The parties cross-moved for summary judgment. In this decision the court granted Mr. Grandson’s motion and denied defendants’ motion. Defendants argued that Mr. Grandson failed to exhaust administrative remedies, and that the trustees’ interpretation of the plan language was reasonable. Mr. Grandson took the contrary position that defendants abused their discretion in denying him an actuarial increase in benefits contrary to the plain language of the pension plan. The court addressed the exhaustion issue first. It determined that defendants’ argument that Mr. Grandson failed to timely exhaust administrative remedies strained credibility for several reasons. First, the court disagreed with defendants that Mr. Grandson was required to raise a challenge to his retirement benefits when he reached normal retirement age of 62. The court reminded defendants that the dispute centers on whether Mr. Grandson is owed an actuarial increase in benefits, and as to that claim, Mr. Grandson undoubtedly “satisfied the administrative exhaustion requirement in spades.” The fact remains that defendants themselves recognized as much in their final denial letter. Thus, the court was confident that Mr. Grandson did all that was required of him under the plan and the law to seek an administrative resolution of his claim, especially as “all parties behaved as if he had.” Having concluded that Mr. Grandon properly exhausted his administrative remedies, the court segued to its analysis of whether the trustees’ interpretation of the “Disqualifying Employment” language of the plan was an abuse of discretion. It held that it was. On the surface, Mr. Grandson argued, “Disqualifying Employment” could only begin after the participant commences benefits and any other reading of the term is nonsensical. The court readily agreed. “Grandson’s interpretation accords with the plain language of the Pension Plan’s definition of ‘Disqualifying Employment’ in effect at the time Grandson reached the normal retirement age, which explicitly contemplates that an employee engages in Disqualifying Employment only after ‘the participant commenced benefits.” Even under a deferential standard of review, the court was adamant that a plan administrator “cannot contradict the plain language of an ERISA plan to deny benefits,” which was exactly what defendants did here. The court additionally noted that the SPD further supported Mr. Grandson’s logical reading of the plan language. Accordingly, the court agreed with Mr. Grandson that the trustees’ decision to deny him an actuarial increase in benefits based on a conclusion that his continued employment counted as “Disqualifying Employment,” as the term was defined in the pension plan, was arbitrary and capricious. Thus, the court found that Mr. Grandson was entitled to summary judgment in his favor. However, the court declined to award attorneys’ fees and costs, despite Mr. Grandson formally moving for them, because he has yet to submit an affidavit supporting those fees and costs and has not submitted any briefing addressing the relevant factors in the Eighth Circuit to demonstrate success on the merits under Section 502(g)(1). The court therefore deferred consideration of Mr. Grandson’s request for fees and costs until he files a formal motion under Federal Rule of Civil Procedure 54(d).

Pleading Issues & Procedure

Fourth Circuit

T.S. v. Evernorth Behavioral Health Inc., No. Civ. MJM-23-2426, 2025 WL 327239 (D. Md. Jan. 28, 2025) (Judge Matthew J. Maddox). Plaintiffs T.S. and J.S. bring this civil action against Evernorth Behavioral Health, Inc., Cigna Behavioral Health Inc., Evolution Healthcare, Luminare Health Benefits, Inc., and The Paul Reed Smith Guitars Qualified High Deductible Health Plan alleging defendants wrongfully denied medically necessary mental healthcare benefits J.S. required and was entitled to under the plan. J.S. was admitted to a residential treatment facility in Utah in the summer of 2020 to treat severe and complex mental disorders. Prior to being admitted at the facility J.S. had a long history of previous medical interventions to treat suicide attempts, hallucinations, catatonic behavior, delusions, and other multifaceted mental health issues. In order to “help him reach a consistently safe mental health space,” his treating professionals recommended a prolonged stay at a residential treatment center. However, defendants denied the family’s claims for J.S.’s residential treatment, arguing that J.S. could have been safely and effectively treated at a lower level of care. In the spring of 2022, J.S. did step down to a transitional living level of care offered by the same facility. The Cigna defendants then denied J.S.’s lower-level transitional care too, claiming this treatment was non-qualifying custodial care. The family unsuccessfully appealed all of the denied healthcare claims. In this action they seek to recover the over $400,000 in medical expenses they incurred as the result of the denials, plus pre- and post-judgment interest, attorneys’ fees, and costs. Defendant Luminare moved to dismiss the claims against it. Plaintiffs allege that Luminare acted as a fiduciary of the plan under ERISA and failed to provide coverage under the terms of the plan, and further failed to respond substantively to the issues the family raised on appeal. Plaintiffs additionally allege that all defendants failed to comply with their obligations under ERISA to act solely in the interest of the plan participants and for the exclusive purpose of providing benefits to them. Luminare argued that the family cannot sustain their claims asserted against it in this action because it is not the plan, the plan administrator, or responsible for benefits under the plan, and because it did not act as a fiduciary with any discretionary authority. The family disputed this, contending that Luminare may be sued as third-party administrator and fiduciary. However, their arguments proved unconvincing to the court, which granted Luminare’s motion to dismiss in this order. The court viewed plaintiffs’ allegations against Luminare as conclusory and inadequate to establish discretionary decision-making authority over the coverage decision and the denial of benefits. Accordingly, the court agreed with Luminare that plaintiffs failed to state any plausible claim against it under ERISA and therefore granted its motion to dismiss, though it did so without prejudice.

Fifth Circuit

Flores v. Hartford Life & Accident Ins. Co., No. 3:23-CV-2687-X, 2025 WL 346934 (N.D. Tex. Jan. 30, 2025) (Judge Brantley Starr). Plaintiff Julia Flores is the named beneficiary of a life insurance and accidental death & dismemberment policy covering Ivan Gonzalez Hernandez, insured by defendant Hartford Life & Accident Insurance Company. After Mr. Gonzalez Hernandez died in a car accident, Ms. Flores submitted a claim on the policy. Her claim was denied because Hartford concluded that Mr. Gonzalez Hernandez was in the United States illegally. Although she initially brought her lawsuit in state court alleging state law causes of action, Ms. Flores has since amended her complaint to assert claims under ERISA. Broadly, Ms. Flores alleges that Mr. Gonzalez Hernandez was in the country legally, that Hartford denied her claim because of her race and ethnicity, and that it misrepresented the terms of the policy in order to deny benefits. Defendants Hartford and Dan Von Deck moved to dismiss Ms. Flores’s claim under Section 502(a)(3), which it argued was duplicative of her Section 502(a)(1)(B) claim. Mr. Von Deck also sought to be dismissed as a defendant to this action because he argued he is a claims analyst and not a party to the contract or a proper party to any ERISA claim. Defendants also sought to strike Ms. Flores’s jury demand. Defendants’ motion was granted wholly in this decision. The court agreed with defendants that the equitable relief claim was really a repackaged benefits claim. However, the court dismissed the claim without prejudice, allowing Ms. Flores the opportunity to replead her allegations around what she characterizes as defendants’ broader racist practices to include factual allegations that this practice was not limited to her. Should she do so, the court said she may be able to plead a non-duplicative claim under Section 502(a)(3) to enjoin these practices, separate and apart from seeking benefits under Section 502(a)(1)(B). As for Mr. Von Deck, the court agreed with defendants that the complaint fails to inform it of who he is and why he is a party that controls the plan. Again, the court permitted Ms. Flores to replead to cure this deficiency should she wish to. Finally, the court struck Ms. Flores’s jury demand as the Fifth Circuit has consistently held that there is no right to a jury in ERISA cases.

Seventh Circuit

Appvion Ret. Sav. & Emp. Stock Ownership Plan v. Richards, No. 18-C-1861, 2025 WL 346736 (E.D. Wis. Jan. 30, 2025) (Judge William C. Griesbach). In the late 1990s the French conglomerate that owned Appvion Papers, Inc. wanted to sell. The problem was it couldn’t find a buyer for the company, which was struggling in the wake of the internet age. The owners found a solution to their problem in the form of an employee stock ownership plan (“ESOP”). In 2001, the Appvion Retirement Savings and Employee Stock Ownership Plan was created, and the company stock was sold to its employees. The downward trajectory of Appvion continued, despite stock valuations predicting otherwise, and eventually in 2017 the company filed for bankruptcy. As a devastating consequence of the bankruptcy, Appvion employees collectively lost $40 million in ESOP retirement funds. The sole member of the ESOP’s administrative committee, Grant Lyon, initiated this lawsuit on behalf of the plan against seven entities and nineteen individuals alleging claims under state law, federal securities fraud, and, of course, ERISA. Procedurally, this case has a long history and has taken many turns. Most recently, the Seventh Circuit revived much of this lawsuit after the district court entered final judgment pursuant to Federal Rule of Civil Procedure 54(b) in favor of defendants. Our summary of that decision was featured as the case of the week in Your ERISA Watch’s May 1, 2024 newsletter. Unhappy with this result, the ESOP’s first trustee, defendant State Street Bank & Trust Company, moved to dismiss the restored claims asserted against it. The court denied its motion here. Mr. Lyon alleges that State Street violated its fiduciary duties by failing to scrutinize and indeed approving the appraiser’s allegedly inflated stock valuations. He argues that “because the Seventh Circuit found that the SAC stated claims against State Street, State Street’s argument that Plaintiff has failed to state a claim against it is barred by the mandate rule and the law of case doctrine.” The court agreed that the Seventh Circuit explicitly held that plaintiff adequately pleaded claims of imprudence, disloyalty, and co-fiduciary liability. Although the Seventh Circuit did not explicitly or implicitly address causation “because State Street did not raise the issue on appeal,” the court concluded that Mr. Lyon “has plausibly alleged State Street caused harm to the plan.” Although causation “often involves thorny, fact-laden issues not well suited to be decided at the pleading stage,” the court was satisfied that Mr. Lyon plausibly suggests that if State Street had not approved of the $17.55 share price in 2013 and instead realized the stock’s true lack of value, the plan would not have purchased the stock at that price in June 2013. The court declined to resolve State Street’s other arguments as it considered them to be “legal and factual questions.” Based on the foregoing, the court denied State Street’s motion to dismiss and lifted the stay of discovery as to State Street.

Provider Claims

Third Circuit

Abira Med. Labs. v. IATSE Nat’l Benefit Funds Office – Local 1 & Their Affiliates, No. 23-21379 (GC) (JBD), 2025 WL 346670 (D.N.J. Jan. 30, 2025) (Judge Georgette Castner). Plaintiff Abira Medical Laboratories, LLC sued the I.A.T.S.E. National Health and Welfare Fund in New Jersey state court alleging state law causes of action seeking to recover $55,006 defendant allegedly owes for over 720 unpaid claims. Defendant removed the action to federal court, and then moved to dismiss the state law causes of action as completely preempted by ERISA. In this decision the court denied defendant’s motion and remanded the case to the Superior Court of New Jersey, Law Division, Mercer County. Very simply, the court concluded that Abira was not a party that could bring a claim under ERISA because it is not a participant or beneficiary of an ERISA plan, and because it does not have derivative standing through an assignment from an ERISA plan participant or beneficiary, which would not, in any event, be enforceable in light of the anti-assignment provisions defendant itself attached in support of its motion to dismiss. Accordingly, the court held that defendant failed to demonstrate that prong one of the two-part Davila ERISA preemption test was satisfied and therefore concluded that it lacks subject-matter jurisdiction over the seven state law causes of action in Abira’s lawsuit.

Genesis Lab. Mgmt. v. United Health Grp., No. 21cv12057 (EP) (JSA), 2025 WL 325840 (D.N.J. Jan. 29, 2025) (Judge Evelyn Padin). Plaintiff Genesis Laboratory Management LLC brings this action alleging that defendants United Healthcare Services, Inc. and Oxford Health Plans, Inc. failed to pay and underpaid it for COVID-19 testing and other laboratory services it provided to participants and beneficiaries of plans either insured or administered by the defendants. Plaintiff asserts claims under both ERISA and state law. Defendants moved to dismiss the complaint for failure to state claims. The motion to dismiss was almost entirely denied as to the ERISA claims, but granted as to the state law causes of action for various reasons. Regarding ERISA, the court rejected defendants’ arguments that Genesis lacks standing to sue for benefits under the statute, that it failed to plead facts establishing exhaustion of administrative remedies, and that it failed to allege sufficient facts to state claims. First, the court held that Genesis adequately pled derivative standing under ERISA as it alleges it made patients assign their benefits and because it quotes from the language of the assignment of benefits. The court said that more specificity was not required here as this lawsuit pertains to care provided to some 13,000 patients. However, there was one small caveat. The court agreed with defendants that some of the assignments were retroactive and that these assignments could not confer standing after litigation commenced. The court therefore disregarded these retroactive assignments and dismissed the ERISA claim for lack of standing as to the plans from United members whose assignments are retroactive. Next, the court blessed Genesis’s admittedly “sparse” allegations that it regularly appeals denials and underpayments by utilizing United’s appeals process and concluded that this was enough to sufficiently plead exhaustion of administrative remedies for the purpose of surviving a motion to dismiss. Finally, because the gravamen of Genesis’s action is that ERISA plans incorporate the requirements of Congress’s emergency COVID-19 legislation, the FFCRA and the CARES Act, to reimburse it for COVID-19 testing, the court determined that plaintiff did enough to plead claims for reimbursement under Section 502(a)(1)(B). The remainder of the decision discussed the various deficiencies in plaintiff’s state law claims as to the non-ERISA plans. To the extent the motion to dismiss was granted (for the state law claims and for the narrow ERISA dismissal relating to the retroactive assignments), dismissal was with prejudice.

Milione v. Aetna Life Ins. Co., No. 24cv4738 (EP) (AME), 2025 WL 325864 (D.N.J. Jan. 29, 2025) (Judge Evelyn Padin). Dr. Donald P. Milione runs a chiropractic practice in New Jersey. In this ERISA action, Dr. Milione sued Aetna Life Insurance Company seeking $133,410.16 in underpaid or unpaid benefits he alleges are due to fifteen patients under assignments of benefits they each signed. Aetna moved to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). The court granted the motion and dismissed the complaint without prejudice in this decision. The court first agreed with Aetna that fourteen of the fifteen patients were insured under plans with clear and unambiguous anti-assignment provisions, and as a result Dr. Milione lacked derivative standing to sue under ERISA. For the last patient, whose plan did not contain any such anti-assignment language, the court agreed with Aetna that Dr. Milione’s complaint fails to tie his claims for reimbursement to any plan provision or language entitling him to the benefits allegedly due. The court thus dismissed this final claim relating to the one remaining plan for failure to plausibly allege Aetna failed to pay according to the terms of the plan.