It was a slow week for ERISA cases in the federal courts last week, with no standout decision. However, the courts did touch on some interesting topics, including whether a health insurance plan has a fiduciary duty to negotiate with providers (Mejia v. Credence Management Solutions), whether a potential beneficiary under a life insurance plan is required to exhaust administrative remedies if they are sued in interpleader (Morgan v. Barrera), whether an arbitration provision in a profit sharing plan can be enforced against an employee who retired and was fully vested before the provision was added to the plan (Parrott v. International Bank of Commerce), and how a court should organize a lawsuit by a medical provider alleging underpayment of 1,000 claims for 366 patients under 100 different plans totaling over $10 million (DaSilva v. Empire).

The courts also addressed the issue of whether it’s okay for plan fiduciaries to loot plans, commingle plan funds with general assets, and fail to make contributions on behalf of plan participants (Chavez-DeRemer v. Christy and Micone v. iProcess Online). You will be shocked to learn that this is not allowed under ERISA, and that you don’t get to be a fiduciary anymore if you do these things.

We’ll be back next week with more ERISA goodness!

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

Arbitration

Fifth Circuit

Parrott v. International Bank of Commerce, No. 5:24-cv-1263-DAE, __ F. Supp. 3d __, 2025 WL 1176523 (W.D. Tex. Apr. 16, 2025) (Judge David Alan Ezra). Plaintiff Paul Parrott brings this putative class action under ERISA against International Bank of Commerce, International Bancshares Corporation, and the International Bancshares Corporation Profit Sharing Plan Committee, alleging they breached their fiduciary duties pertaining to the International Bancshares Corporation Employees’ Profit Sharing Plan and Trust by failing to prudently invest plan assets for the exclusive benefit of plan participants. Defendants responded to Mr. Parrott’s class action by filing a motion to compel individual arbitration pursuant to the plan’s 2024 arbitration provision. Mr. Parrott opposed. He argued that the arbitration provision was not valid for two reasons. First, he maintained that he did not consent to arbitrate as he had already separated from the company and ceased participation in the plan at the time of the arbitration agreement, and never assented to the agreement through continued employment or plan participation. Second, Mr. Parrott argued that the arbitration amendment is invalid because it prevents the effective vindication of statutory rights under ERISA by barring plan-wide relief and claims brought in a representative capacity on behalf of the plan. He further argued that the arbitration amendment “waters down the standard by which fiduciaries will be evaluated.” Because the court agreed with Mr. Parrott’s first argument, it did not even get to his second. Mr. Parrott relied on Casey v. Reliance Tr. Co., No. 4:18-CV-424, 2019 WL 7403931 (E.D. Tex. Nov. 13, 2019), to support his position that he did not consent to the 2024 amendment to the plan which added the arbitration provision. In Casey the plaintiffs had similarly already left their employment and were fully vested in their plan benefits prior to the addition of the arbitration amendment. The court held that there was no valid arbitration agreement because neither the employer nor the plan gave the plaintiffs anything in exchange for the amended arbitration clause. As a result, the court concluded that the retroactive arbitration agreement did not bind individuals who had ceased participation in the plan and whose cause of action accrued prior to the amendment. The court agreed with Mr. Parrott that Casey was on point. “As alleged, Plaintiff is a ‘former’ Participant in the Plan and already received his full distribution from the Plan. Therefore, as in Casey, the Court finds that there was no consideration under Texas law for the Amended Arbitration agreement because this was not a situation where an at-will employee received notice of an employer’s arbitration policy and continued working with knowledge of the policy.” Accordingly, the court found that defendants failed to meet their burden to establish that the arbitration agreement was valid and enforceable. Given this holding, the court did not reach the issue of the application of the effective vindication doctrine. The court therefore concluded that it could not compel arbitration and denied defendants’ motion.

Breach of Fiduciary Duty

Sixth Circuit

Parker v. Tenneco Inc., No. 23-cv-10816, 2025 WL 1173011 (E.D. Mich. Apr. 22, 2025) (Judge Judith E. Levy). Participants of the DRiV 401(k) Retirement Savings Plan and the Tenneco 401(k) Investment Plan bring this putative class action against the plans’ fiduciaries for violations under ERISA. This lawsuit already has quite the procedural history, including, most notably, a decision denying defendants’ motion to compel individual arbitration, which was affirmed in the Sixth Circuit. Defendants petitioned the Supreme Court to take up the arbitration issue, but the Supreme Court denied their writ of certiorari. Presently before the court was plaintiffs’ motion for leave to file a second amended complaint and defendants’ motion to dismiss. The court granted in part and denied in part plaintiffs’ motion for leave to amend and denied as moot defendants’ motion to dismiss. Plaintiffs seek leave to amend “to bring the factual allegations and claims up to date and amend and expand upon them based on new information learned since Plaintiffs filed their last pleading in a different court over two years ago, and to provide additional and more-specific allegations to address alleged technical deficiencies.” Defendants opposed and argued that amendment would be futile because the proposed second amended complaint violates the pleading requirements of Rule 8 and 10 and rests on formulaic recitations and conclusory allegations in violation of the pleading standards of Twombly and Iqbal. Additionally, defendants contend that certain claims are time-barred. As an initial matter, the court disagreed with defendants that the proposed amended complaint fails to satisfy Rule 8 and Rule 10. The court found defendants had adequate notice of the claims against them and the grounds upon which the claims rest, satisfying Rule 8, and the presentation of the claims does not create any clarity issues under Rule 10 that render amendment futile. Defendants found more success with their assertion that the proposed complaint fails to comply with the pleading requirements in Twombly and Iqbal. Their objection broke down into four parts: (1) the complaint does not provide the factual basis for plaintiffs’ claim that all defendants were fiduciaries of both plans; (2) the claims for relief in the amended complaint recite the elements of co-fiduciary liability without explaining how each defendant is liable as a co-fiduciary; (3) the claims for breach of the fiduciary duty to monitor likewise fail to identify which defendant failed to monitor which other defendants; and (4) the new claims related to forfeited employer contributions are not supported by factual allegations related to each defendant. The court agreed, at least in part, with the first three arguments. The court held that plaintiffs could not rely on the assertion that two defendants, Lynette Vollink and Jeff Bowen, have fiduciary status solely because they signed Form 5500s. However, as a general matter, the court was satisfied that the complaint alleges far more with regard to the fiduciary status of all other defendants and thus mostly disagreed with defendants on this point. That being said, the court stipulated that not all defendants are alleged to be fiduciaries of both plans, and the court took issue with the proposed second amended complaint to the extent that it relies on the assertion that certain fiduciaries are defendants with respect to plans they did not administer or oversee. The court also agreed with defendants that the proposed amended complaint does not meet the pleading requirements of Twombly and Iqbal with regard to the co-fiduciary and failure to monitor claims, as it found plaintiffs fail to state a claim for relief based on co-fiduciary liability and failure to monitor beyond reciting the elements of such claims. Accordingly, plaintiffs’ motion for leave to amend was denied with respect to these claims. Beyond these holdings, however, the court disagreed with defendants that plaintiffs’ proposed amendments would be futile. With respect to their forfeited employer contribution claims, the court stated that other district courts have found similar allegations sufficient to survive challenges at the pleadings and therefore disagreed with defendants that adding such claims would be futile. Moreover, because plaintiffs allege that defendants’ actions relating to employer contributions are ongoing, the court declined to deny leave to amend them based on arguments that they are time-barred. Accordingly, the court granted plaintiffs’ motion for leave to file their second amended complaint, with certain exclusions explained above, and in light of that decision, denied defendants’ motion to dismiss as moot.

Ninth Circuit

Mejia v. Credence Management Solutions, No. 2:23-cv-02028-MEMF-MRW, 2025 WL 1167349 (C.D. Cal. Apr. 21, 2025) (Judge Maame Ewusi-Mensah Frimpong). Plaintiff Clarisol Mejia sued her ERISA-governed health care plan and its administrator seeking the vast difference between the costs they paid for two surgeries, $1,606.60, and the total amounts billed, $101,046.00. In her operative complaint Ms. Mejia alleges claims for failure to pay plan benefits under Section 502(a)(1)(B) and breach of fiduciary duty under Section 502(a)(3). Defendants moved for judgment on the pleadings as to the fiduciary breach claim. They also filed a request for judicial notice. The court addressed this first. Defendants requested the court judicially notice two documents: a declaration and the health benefits plan. The court took judicial notice of both, concluding that the declaration is public record, and that the plan is incorporated by reference in Ms. Mejia’s complaint, and she did not oppose defendants’ request for judicial notice. Accordingly, the court granted defendants’ request for judicial notice in its entirety. It then discussed the motion for judgment on the pleadings. Defendants argued that Ms. Mejia failed to state her claim for two reasons. First, they argued that a failure to negotiate with medical providers cannot give rise to a claim for fiduciary breach. Second, defendants maintained that Ms. Mejia seeks inappropriate, duplicative relief. The court was not persuaded by either argument. Ms. Mejia’s counsel argued that there is a fiduciary duty to attempt to negotiate. The court agreed, “insofar as Defendants owe fiduciary duties to act in the best interest of Plan participants and beneficiaries—including Mejia—and reading the allegations and drawing reasonable inferences in the light most favorable to Mejia, Defendants have a fiduciary duty to attempt to negotiate with the Medical Providers.” The court therefore denied defendants’ motion as to the first ground. Regarding the second ground for the motion, the court found that Ms. Mejia may pursue both monetary relief, i.e.,the payment of her bill under the plan, and equitable relief, i.e., an order compelling defendants to attempt a negotiation with the providers. The court disagreed with defendants’ argument about a potential windfall. They asserted that paying the full cost of services is not a benefit that is provided to Ms. Mejia under the plan. The court replied that although defendants are correct that the plan provision Ms. Mejia cites does not necessarily provide that they must pay the full amount sought, the court stated that the language does not preclude such a remedy either. Moreover, the court emphasized that Ms. Mejia’s requested relief under Section 502(a)(1)(B) and Section 502(a)(3) are alternative theories, and not duplicative of one another. For these reasons, the court denied defendants’ motion with respect to Ms. Mejia’s requests for monetary and equitable relief under her fiduciary breach claim, and, by extension, denied their motion for judgment on the pleadings.

Class Actions

Third Circuit

Cockerill v. Corteva, Inc., No. 21-3966, 2025 WL 1159519 (E.D. Pa. Apr. 21, 2025) (Judge Michael M. Baylson). This class action lawsuit stems from the 2019 spinoff by chemical company DuPont into three separate business organizations: DuPont de Nemours Inc., Dow Inc., and Corteva, which disrupted the retirement benefits of many DuPont employees. The workers sued under ERISA seeking the early and optional retirement benefits they lost the ability to apply for and obtain following this corporate restructuring. After a bench trial which took place in the summer and fall of 2024, the court issued a liability decision finding in favor of the plaintiffs. (Your ERISA Watch covered that decision in our January 1st edition of this year). The case has since proceeded to its remedies phase. Before the court here was defendants’ motion to dismiss the optional retirement class breach of fiduciary duty claim, as well as the claims of one of the named plaintiffs, for lack of subject matter jurisdiction based on a purported lack of Article III standing. Additionally, defendants moved to decertify the optional retirement class. The court denied both motions in this order, stating that defendants were improperly attempting to relitigate liability issues already decided in favor of plaintiffs. The decision discussed standing first. As an initial matter, the court rejected defendants’ assertion that plaintiffs’ injury was premised on “subjective confusion.” On the contrary, the court explained that the optional retirement class members were concretely injured by the breach of fiduciary duties because defendants’ failure to provide clear and accurate information prevented the class members from knowing where they stood with respect to their pensions and prevented them from taking any action to prevent or mitigate this loss of benefits. Moreover, the court held that plaintiffs’ injuries were concrete, not merely statutory violations, as defendants argued. By way of example of a bare statutory violation, the court offered the hypothetical of an incorrect zip code. “But, in no way can the harms experienced by Plaintiffs be conceptualized as equivalent to an incorrect zip code.” Rather, the court agreed with plaintiffs that the incomplete, inconsistent, and contradictory information communicated (and not communicated) to them by defendants went far beyond a mere technical violation of the statute. “The injury to the Early and Optional Retirement Class Members is one of the very specific injuries that ERISA was enacted to prevent—the inability to know where exactly one stands with respect to his pension benefits and Plan resulting from the miscommunication or omission of material information.” As a result, the court was confident that the optional retirement class plaintiffs satisfied the injury-in-fact requirement for Article III standing. And the court was also confident that plaintiffs’ injuries were traceable to defendants’ actions as those actions directly deprived them of the opportunity to pressure defendants or challenge defendants’ erroneous interpretation of the plan. The court then spoke to defendants’ motion to decertify the optional retirement class. The court declined to adopt defendants’ position that this case is not appropriately treated as a class action, stating that to do so “would defeat the purpose of class actions entirely.” The court further rejected the idea that even to the extent that resolution of the optional retirement class claims requires determining individualized financial harm evaluations, the case could not proceed as a class action. Next, the court maintained that the optional retirement class satisfies Rule 23(a)’s typicality and adequacy retirements. The court found that one of the named plaintiffs was an adequate class representative regardless of the release he signed, and that another named plaintiff was an adequate representative despite being laid off after the spin-off and testifying that he planned for an unreduced retirement benefit. For these reasons, the court denied defendants’ partial motion to dismiss and their motion to decertify. The decision ended with a discussion of why the court was deciding that it could and should award the optional retirement class retroactive recovery as of the date of the spin-off, should class members elect such recovery. The court distinguished the present action from Cottillion v. United Ref. Co., 781 F.3d 47 (3d Cir. 2015), a case in which the Third Circuit found retroactive relief too speculative because the plan participants knew of their eligibility to elect benefits but chose not to because of misleading plan communications about actuarial reductions. The court stated that the optional retirement class members’ denial of benefits was materially different from the Cottillion plaintiffs because they failed to apply for optional retirement benefits due to defendants’ silence about those benefits being cancelled and because of the lack of information necessary to assert those rights in the first place. “Cottillion does not foreclose this type of relief. Rather, Cottillion underscores the distinction between participants who were given the option to elect benefits and chose not to, and those who were deprived of the option altogether. Accordingly, the Court finds that retroactive recovery is appropriate for the Optional Retirement Class under Count II. This remedy is permissible… and necessary to place class members in the position they would have been in had the Plan been administered in accordance with its terms and ERISA’s requirements.” Thus, the court ended its order by formalizing its decision that it would permit the optional retirement class members to elect retroactive benefits under the fiduciary breach claim.

Disability Benefit Claims

Second Circuit

Rappaport v. Guardian Life Ins. Co. of Am., No. 1:22-cv-08100 (JLR), 2025 WL 1156760 (S.D.N.Y. Apr. 21, 2025) (Judge Jennifer L. Rochon). In 1994 plaintiff Jason Rappaport co-founded a mortgage banking company, Industrial Credit of Canada Mortgage Services (“ICC”). In addition to being a mortgage broker, Mr. Rappaport was also a 50% owner of  ICC. In about 2004 or 2005, ICC applied for a group disability insurance policy from Guardian Life Insurance Company of America through ICC’s insurance broker. There was some confusion about whether the policy included or excluded bonuses and commissions in its earnings definition, though it was clear that the parties discussed this, and that ICC wished to include them. Notwithstanding that communicated desire, Guardian ultimately issued the long-term disability policy with an earnings definition that excluded bonuses and commissions. Cut ahead ten years to 2015 and Mr. Rappaport was diagnosed with a severe form of leukemia. On August 17, 2015, Mr. Rappaport informed Guardian that he was unable to continue working, and on September 15, 2015, he applied for long-term disability benefits. Since he applied for disability benefits, Guardian has had questions regarding how Mr. Rappaport was paid, including whether he was paid by ICC on a W-2 or as a shareholder, and whether he had a set salary or was paid based on the company’s earnings and profits through K-1 earnings. To clear up this confusion Mr. Rappaport’s attorney confirmed that prior to his disability Mr. Rappaport’s salary was calculated based on both salary and profits, including his K-1 earnings. It took a bit of back and forth, but ultimately Guardian approved Mr. Rappaport’s claim and began paying him the maximum long-term disability benefit of $10,000 per month effective October 13, 2015. Guardian paid these benefits through August 2020. This litigation arises from Guardian’s termination of Mr. Rappaport’s long-term disability benefits. At first, Guardian informed Mr. Rappaport that it was terminating his monthly benefits because it had not received ongoing proof of claim from his medical providers. But this was during the height of the COVID-19 pandemic and Mr. Rappaport convincingly argued that he had difficulty acquiring outstanding medical information from his providers given the epidemic. On December 21, 2020, he successfully submitted the outstanding medical records to Guardian. Nevertheless, Guardian maintained that he no longer qualified for disability payments, but for a different reason – he was capable of earning more than the maximum allowed while disabled (more than 80% of his indexed insured earnings). Moreover, Guardian claimed that it had overpaid him hundreds of thousands of dollars based on its recalculation of his earnings while disabled, and requested reimbursement of $326,889.05 by March of 2021. This action followed. Mr. Rappaport asserted a claim for wrongful denial of benefits under Section 502(a)(1)(B) as well as a claim for an alternative equitable remedy of reformation of the plan so that insured earnings would include bonuses and commissions, as ICC had always intended. Mr. Rappaport also sought attorneys’ fees and costs under Section 502(g)(1). Guardian meanwhile asserted counterclaims against Mr. Rappaport for restitution and set-off. In a previous order the court held that a de novo standard of review applied to the benefits claim and that Mr. Rappaport’s reformation claim was not time barred. The court also entered summary judgment in favor of Mr. Rappaport as to Guardian’s counterclaim for restitution. The parties subsequently consented to a bench trial on the stipulated record. Both parties agree that the central question before the court is whether the term “insured earnings,” as used in the plan, includes Mr. Rappaport’s K-1 earnings from his position at ICC. In this decision, the court found it does and that Guardian’s benefit denial was erroneous because it did not apply this more inclusive insured earnings definition. The court thus entered judgment for Mr. Rappaport. First, the court determined that K-1 earnings are not bonuses or commissions because this income was not discretionary, like a bonus, or dependent on a particular sale, as a commission would be. The court said that K-1 earnings were not extra compensation, but regular income. Thus, it concluded that “based on the Plan’s plain language… Rappaport’s K-1 income unambiguously falls within the ambit of the Plan’s insured-earnings definition.” However, the court added that even if the plan language was ambiguous on this point, extrinsic evidence also supported Mr. Rappaport’s position that both ICC and Guardian intended insured earnings to encompass his K-1 income from the company, including Guardian’s own documents and Mr. Rappaport’s financial submissions when he applied for benefits. The court therefore held that the plan’s definition of insured-earnings encompasses Mr. Rappaport’s K-1 earnings in addition to his W-2 salary earnings. Second, the court agreed with Mr. Rappaport that even though the K-1 earnings were not bonuses, commissions, or any other form of extra earnings, those earnings should still be included in the plan’s definition of insured earnings and the policy should be reformed to reflect the most expansive definition of insured earnings, as the parties intended all along. “Other than pointing to the ultimate policy language that mistakenly does not contain ‘including bonuses and commissions,’ Guardian has not identified any evidence in the record, despite searching, where the parties agreed to a definition that excluded bonuses and commissions. Rather, all the evidence in the record demonstrates that ICC consistently expressed its intent to procure an earnings definition that included bonuses and commissions and that Guardian knew and confirmed that election. Reformation of the Plan’s language, which did not ultimately reflect that mutual agreement, is therefore appropriate.” This left only the issue of the appropriate remedy. The parties agreed, and the court did too, that if it were to find K-1 earnings included in insured earnings it should remand to Guardian to engage in a benefit determination based on an income and medical assessment and to determine if any potential set-off is appropriate. Finally, the court allowed Mr. Rappaport time to file a motion for attorneys’ fees and costs.

ERISA Preemption

Ninth Circuit

Sagebrush LLC v. Cigna Health and Life Ins. Co., No. 8:24-cv-00353-MEMF-JDE, 2025 WL 1180696 (C.D. Cal. Apr. 23, 2025) (Judge Maame Ewusi-Mensah Frimpong). Plaintiff Sagebrush LLC is a healthcare provider that delivers medically necessary behavioral health services to its patients. In this action Sagebrush alleges that Cigna Health and Life Insurance Company has not properly reimbursed it for the care it has provided to Cigna policyholders. Sagebrush asserts state law causes of action for breach of implied-in-fact contract, unfair business practices under the California Unfair Competition Law, unjust enrichment, quantum meruit, and account stated. Cigna moved for judgment on the pleadings. It argued that Sagebrush failed to state its claim and that to the extent any claim for reimbursement is governed by a self-funded ERISA-governed employee benefit plan those claims are preempted by ERISA. The court granted in part Cigna’s motion, with leave to amend. It concluded that Sagebrush either sufficiently pleaded its state law claims or that the proposed amendments would be sufficient. The court refrained from reaching the issue of preemption at this time stating that the pleadings do not indicate that there are any ERISA plans at issue. Should the existence of an ERISA plan be later revealed by the pleadings, the court stipulated that Cigna may raise the issue again at the summary judgment stage.

Life Insurance & AD&D Benefit Claims

Second Circuit

Daus v. Janover LLC Cafeteria Plan, No. 19-CV-6341, 2025 WL 1167816 (E.D.N.Y. Apr. 22, 2025) (Judge Frederic Block). Plaintiff Paul Daus has been a public accountant since 1996. From 2011 until 2016 Mr. Daus worked for Janover, LLC as a senior tax manager. He lost that position after he became disabled from a medical condition and was terminated. Following his termination from Janover Mr. Daus filed a charge with the Equal Employment Opportunity Commission (“EEOC”) alleging disability discrimination and retaliation by his employer. On January 9, 2018, Mr. Daus, along with his counsel, participated in an EEOC mediation session with Janover during which the parties signed a settlement agreement wherein Janover paid Mr. Daus $35,000 in exchange for a general release. That release expressly provided that Mr. Daus was executing the release on his own behalf and behalf of his heirs, executors, successors and beneficiaries, and that he waived all claims for alleged lost wages and benefits, including claims under ERISA. The settlement agreement also provided that Mr. Daus could consider the agreement for 21 days and that he had 7 days to revoke it after signing. Mr. Daus did not do so. Then Mr. Daus lost his life insurance coverage under Janover’s group policy. He alleges that Janover failed to notify him that he had the right to convert his coverage under the group policy to an individual policy, for which no premiums would be due because he was totally disabled. Mr. Daus, along with his wife, Traci Daus, then initiated this litigation against Janover asserting breach of fiduciary claims under ERISA in connection with the lost life insurance benefits. Janover and the Dauses cross-moved for summary judgment. The central question before the court was whether plaintiffs’ claims under ERISA were waived in the EEOC settlement agreement. The court found they were. Accordingly, the court granted Janover’s motion for summary judgment and denied plaintiffs’ motion. To get there, the court considered the Second Circuit’s six Laniok-Bormann factors to determine the knowledge and voluntariness of the waiver. First, the court concluded that Mr. Daus, a savvy senior tax manager, had the requisite sophistication and business experience to enter into the contract knowingly. Second, the court found that the amount of time he had to review the agreement, coupled with the period he had after the agreement to revoke it, meant that Mr. Daus signed the agreement only after giving it due consideration. Third, the court agreed with Janover that Mr. Daus and his counsel played at least some role in negotiation and deciding the terms of the agreement. Fourth, the court concluded that the terms of the agreement were clear and specific, and that these terms expressly announced that Mr. Daus agreed to waive claims under ERISA. Fifth, there was no question that Mr. Daus was represented by legal counsel. The only factor that complicated the picture somewhat was the sixth and final one – whether the consideration given in exchange for the waiver exceeded employee benefits to which the employee was already entitled by contract or law. Here, there was no question that the $35,000 settlement payment was meager relative to the right of the couple to $500,000 in life insurance benefits at no premium cost. Nevertheless, the court determined that this factor did not strongly disfavor enforcement when considered in tandem with the others. Thus, the court held that Mr. Daus knowingly and voluntarily waived ERISA claims against Janover. The court then took a moment to consider Mr. Daus’s most substantial argument against enforcement – that on the day of the mediation he was in serious pain, recovering from spinal surgeries, and that his doctor had changed his prescription medication just one day before. Though the court acknowledged that Mr. Daus recounted serious pain, stress, and discomfort on the day of the settlement, even accepting this account, it simply felt that the proffered evidence was insufficient to overcome the presumption of his competency because the symptoms he described are “not of the sort that suggests he was unable to willingly and voluntarily enter into the Settlement Agreement.” Finally, the court agreed with Janover that Traci Daus’s claims would ultimately fail too as they were encompassed by the waiver. For these reasons, the court found that all of the couple’s ERISA claims were validly encompassed by the EEOC settlement agreement provisions that released Janover from liability from all claims under ERISA in connection with Mr. Daus’s termination. Thus, the court entered judgment in favor of Janover.

Fifth Circuit

Morgan v. Barrera, No. 21-20497, __ F. App’x __, 2025 WL 1157549 (5th Cir. Apr. 21, 2025) (Before Circuit Judges Richman and Ho). This case involves a dispute over the life insurance benefits of Janie Barrera, and whether she had properly designated Christine and Denise Morgan as her beneficiaries before she died or if the proceeds should instead pass to her sisters under the plan’s default provisions. Prudential sought interpleader relief, stating it couldn’t determine the proper beneficiary to the death benefit. The district court ruled in favor of the Morgans. The sisters appealed that decision to the Fifth Circuit. In this order the Fifth Circuit affirmed. Appellants argued that the district court erred in granting the Morgans’ summary judgment motion for two reasons: (1) they lack standing under ERISA and (2) they did not substantially comply with the change of beneficiary requirements. The court of appeals did not agree. The Barrera sisters’ standing argument was two-fold. First, they contended that the Morgans failed to exhaust administrative remedies. Although the Fifth Circuit requires exhaustion, the appeals court held that this requirement is not applicable in the interpleader context because the concerns addressed by the exhaustion requirement are simply not present in these types of cases. Thus, it found that non-exhaustion does not defeat standing in the present matter. Next, the court of appeals disagreed with the sisters that the Morgans are not beneficiaries with the ability to sue under ERISA. “As our sister circuit has emphasized, in cases in which the insurance company has properly asserted an interpleader action, ‘it does not matter whether [claimants themselves] have standing to assert an ERISA cause of action.’ The Morgans have standing as potential beneficiaries and as claimants in the interpleader action.” The Fifth Circuit then addressed the Barreras’ second argument that their sister Janie did not substantially comply with the policy requirements to change her beneficiary. Here, it was clear that Janie intended to change her beneficiary designation and that she took active steps to effectuate that change. In fact, Prudential even appeared to have accepted the attempted change as evidenced by the fact it sent a letter to the Morgans after Janie’s death confirming the change of beneficiary and inviting them to begin the claim process. For these reasons, the court of appeals determined that the district court did not err in rendering judgment for the Morgans and thus affirmed.

Medical Benefit Claims

Seventh Circuit

Leo K. v. Anthem Blue Cross Blue Shield, No. 24-CV-1625, 2025 WL 1169054 (E.D. Wis. Apr. 22, 2025) (Magistrate Judge Nancy Joseph). Plaintiffs Leo and Donna K. sued their ERISA health benefits plan and its administrator, Anthem Blue Cross Blue Shield, after the plan denied coverage for their minor child’s mental health treatment at a residential facility which resulted in them paying over $40,000 in out-of-pocket costs. Plaintiffs sued for recovery of benefits under Section 502(a)(1)(B) and for equitable relief under Section 502(a)(3) for violation of the Mental Health Parity and Addiction Equity Act. Defendants moved to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The court denied the motion to dismiss in this decision. The court addressed each cause of action in turn. First, it held that plaintiffs asserted a viable claim under Section 502(a)(1)(B) for recovery of benefits because they were able to point to plan language which potentially provides coverage for the facility’s services: “Plaintiffs assert that M.L.K.’s treatment at Blue Ridge met all of the requirements of a ‘covered service’” as that term is defined in the plan. The crux of defendants’ argument was that the plan contains language specifically excluding certain forms of wilderness therapy treatment from coverage. But the court noted that plaintiffs contest this and argue that the version of the plan document they had and used when making treatment decisions for their child contained no such exclusion. Given this dispute, and plaintiffs’ allegations in the complaint that the operative plan document does not contain the language on which defendants rely, the court declined to dismiss the claim for benefits. Next, the court discussed the Parity Act allegations. Plaintiffs alleged that the plan offered comparable benefits for medical and surgical treatments that were analogous to the benefits it excluded at Blue Ridge for their child’s residential inpatient treatments. Moreover, they alleged that the plan does not exclude coverage for medically necessary medical or surgical care based on the location, facility type, provider specialty, or other criteria in the manner that it excludes the mental health treatment at Blue Ridge. “Plaintiffs further allege that the Plan contains exclusions for behavioral and mental health disorders and substance abuse that are not imposed on medical/surgical benefits and thus imposes more restrictive treatment limitations on mental health conditions.” Based on these allegations, the court found that the complaint sufficiently alleges that the plan applies separate and more restrictive treatment limitations to mental health services versus other types of medical and surgical services and therefore it properly alleges a claim under the Mental Health Parity Act. Accordingly, the court denied defendants’ motion to dismiss plaintiffs’ complaint, leaving plaintiffs with both of their causes of action.

Pleading Issues & Procedure

Fifth Circuit

The Expo Group LLC v. Purdy, No. 3:23-CV-2043-X, 2025 WL 1170319 (N.D. Tex. Apr. 22, 2025) (Judge Brantley Starr). This case concerns benefits under two plans: an ERISA-governed plan, the Expo Group’s Leadership Equity Incentive Plan, and a non-ERISA plan, the Long-Term Incentive Plan. Plaintiff Torbejorne Purdy disputes benefit calculations under both plans. The case is set for a jury trial on the state law claims under the long-term plan, followed by a bench trial on the ERISA claims under the equity plan. Mr. Purdy moved to exclude expert testimony of two of the Expo Group’s designated experts: Terese Connerton, designated to testify as the applicable Top Hat classification under ERISA of both plans, and rebuttal expert Robert Cavazos, designated to testify regarding damages calculations under both plans, including the Expo Group’s valuation as of Purdy’s termination date. In this brief order the court granted in part and denied in part the motion to exclude. To begin, the court granted the motion to exclude Ms. Connerton’s testimony as to the claims brought under the long-term plan because Expo Group has since stipulated that the long-term plan is not subject to ERISA, making her testimony no longer relevant as to that plan. However, the court denied the motion to exclude the expert testimony of Ms. Connerton as to the claims under the ERISA-governed equity plan. The court also denied Mr. Purdy’s motion to exclude the expert testimony of Mr. Cavazos. The court stated that Mr. Purdy’s disputes about the valuation and benefit calculation dates go to the weight of the evidence, not the relevance of the expert’s opinion. The court added that Mr. Purdy will have the opportunity to cross-examine Mr. Cavazos before the jury and to present his own expert, as well as advance his arguments on issues of fact before the court with regard to the ERISA claims. The court thus held that Mr. Cavazos’s testimony is relevant and admissible.

Ninth Circuit

Chavez-DeRemer v. Christy, No. CV-24-02640-PHX-DWL, 2025 WL 1169163 (D. Ariz. Apr. 22, 2025) (Judge Dominic W. Lanza). United States Secretary of Labor Lori Chavez-DeRemer filed this action against the trustees and fiduciaries of the Han Robert Christy, D.D.S., P.C. Profit Sharing Plan, alleging they attempted to loot assets from the plan and otherwise failed to properly administer it or distribute retirement funds to eligible employee participants. Before the court here was the Secretary’s motion for a preliminary injunction. Defendants did not file a response to the Secretary’s motion, which, as the court noted, is a sufficient reason alone to grant the motion. However, the court stated it was independently inclined to support the motion on the merits. “[T]he Court agrees with and adopts the Secretary’s arguments as to why the Secretary has established a likelihood of success on the merits, why irreparable harm will result in the absence of preliminary injunctive relief, why the balance of equities favors issuing a preliminary injunction, and why a preliminary injunction is in the public interest. The Court also notes that other courts have granted similar requests for preliminary injunctive relief in analogous cases.” The court broadly agreed that the fiduciaries must be removed from their positions so as not to risk further harm to the plan and its participants during the pendency of this litigation. Thus, the court removed defendants from their roles as trustees, fiduciaries, and administrators of the plan, appointed AMI Benefit Plan Administrators as the independent fiduciary of the plan, and placed the retirement plan assets into an account at Charles Schwab subject to AMI’s exclusive control.

Provider Claims

Second Circuit

DaSilva Plastic and Reconstructive Surgery, P.C. v. Empire HealthChoice HMO, Inc., No. 22-cv-07121 (NCM) (JMW), 2025 WL 1181588 (E.D.N.Y. Apr. 23, 2025) (Judge Natasha C. Merle). Da Silva Plastic & Reconstructive Surgery, P.C. is an emergency plastic surgery practice that provides medically necessary reconstructive surgery to patients in hospitals. It sued Empire HealthChoice HMO, Inc., alleging that the insurer systematically reimbursed it at rates lower than it was required to pay. Da Silva originally asserted claims under both state law and ERISA, seeking over $10 million in reimbursement relating to over 1,000 medical claims for services provided to 366 patients. On January 17, 2025 the court issued an order dismissing plaintiff’s second amended complaint and granting defendants’ motion to sever plaintiff’s claims should the provider file a third amended complaint. The court concluded that the claims had been improperly joined. It concluded that it was implausible that a majority of more than 1,000 claims on behalf of 366 individual patients, subject to more than 100 different plans issued by different plan sponsors, “arose out of the same transaction or occurrence.” Moreover, the court observed that in its opinion no single overarching legal question could resolve all of these diverse claims. Accordingly, the court determined that severance was justified due to the immense record and the vast makeup of the provider’s claims, and would serve the goals of Rule 21, especially judicial efficiency. Da Silva and Empire HealthChoice each filed competing proposals as to how to sever plaintiff’s claims. In this decision the court adopted defendant’s proposal and granted Da Silva leave to file a third amended complaint for medical reimbursement claims under a single ERISA-governed healthcare plan for a single year. The court agreed with Empire HealthChoice that its proposal takes into consideration the fact that the terms of various health plans vary year to year, as do the relevant claims administrators. The court was convinced that narrowing the subset in this way best serves the interests of judicial economy and ensures that the claims that will continue forward are logically related to one another. The court disagreed with Da Silva’s argument that fewer lawsuits necessarily promote judicial efficiency. It stated that it was not clear how plaintiff’s convoluted proposed grouping of claims, severing its medical reimbursement claims into at least six separate lawsuits, “yields the efficiencies contemplated,” because plaintiff’s proposal would not fundamentally answer questions which turn on the provisions of the specific health plans each claim was brought under. “A more tailored grouping – such as grouping together reimbursement claims whose timeliness or recoverability can be determined by reference to the same health plan terms – would better serve judicial efficiency and permit plaintiff’s claims to be resolved by ‘overarching’ legal or factual questions.” Circling back to its observation that the medical claims in plaintiff’s original complaint have no common nucleus, the court stated that each claim for reimbursement “arose out of a distinct factual scenario, including the specific services a patient received, when they received treatment, the specific health plan they received benefits under, and what administrative remedies were pursued.” Thus, the court concluded that only defendant’s proposal adequately factors in this reality. The court therefore adopted that proposal and required plaintiff to file a third amended complaint solely for those claims involving one single ERISA healthcare plan in a single year.

Remedies

Fourth Circuit

Micone v. iProcess Online, Inc., No. 24-61-BAH, 2025 WL 1158885 (D. Md. Apr. 21, 2025) (Judge Brendan A. Hurson). Acting Secretary of Labor Vincent Micone brought this action against a Baltimore payroll processing company, iProcess Online, Inc., the company’s ERISA-governed 401(k) Plan, and the head of day-to-day operations of the plan, Michelle Leach-Bard, for breaches of their fiduciary duties and prohibited transactions under ERISA. The Secretary alleged that from approximately 2014 to 2021, the fiduciary defendants consistently withheld employee contributions from their paychecks for the purpose of remitting the money into their plan accounts but failed to do so, and instead allowed the money to remain unsegregated in the company’s general operating account and commingled it with the company’s assets. Moreover, plaintiff maintains that the fiduciary defendants failed to ensure that all employer matching contributions for employees were made to the plan. In a memorandum order issued on December 2, 2024, the court held that plaintiff established liability and violations of §§ 1103, 1104, and 1106, but failed to adequately support the damages request. Plaintiff supplemented the record and provided additional documentation to support the damages request shortly after that decision. In light of the updated record, the court found it could now determine damages and accordingly amended its order and awarded plaintiff the requested relief. As a preliminary matter, the court sealed the exhibits plaintiff filed relating to the calculation of damages which included employee paystubs and documentation of the 401(k) plan accounts provided by the workers which contained sensitive details including financial account numbers, home addresses, and pay and savings information. Then, relying on this information in the relevant exhibits, as well as the submitted declaration of a labor department investigation, the court concluded that plaintiffs’ requested monetary relief was at this point well documented. The court thus awarded plaintiff the $100,239.54 in monetary damages sought and ordered defendants to pay this amount to the plan. Additionally, the court granted the Secretary’s request that it remove defendants as fiduciaries of the plan and enjoin them from any future service as a fiduciary for an ERISA-governed plan. Finally, the court appointed AMI Benefit Plan Administrators, Inc. to serve as an independent fiduciary of the plan.

Statute of Limitations

Second Circuit

Robinson v. Guardian Life Ins. Co. Grp. Long Term Disability Claim, No. 3:24-cv-994 (BKS/MJK), 2025 WL 1191317 (N.D.N.Y. Apr. 24, 2025) (Judge Brenda K. Sannes). Pro se plaintiff Michelle Robinson filed this action against Guardian Life Insurance Company Group Long Term Disability Claim to challenge Guardian’s denial of her claim for long-term disability benefits. Guardian moved to dismiss the complaint under Rule 12(b)(6). As an initial matter, Guardian asked the court to consider two documents outside the complaint: the certificate of coverage for the group long-term disability policy and a letter dated July 7, 2021 upholding the denial of Ms. Robinson’s claim for long-term disability benefits. The court concluded that it may consider the former but not the latter, as only the certificate of coverage was incorporated by reference and integral to the complaint. The court then discussed Guardian’s principal argument – that Ms. Robinson’s claim for benefits is time-barred under the terms of the plan. The certificate of coverage states that no legal action may be brought against the plan after three years from the date of final benefit determination. The court found this time period reasonable, and agreed with Guardian that Ms. Robinson’s action was filed two days too late. “However, given Plaintiff’s pro se status, and her statement in her response that she ‘was corresponding with Guardian Life up until July 3, 2024,’ the Court grants her leave to amend her complaint to give her an opportunity to allege equitable tolling.” Accordingly, the court granted Guardian’s motion to dismiss, but dismissed the complaint without prejudice and with leave for Ms. Robinson to amend.

Cunningham v. Cornell Univ., No. 23-1007, __ S. Ct. __, 2025 WL 1128943 (U.S. Apr. 17, 2025)

As Your ERISA Watch readers probably know, ERISA litigation often entails a surprising number pf peculiar, court-created rules not applied in any other context. But not for the first time, the Supreme Court this week rejected the notion that ERISA exists in its own special bubble, and firmly planted ERISA in the world of ordinary civil litigation. In this more recognizable world, the burden of pleading and proving an affirmative defense lies with the defendant.

The Cunningham case arose out of a challenge to the investment and recordkeeping fees paid by two defined contribution retirement plans sponsored by Cornell University for 28,000 of its employees. The plan participants alleged not just that the fiduciaries breached their duties of prudence and loyalty by allowing the plan to pay these fees, but also that they engaged in prohibited transactions under ERISA Section 406(a)(1)(C) in contracting on behalf of the plan with the recordkeepers (TIAA and Fidelity), and allowing the plans to pay them excessive fees for these services.

The district court granted defendants’ motion to dismiss the prohibited transaction claim, agreeing with the defendants that Section 406(a)(1)(C) tacitly requires plaintiffs to allege some evidence of self-dealing or disloyalty. The Second Circuit affirmed the dismissal but on a different basis. The court acknowledged that Section 406(a)(1)(C) did not expressly require plaintiffs to plead self-dealing or disloyalty, but reasoned that because its terms would prohibit payment by a plan to any entity providing it with any services, strict application of these terms would lead to absurd results. To avoid those results, the court of appeals held that at least some of the exemptions in ERISA Section 408 – and in particular, the exemption in Section 408(b)(2)(A) for necessary transactions for which no more than reasonable compensation was paid – impose additional pleading requirements on plaintiffs asserting a violation of Section 406(a). The Second Circuit concluded that plaintiffs had not sufficiently pled that the compensation was unreasonable and on that basis affirmed the dismissal.     

The Supreme Court granted certiorari “to decide whether a plaintiff can state a claim for relief by simply alleging that a plan fiduciary engaged in a transaction proscribed by §1106(a)(1)(C), or whether a plaintiff must plead allegations that disprove the applicability of the §1108(b)(2)(A) exemption.” In a unanimous decision, the Court ruled that the answer was the former and not the latter.

The path to this conclusion was surprisingly straightforward. First, the Court relied on the well-settled rule that when a statute sets out prohibitions apart from exemptions, those exemptions are affirmative defenses that defendants bear the burden of proving. Because this describes how ERISA Sections 406(a) and 408 are structured, the Section 408 “exemptions must be pleaded and proved by the defendant who seeks to benefit from them.” In an interesting footnote, the Court noted that this was consistent with the common law of trusts, which allowed a trustee to delegate its duties, but then placed on the trustee the burden of showing that the agent’s employment was necessary and that the terms of its contract with the agent were reasonable. Thus, “[a]t the pleading stage,” the Court concluded that “it suffices for a plaintiff plausibly to allege the three elements set forth in §1106(a)(1)(C).”

The Court found further support for its conclusion in the headings to Sections 406 – “Prohibited transactions” – and Section 408 – “Exemptions to prohibited transactions.” Furthermore, because requiring plaintiffs asserting Section 406 violations to plead around all 21 exemptions set forth in Section 408, as well as the hundreds of regulatory exemptions promulgated over the years by the Secretary of Labor, would eviscerate the explicitly per se nature of the prohibitions in Section 406(a), the Court found that structural considerations also supported its conclusion that the Section 408 exemptions are affirmative defenses. And the Court had no trouble distinguishing a very old Supreme Court decision on which the defendants relied – United States v. Cook – as setting forth a “rule of criminal pleading…[that] rested on constitutional considerations not present in the civil context.”

The Court expressed somewhat more concern with defendants’ assertion that “an avalanche of meritless litigation” will ensue “if disproving the applicability of §1108(b)(2)(A) is not treated as a required element of pleading §1106(a)(1)(C) violations.”When Your ERISA Watch reported on the oral argument of this case in our January 29, 2025 edition, we identified this concern, and how to mitigate this possibility, as one of the overarching themes that seemed of interest to the Justices. Although the decision suggests ways in which courts might be able to screen out meritless cases before discovery – including by asking for a reply under Federal Rule of Civil Procedure 7 “put[ting] forward specific, nonconclusory factual allegations” – the Court was ultimately satisfied that Congress “set the balance” in “creating [an] exemption and writing it in the orthodox format of an affirmative defense,” and the Court’s job was to apply the statute as written.   

A separate concurrence by Justice Alito, joined by Justices Thomas and Kavanaugh, expressed some enthusiasm for the idea of using Rule 7 replies as a means to dispose of Section 406 claims at the pleading stage, referring to it as the “most promising” of the suggested “safeguards” against meritless suits. Indeed, the concurrence went so far as to encourage district courts to “strongly consider utilizing this option—and employing the other safeguards that the Court describes—to achieve ‘the prompt disposition of insubstantial claims.’” The concurrence concluded by saying that ‘[w]hether these measures will be used in a way that adequately addresses the problem that results from our current pleading rules remains to be seen.”

Your ERISA Watch will conclude this summary by saying that what “remains to be seen” is how requiring plaintiffs to plead around Section 408 in a reply rather than in the complaint itself could possibly be reconciled with the Court’s unanimous holding that Section 408 exemptions are affirmative defenses. Hopefully, this procedure will remain as obscure as it has been to date and will not become the exception that swallows the exemption.      

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

Attorneys’ Fees

Second Circuit

Nathanial L. Tindel, M.D., LLC v. Excellus Blue Cross and Blue Shield, No. 5:22-cv-971 (BKS/MJK), 2025 WL 1127489 (N.D.N.Y. Apr. 16, 2025) (Judge Brenda K. Sannes). This action was filed by a plan participant, plaintiff Kevin Heffernan, and his healthcare providers, plaintiffs Nathaniel L. Tindel, M.D., LLC, Nathaniel L. Tindel M.D., individually, and Harris T. Mu, M.D., against Excellus Blue Cross and Blue Shield contesting the rate of reimbursement the insurance company paid for Mr. Heffernan’s spinal surgery in the summer of 2019. Plaintiffs asserted seven claims under both ERISA and state law. Three of these causes of action were dismissed at the pleading stage. Then, on September 16, 2024, the court ruled on the parties’ cross-motions for summary judgment on the remaining four causes of action. The court granted in part and denied in part each party’s motion, ultimately concluding that the denial of benefits was an abuse of discretion. Rather than award benefits, the court determined that under the circumstances remand was the appropriate remedy. (Your ERISA Watch reported on this decision in our September 25, 2024 newsletter). Before the court here was plaintiffs’ motion for attorneys’ fees and costs under ERISA Section 502(g)(1). Excellus Blue Cross opposed an award, arguing that plaintiffs achieved a purely procedural victory because the court assessed the denial and essentially assumed “the benefits at issue will be denied again” on remand. The court disagreed with defendant’s reading of its decision. The court stated that by “explaining the presence of evidence supporting a denial of benefits, this Court was directly addressing the reason why remand was the appropriate remedy, not providing its assessment of the underlying claim.” The court expressed that it had made no determination as to whether there was sufficient evidence to support the denial of benefits and that contrary to defendant’s position, remand represents a “renewed opportunity to obtain benefits or compensation.” By achieving a remand for further consideration, the court held that Mr. Heffernan achieved success on the merits to be eligible for a fee award. The court then considered the Second Circuit’s five Chambless factors: (1) the degree of bad faith or culpability; (2) the ability to satisfy an award; (3) the deterrent effect of any fee award; (4) whether a fee award would benefit all participants of ERISA plans or whether the case resolved a significant legal question; and (5) the relative merits of the parties’ positions. As to the first factor, the degree of culpability, the court held that it favors plaintiffs because defendant’s determination of the claim was an abuse of discretion. Both sides agreed that Blue Cross has the ability to pay a fee award. The court also determined that deterring plan administrators from arbitrarily and capriciously denying future claims for benefits is a laudable goal and supports an award of fees. The fourth factor, the existence of a common benefit or significant legal question, was the only factor the court concluded favors defendant. Nevertheless, the court held that the absence of the common benefit factor does not preclude an award of attorneys’ fees. Finally, the court held that factor five, the relative merits of the parties’ positions, supported an award of fees because defendant’s denial of benefits was not properly explained and was an abuse of discretion. For these reasons, the court found an award of attorneys’ fees and costs to be appropriate in this case. Plaintiffs requested a total of $75,550.00 in attorneys’ fees, an approximate five percentage reduction in their lodestar figure of $80,229.00. The court ultimately awarded $21,282.50 in fees. It reduced both plaintiffs’ requested hourly rates and their hours. Plaintiffs requested that attorney Roy Breitenbach be compensated at $640 per hour and attorney Daniel Hallak be compensated at $525 per hour. The court concluded that the requested rates were substantially higher than what experienced attorneys have been awarded in other cases in the district. Pursuant to its review of those cases the court concluded that an hourly rate range of $250-$350 for partners is reasonable. The court therefore determined that an appropriate hourly rate for attorney Breitenbach was $350 per hour and the appropriate rate for attorney Hallak was $275 per hour. In addition to reducing counsel’s rates, the court also reduced their hours by 50% to reflect plaintiffs’ mixed success obtained overall in the case. The court therefore allowed plaintiffs to recover 18.3 hours for attorney Breitenbach’s time and 54.1 hours for attorney Hallak’s time. Although the court reduced plaintiffs’ fees considerably, it awarded them their full requested $1,503.78 in costs, as these amounts were recoverable and supported by their records. For these reasons, plaintiffs’ fee motion was granted in a modified form and Excellus Blue Cross was ordered to pay plaintiffs a total amount $22,786.28 in attorneys’ fees and costs.

Class Actions

Third Circuit

McLachlan v. International Union of Elevator Constructors, No. 22-4115,  2025 WL 1116533 (E.D. Pa. Apr. 15, 2025) (Judge Michael M. Baylson). Two participants in an ERISA-governed multi-employer retirement plan brought this class action alleging the plan’s trustees breached their fiduciary duties by failing to control plan costs to ensure they were reasonable and by retaining underperforming and imprudent investment options. After less than two years of litigation the parties reached a $5 million agreement to settle the case. On November 26, 2024, the court preliminarily approved the settlement and conditionally certified a settlement class and appointed class representatives and class counsel. Notice was then sent, and on April 10, 2025 the court held a fairness hearing. No class members objected to the terms of the settlement. Plaintiffs subsequently moved, unopposed, for final approval of settlement and for attorneys’ fees, litigation expenses, and incentive awards. In this order the court certified the settlement class, approved of the settlement, and granted in part the motion for attorneys’ fees, costs, and incentive awards. To begin, the court found that the settlement class is so numerous that joinder is impracticable, that there are questions of law and fact common to the class and that these questions predominate over individual ones, that the named plaintiffs’ claims are typical of the class, and that class counsel and named plaintiffs are adequate representatives of the class. Accordingly, the court determined that the settlement class met the requirements of Rule 23(a). Moreover, the court found certification of the settlement class appropriate under Rule 23(b)(1). Thus, the court certified the settlement class. The court further determined that notice provided to the settlement class was proper and complied with the requirements of Rule 23(c)(2). The court also found that the settlement was presumptively fair as the parties negotiated the settlement at arms-length before a neutral and experienced mediator after sufficient discovery had occurred. Additionally, the court noted that class counsel are experienced ERISA litigators and no class members objected to the settlement. The court also emphasized that the trustees will pay the participants on an equitable pro-rata basis. Other factors too supported approving the settlement. The court noted that continued litigation would be costly, risky, and lengthy. The court also found the settlement will benefit the class members and that it is within the range of reasonableness as it represents about a 5.11% recovery based on plaintiffs’ estimate of maximum damages or 40.6% of defendants’ estimate of damages. For these reasons, the court granted the motion for final approval of the settlement. The decision then segued to a discussion of fees, expenses, and incentive awards. Plaintiffs sought incentive awards for the two named plaintiffs in an amount of $8,000 each. The court concluded this amount was unreasonable and improper as it would reduce the payment to the other settlement class members. Instead, the court awarded each named plaintiff $1,000 to compensate them for their time and effort in the case. Next, the court assessed plaintiffs’ $24,125.44 in litigation expenses, which included FedEx costs, court filing fees, travel expenses, research and e-discovery costs, and mediation. The court approved the payment of these expenses to class counsel without alteration. It spent significantly more time discussing an appropriate award of attorneys’ fees. Class counsel requested $1,666,500 in attorneys’ fees, which represented 30.3% of the settlement fund and a lodestar multiplier of 3.87. To the court, this amount was unreasonable in light of the relatively short duration of the case and the recorded total of 638.3 hours the attorneys worked on the lawsuit. The court also pointed out the inherent tension between the interests of the settlement class and class counsel, because the greater their fee award, the less remained for the class. With these factors in mind, the court reduced the fee award to 19% of the common fund or $950,000. The court then evaluated this number with a lodestar cross-check. It stated that multiples between one and four are generally considered reasonable. Employing the lodestar method to the $950,000 award resulted in a 3.87 multiplier. The court determined that a 3.87 multiplier was entirely reasonable and confirms its finding pursuant to the percentage-of recovery method that this award in attorneys’ fees is appropriate. Accordingly, the court granted plaintiffs’ motion for attorneys’ fees, costs, and incentive awards in accordance with  these adjustments.

Disability Benefit Claims

Fourth Circuit

Wray v. Life Ins. Co. of N. Am., No. 5:23-cv-00060, 2025 WL 1119025 (W.D. Va. Apr. 15, 2025) (Judge Jasmine H. Yoon). Until he applied for short-term disability benefits in December of 2022, plaintiff Nicholas Wray worked as a senior manager at the management and technology consulting firm The West Monroe Partners, Inc. Mr. Wray suffers from a rare autoimmune disease called Granulomatosis with Polyangiitis, which is characterized by inflammation of blood vessels. Either because of his disease or side effects from the steroid medication he is on to treat it, Mr. Wray began to experience deficits in cognitive function, as well as problems with his mood and hearing. In response to Mr. Wray’s claim for short-term disability benefits, the plan’s administrator, defendant Life Insurance Company of North America, asked three doctors to review his medical records: a rheumatologist, a neurologist, and a behavioral health specialist. Each doctor opined that Mr. Wray’s medical records did not support a finding of functional limitations. Mr. Wray appealed. On appeal, Mr. Wray provided additional documentation including the results of a five-hour neuropsychological evaluation and a vocational consultation. During his appeal, Mr. Wray also included a supplement to his appeal letter which informed LINA that he wished to apply for long-term disability benefits as well. LINA had the same three doctors review Mr. Wray’s claim on appeal, and again they determined that his symptoms were not disabling. After LINA upheld its denial, Mr. Wray commenced this civil action under ERISA Sections 502(a)(1)(B) and (a)(3) against LINA and the plans seeking a judicial order clarifying his right to past and future benefits under West Monroe’s short-term and long-term disability plans. The parties filed competing motions for summary judgment. To resolve the motions, the court addressed three main issues: (1) whether the long-term disability claim was appropriately exhausted; (2) what standard of review the court should apply to analyze the short-term disability benefit claim; and (3) the merits of the short-term disability benefit claim. First, the court agreed with LINA that Mr. Wray failed to exhaust his long-term disability benefit claim. The court stated that the circumstances presented were strikingly similar to those discussed by the Fourth Circuit in Isaacs v. Metropolitan Life Insurance Co., where a plaintiff in the process of appealing his short-term disability benefit claim denial mentioned informally his intent to initiate a long-term disability claim to the insurance company that administered both plans. Like Isaacs, the court concluded that Mr. Wray failed to properly initiate a valid long-term disability claim under the long-term disability policy’s notice requirement. The court thus concluded that Mr. Wray failed to exhaust the long-term disability policy’s administrative procedures. Moreover, the court agreed with LINA that the time to do so has passed. Because the court found that Mr. Wray can no longer timely file a claim for long-term disability benefits, it granted LINA’s motion for summary judgment as to the long-term disability claim. Next, the court discussed the appropriate standard of review as to the short-term disability claim. LINA argued that it is entitled to abuse of discretion review because the plan vests it with discretionary authority. Mr. Wray, however, argued that the denial decision is entitled to de novo review because it is subject to Illinois law, and Illinois voids any grant of discretionary authority to a plan fiduciary. The court again agreed with LINA. The court concluded that the choice of law provision in the long-term disability policy did not apply to the short-term disability plan, but that even if the short-term plan contained such a choice of law provision, it was a self-funded plan and thus “no provision of Illinois law appears incompatible with the delegation of discretionary authority to LINA.” The court therefore analyzed the denial under the arbitrary and capricious standard of review. Under the deferential review standard, the court affirmed the benefit denial. It found that LINA appropriately exercised its discretion, employed a reasonable and principled decision-making process, considered adequate materials in rendering its decision, offered Mr. Wray a full and fair review, and ultimately reached a decision that was reasonable and supported by the substantial evidence in the record. As a result, the court entered summary judgment in favor of defendants, and denied Mr. Wray’s cross-motion for judgment.  

Ninth Circuit

Stickley v. Unum Life Ins. Co. of Am., No. 3:24-cv-05364-TMC, 2025 WL 1094346 (W.D. Wash. Apr. 10, 2025) (Judge Tiffany M. Cartwright). April 19, 2019 was plaintiff Rhonda Stickley’s last day at work as a chief human resources manager at James Hardie Building Products. Ms. Stickley claims that since late 2018 she has experienced a steady decline in her health and at the time of her separation from employment, she was experiencing extreme fatigue, headaches, body pains, fever, and brain fog. Four years later, Ms. Stickley tested positive for Epstein-Barr Virus and was diagnosed with fibromyalgia and chronic fatigue syndrome. After her diagnoses, Ms. Stickley retroactively applied for short-term disability, long-term disability, and waiver of life insurance premium benefits under James Hardie’s plan administered by defendant Unum Life Insurance Company of America. Unum denied the claim for short-term disability benefits, ignoring the other claims. This dispute arises out of Ms. Stickley’s claim for long-term disability benefits. The parties each moved for judgment in their favor. Additionally, Ms. Stickley sought to supplement the administrative record to include three records from Unum’s claim manual that she argued would provide clarity as to its internal procedures and policies, and its failure to abide by them with regard to her claim. The core question of the case was not whether Ms. Stickley is disabled now, but whether she could show by a preponderance of the evidence that she has been continuously disabled since she stopped working in 2019. However, before the court could answer that question it first needed to address Unum’s argument that Ms. Stickley had failed to exhaust her administrative remedies before filing this lawsuit. The court disagreed with Unum. Contrary to Unum’s assertion, the long-term disability plan did not require Ms. Stickley to exhaust short-term disability benefits, or even apply for short-term disability benefits, as a prerequisite for long-term disability eligibility. Nor was Ms. Stickley required under the language of the plan to be under the regular care of a physician for the four years after she stopped working. The court also rejected Unum’s argument that Ms. Stickley had “slipped” a request for long-term disability benefits. According to the court the facts did not support this contention and instead demonstrated that Unum never acknowledged her long-term disability claim and failed to respond to it, despite its affirmative obligation to do so within 45 days. The court added that this failure to respond meant that Ms. Stickley’s long-term disability benefit claim was deemed denied, and therefore she had exhausted her administrative remedies under the plan. Even putting that aside, however, the court added that it would have futile for Ms. Stickley to exhaust her long-term disability claim after Unum already rejected her short-term disability benefit claim on two separate occasions. The court next concluded that it would not admit excerpts from Unum’s claims manual into the administrative record because there were no exceptional circumstances to warrant consideration of these extrinsic pieces of evidence. The court then assessed whether Ms. Stickley demonstrated that she was disabled under the plan when she stopped working in April of 2019. It concluded that she did not. The court found the contemporaneous medical and non-medical evidence simply too thin and inconclusive. The court was further unconvinced that later medical evidence necessarily related back to Ms. Stickley’s documented symptoms from four years earlier. “Likewise, Stickley’s SSDI determination, while relevant, is also not persuasive evidence on its own that she was totally disabled as of April 2019.” Thus, the court found that Ms. Stickley did not meet her burden to prove that she was disabled within the meaning of the plan as of the last date she was employed. The court therefore granted Unum’s motion for judgment and denied Ms. Stickley’s cross-motion.

Life Insurance & AD&D Benefit Claims

Seventh Circuit

Jones v. The Prudential Ins. Co. of Am., No. 24-cv-214-wmc, 2025 WL 1125385 (W.D. Wis. Apr. 16, 2025) (Judge William M. Conley). Plaintiff Austin Jones initiated this action against the Prudential Insurance Company of America claiming he was entitled to benefits under his mother Amy Dillahunt’s group life insurance policy. Prudential responded by asserting a counterclaim and third-party complaint for relief in interpleader against Mr. Jones and third-party defendant Mr. Stassen, who claimed to be entitled to the benefits as Amy’s domestic partner. The parties then jointly moved for interpleader relief, which the court granted. The court dismissed Prudential from the action after it deposited the $75,000 in benefits with the court. Mr. Jones subsequently moved for summary judgment. Rather than respond to Mr. Jones’s motion, Mr. Stassen withdrew from the case and no longer asserts an interest in the interpleader funds deposited by Prudential. Even if Mr. Stassen had not withdrawn, however, the court stated that the evidence indicates that Ms. Dillahunt and Mr. Stassen were not in a “single dedicated, serious and committed relationship” that was similar to marriage, but rather were non-romantic roommates out of financial necessity. Under the terms of the policy, absent a viable claim to the death benefit from any surviving spouse or domestic partner, a surviving child is entitled to the entire benefit. The court therefore agreed with Mr. Jones that he was entitled to the entire death benefit as Ms. Dillahunt’s sole surviving child. Thus, the court entered final judgment in his favor and directed payment of all funds, plus interest, to him.

Medical Benefit Claims

Second Circuit

Doe v. Oxford Health Plans Inc., No. 24-cv-5922 (LJL), 2025 WL 1105287 (S.D.N.Y. Apr. 14, 2025) (Judge Lewis J. Liman). In this action plaintiff John Doe seeks reimbursement for his daughter’s medically necessary facial plastic surgery under his ERISA-governed welfare plan administered and insured by Oxford Health Insurance, Inc. Of the $46,500 in submitted medical bills, Oxford Health paid just $147.06. According to plaintiff, Oxford Health offered several reasons for not paying the remainder of the costs of the claims, but its explanations were largely incomprehensible. For example, Oxford Health stated that it would pay for the plastic surgeon’s claim because it was not reimbursable based on the “office setting” in which the services were performed, citing a section of the certificate of coverage. However, that section explains nothing and simply references “standards” that it does not specify, and which were not provided to Mr. Doe, despite requests. Similarly, denials for the anesthesiologist’s claim cite unspecified standards within the same subsection. After he exhausted the appeals process to no avail, John Doe commenced this action under ERISA Section 502(a) against defendants Oxford Health Plans (NY), Inc., Oxford Health Insurance, Inc., Oxford Health Plans, LLC, United Healthcare Insurance Company, and UnitedHealthcare Group Incorporated. Defendants moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The court granted in part and denied in part defendants’ motion to dismiss in this decision. It began with a discussion of standing. Contrary to defendants’ assertion, the court concluded that John Doe had both constitutional and statutory standing to bring this action, notwithstanding that the healthcare claims relate to Jane Doe. The court said that it has long been established that an ERISA plan participant can sue for the denial of benefits to a beneficiary. “It is ‘axiomatic’ that a party to an agreement has standing to sue a counterparty who breaches that agreement, even where some or all of the benefits of that contract accrue to a third party.” The court added that when an employee benefit plan includes coverage for dependents and other beneficiaries, part of the benefit of the participant’s bargain in joining the plan is that coverage will in fact be provided to those individuals. Thus, a denial of this benefit is an injury to the employee, even when the coverage is for others. And this injury confers both Article III standing and statutory standing to sue under Section 502(a)(1)(B) to enforce a right to benefits. Accordingly, the court denied the motion to dismiss on this basis. Defendants made more headway with their argument that plaintiff failed to state a claim against any defendant other than Oxford Health Insurance, Inc. – the named plan administrator and insurer. The court stated that the remaining defendants were not alleged to be administrators or trustees of the plan, nor to have handled the claim or exercised any control over the benefits. Instead, the other entities are parents and affiliates of Oxford Health Insurance and not proper parties to the present action. The court therefore dismissed the complaint as to these defendants. Finally, the court assessed the plausibility of the pleadings. The court agreed with defendants that John Doe has not properly alleged he is entitled to the benefits he seeks under the plan, as “the complaint does not set out any provisions of the Plan that required [Oxford Health Insurance] to pay for Jane Doe’s care.” Nevertheless, the court recognized that this shortcoming can be addressed through amendment and thus allowed plaintiff to replead his claim for entitlement to benefits, should he wish to. But the court was not finished assessing the complaint. It noted that although the allegations fail to tie the claim for benefits to specific plan provisions, the complaint sufficiently alleges that defendant violated the procedural protections of ERISA contained in 29 U.S.C. § 1133(1). The court said it could plausibly infer that Oxford Health Insurance failed to follow the procedural requirements of ERISA to set forth the specific reasons for the denials in a manner written to be understood by the participant. The explanations outlined in the complaint, the court added, were insufficient to “facilitate ‘meaningful dialogues between plan administrators and plan members,’ and permit effective review.” Therefore, the court denied the motion to dismiss this element of the claim, which, if proven, will entitle the family to remand for the administrator to provide further explanation. For the reasons outlined above, the court granted in part and denied in part the motion to dismiss, and its partial dismissal was with leave to replead.

Pleading Issues & Procedure

Second Circuit

Merrow v. Delhaize America, LLC Welfare Benefit Plan, No. 24-CV-1205 (MAD/TWD), 2025 WL 1113416 (N.D.N.Y. Apr. 15, 2025) (Judge Mae A. D’Agostino). This case began as a medical malpractice suit brought by plaintiff Michael A. Merrow, individually and on behalf of his daughter Kelly J. Merrow, against several medical providers. These medical malpractice claims arose from medical care Kelly received in 2016, after which she was diagnosed with a permanent brain injury and a severe form of cerebral palsy. The medical malpractice claims were resolved through settlement between plaintiff and the medical defendants, and on May 30, 2023, the parties entered a stipulation of discontinuance by reason of settlement. The settlement agreement required funds to be held in escrow pending resolution of any liens. At first, Mr. Merrow attempted to negotiate with his ERISA-governed welfare plan, Delhaize America, LLC Welfare Benefit Plan, concerning Delhaize’s liens. But negotiations failed, so on July 25, 2024, Mr. Merrow moved for an order to show cause directing the plan to show cause why it is entitled to the amount of lien that it sought and why any liens on Kelly Merrow’s medical expenses should not be vacated pursuant to Section 502(a)(1)(B) of ERISA. Mr. Merrow requested that the state court declare any liens by Delhaize against any of the settlement proceeds to be null and void. Because Mr. Merrow’s request for an order to show cause implicated ERISA, the Plan removed the action from state court to federal court. Mr. Merrow moved to remand his action. Delhaize opposed Mr. Merrow’s motion and moved to transfer the case to the Middle District of North Carolina. The court in this order granted Mr. Merrow’s motion to remand the case to state court. It held that Delhaize did not have the authority to remove the case as it was not a defendant in the original state court case. The court disagreed with the Plan that it had removal power because Mr. Merrow asserted a federal ERISA claim against it. The court stated that the Supreme Court has held that “Congress did not intend for the phrase ‘the defendant or the defendants’ in § 1441(a) to include third-party counterclaim defendants.” Thus, the court found that because the removing defendant was not a defendant in the original action, it could not remove the action to federal court, even if a claim implicated ERISA. As a result, the court granted plaintiff’s motion and remanded the case back to state court.

Sixth Circuit

In re AME Church Emp. Ret. Fund Litig., No. 1:22–md–03035–STA–jay, 2025 WL 1104985 (W.D. Tenn. Apr. 14, 2025) (Judge S. Thomas Anderson). In this multidistrict litigation current and retired clergy of the African Methodist Episcopal Church (“AMEC”) who participated in the AMEC’s retirement plan, the Ministerial Annuity Plan of the African Methodist Episcopal Church, allege that the church, its officials, and the plan’s third-party service providers, including defendant Symetra Life Insurance Company, mismanaged the plan. Plaintiffs seek to recover losses of at least $90 million, the result of embezzlement and misappropriation of plan funds by its former Executive Director, Dr. Harris. Before the court was Symetra’s motion to stay or dismiss challenging the pleadings of plaintiffs’ second consolidated amended complaint. In this order the court granted in part and denied in part Symetra’s motion. Before reaching Symetra’s arguments for dismissal, the court first addressed its motion to stay plaintiffs’ claims against it. Symetra argued that the claims are subject to a mandatory arbitration clause. However, since filing its motion, Symetra filed a supplemental brief to clarify that it was withdrawing its request for a stay as the arbitrator issued his ruling and concluded that the claims between AMEC and Symetra are not subject to arbitration. In light of this, the court denied Symetra’s motion to stay the action as moot. The court then turned to Symetra’s arguments for dismissal of each of plaintiffs’ claims. To begin, the court granted Symetra’s motion to dismiss plaintiffs’ claims for violations of Tennessee’s Uniform Trust Code. Under the unambiguous language of the statute, the court agreed with Symetra that it did not meet the definition of a “trustee, trust protector, or trust advisor,” as the plan terms did not vest it with the specific powers or duties to function as a trustee or co-trustee. Symetra next challenged plaintiffs’ claim for fraudulent concealment. It argued that the complaint fails to satisfy the heightened pleading standards required to state a claim for fraud. The court did not agree. “For purposes of deciding Symetra’s Motion to Dismiss, the Court concludes that the Second Amended Complaint plausibly alleges with particularity that Symetra concealed or suppressed the facts about Dr. Harris’s dealings in abrogation of its fiduciary duty to the Plan.” The court thus denied the motion to dismiss this claim. It did so for plaintiff’s civil conspiracy claim as well. The court stated that the amended complaint was “replete with allegations about the conspiracy and Symetra’s involvement. In fact, the very first allegation stated in the pleading suggests that the gravamen of Plaintiffs’ case is a conspiracy: ‘This case is about a conspiracy between a group of businesses and individuals who used their control and influence over a retirement fund to enrich themselves at Plaintiffs’ and Class Members’ expense.’” Finally, the court denied Symetra’s motion to dismiss the aiding and abetting breach of fiduciary duty claim, finding that the complaint plausibly states such a claim and provides sufficient details about Symetra’s alleged involvement with Dr. Harris in his breaches of fiduciary duty. Accordingly, Symetra’s motion to dismiss was granted as to the Tennessee Uniform Trust Code claims and otherwise denied, as explained above.

Eighth Circuit

Navarro v. Wells Fargo & Co., No. 24-cv-3043 (LMP/DTS), 2025 WL 1136091 (D. Minn. Apr. 17, 2025) (Judge Laura M. Provinzino). This putative class action lawsuit against Wells Fargo & Company alleges that it mismanaged its prescription drug benefits program in breach of its fiduciary duties under ERISA. In our April 2, 2025 issue, Your ERISA Watch selected the court’s decision granting Wells Fargo’s motion to dismiss plaintiffs’ complaint without prejudice for lack of standing as our case of the week. Pursuant to local rules in the district, plaintiffs requested the court’s permission to file a motion to reconsider the dismissal order. They raised two reasons for their request. First, plaintiffs asserted that the court erred by not addressing their request for an opportunity to amend their complaint and address any deficiencies in the event the court granted Wells Fargo’s motion to dismiss. Second, they argued that the court erroneously held that monetary relief is unavailable to them for their claims under Section 502(a)(3). Wells Fargo opposed plaintiffs’ request. It responded that plaintiffs’ request for leave to amend their complaint came in a footnote at the end of their opposition brief and was therefore procedurally improper. Additionally, Wells Fargo argued that to the extent the court was in error as to the availability of monetary relief under Section 502(a)(3), such an error was not determinative and would not have altered the outcome because plaintiffs’ allegations of injury were speculative and insufficient to establish constitutional standing. The court replied that while Wells Fargo is correct that “‘placing a footnote in a resistance to a motion to dismiss requesting leave to amend in the event of dismissal is insufficient’ as a means to make such a request,” courts should not deny leave to amend a complaint on a purely procedural basis. In fact, the Eighth Circuit has said that it may be an abuse of discretion by district courts to deny leave to amend absent undue delay, bad faith, or repeated failure to cure deficiencies by amendment. None of those circumstances are present here. “There has been no undue delay or bad faith by Plaintiffs in prosecuting this case, and Plaintiffs have not yet had the opportunity to amend their complaint. Although Plaintiffs have not submitted their proposed amended complaint such that its futility, or lack thereof, may be assessed, the Court is persuaded by Plaintiffs’ observations regarding the efficiency of permitting Plaintiffs to amend their complaint in this case before this Court – which has developed at least some familiarity with the factual background and claims at issue – rather than to initiate a separate, potentially duplicative lawsuit while also appealing the Dismissal Order in parallel. And to the extent Wells Fargo is prejudiced by the Court permitting Plaintiffs to amend their complaint, the Court believes that prejudice is meaningfully reduced by the benefits of sorting through these issues now and creating a more robust record for appeal, regardless of the final disposition of the case.” In light of this decision, the court vacated the prior judgment it entered in the case so plaintiffs may preserve any issues they might wish to appeal relating to the dismissal order, if necessary. Also, because the court granted plaintiffs leave to amend their complaint, it declined to address their argument regarding remedies under Section 1132(a)(3). For this reason, the court granted plaintiffs’ request for leave to amend their complaint and gave them 21 days from the date of the order to do so.

After the flood of end-of-reporting-period decisions issued over the past several weeks, the tide has turned. This week we report on only eight cases. So relax and enjoy reading this week’s short but interesting selection of ERISA decisions, including one holding that 401(k) plan participants have adequately stated excessive fee claims, another reluctantly holding that an insurance company acted within its discretion in concluding that a plaintiff did not offer sufficient objective proof of disability from long COVID, and one holding that ERISA does not preempt a local government’s state law nuisance claims against Optum and related entities for their role in the opioid crisis.

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

Breach of Fiduciary Duty

Ninth Circuit

Meyer v. United Healthcare Ins. Co., No. 21–148–M–DLC, 2025 WL 1042809 (D. Mont. Apr. 8, 2025) (Judge Dana L. Christensen). In December 2015, plaintiff John Meyer was injured in a serious skiing accident. After the accident, Mr. Meyer spent a month receiving treatment at two facilities owned by defendants Billings Clinic and Regional Care Hospital Partners. Mr. Meyer was charged out-of-network rates for his care by his insurance provider, defendant United Healthcare Insurance Company, despite the fact that the two facilities were in-network providers. Also, due to the timing of his accident, Mr. Meyer had to pay his $6,000 deductible twice, once in December 2015 and again in January 2016, despite only acquiring his healthcare coverage shortly before the accident. In 2021, Mr. Meyer sued United, Billings Clinic, and Regional Care Hospital Partner over these healthcare costs. Mr. Meyer has amended his complaint twice. In his second amended complaint, styled as a putative class action, Mr. Meyer alleges that United Healthcare breached its fiduciary duties under ERISA and that the providers knowingly participated in United’s fiduciary breach. He argues that his ERISA claims arise under the federal “No Surprises Act,” a bill passed in 2022 to restrict surprise out-of-network charges from in-network healthcare facilities. Defendants collectively moved to dismiss Mr. Meyer’s action pursuant to Federal Rule of Civil Procedure 12(b)(6). They argued that his complaint could not be sustained for a number of reasons, and the court agreed. First, the court dismissed the individual ERISA fiduciary breach claims against United because it agreed with United it could not have breached its fiduciary duties in 2015 and 2016 by violating a law that was not in effect at the time. “Meyer makes no argument that the No Surprises Act is retroactive under ERISA, nor has Congress unambiguously instructed as much. It is not apparent from the facts pled that United failed to use the prevailing standard of care, skill, and diligence as existed in 2015 and 2016, nor is it apparent exactly what duty United breached.” Accordingly, the court agreed with defendants that the complaint failed to plead a cognizable claim of breach of fiduciary duty under ERISA. The court also held that Mr. Meyer could not sustain a claim for knowing participation against the providers as they were not fiduciaries, and, moreover, as stated above, there was no underlying breach of fiduciary duty. Even putting these issues aside, the court also concurred with defendants that it was clear from the complaint Mr. Meyer had actual knowledge of the underlying transactions in 2016 sufficient to trigger ERISA’s three-year statute of limitations. Thus, the court found his claims were time-barred. Finally, the court concluded that it was appropriate to dismiss the class claims at the pleading stage as they are premised on the same allegations as the individual claims, and there is no factual support for them. The court therefore granted defendants’ motion to dismiss, and because Mr. Meyer has twice amended his complaint, the court determined that further amendment would be futile, and thus dismissed the action with prejudice.

Schuster v. Swinerton Inc., No. 3:24-cv-04970-JSC, 2025 WL 1069887 (N.D. Cal. Apr. 8, 2025) (Judge Jacqueline Scott Corley). Plaintiffs Michael S. Schuster and Juan C. Del Barco are former employees of Swinerton Incorporated and participants in its 401(k) Plan. They bring this action on behalf of a putative class of plan participants against Swinerton, its board of directors, and the plan’s committee alleging defendants breached their duties of prudence and monitoring by incurring excessive recordkeeping and administrative fees charged by the plan’s two recordkeepers, John Hancock and Principal Life Insurance Company. The fiduciaries moved to dismiss the complaint for failure to state a claim. In their motion to dismiss, defendants requested that the court take judicial notice of 20 documents, including the plan’s Form 5500s, the Form 5500s of the ten comparator plans, several Department of Labor publications, and a blog post. Because these documents are public and plaintiffs did not question their authenticity, the court took judicial notice of them. However, it stipulated that it could not, and would not, take judicial notice or infer, as the defendants requested, that based on the contents of the Form 5500s the comparator plans did not receive the same recordkeeping and administrative services or that plaintiffs incorrectly calculated fees. Doing so, the court stated, would improperly require the court to draw inferences in defendants’ favor, rather than plaintiffs’ favor. When the court drew inferences in plaintiffs’ favor, it determined that their complaint plausibly alleges what services were being provided, what the cost of those services were, and that defendants failed to administer the fees in a prudent manner. Plaintiffs allege from the years 2018 through 2023 the plan paid, on average, $124 per participant annually in recordkeeping fees. Plaintiffs maintain that reasonable fees should have been $43 per participant. They offered ten plans of comparable size, receiving a materially similar level and quality of recordkeeping and administrative services as that offered by the Swinerton plan. The court held that in the Ninth Circuit no more is required of plaintiffs: “Plaintiffs need not provide even more granular, micro-level ‘apples to apples’ comparisons, based on data to which they may not yet have access, in order to survive a motion to dismiss.” Accordingly, the court denied defendants’ motion to dismiss.

Disability Benefit Claims

Fifth Circuit

Stout v. Smith Intl., No. 24-30571, __ F. App’x __, 2025 WL 1029503 (5th Cir. Apr. 7, 2025) (Before Circuit Judges Dennis, Haynes, and Engelhardt). Plaintiff-appellant Charles Stout worked as an offshore drilling engineer for Smith International for ten years. Then, in 2011, Mr. Stout was diagnosed with several heart conditions and other comorbidities. His cardiologist advised him that he should not lift more than 25 pounds. Mr. Stout’s work at Smith required him to lift nearly twice as much weight. His diagnoses ultimately qualified him for benefits under Smith’s disability benefit plan offered through MetLife. In 2021, MetLife obtained updated medical records on Mr. Stout. These records showed improvement and indicated his valvular heart disease was stable. MetLife then retained a doctor to review Mr. Stout’s records. That doctor concluded that Mr. Stout’s conditions did not indicate any restrictions or limitations. After reviewing this report, Mr. Stout’s own cardiologist changed his opinions regarding Mr. Stout’s abilities and expressed that he absolutely agreed with the report, including its conclusion that Mr. Stout could return to full-time work. Mr. Stout did not agree. He appealed MetLife’s adverse decision. On appeal, MetLife hired a second specialist to review Mr. Stout’s records and he too concluded that the underlying cardiac impairments were not so severe as to impair Mr. Stout’s functions, and therefore no restrictions or limitations were indicated. Mr. Stout challenged MetLife’s decision to terminate his benefits in court, suing Smith International and MetLife under ERISA. The district court granted summary judgment for Smith International and MetLife. Mr. Stout appealed that ruling to the Fifth Circuit. In this brief, unpublished per curiam decision the Fifth Circuit affirmed. It declined to even discuss the relevant standard of review as it concluded the standard of review “is not dispositive in this case.” Even if de novo review applied, the Fifth Circuit stated that it could not see how any reasonable fact finder could conclude Mr. Stout is entitled to continued benefits. “There is no evidence in the administrative record that Stout is still disabled. All three doctors who examined Stout or reviewed his medical records concluded that there are no restrictions or limitations on his activity. With no evidence of restrictions or limitations on his activity, no reasonable fact finder could conclude that, due to sickness or accidental injury, Stout is unable to earn 60% of his predisability earnings. Stout therefore is not entitled to disability benefits under the plan.” Accordingly, the court of appeals affirmed the judgment of the district court.

Seventh Circuit

Schwingle v. Hartford Life & Accident Ins. Co., No. 24-cv-125-jdp, 2025 WL 1019986 (W.D. Wis. Apr. 4, 2025) (Judge  James D. Peterson). Plaintiff Stephanie Schwingle worked as a spiritual and grief counselor for a hospice care company where she provided counseling and care for the bereaved. In the fall of 2021, Ms. Schwingle went to the emergency room and was diagnosed with COVID-19. Symptoms which affected her stamina, lung function, and cognitive abilities did not go away and in early 2022 Ms. Schwingle became one of the millions of Americans to be diagnosed with long COVID. She applied for short-term, and later, long-term disability benefits with Hartford Life and Accident Insurance Company, the administrator of her employer’s group policy. Hartford approved the long-term disability benefit claim through early 2023. Hartford’s decision to terminate Ms. Schwingle’s benefits is the subject of this litigation. Ms. Schwingle challenges that decision, arguing that Hartford placed too much emphasis on objective evidence and failed to adequately consider why it did not find the evidence she did submit to be persuasive. Hartford responded that it has the discretionary authority to conclude that “satisfactory proof” under the plan requires some corroboration of subjective reports of symptoms with objective medical and diagnostic testing. The parties each moved for summary judgment in their favor. The court sided with Hartford. It stated, “Hartford was entitled to require Schwingle to come forward with objective evidence of functional limitations.” The court noted that the Seventh Circuit Court of Appeals has long ago weighed in on this debate and concluded that “even when symptoms are subjective, functional limitations caused by those symptoms can be objectively measured, so it is not arbitrary and capricious to ask for objective evidence.” Here, the only significant objective medical evidence was cognitive testing which showed normal functioning and no impairment. During the internal appeals process Hartford suggested that Ms. Schwingle could perfect her claim by providing additional testing, including undergoing a formal neuropsychological evaluation, but Ms. Schwingle took no such action. Moreover, the court said that Hartford had the authority to reject the opinions of Ms. Schwingle’s treating providers for much the same reason – they too relied only on her subjective complaints to support their opinions regarding her functional limitations. The court added that an administrator is not required to separately explain why it finds each opinion offered by each doctor to be persuasive or unpersuasive, but is only required to more generally engage with those opinions and consider whether to credit them or not. The court found that Hartford did so here. That is not to say there was no evidence in the administrative record which supported Ms. Schwingle’s claim. To the contrary, there were pulmonary tests, psychiatric questionnaires, her affect during doctors’ appointments, her testimony of her own limitations, as well as her “extensive and rigorous treatment” and medical history. The court expressed it “would have been reasonable for Hartford to credit those statements and award benefits. And if the court were acting as the factfinder, it would be inclined to find for Schwingle.” Nevertheless, when pressed to decide whether Hartford’s decision to terminate benefits was reasonable and supported by the evidence before it, the court concluded that it was. As such, the court found that Hartford’s decision was not arbitrary and capricious. The court therefore denied Ms. Schwingle’s motion for summary judgment and granted Hartford’s summary judgment motion.

ERISA Preemption

Ninth Circuit

King County v. Express Scripts Inc., No. 24-cv-49-BJR, 2025 WL 1082130 (W.D. Wash. Apr. 10, 2025) (Judge Barbara J. Rothstein). In the past 25 years, over a million Americans have died as a result of opioid overdoses. King County in the State of Washington filed this action against the country’s largest pharmacy benefit managers (“PBMs”) and related entities alleging they violated the state’s public nuisance law due to the central role they played creating and perpetuating the opioid epidemic through the over-prescription, misuse, diversion, and abuse of opioids. The County alleges that defendants “worked directly with the Opioid Manufacturers to convince patients, prescribers, payors and the public that long term opioid use was appropriate chronic pain treatment and that opioids were not addictive.” Plaintiff further alleges that defendants lobbied state governments to promote its opioid programs by collaborating with Purdue Pharma on studies and presentations that promoted and normalized opioid use. In particular, King County maintains that the PBMs set their formulary lists, and then incentivized patients to use certain opioids through utilization management techniques including: “(1) formulary tiering; (2) step therapy, where a consumer is required to try a cheaper drug first before a restricted drug; (3) quantity limits, which limit the dosage or days’ supply that a consumer may receive for a prescription; (4) prior authorizations, which are rules that require a physician to confirm that a prescription is therapeutically appropriate before the drug is dispensed; and (5) formulary exclusion.” According to the complaint, the PBM defendants engaged in this conduct for their own financial reasons despite knowing opioids were highly addictive and carried a serious risk of injury and death. Defendants moved to dismiss the complaint for failure to state a claim. They argued that the public nuisance claim is barred under a two-year statute of limitations. They also argued that the County failed to adequately allege the elements of a public nuisance claim. Additionally, defendants argued that the state law claim was preempted by both ERISA and Medicare Part D. Finally, Optum, Inc. argued that it should be dismissed because the allegations in the complaint focus on its various subsidiaries. The court went through each of defendants’ arguments in turn and rejected them all. First, the court found that presented facts, when viewed most favorably to the County, support its position that in 2023 it discovered new, previously unavailable information relevant to its public nuisance claim and defendants’ actionable conduct. Accordingly, the court disagreed with defendants that the claim was time barred. Next, the court concluded that plaintiff plausibly pleaded a nuisance claim under Washington law as the complaint alleges the “purposeful actions Defendants took to promote opioid use,” there is a sufficiently strong and close connection between the County’s harms and defendants’ alleged misconduct, and the complaint adequately alleges interference with a public right to safety, peace, and public comfort. As most relevant to our readers, the court then addressed ERISA preemption. It concluded that plaintiff’s public nuisance claim does not implicate ERISA preemption under either the “reference to” or “connection with” categories. The court stated that the existence of ERISA-covered plans is not essential to the County’s state law claim. “[W]ith or without ERISA-covered plans, the County’s claim would proceed with respect to Defendants’ formularies and [utilization management] techniques adopted by plans offered by government or religious entities and individual plans offered by insurers.” Moreover, the court stated that the County’s success on its claim wouldn’t dictate any particular scheme of coverage like requiring defendants “to cover alternative, non-medication treatments, cover treatments considered less addictive, or otherwise structure benefit plans in any particular manner.” In fact, defendants could retain the exact same formulary structures and utilization management techniques as they had before “provided that doing so is not part of a greater scheme to collude with opioid manufacturers to maximize profits derived from opioid prescriptions.” Accordingly, the court found there is no ERISA preemption. And for much the same reason, it also found there is no Medicare Part D preemption. Finally, the court disagreed with Optum, Inc. that the complaint solely focuses on the actions of its subsidiaries. To the contrary, the complaint explicitly alleges that “Optum, Inc. was actively involved in promoting opioid programs to its clients and the media and coordinating the efforts of its subsidiary entities.” Taking these allegations as true, the court denied the motion to dismiss the claim against Optum, Inc. Thus, the court denied defendants’ motion to dismiss pursuant to Rule 12(b)(6).

Life Insurance & AD&D Benefit Claims

Sixth Circuit

McGill v. Prudential Ins. Co. of Am., No. 1:24 CV 916, 2025 WL 1079315 (N.D. Ohio Apr. 10, 2025) (Judge Donald C. Nugent). Plaintiffs Megan and Shannon McGill were the named beneficiaries of their father Joseph McGill’s life insurance policies before a change in beneficiaries was executed after Joseph became ill with pancreatic cancer. According to the daughters, Joseph’s health rapidly declined and he suffered from diminished mental capacity, was heavily medicated, and was not capable of fully understanding his financial affairs. Plaintiffs allege that their uncle, defendant Gerald McGill, exercised undue influence over their father during this time and either changed the beneficiary of the life insurance policies to himself without Joseph’s knowledge and consent or convinced Joseph to name him as the beneficiary. In addition to Gerald, plaintiffs have also sued their father’s former employer, Amazon, as well as the Prudential Insurance Company of America. Before the court here was Gerald’s motion for summary judgment. He argued that the claim for declaratory relief against him is preempted by ERISA. The court did not agree. It held that ERISA does not contain any provisions regarding regulating the problem of beneficiary designations that are the result of undue influence or forged. Moreover, whether an individual exercised undue influence over another, it said, is a highly fact-intensive inquiry, inappropriate for resolution before the completion of discovery. The court therefore ruled that genuine issues of material fact persist regarding Joseph’s mental capacity at the time the beneficiary designation of his life insurance policies was changed and whether Gerald exercised undue influence over him or otherwise improperly procured the change in designation. Accordingly, the court denied Gerald’s motion for summary judgment and ordered the parties to continue with discovery.

Pleading Issues & Procedure

Fifth Circuit

Humana Inc. v. Deliver My Meds Corp., No. 3:24-CV-2568-B, 2025 WL 1071429 (N.D. Tex. Apr. 9, 2025) (Judge Jane J Boyle). Plaintiff Humana Inc. is one of the country’s largest health benefit companies. It administers healthcare plans and policies governed by ERISA, Medicare, and state law. This case arises from allegations of healthcare fraud. Humana alleges that defendants Deliver My Meds Corporation and CGM Monitors Corp. have engaged in false billing practices. Humana asserts that it has paid nearly $3 million to defendants for claims it has reason to believe are fraudulent. In this lawsuit Humana seeks monetary relief for its harms. It asserts five claims against the providers: (1) fraud and fraudulent concealment; (2) negligent misrepresentation; money had and received/unjust enrichment; (4) violations of the Texas theft liability act; and (5) a claim under ERISA Section 502(a)(3). Defendants moved to dismiss the action pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The court granted in part and denied in part the motion to dismiss. Specifically, the court granted the motion to dismiss the ERISA claim, without prejudice. Before it got there, the court considered defendants’ standing arguments. The providers argued that Humana did not adequately allege an injury to itself but instead focused on how its members were allegedly harmed by their actions. The court did not agree. Rather, it concluded that while Humana’s complaint references injuries its members suffered because of defendants’ alleged conduct, it does not seek to recover or sue on behalf of the patients. Instead, it seeks to recover economic damages that it sustained itself due to the alleged fraudulent billing practices of the defendants. “Therefore, Humana alleged an injury that is fairly traceable to Defendants’ conduct and likely to be redressed by awarding monetary damages.” Furthermore, the court determined that Humana’s claims are ripe regardless of the fact that the defendants have not yet exhausted their ability to appeal the decisions of their claims under Humana’s internal review policies. “Whether Humana is conducting an internal prepayment review investigation is irrelevant to the question of whether this case is ripe for legal review.” The court then assessed whether Humana stated viable claims upon which relief may be granted. It concluded that Humana did state viable claims except for the ERISA claim. The court held that Humana failed to state a claim under ERISA Section 502(a)(3) because it failed to allege that it seeks appropriate equitable relief. In particular, the court noted that Humana fails to allege facts to indicate that it seeks funds that can be clearly traced to particular funds or property in defendants’ possession. Not only did Humana fail to allege that the funds are traceable, but it also fails to allege that there was an equitable lien by agreement. “As such, Humana has not plausibly alleged that the basis of its claim or the basis of the underlying remedies it seeks are equitable.” The court therefore granted the motion to dismiss the ERISA claim. However, because Humana requested leave to amend its complaint and the defects in its complaint were not necessarily incurable, the court dismissed the claim without prejudice to file a first amended complaint. In all other respects, the court denied the motion to dismiss because the court concluded that Humana pleaded the remainder of its claims, including its fraud claims, with particularity and specificity.

Ninth Circuit

Vidal v. Verizon Pension Plan for Assocs., No. 2:22-cv-00274-ART-BNW, 2025 WL 1068591 (D. Nev. Apr. 9, 2025) (Magistrate Judge Brenda Weksler). This ERISA case was filed in early 2022. The parties were given until the end of September 2025 to conduct and complete discovery. The parties agree that, for the sake of efficiency, plaintiffs’ pending motion to amend should be resolved before setting any internal deadlines that could potentially change or affect the scope of discovery. Nevertheless, plaintiffs’ counsel filed 15 motions relating to the pending motion to amend. In this decision the court granted certain of those motions, denied many others, struck plaintiffs’ reply in support of the motion to amend, and denied, without prejudice, the motion to amend itself. Overall, the court concluded that many of the problems plaintiffs complained of were ones of their counsel’s own making. The court denied motions to extend deadlines on this basis, as it determined that plaintiffs’ struggles with the deadlines were the result of counsel putting things off to the last minute and then rushing to get things done. Similarly, the court denied plaintiffs’ motion to exceed page limits, stating that a “verbose writing style does not constitute good cause.” The court did grant the parties’ requests to shorten time, as it concluded there was good cause to grant these requests given that the court must resolve the above motions before deciding the motion to amend. Because plaintiffs’ reply brief in support of their motion to amend was well over the page limit set by the court, and because the court denied plaintiffs’ motion to exceed the page limits, the court struck the brief for failure to comply with its orders and the district’s local rules. The court then denied the motion to amend. It stated that plaintiffs’ motion was “largely incomprehensible,” “difficult to decipher,” and “unclear” about what amendments it sought. Given these issues and the stricken reply, the court denied the motion to amend without prejudice. Plaintiffs were given until April 30, 2025 to amend pleadings and/or add parties. However, the court first outlined its expectations about conduct going forward. “Plaintiffs have filed numerous rushed and difficult-to-understand motions, which this Court has been forced to resolve.” In the future, the court said it was unlikely to tolerate this type of behavior. It warned counsel to not file repeated or redundant motions, to file any time extension requests “as soon as practicable,” and to shorten briefs by removing excess language and “lengthy and repetitive sentences.” Finally, the court stressed that it has limited resources and that it would not take kindly to exhausting those resources “deciphering a party’s arguments or requests for relief.” The court instructed counsel to file motions going forward that are easy to understand and which comport with local rules.