Karkare v. International Ass’n of Bridge, Structural, Ornamental & Reinforcing Iron Workers Local 580, No. 22-2874, __ F.4th __, 2025 WL 1618132 (2d Cir. June 9, 2025) (Before Circuit Judges Sullivan, Robinson, and Kahn)

ERISA is a minefield for almost every plaintiff, but medical providers probably face the biggest navigation challenge. As we have discussed in the past, benefit plans and their insurers have countless defenses when providers try to sue them for not paying or underpaying medical bills. Plans can assert (1) inadequate standing, (2) anti-assignment provisions, (3) failure to exhaust administrative remedies, and (4) federal preemption, among other more typical litigation defenses.

Perhaps the most vexing defense is the first and most important one: standing. ERISA allows for a private right of action against plans to “recover benefits,” but only by “a participant or beneficiary.” 29 U.S.C. § 1132(a)(1)(B). Providers, of course, are neither participants nor beneficiaries. As a result, providers have tried numerous arguments to justify suing under this provision, with limited success.

This week’s notable decision involves one of those methods: obtaining a power of attorney. The plaintiff in the case was Dr. Nakul Karkare, a surgeon affiliated with AA Medical, P.C. In 2022, another surgeon at AA Medical performed knee surgery on a patient, referred to as Patient JN. Patient JN was a beneficiary of the defendant benefit plan; AA Medical was out-of-network.

AA Medical submitted an invoice to the plan for the treatment, for a total of $153,579.94. The plan only paid $1,095.92, contending this was sufficient under its out-of-network provision which provides reimbursement “based on…the customary charge or the average market charge in [the patient’s] geographical area for a similar service.” AA Medical appealed, but to no avail.

Undeterred, Dr. Karkare obtained a power of attorney from Patient JN and filed this action, alleging that the plan violated its obligations under 29 U.S.C. § 1132(a)(1)(B). The district court immediately leaped into the fray, ordering Dr. Karkare sua sponte to show cause why the case should not be dismissed because of the plan’s “requirement that a physician must demonstrate a valid assignment of a claim from a beneficiary to maintain a cause of action for unpaid benefits under ERISA[.]”

Dr. Karkare responded that no assignment was necessary because he had a power of attorney from Patient JN. The district court did not agree, dismissed the case, and denied Dr. Karkare’s motion for reconsideration. Dr. Karkare appealed to the Second Circuit Court of Appeals, which issued this published decision.

The Second Circuit observed that it was “not entirely clear from the district court’s one-paragraph docket order dismissing the complaint whether the district court concluded that Karkare lacked constitutional standing, a statutory right to bring a cause of action under section 502(a), or both; the district court’s order cites various cases that address the two concepts.”

The court further noted that Dr. Karkare’s status as a provider – and not “a participant or beneficiary” – was not necessarily fatal to his statutory claim, because the federal courts “have recognized a limited exception permitting ‘physicians to bring claims under [section] 502(a) based on a valid assignment from a patient[.]’”

However, the Second Circuit emphasized that statutory rights must take a back seat to constitutional standing under Article III, and thus began its analysis there. The court recited the familiar elements of constitutional standing: “(1) an ‘injury in fact,’ defined as ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent’; (2) a sufficient ‘causal connection between the injury and the conduct complained of’; and (3) a likelihood that ‘the injury will be redressed by a favorable decision.’”

The court noted that Dr. Karkare “does not argue that he has suffered any direct injury…[n]or can he, since the complaint alleges that another physician treated Patient JN on behalf of a corporate entity, AA Medical, that was the party entitled to the outstanding treatment fees.” Dr. Karkare did not explain in his complaint what “the precise contours of his affiliation with AA Medical were,” but regardless, “Karkare does not have standing to assert claims for any injuries suffered by that corporate entity, even if he was ‘personally aggrieved’ by the Union’s conduct and ‘may have faced the risk of financial loss as a result.’”

The Second Circuit noted that Dr. Karkare’s “theory of constitutional standing appears to be that he is suing purely in a representative capacity on behalf of Patient JN” pursuant to the power of attorney. However, according to the court this did not align with the allegations in Dr. Karkare’s complaint, which “indicate that Karkare is in fact suing in his own name and for his own benefit[.]”

The court stressed, “Our precedent is clear that a power of attorney does not confer Article III standing on the attorney-in-fact to file suit in the attorney-in-fact’s own name, even if the suit is purportedly brought on behalf of the grantor of the power-of-attorney.” Thus, the court stated that Dr. Karkare’s power of attorney only allowed him to “act as an agent or an attorney-in-fact for the grantor,” i.e., Patient JN, and did not give him “legal title to, or a proprietary interest in, the claim.” (The court noted that this analysis would be different if Dr. Karkare had an assignment from Patient JN, which would transfer legal title of the claims in question and would give him constitutional standing.)

In short, because Dr. Karkare brought the action “in his own name and for his own benefit (or that of AA Medical),” and not on behalf of Patient JN, for whom he was purporting to act, the Second Circuit concluded that he “lacks Article III standing.” Thus, the “district court lacked subject-matter jurisdiction to adjudicate this dispute,” and “dismissal of the complaint, without prejudice, was warranted.”

The Second Circuit was not done, however. The court observed that “since, based on the complaint, it seems likely (if not a near certainty) that Patient JN has standing to maintain the ERISA claim at issue here,” the court remanded to the district court “to permit Patient JN to move to be substituted into the action or to otherwise submit an amended complaint that properly asserts the ERISA claim on behalf of Patient JN.”

The Second Circuit noted that further proceedings would likely involve additional motions and rulings, including further investigation into the nature of the power of attorney, but the court declined to weigh in on those issues in advance: “we leave it to the district court to decide these (and any other related) questions in the first instance.”

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

Breach of Fiduciary Duty

Tenth Circuit

Chavez-DeRemer v. Ascent Construction, No. 24-4072, __ F. App’x __, 2025 WL 1638134 (10th Cir. Jun. 10, 2025) (Before Circuit Judges Bacharach, Carson, and Rossman). The United States Department of Labor (“DOL”) brought this action against Ascent Construction, Inc., Bradley L. Knowlton, and the Ascent Construction, Inc. Employee Stock Ownership Plan, alleging that the fiduciaries breached their duties and engaged in prohibited transactions by misappropriating plan assets and otherwise mishandling the plan. In its complaint, the DOL requested a permanent injunction removing Knowlton and Ascent from their positions as trustee and plan administrator and appointing an independent fiduciary in their stead. After discovery commenced, defendants stopped actively participating in the litigation. In late January 2024, the DOL moved for discovery sanctions. The district court subsequently ordered defendants to show cause for their failure to timely answer the amended complaint and to obey its orders compelling a response to the DOL’s interrogatories. The district court warned that further compliance failures could result in a default judgment against them. When defendants’ behavior continued, the district court concluded that they willfully failed to engage in the litigation process and comply with its orders, prejudicing the DOL and interfering with the judicial process. As warned, the district court entered a default judgment against defendants under Federal Rules of Civil Procedure 16(f)(1)(C) and 37(b)(2)(A)(vi) in the amount of $288,873.64. The court also entered a permanent injunction barring Knowlton and Ascent from serving in their respective roles, and appointing an independent fiduciary whom the court authorized to terminate the plan and commence a claim submission process for the participants. Defendants appealed the district court’s entry of default judgment and the permanent injunction. The Tenth Circuit affirmed in this unpublished per curiam decision. The court of appeals found that the district court had not abused its discretion in finding the defendants’ disobedience of its orders willful. It agreed with the lower court that defendants never, including on appeal, offered any reason why they were unable to comply with the January 29, 2024 deadline to file an answer and respond to the discovery requests, or argue that their noncompliance was in any way involuntary. The appeals court further agreed that lesser sanctions would have been ineffective because defendants “continually refused to participate in [the] litigation.” Thus, the Tenth Circuit concluded that the district court acted well within its discretion to enter default judgment under the circumstances. Moreover, the court of appeals agreed with the district court’s decision to enter a permanent injunction to prevent any further unlawful handling of the Plan’s funds. “By removing Knowlton and Ascent as Plan fiduciaries, the injunction reasonably seeks to prevent additional ERISA violations that would likely make it impossible for the Plan to timely pay claims or distributions to its beneficiaries.” Removing Knowlton and Ascent as fiduciaries of the plan, the court added, is not only authorized by ERISA, but consistent with its purposes. For these reasons, the Tenth Circuit affirmed the district court’s entry of default judgment and permanent injunction.

Disability Benefit Claims

Fourth Circuit

Penland v. Metropolitan Life Ins. Co., No. 24-1772, __ F. App’x __, 2025 WL 1672861 (4th Cir. Jun. 13, 2025) (Before Circuit Judges Wynn, Harris, and Benjamin). Plaintiff-appellant Tracy Penland sued Metropolitan Life Insurance Company (“MetLife”) under ERISA seeking restoration of his long-term disability benefits. Under the policy, disabilities due to musculoskeletal disorders, excluding radiculopathy, are limited to a maximum benefit duration of 24 months. MetLife terminated Mr. Penland’s benefits in January 2021, concluding that he had received the maximum lifetime disability benefits and that medical records did not support the presence of non-limited conditions that prevent him from performing any gainful occupation. After he exhausted the claims appeals process, Mr. Penland challenged MetLife’s decision in court. First, the district court issued a ruling on summary judgment finding in favor of MetLife. Mr. Penland appealed. The Fourth Circuit overturned that decision under its rule favoring resolution of ERISA benefit cases using Rule 52 bench trials, established in Tekmen v. Reliance Standard Life Insurance Co., 55 F.4th 951 (4th Cir. 2022). On remand from the Fourth Circuit, the court followed the appeals court’s directive and issued findings of fact and conclusions of law under Federal Rule of Civil Procedure 52. Once again, it affirmed MetLife’s denial of Mr. Penland’s claim. Mr. Penland appealed again. This time, the court of appeals found no clear error with the court’s finding and affirmed it in full. At the outset, the Fourth Circuit stated that this appeal “solely concerns the question of whether the terms of the plan provide for Penland’s continued receipt of long-term disability benefits or whether those terms preclude coverage due to the lifetime-maximum-coverage provision.” Ultimately, the Fourth Circuit found that Mr. Penland could not establish ongoing disability due to non-limited conditions. Mr. Penland first argued that the district court erred by interpreting the plan’s limitation provision to require him to prove disability without reference to the limited medical conditions. “In other words, Penland believes that the limitation provision only takes effect if limited conditions are the sole cause of a claimant’s disability.” But the appeals court did not agree. It found that adopting Mr. Penland’s stance would “render the provision all but meaningless.” Mr. Penland also argued that he presented objective evidence of radiculopathy, such that the limitation provision should not apply. But again, the court of appeals was not convinced. It concluded that the district court correctly held that the record does not include objective evidence of radiculopathy and that it was proper for the lower court to credit MetLife’s reviewing physicians’ determination that Mr. Penland did not have radiculopathy. Finally, the Fourth Circuit disagreed with Mr. Penland that the district court committed clear error by finding he failed to meet his burden of showing disability under the plan. He claimed that the district court erred by deciding that his non-limited health conditions leave him able to earn more than 60% of his pre-disability earnings. The appeals court concluded, however, that there was ample evidence to support MetLife’s, and the district court’s finding, to the contrary. Based on the foregoing, the court of appeals affirmed the judgment of the district court.

Wonsang v. Reliance Standard Life Ins. Co., No. 24-1419, __ F. App’x __, 2025 WL 1672860 (4th Cir. Jun. 13, 2025) (Before Circuit Judges Wilkinson, Wynn, and Richardson). Plaintiff-appellee Rebecca Wonsang filed this action against Reliance Standard Life Insurance Company seeking judicial review of its decision to terminate her long-term disability benefits under a group policy provided by Reliance. On summary judgment, the district court concluded that Reliance’s decision was erroneous. It granted summary judgment in favor of Ms. Wonsang. The court held that de novo review applies, rather than abuse of discretion, because Reliance violated ERISA’s procedural requirements that it issue a decision on appeal within 45 days and therefore forfeited its discretionary authority under the policy. The district court further concluded that Reliance’s decision could not be upheld under either standard of review. It reasoned that Reliance cherry-picked evidence in the medical record and ignored the findings and opinions of Ms. Wonsang’s treating physicians. It explained that even crediting the evidence cited by Reliance, it could not overcome the volume of undisputed medical documents and test results establishing the severity of Ms. Wonsang’s disabling conditions. Finally, the district court rejected Reliance’s request for a remand to consider the applicability of a limitation for self-reported conditions. The district court stressed that the record was replete with MRI imaging verifying the severity of Ms. Wonsang’s spinal impairment and, as a result, it was clear the self-reported conditions limitation did not apply. Reliance appealed all aspects of the district court’s decision. In this unpublished opinion, the Fourth Circuit affirmed. First, the court of appeals addressed the district court’s decision to resolve the case at the summary judgment stage. In Tekmen v. Reliance Standard Life Insurance Co., 55 F.4th 951 (4th Cir. 2022), the Fourth Circuit held that a district court may conduct a Rule 52 bench trial to resolve disputes issues of material fact in ERISA denial of benefit cases. The court of appeals ruled that in the present matter “the evidence of disability did not admit of a genuine dispute, and the district court did not err in proceeding accordingly.” Thus, the court disagreed with Reliance that the lower court’s approach was inconsistent with Tekmen. The Fourth Circuit then reached the merits of the district court’s decision. Reliance primarily argued that the district court erred in applying de novo review. The Fourth Circuit declined to resolve this issue given its conclusion that “Reliance’s decision does not withstand scrutiny even under the less rigorous abuse of discretion standard.” The appeals court noted that it was “undisputed that every physician who considered Wonsang’s ability to work concluded she ‘was not capable of any work.’” Moreover, these opinions were based on objective testing, including MRIs, which showed that Ms. Wonsang suffered from “cervical instability.” Although Reliance was not obligated to credit these opinions, the Fourth Circuit was clear that at a minimum it needed to address them and engage with evidence in the medical record that conflicted with its decision. The court found it did not do so. Nor did it “engage in a deliberate, principled reasoning process.” To the contrary, each piece of evidence that Reliance relied upon to reach its decision to terminate benefits either supported Ms. Wonsang, or at the very least did not cut against her claim that she cannot perform sustained activities due to severe spinal damage. Simply put, the court wrote, “Reliance has done nothing to call this evidence into question.” The Fourth Circuit also agreed with the district court’s decision not to remand to Reliance as it concluded that “[n]o purpose would be served by remanding here.” For these reasons, the court of appeals affirmed the judgment of the district court in its entirety. However, Circuit Judge Richardson dissented. Judge Richardson disagreed with his colleagues on the panel about the district court’s decision to resolve the case on summary judgment. He argued that this case presented genuine disputed issues of material fact, and that, under Tekmen, he would vacate and remand for a bench trial without deference to Reliance.

Seventh Circuit

Oye v. Hartford Life & Accident Ins. Co., No. 24-2925, __ F. 4th __, 2025 WL 1659281 (7th Cir. Jun. 12, 2025) (Before Circuit Judges Easterbrook, Brennan, and Scudder). Plaintiff-appellant Olayinka Oye applied for long-term disability benefits through her ERISA-governed plan insured and administered by Hartford Life and Accident Insurance Company. Ms. Oye asserted that symptoms caused by fibromyalgia prevented her from continuing her work as a director at PricewaterhouseCoopers and performing the essential duties of that job. Hartford initially denied Ms. Oye’s claim. However, on her appeal of the initial denial, Hartford reversed course and found her disabled within the meaning of the plan. After she began receiving benefits, Hartford had another change of heart and terminated her benefits, finding her no longer disabled. Hartford upheld this denial during the internal appeals process, prompting Ms. Oye to sue under ERISA, hoping to reinstate her long-term disability benefits under the plan. The parties agreed to a paper trial under Rule 52(a). Because the plan did not give Hartford discretionary authority regarding benefit eligibility, the court applied de novo review. Ultimately, the court concluded that while the record evidence clearly showed Ms. Oye’s fibromyalgia caused her pain and limited her abilities, it did not support a finding that her condition rendered her unable to continue her work at the accounting firm. “Most persuasive, the district court reasoned, was that three of Hartford’s medical reviewers concluded in detailed consultative reports that Oye’s medical records and physical exams did not support her claim of complete disability. These reports, the court explained, belied the brief and conclusory letters from Oye’s treating physicians, which described Oye’s condition as totally disabling.” The district court entered judgment in favor of Hartford. Ms. Oye appealed the unfavorable decision. At the outset, the Seventh Circuit stated that the district court “approached its review exactly the right way, owing no deference to Hartford’s prior decisions.” Given the de novo standard of review, the court of appeals held that the district court acted appropriately by affording no weight to Hartford’s prior finding that Ms. Oye was disabled. As for the merits of the district court’s decision that Ms. Oye failed to meet her burden of establishing eligibility under the plan, the Seventh Circuit found no clear error. It noted that the lower court had articulated why it afforded the weight it did to the opinions of Hartford’s consultative doctors. Ms. Oye argued that the district court had erred by crediting the reports of doctors who never examined her over reports from her treating physicians. But the Seventh Circuit stated that its role is not to decide as a matter of first instance which doctor offered the most credible opinion, but rather to assess whether the district court’s decisions were clearly erroneous. It found they were not. “The district court explained at length why it credited the more reasoned reports. The law required no more.” Finally, the court of appeals disagreed with Ms. Oye that the district court erred by failing to discuss a relevant piece of evidence, stating, “the district court had no legal obligation to discuss each piece of evidence in the record.” Moreover, because the medical document at issue predated the period of time on which the district court focused its discussion, the appeals court noted that the district court’s decision to forgo discussion of it made sense. In sum, the Seventh Circuit held that the district court provided adequate reasoning and issued an ultimate decision that was “plausible in light of the record viewed in its entirety.” Thus, the Seventh Circuit affirmed.

ERISA Preemption

Second Circuit

Office Create Corp. v. Planet Ent., LLC, No. 24-1879, __ F. 4th __, 2025 WL 1634970 (2d Cir. Jun. 10, 2025) (Before Circuit Judges Calabresi, Chin, and Merriam). Plaintiff-appellant Office Create Corporation brought this action as a petition to confirm an arbitration award it had won against defendants-appellees Steve Grossman and Planet Entertainment, LLC. The district court granted Office Create’s petition and entered judgment in its favor. Following that decision, Office Create served an information subpoena and restraining notice on Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill”), seeking to restrain certain accounts in which it contended Grossman had an interest. Five of the Merrill accounts Office Create flagged, which held about $2 million in assets, were designated as retirement case management accounts and were governed by ERISA. Mr. Grossman served an exemption claim form on Office Create, arguing that these accounts were exempt from collection because they were pension and retirement accounts whose assets were protected by ERISA’s anti-alienation provision. Office Create had other thoughts. Relying on a New York state law, New York Civil Practice Law and Rules (“NYCPLR”) Section 5205(c)(5), Office Create contended that these assets could be used to satisfy its money judgment if the funds were deposited into retirement accounts during a ninety-day look-back period. Office Create maintained that because the arbitration proceedings underlying the judgment commenced on April 6, 2021, and the Merrill retirement case management accounts were opened after January 6, 2021, the funds in the accounts are exposed to collection under the New York law. Office Create sought a ruling from the district court agreeing with it. It did not get one. Instead, the district court agreed with Mr. Grossman that Office Create could not go after his ERISA-governed retirement funds. The court held that ERISA preempts NYCPLR § 5205’s 90-day look-back exemption, meaning the money in the Merrill accounts at issue is exempt from collection under ERISA’s anti-alienation provision. Office Create appealed that decision. Before the Second Circuit addressed the merits of the lower court’s preemption ruling, it first considered whether it even had appellate jurisdiction over the matter. The district court had issued a non-final order. Its denial was without prejudice and allowed Office Create to request a hearing to further litigate the matter. However, the district court’s order was clear that if Office Create did not seek a hearing, its decision would be with prejudice, and thus appealable. Office Create agreed to withdraw its request for an evidentiary hearing, which rendered the district court’s order final. The Second Circuit accordingly proceeded to review the merits, confident that it could properly exercise jurisdiction over the appeal. The Second Circuit’s discussion of preemption was straightforward. It was clear to the court that Congress had a “clear and manifest purpose” in enacting ERISA’s anti-alienation provision, which was to protect pension funds, including against collection by creditors. “Both the plain language of ERISA and the precedent interpreting it make clear that pension plan funds are exempt from attachment to satisfy a money judgment.” The exemption in NYCPLR § 5205 which opens up pension funds for collection, the Second Circuit determined, presents a direct and obvious conflict with ERISA’s anti-alienation provision. Accordingly, the court of appeals agreed with the district court that the state law is preempted by ERISA, and the funds at issue cannot be used to satisfy the money judgment. Thus, the Second Circuit concluded that the district court did not err in denying Office Create’s objection to Mr. Grossman’s claim of exemption as to his Merrill retirement accounts. Based on the foregoing, the Second Circuit affirmed the judgment of the district court.

Ninth Circuit

Abira Med. Lab., LLC v. Anthem Blue Cross Life & Health Ins. Co., No. 2:25-cv-03220-WLH-RAO, 2025 WL 1664596 (C.D. Cal. Jun. 12, 2025) (Judge Wesley L. Hsu). Plaintiff Abira Medical Laboratories LLC, filed this action in state court against defendants Anthem Blue Cross Life and Health Insurance Company and Blue Shield of California alleging claims for breach of contract, breach of implied covenant of good faith and fair dealing, and quantum meruit/unjust enrichment. Abira generally alleges that the Blue Cross defendants wrongly refused to pay for lab testing services, depriving it of millions of dollars. Abira expressly frames its suit as premised on “the contractual obligations which arose between Plaintiff and Defendants via the assignments of benefits executed by the insureds.” Eleven of the plans at issue are governed by ERISA, others are Medicare plans, and the remainder are healthcare plans that were privately purchased through the marketplace. Defendants removed the lawsuit to federal court. Abira believed the removal was improper and thus moved to remand its action to state court. Meanwhile, defendants moved to dismiss the complaint. The court in this order denied the motion to remand, and granted the motion to dismiss. It began with the motion to remand, and started by assessing whether plaintiff’s claims that pertain to ERISA-governed plans are completely preempted by ERISA. The court agreed with defendants that they were. Assessing the claims under the two-part Davila test, the court concluded that Abira could bring its claims under ERISA Section 502(a) as an assignee, and that the state law claims do not rest on any independent legal duty aside from the obligations set forth in the health plan documents. The court thus determined that removal was proper and denied the motion to remand. It then took a look at defendants’ motion to dismiss. Defendants presented three arguments in support of their motion: (1) the claims related to the ERISA plans are completely preempted by ERISA and Abira lacks standing due to valid and enforceable anti-assignment provisions within the plans; (2) the claims arising under the Medicare Act are subject to dismissal for failure to allege exhaustion of administrative remedies; and (3) the complaint fails to state a claim with respect to all three state law causes of action. The court agreed entirely. With regard to the ERISA-governed claims, the court not only found that the state law causes of action were completely preempted under Section 502, but also conflict preempted under Section 514, as none of the three state law claims could exist independent of the terms of the ERISA plans at issue. Notably, this case does not involve any independent contract or promise to pay between the parties absent the existence of the healthcare plans. Moreover, the court agreed with defendants that the ERISA plans contain valid and enforceable anti-assignment provisions which preclude Abira from asserting claims under the statute. It also stated that “there are no facts alleged in the complaint that suggest the anti-assignment provisions were waived.” Accordingly, the court granted defendants’ motion to dismiss the claims related to ERISA healthcare plans, and because amendment would be futile, dismissed them with prejudice. As noted, the court also dismissed the remainder of Abira’s claims for failure to exhaust and for failure to state a claim upon which relief may be granted. However, because these identified deficiencies may be cured through amendment, the court dismissed the non-ERISA related claims without prejudice.

Life Insurance & AD&D Benefit Claims

Fifth Circuit

Avila v. Metropolitan Life Ins. Co., No. 1:24-cv-0242-DAE, 2025 WL 1663104 (W.D. Tex. Jun. 12, 2025) (Judge David Alan Ezra). Plaintiff Lorenza Avila filed this action against Dell, Inc. and Metropolitan Life Insurance Company (“MetLife”) for recovery of her deceased husband’s life insurance benefits under ERISA. Ms. Avila’s husband worked for Dell and was insured under a group life insurance policy issued by MetLife. At the end of 2017 her husband took disability leave from Dell to undergo cancer treatment. The founder, chairman, and CEO of Dell Technologies, Michael Dell, even personally reached out to the family and offered to help them. Nevertheless, Dell did not inform the couple about the need to convert the group life insurance policy to an individual one. Because of this, the husband’s life insurance coverage lapsed and he had no life insurance coverage when he died in 2020. On this basis, MetLife denied Ms. Avila’s claim for life insurance benefits. In her lawsuit, Ms. Avila asserted a claim for benefits under Section 502(a)(1)(B) against MetLife and claims of fiduciary breach under Section 502(a)(3) against both defendants. MetLife and Dell each filed a separate motion to dismiss Ms. Avila’s complaint. Those motions were before Magistrate Judge Susan Hightower. Judge Hightower issued a report and recommendation recommending the court grant MetLife’s motion to dismiss the claim for benefits, deny both defendants’ motions to dismiss the fiduciary breach claims, and grant defendants’ motion to strike Ms. Avila’s demand for a jury trial. Defendants filed their respective objections to the recommendation. Ms. Avila, however, did not object to Judge Hightower’s findings. In this decision the court adopted in part the recommendation. As a preliminary matter, the court agreed with Judge Hightower’s finding that Ms. Avila does not have a claim for wrongful denial of benefits under Section 502(a)(1)(B). The court further agreed with the Magistrate’s jury trial analysis and therefore struck Ms. Avila’s demand for a jury trial. The court then discussed the breach of fiduciary duty claims. MetLife argued that it did not have a fiduciary duty to notify the family of conversion or porting options, and that Ms. Avila failed to allege any facts as to MetLife’s knowledge of her husband’s serious illness prior to his death to establish a fiduciary duty under the Fifth Circuit’s “special circumstances” standard. The court disagreed with the first argument. The court concluded that because MetLife argued that it provided conversion notice to the family, through its own discretion, MetLife acted as a fiduciary. Nonetheless, the court disagreed with Judge Hightower that Ms. Avila had alleged sufficient facts to infer that MetLife had a fiduciary duty to inform her late husband of his conversion rights based on its knowledge of his cancer. The court stated that the factual allegations regarding Dell’s knowledge of the husband’s illness prior to the insurance coverage lapse could not “be imputed onto MetLife for purposes of establishing a fiduciary duty under the ‘special circumstances’ standard.” The court stressed “that there is a difference between an employer (plan administrator) and claim administrator and whether they owe a duty to notify a beneficiary of his option to convert his plan.” Accordingly, the court concluded that the complaint fails to state a claim that MetLife had a fiduciary duty to provide notice of the option to port or convert and thus sustained MetLife’s objection to the recommendation. The court thus granted MetLife’s motion to dismiss. The breach of fiduciary duty claim against Dell was another matter though. The court adopted the Magistrate’s conclusions Dell was made aware of circumstances that suggest that silence about the need to convert would be materially harmful, triggering a duty to inform the family about their conversion rights. Therefore, the court held that Ms. Avila stated facts to state a plausible breach of fiduciary claim against Dell. As a consequence, the court overruled Dell’s objections and denied its motion to dismiss.

Pleading Issues & Procedure

Sixth Circuit

Doe v. Bluecross Blueshield of Ill., No. 2:25-cv-00608, 2025 WL 1648757 (S.D. Ohio Jun. 11, 2025) (Magistrate Judge Kimberly A. Jolson). Plaintiff Jane Doe is an employee of AT&T Services, Inc. and a participant in its healthcare plan administered by Blue Cross Blue Shield of Illinois. Her son, John Doe, is a beneficiary covered under the plan. When he was 19 years old, John Doe had a mental health crisis and was hospitalized. Doctors recommended in-patient treatment, and Jane Doe worked with Blue Cross to evaluate treatment facilities. Eventually, she concluded that Linder Center of Hope in Cincinnati could provide the best care for her son. Jane alleges that Blue Cross approved the treatment as medically necessary and informed her that her out-of-pocket costs would not exceed $15,000, per the terms of her plan. John Doe was treated at the residential facility for one month. The treatment cost was $47,200, which Jane paid in full. When she submitted the bill for reimbursement, Blue Cross paid far less than the amounts it had promised her during their pre-authorization conversations. After exhausting the plan’s administrative procedures to challenge the payment decision, Jane Doe filed this ERISA action seeking payment of the out-of-pocket costs she incurred in excess of the plan’s out-of-pocket limitation. At issue here was whether plaintiffs should be permitted to proceed under pseudonyms. Typically, such a request in a case like this is a non-issue, given the sensitive and private medical information at issue. But plaintiffs got some pushback in this decision issued by Magistrate Judge Kimberly Jolson. For one thing, Judge Jolson brushed aside plaintiffs’ arguments that they should be allowed to proceed anonymously given John Doe’s young age. The Magistrate wrote, “the fact remains that John Doe was not a child during his hospitalization nor when he initiated this lawsuit. Plaintiffs do not provide any caselaw saying the Court may consider this factor met when the plaintiff at issue is not, in fact, a child. Therefore, this factor does not weigh in Plaintiffs’ favor.” However, Judge Jolson took plaintiffs’ argument that the litigation will compel them to disclose information of the utmost intimacy about John Doe’s mental health condition more seriously. She noted that there is limited caselaw in the Sixth Circuit related to privacy concerns over a party’s medical history and whether those concerns allow plaintiffs to file cases under pseudonyms. Judge Jolson cited cases challenging Social Security disability decisions, which similarly involved detailed discussions of sensitive medical information. The district courts in those cases allowed plaintiffs to file their actions under their first name and last initial only. Magistrate Jolson decided to do the same. “In the end, the Court finds a middle ground sufficiently balances Plaintiffs’ privacy interests with the presumption in favor of open judicial proceedings. While they may not proceed as ‘Jane and John Doe,’ Plaintiffs will be permitted to proceed under their first names and last initial.” Judge Jolson held that this decision would strike a fair balance for the privacy concerns in this lawsuit and is a just outcome under the relevant considerations. Thus, plaintiffs were ordered to refile their complaint under their first names and last initial, and were informed that they may also pursue other avenues available to them to address worries about sensitive medical information, such as seeking protective orders or moving to seal filings from the public docket.

McDonald v. Brookdale Senior Living, Inc., No. 3:25-cv-00094, 2025 WL 1625654 (M.D. Tenn. Jun. 5, 2025) (Magistrate Judge Barbara D. Holmes). Plaintiff Monique McDonald brings this action individually, as a representative of the Brookdale Senior Living, Inc. 401(k) retirement savings plan, and as a representative of a putative class of participants and beneficiaries of the plan, alleging that Brookdale Senior Living Inc., the Brookdale Retirement Committee, and the committee members are breaching their fiduciary duties under ERISA and violating ERISA’s anti-inurement provision by using forfeited employer contributions for their own benefit. According to the plan’s Form 5500s from the years 2018 to 2022, those forfeitures were to be used first to restore previously forfeited accounts of former participants, second to pay the plan’s administrative expenses, and finally to offset any future employer contributions to the plan. Ms. McDonald contends that despite this directive the fiduciaries consistently used the forfeitures to reduce Brookdale’s contribution obligations to the plan. She adds that, to reflect this reality, defendants changed the language of the plan’s Form 5500 in 2023 to remove the priority use of forfeitures to pay the plan’s administrative expenses before offsetting future employer contributions. Ms. McDonald maintains that defendants’ conduct has harmed the participants of the plan and prioritized a benefit to the employer over the best interest of the putative class. In her complaint, Ms. McDonald asserts four claims: (1) breach of the duty of prudence; (2) breach of the duty of loyalty; (3) breach of ERISA’s anti-inurement provision; and (4) failure to monitor fiduciaries and co-fiduciary breaches. Defendants responded to the complaint by filing a motion to dismiss. Defendants’ motion to dismiss remains pending and is under consideration by Judge Richardson. Before Magistrate Judge Barbara Holmes here was defendants’ motion to strike Ms. McDonald’s demand for a jury trial. Defendants argued that there is no right to a jury trial in this case under the Seventh Amendment as Ms. McDonald’s proposed remedies are equitable in nature. Judge Holmes agreed. The Magistrate noted that courts in the Sixth Circuit have consistently held that ERISA claims are equitable in nature and therefore ineligible for a jury trial. Judge Holmes added that this holding is consistent with the Supreme Court’s ruling in Cigna v. Amara, wherein the court held that even relief in the form of money payments remain in the category of traditionally equitable relief, as courts of equity possessed the power to provide monetary compensation for losses resulting for a trustee’s breach of duty or unjust enrichment. Thus, Judge Holmes concluded that “[t]here is no question that equitable relief predominates in Plaintiff’s complaint.” Accordingly, Judge Holmes found that Ms. McDonald does not have a statutory or constitutional right to a jury trial and decided to grant defendants’ motion to strike her jury demand.

Provider Claims

Second Circuit

Emsurgcare v. Hager, No. 24-CV-6181 (JPO), 2025 WL 1665072 (S.D.N.Y. Jun. 12, 2025) (Judge J. Paul Oetken).  Plaintiffs Emsurgcare and Emergency Surgical Assistant filed this action in state court in California against Avery Hager, Oxford Health Plans, Inc., Oxford Health Insurance, Inc., and John Does 1-10 seeking reimbursement of the costs of emergency gallbladder surgery they performed on Mr. Hager in 2018. Defendants removed the action to federal court in the Central District of California. The Central District of California made two rulings. First, it dismissed all of the claims against Mr. Hager because their practice of “balance billing” was illegal under California law. Second, the Central District of California also held that transfer to the Southern District of New York was proper as to the claims against Oxford because the health plan at issue contains a forum selection clause mandating that actions be filed in New York courts. The Oxford defendants moved to dismiss the ERISA claim asserted against them. The court granted their motion, without prejudice, in this decision. To begin, the court agreed with defendants that the complaint contains only a bare assertion that Mr. Hager assigned his rights to the healthcare providers. Without further facts about the assignment, or language from the assignment of benefits, the court said it did not have enough to determine that assignment ever occurred. Putting that issue aside, however, the healthcare providers were up against a larger problem – the plan at issue contains an anti-assignment provision barring assignment of benefits in the vast majority of circumstances. The one exception to the anti-assignment clause is for “monies due for a surprise bill.” However, plaintiffs do not contend that their charge to Mr. Hager qualifies as a surprise bill. And the court was doubtful that it could under the terms of the plan. Thus, the court agreed with the Oxford defendants that the complaint currently fails to allege the necessary elements of a wrongful denial of benefits claim under ERISA. It therefore granted the motion to dismiss. However, because plaintiffs could potentially amend their complaint without amendment being futile, the court permitted the providers the opportunity to do so.

Fifth Circuit

Guardian Flight v. Health Care Service Corp., No. 24-10561, __ F. 4th __, 2025 WL 1661358 (5th Cir. Jun. 12, 2025) (Before Circuit Judges Smith, Clement, and Duncan). In 2022, Congress enacted the No Surprises Act to protect patients from surprise medical bills incurred when they receive emergency medical services from providers who are out-of-network with their healthcare plans. To achieve this goal, the No Surprises Act relieves patients from financial liability for these bills, and creates an Independent Dispute Resolution (“IDR”) process for resolving billing disputes between providers and insurers. During the IDR process, a certified independent dispute resolution entity serves as referee and selects the payment amount among the parties’ bids. The insurance company is then required to pay the IDR award within 30 days. The Department of Health and Human Services (“HHS”) has the authority to enforce an insurance company’s non-compliance in paying an IDR award. This has proven problematic. In the first year the No Surprises Act was in operation, providers filed more than thirty times the number of IDR disputes HHS anticipated. The Centers for Medicare and Medicaid Services (“CMS”) maintains an online portal through which providers may submit complaints regarding noncompliance with IDR awards. CMS has received thousands of complaints and has a substantial backlog of unresolved complaints. Understandably, emergency healthcare providers are unhappy with this mechanism Congress designed for resolving their disputes with insurers. They argue that the system, as it is currently functioning (or not functioning), is creating perverse incentives for insurers to simply not pay or to delay payment indefinitely. Two emergency air ambulance providers, plaintiffs-appellants Guardian Flight, LLC and Meds-Trans Corporation, experienced this firsthand when Health Care Service Corporation simply ignored the IDR award it was required to pay them. The air ambulance companies filed this action against Health Care Service Corp. “alleging it (1) failed to timely pay Providers thirty-three IDR awards in violation of the No Surprises Act; (2) improperly denied benefits to HCSC’s beneficiaries in violation of ERISA by failing to pay Providers; and (3) was unjustly enriched because Providers conferred a benefit on HCSC that HCSC has never paid.” Health Care Service Corporation moved to dismiss the complaint. The district court granted the motion to dismiss. First, it concluded that the providers could not assert a claim under the No Surprises Act because it contains no private right of action. Second, the court dismissed the ERISA claim for lack of standing, reasoning that the patients that assigned their claims to their providers suffered no injury because the No Surprises Act shields them from liability. Finally, the district court dismissed the quantum meruit claim, concluding that the providers did not perform their air ambulance services for the insurance company’s benefit. The providers appealed. In this decision the Fifth Circuit affirmed, agreeing with the district court on all three points. Like the district court, the Fifth Circuit concluded that the No Surprises Act does not create a private right of action, either expressly or implicitly. In fact, the Fifth Circuit concluded that it was clear Congress had chosen to design the law without a judicial enforcement mechanism. Perhaps, it theorized, Congress did so in order to not “throw open the floodgates of litigation.” For whatever reason, the Fifth Circuit was clear that Congress designed the law with an administrative enforcement mechanism to handle award disputes instead. Whether or not this was a good thing, the appeals court wrote that “the wisdom of Congress’s policy choice is beyond our judicial ken.” Accordingly, the Fifth Circuit affirmed the dismissal of the claim under the No Surprises Act. It then turned to the providers’ ERISA claim. While the providers satisfied the derivative standing requirements to sue under ERISA, the Fifth Circuit agreed with the lower court that the problem with standing centers on the fact that the beneficiaries themselves would not have standing to sue under Article III. The court found the fact that the No Surprises Act shields the beneficiaries from liability for any coverage costs means the patients suffer no concrete injury when their insurance company fails to cover medical bills that fall within the scope of the Act. The providers argued that the beneficiaries are harmed because they suffer a breach of contract and are denied a benefit of their agreement with the insurance company. But the Fifth Circuit was not moved by this “technical violation,” and concluded it does not amount to actual harm sufficient to confer Constitutional standing. In short, the Fifth Circuit agreed with the lower court’s dismissal of the ERISA claim. Last, the court of appeals held that the district court properly dismissed the quantum meruit claim. Under Texas law, the Fifth Circuit stated that healthcare services are undertaken for the patient’s benefit, not the insurer’s. “The district court was right. Providers did not render any services for HCSC’s benefit.” For these reasons, the Fifth Circuit affirmed the district court’s dismissal of all three causes of action, leaving the air ambulance companies without an avenue in the courts to receive payment from Health Care Service Corporation. Congress wanted No Surprises, but this decision may come as somewhat of a surprise to providers who expected to have their IDR awards paid.

Ninth Circuit

County of Riverside v. Cigna Health and Life Ins. Co., No. 2:24-CV-10793-SPG-MAR, 2025 WL 1671887 (C.D. Cal. Jun. 13, 2025) (Judge Sherilyn Peace Garnett). This action by Riverside University Health System seeks to recover $1.475 million in unreimbursed medical bills from Cigna Health and Life Insurance Company and Cigna Healthcare of California Inc. The Hospital filed its action in California state court asserting only state law causes of action premised on Cigna’s alleged violation of California’s Knox-Keene Act and California common law. The Knox-Keene Act requires healthcare plans to reimburse medical providers for the reasonable costs of emergency medical services. “And Plaintiff’s common law causes of action are based on Plaintiff’s treatment of the patients and Defendants’ alleged acceptance of payment responsibility for such treatment.” Notwithstanding the fact the Hospital raises no claim for relief based on the purported assignment of ERISA benefits and the fact the complaint explicitly disavows any claims based on the patients’ rights to benefits under ERISA plans, Cigna removed the action to federal court arguing that ERISA completely preempts the provider’s state law causes of action. The Hospital moved to remand its action back to state court. Because the court agreed that Cigna could not satisfy its burden on the second prong of the Davila preemption test, the court granted plaintiff’s motion to remand. The court ruled that regardless of the existence of assignments of benefits, the Hospital was not required to assert its right to relief under the terms of the ERISA plans. Instead, it was permitted to assert causes of action premised on the independent legal duties imposed by the Knox-Keene Act and California common law. The court stressed that it is a plaintiff’s “prerogative to choose which claims to pursue.” Moreover, the court disagreed with Cigna that any cause of action premised on the Knox-Keene Act is automatically preempted by ERISA. “Thus the Court agrees with Plaintiff that its causes of action ‘would exist whether or not an ERISA plan existed.’” Accordingly, the court determined that the complaint is not completely preempted under Section 502(a) of ERISA. Therefore, the court granted the Hospital’s motion to remand its action to Los Angeles County Superior Court.

Valley Children’s Hospital v. Cigna Healthcare of Cal., Inc., No. 1:25-cv-00337-KES-EPG, 2025 WL 1665058 (E.D. Cal. Jun. 12, 2025) (Judge Kirk E. Sherriff). Plaintiff Valley Children’s Hospital brought this action in state court against Cigna Healthcare of California, Inc. and Cigna Health and Life Insurance Company to recover payment from Cigna for medically necessary services it provided to 151 patients who were enrolled in health plans sponsored by defendants. The Hospital alleges that it formed implied-in-fact contracts with Cigna for each of these patients to whom it provided medically necessary treatment, but that Cigna did not fully reimburse it in accordance with those promises. The Hospital asserts only state law claims in its complaint, namely breach of implied contract and quantum meruit. Cigna removed the case to federal court based on federal question jurisdiction, asserting that the state law claims are completely preempted by Section 502(a) of ERISA. Valley Children’s Hospital moved to remand its action back to state court, while Cigna moved to dismiss the complaint based on Section 514(a) conflict preemption. The court determined that neither prong of the two-prong Davila preemption test was met because the Hospital could not have brought its claims under ERISA and because those claims are based on an independent legal duty. The court held that “[t]his case is on all fours with Marin General Hospital v. Modesto & Empire Traction Company, 581 F.3d 941 (9th Cir. 2009).” There, as here, the Hospital plaintiff sued for reimbursement of benefits not based on the terms of the patients’ plans, but rather, under the terms of implied-in-fact contracts. Given this fact, both the Marin court and this district court concluded that the state law claims were not based on obligations owed under ERISA-governed plans, as they would exist whether or not the ERISA plans existed. “Thus, regardless of whether the Hospital could have brought a claim under ERISA, the Hospital could not have brought these claims under ERISA. The Hospital’s claims are based on independent state-law duties: those allegedly imposed by an implied contract or the theory of quantum meruit. Thus, neither prong of Davila is satisfied, and the Hospital’s claims are not preempted.” Finding that the doctrine of complete preemption does not apply, the court determined that it lacks federal question jurisdiction over this matter and so granted the Hospital’s motion to remand. Consequently, Cigna’s motion to dismiss was denied as moot.

Remedies

Ninth Circuit

Su v. Bensen, No. CV-19-03178-PHX-ROS, 2025 WL 1634940 (D. Ariz. Jun. 9, 2025) (Judge Roslyn O. Silver). The former acting Secretary of Labor, Julie A. Su, brought this action against the three owners of a company that rents recreational vehicles to the public, alleging that they knowingly participated in fiduciary breaches and engaged in a prohibited transaction in the creation of the RVR Employee Stock Ownership Plan (“ESOP”) and during the ESOP’s stock transaction. Following a 16-day bench trial, the court issued its liability decision on August 15, 2024, holding “that Defendants were the beneficiaries of a ludicrous one-sided transaction” wherein the plan overpaid $72 million for the stock, and finding in favor of the Secretary on all of her claims against the selling shareholders. (Your ERISA Watch covered that decision in our August 21, 2024 newsletter). The case subsequently proceeded to its bifurcated second phase on liability and remedies. The parties presented competing narratives over the harm suffered by the ESOP and the appropriate remedies. Before considering the parties’ discussions on various topics, the court first addressed defendants’ arguments that the ESOP has not been damaged. Defendants raised four arguments in support of this proposition: (1) the ESOP has not paid the full loan for the purchase of the RVR stock; (2) the ESOP has only been making annual payments of $4.72 million per year for the stock purchase and only $14.78 million to date; (3) RVR’s stock has outperformed internal projections created prior to the ESOP; and (4) the $20.5 million that Reliance Trust paid to the ESOP in settlement is a windfall for the ESOP when considered with the other elements of the transaction. The court disagreed with each point. First, the court stated that the structure of the ESOP loan is not evidence of a lack of harm to the plan, as indebtedness by an ESOP has immediate consequences. It stated that because of this, “courts have held that, under ERISA, loans owed by ESOPs are counted towards an ESOP’s damages at the time the loan is held, not when the ESOP repays the loan.” Relatedly, the court disagreed with defendants that reformation of the loan is an appropriate remedy here. The court also found that the structure of annual payments doesn’t indicate that the ESOP failed to suffer a loss from overpayment at the time of the purchase of the RVR stock. As for the post-transaction performance of the RVR stock, the court agreed with plaintiff that the subsequent stock gains are irrelevant to the loss incurred by the ESOP at the time when the fiduciary breach occurred and therefore should not be considered or used to offset losses. Further, the court disagreed with defendants that the Reliance Trust settlement presents a windfall to the ESOP. However, per the agreement upon terms of the settlement, the court agreed to reduce the judgment against defendants by the amount of that settlement. Having rejected defendants’ arguments that the ESOP had not been harmed, the court proceeded to its discussion of the appropriate remedies. First, the court took a moment to clarify that it had “made the necessary and substantial findings of fact to find Defendants liable as co-fiduciaries and for knowing participation in a prohibited transaction” in its liability decision. Next, the court agreed with plaintiff that the proper measure of loss here should be calculated by subtracting the fair market value of the stock as determined by the court ($33 million) from the inflated price paid by the ESOP (“$105 million). Accordingly, the court held that the ESOP overpaid by $72 million. The court also decided that defendants are not entitled to an offset of the damages award based on their own compensation because “Defendants have not proven they are entitled to the salary they claim, that such salary was deferred or waived for the purpose of RVR or the ESOP, nor that the ESOP benefitted in any way from their deferral of salary.” Notably, the court left unresolved two important issues. Rather than decide whether lost opportunity damages are warranted here, and if so, what rate of prejudgment interest should apply, and whether disgorgement should be awarded, the court instead chose to resolve these issues in a second trial. The court then discussed the topics that defendants requested it rule on. The court held that under Section 502(1), the Secretary is entitled to recover the 20% civil penalty for the fiduciary breach claim, and that the complaint did not need to specifically plead such a demand for relief because the statutory framework indicates that the penalty is an automatic consequence of recovery and at the discretion of the Secretary. Defendants also argued that the only appropriate remedy here is to order recission of the transaction wherein they return the purchase price to the ESOP and the ESOP returns the RVR stock to them and pays off the ESOP loan. The court disagreed, stating, “Defendants have not established how recission would be an equitable remedy here, nor have they cited any case like this one in which recission was ordered.” Accordingly, while the court resolved many of the issues raised by the parties in this lengthy decision, it left some key ones for resolution at a second trial, and the ultimate question of what remedy is appropriate remains unanswered for now.

Schuman v. Microchip Technology Inc., No. 24-2624, 24-2978, __ F. 4th __, 2025 WL 1584981 (9th Cir. Jun. 5, 2025) (Before Circuit Judges Thomas, Fletcher, and Smith, Jr.)

Waivers and releases of federal claims, including ERISA claims, are not favored, but are generally allowed so long as they are “knowing and voluntary.” Courts have enumerated various factors, which they usually describe as non-exhaustive, to be applied in making this determination. In this week’s notable decision, the Ninth Circuit reversed a district court ruling holding that releases signed by two former employees barred them from being named plaintiffs in an ERISA class action challenging the elimination of severance benefits by their employer. In so doing, the court announced a new Ninth Circuit test for evaluating ERISA releases. 

This case arose from the 2016 merger of Atmel Corp. and Microchip Technology. Following the merger, Microchip announced that it would no longer honor a severance plan that Atmel had adopted in anticipation of the merger for employees who were fired without cause. Two such former Atmel employees, Peter Schuman and William Coplin, filed an ERISA class action lawsuit challenging this decision and also asserting that that Microchip further violated its fiduciary duties by encouraging employees to sign a release of claims in exchange for significantly lower benefits than they had been promised under the severance plan.

The district court, however, agreed with Atmel and Microchip that Mr. Schuman and Mr. Coplin were precluded by the releases from suing and representing others who had signed releases. Strictly applying a six-factor test from the First and Second Circuits, the district court concluded that the release was “knowing and voluntary” and therefore enforceable. The court expressly declined to consider any evidence concerning whether Microchip had violated its fiduciary duties in obtaining the releases.

The court therefore granted summary judgment in favor of Microchip with respect to Mr. Schuman and Mr. Coplin, but not with respect to the unnamed class members because the court concluded that the factors were “too individualized to support a class-wide conclusion that all of the releases were signed knowingly and voluntarily.”

The district court “entered final judgment under Federal Rule of Civil Procedure 54(b) in favor of Microchip and against Schuman and Coplin, certifying for our review the question of “what legal test the Court should apply in determining the enforceability of the releases signed by Plaintiffs Peter Schuman and William Coplin and the majority of class members.” Specifically, the court wanted to know “whether it properly adopted and applied the First and Second Circuit’s six-part test or whether it should have considered Microchip’s alleged breach of fiduciary duties as part of its evaluation.” The Ninth Circuit answered the certified question in several steps.

First, the court considered whether, given the protective purposes and trust-law underpinnings of the statute, “ERISA requires heightened scrutiny of a waiver or release of ERISA claims,” particularly where there are allegations of fiduciary abuse. The court had little trouble answering this in the affirmative. “In accord with ERISA’s purposes and guided by other circuits’ approaches, we conclude that, when a breach of fiduciary duties is alleged, courts must evaluate releases and waivers of ERISA claims with ‘special scrutiny designed to prevent potential employer or fiduciary abuse.’” The court reasoned that “[r]equiring courts to consider evidence of a breach of fiduciary duty related to a release of claims under ERISA aligns with the statute’s purpose, structure, and underlying trust-law principles.”

The court then considered how best “to apply the required special scrutiny in practice.” Looking at the “ERISA-specific tests for the enforceability of releases” that other circuits have adopted, the Ninth Circuit concluded “that courts must consider alleged improper conduct by the fiduciary in obtaining a release as part of the totality of the circumstances concerning the knowledge or voluntariness of the release or waiver.”

The Ninth Circuit recognized that other circuits have adopted slightly different tests, contrasting “the First and Second Circuit’s non-exhaustive six-part test” with the Seventh and Eighth Circuits’ “more comprehensive but still non-exhaustive eight- and nine-part tests.” Because the Seventh and Eighth Circuit “explicitly require consideration of any improper conduct by the fiduciary,” the court concluded that their approach “provides the right balance between a strictly traditional voluntariness examination and an ERISA-based analysis.”

Thus, the Ninth Circuit combined “the two sets of factors, [to] hold that, in evaluating the totality of the circumstances to determine whether the individual entered into the release or waiver knowingly and voluntarily, courts should consider the following non-exhaustive factors: (1) the employee’s education and business experience; (2) the employee’s input in negotiating the terms of the settlement; (3) the clarity of the release language; (4) the amount of time the employee had for deliberation before signing the release; (5) whether the employee actually read the release and considered its terms before signing it; (6) whether the employee knew of his rights under the plan and the relevant facts when he signed the release; (7) whether the employee had an opportunity to consult with an attorney before signing the release; (8) whether the consideration given in exchange for the release exceeded the benefits to which the employee was already entitled by contract or law; and (9) whether the employee’s release was induced by improper conduct on the fiduciary’s part.”  

Because the district court “found a genuine issue of fact material to the issue of a breach of fiduciary duty in obtaining the release of claims,” the Ninth Circuit noted that “the final factor warrants serious consideration and may weigh particularly heavily against finding that the release was ‘knowing’ or ‘voluntary’ or both.” After concluding that the district court properly certified the release question for interlocutory review under Rule 54(b), but that it lacked jurisdiction over Microchip’s cross-appeal from the denial of summary judgment as to the non-named class members’ claims, the Ninth Circuit reversed the grant of summary judgment against Mr. Schuman and Mr. Coplin and remanded for consideration of the enumerated factors. 

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

Attorneys’ Fees

Eleventh Circuit

Asselta v. Nova Southeastern Univ., No. 0:22-cv-61147-WPD, 2025 WL 1560772 (S.D. Fla. May 28, 2025) (Magistrate Judge Patrick M. Hunt). This breach of fiduciary duty class action brought on behalf of the participants of the Nova University Defined Contribution 403(b) Plan ended with the parties reaching a settlement totaling $1,500,000. The court granted final approval to all aspects of the parties’ settlement other than attorneys’ fees and costs. This matter was referred to Magistrate Judge Patrick M. Hunt for appropriate disposition or report and recommendation. In this order Judge Hunt recommended the court approve plaintiffs’ requested attorney fee award of one-third of the settlement amount, or $500,000, as well as costs of $8,051.35. Judge Hunt held that class counsel should be awarded this amount given their expertise, the quality of their representation, counsel’s considerable time and effort, and the excellent result they achieved on behalf of the class. Judge Hunt wrote, “[t]he size and complexity of the issues before the Court, and the novelty of the litigated claims involving a 403(b) plan, support the one-third fee sought.” Moreover, the Magistrate concluded that one-third of the common fund is in line with fees awarded in similar complex ERISA class actions, and cited several instances where courts have awarded the same percentage of the common fund to the attorneys. “Not only that,” he added, “but the benefits of the Settlement must also be considered in the context of the risk that further protracted litigation might lead to no recovery, or to a smaller recovery for Plaintiffs and the proposed Settlement Class. The Defendant mounted a vigorous defense at all stages of the litigation and, but for the Settlement, would have continued to do so through all future stages of the litigation, including through possible appellate proceedings.” Given these factors and more, Judge Hunt opined that plaintiffs’ requested fee recovery was appropriate and well deserved. Thus, Judge Hunt fully approved plaintiffs’ unopposed motion for attorneys’ fees and costs.

Class Actions

Second Circuit

Andrew-Berry v. Weiss, No. 3:23-cv-978 (OAW), 2025 WL 1549102 (D. Conn. May 30, 2025) (Judge Omar A. Williams). Plaintiff Beth Andrew-Berry is a former employee of the now bankrupt Connecticut hedge fund GWA, LLC. Ms. Andrew-Berry brought this action against her former employer and its owner alleging they violated their fiduciary duties and misused assets of the company’s retirement plan in violation of ERISA. After the parties engaged in limited discovery, the case was stayed pending the resolution of the related bankruptcy action. The bankruptcy court eventually gave permission to continue litigating this action. At that time the parties engaged in mediation, which was successful. Thus, before the court here was plaintiff’s unopposed motion for preliminary approval of class action settlement and class certification. The court granted the motion in this decision. It began with certification of the settlement class. The court determined that all four elements of Rule 23(a) were satisfied because (1) the 200-plus individual class members made joinder impracticable and satisfied numerosity, (2) there are common questions of law and fact around defendants’ conduct that are capable of class-wide resolution, (3) the claims of Ms. Andrew-Berry are typical of those of the absent class members as they all revolve around the same course of conduct and events, and (4) Ms. Andrew-Berry and her counsel at Cohen Milstein Sellers & Toll PLLC are adequate representatives of the class. Having found that Rule 23(a) “presents no impediment to the relief requested,” the court looked to the requirements of Rule 23(b). It determined that certification under subsection (b)(1)(B) was appropriate “since success or failure on the claims presented as to the named plaintiff would be dispositive of the success or failure of the claims as to the entire class.” The court therefore preliminarily certified the proposed class of plan participants and beneficiaries and appointed Ms. Andrew-Berry as the class representative and Michelle C. Yau, Caroline Elizabeth Bressman, Daniel Sutter, and Jacob Timothy Schutz at Cohen Milstein Sellers & Toll PLLC as class counsel. The court then assessed the fairness of the settlement terms. The gross settlement amount is $7,900,000. Out of this amount litigation costs, attorneys’ fees, and a class representative award will be deducted. The remaining amount in the fund, the net settlement amount, will then be distributed automatically on a pro rata basis to each member of the class. Counsel agreed to cap their fee award at one-third of the settlement fund. Ms. Andrew-Berry will receive an award of up to $45,000. The court assessed the terms of the settlement and determined that they appear both procedurally and substantively fair. The court stated that it appears the settlement was the result of arm’s-length and informed negotiations, without collusion among the parties. Moreover, the court found the relief provided in the agreement, representing approximately 36% of the total losses to the class, to be reasonable, adequate, and substantively fair. Likewise, the court concluded that the proposed attorneys’ fee award and award to the class representative “are not extravagant.” Finally, the court found the proposed method of notice and the content of the proposed notice appropriate. For the reasons discussed, the court granted plaintiff’s motion and preliminarily approved of the class action settlement. The final approval fairness hearing is scheduled for August 26, 2025.

Disability Benefit Claims

Ninth Circuit

Dharmasena v. Metropolitan Life Ins. Co., No. EDCV 23-01510 JGB (DTBx), __ F. Supp. 3d __, 2025 WL 1563970 (C.D. Cal. May 29, 2025) (Judge Jesus G. Bernal). Plaintiff Hettihewage Dharmasena worked for many years as an electrical engineer. Mr. Dharmasena suffers from a type of muscular dystrophy and also has chronic kidney disease. Both illnesses are progressive. The kidney disease required him to undergo an organ transplant. But it was the genetic muscular dystrophy that affected him even more. The progressive muscle degeneration and weakness from the disease left Mr. Dharmasena in a wheelchair and unable to use his right hand for everyday activities such as eating, drinking, and brushing his teeth. His disease also impeded his ability to function on a computer keyboard, or to sit for any prolonged period. Ultimately, Mr. Dharmasena’s conditions caused him to get sicker, until he could no longer continue working in his sedentary occupation, despite his best efforts to continue doing so. On February 4, 2022, Mr. Dharmasena was terminated from his employment at Schneider Electric, Inc. He then submitted a claim for disability benefits, which was denied by defendant MetLife. First, MetLife informed Mr. Dharmasena that it was denying his claim for long-term disability benefits because it was no longer administering claims for Schneider Electric. However, on June 29, 2023, MetLife sent a denial letter correcting its previous rationale, distancing itself from its position that the claim was being denied due to the fact that it no longer administered Schneider’s disability benefits. In the new letter MetLife changed the reason for the denial to something else entirely. It determined that Mr. Dharmasena’s disability onset date was February 7, 2022. Because he was laid off a few days earlier, on February 4, 2022, MetLife determined that Mr. Dharmasena did not have active long-term disability insurance coverage as of February 7, 2022, and was therefore ineligible for benefits. Represented by attorneys Glenn Kantor and Sally Mermelstein of Kantor & Kantor LLP, Mr. Dharmasena brought this action under ERISA to challenge MetLife’s decision. Mr. Dharmasena moved for judgment on the administrative record under Rule 52. In this decision the court granted his motion. As a preliminary matter, the court noted that it would employ de novo review of the denial and that it would not give deference to the MetLife’s decision. Mr. Dharmasena next argued that under the Ninth Circuit’s decision in Harlick v. Blue Shield of California, MetLife could not raise new challenges to his claim in court that it did not offer during the administrative appeals process. The court was not convinced. It stated that it could not read Harlick “to disclaim Plaintiff of his burden of proof, as the claimant, to ‘show he was entitled to the benefits under the terms of his plan.’” Accordingly, the court agreed with MetLife that it was entitled to rebut Mr. Dharmasena’s attempt to meet his burden of showing by a preponderance of evidence that he was disabled under the terms of the plan during the claim period. Nevertheless, the court ultimately decided that the Harlick issue was a moot point because the court was confident that Mr. Dharmasena could meet that burden here. Contrary to MetLife’s assertions, the court found that Mr. Dharmasena was disabled on or before February 4, his last day of employment. The court stated that there is not a “brightline rule that an employee must claim disability before being terminated to receive long-term benefits.” Here it was clear to the court that Mr. Dharmasena was disabled when his employer terminated him. The court found that there was “adequate evidence in the record” to support that Mr. Dharmasena “was pushing himself beyond his limits” by the time Schneider laid him off. Moreover, while it is true that Mr. Dharmasena had a degenerative and progressive condition with symptoms that can rapidly worsen, the court stated there was “no evidence to suggest that Plaintiff’s condition could have deteriorated so rapidly that he was not disabled on the date of his termination.” For these reasons, the court found the record sufficient for it to determine that Mr. Dharmasena was disabled and eligible for benefits. The court thus reversed MetLife’s denial. It then concluded that remand was inappropriate under the circumstances, and opted instead to award benefits outright. Accordingly, the court granted Mr. Dharmasena’s motion and entered judgment in his favor.

Discovery

Ninth Circuit

THC – Orange County, LLC v. Regence BlueShield of Idaho, Inc., No. 1:24-cv-00154-BLW, 2025 WL 1556137 (D. Idaho Jun. 2, 2025) (Judge B. Lynn Winmill). Plaintiff Kindred Hospital is a long-term acute care hospital in California. Kindred provided care to a patient who was a participant in defendant Winco Holdings, Inc.’s employee benefit welfare plan. Winco sponsored and administered the plan. Defendant Regence Blue Shield of Idaho is the plan’s contracted administrator. Plaintiff also sued Cambia Health Solutions, Inc., the parent company of Regence, in this ERISA action seeking judicial review of the claims denial. Before the court was Kindred’s motion for limited discovery, as well as its motion to take judicial notice. Kindred requested discovery on six topics: (1) Regence’s relationship to the plan; (2) the existence of reinsurance and documentation concerning Regence’s compensation from the plan; (3) the identities and qualifications of the medical reviewers who handled the claim; (4) information regarding the Blue Card Program; (5) the appeal panel minutes and material; and (6) defendants’ assertions of privilege. The court addressed each topic in turn. First, the court agreed with Kindred that discovery into the relationship between Regence and Plan is necessary in order to determine the appropriate standard of review, as the plan’s delegation of authority appears to conflict with terms of the Administrative Services Agreement. Not only do the terms of the Administrative Services agreement call into question the discretionary grant, but the court also read them to suggest a structural conflict may exist, which also warrants limited discovery into this topic. Next, the court permitted Kindred to conduct discovery into the plan’s reinsurance as it was able to make a threshold showing of a plausible conflict of interest. As for the identities and qualifications of the medical reviewers, the court stated that the failure to provide this information to the hospital in the first instance “constitutes a failure to follow a procedural requirement of ERISA that prevented the full development of the administrative record.” Therefore, the court found that Kindred is entitled to discovery on this matter. The court also agreed with Kindred that it is entitled to discovery on the Blue Card Program, stating, “[a]s a matter of fairness, Regence and Cambia should not be able to argue that, based on the Blue Card Program, they had no role in the denying the claim without producing information about the Blue Card Program to support this claim. This information is also relevant to the presence, or absence, of a conflict of interest because if, as Regence and Cambia claim, it did not deny the claim then there should be no conflict of interest. If, however, the opposite is true then questions about a conflict of interest remain.” Regarding the appeal panel minutes, documents, notes, and communications, the court found that this material should be part of the administrative record and that it should be provided to Kindred. As for defendants’ assertions of privilege, the court ruled that, consistent with normal discovery procedures, should defendants withhold any documents on this basis they must produce a privilege log. For these reasons, the court granted Kindred’s discovery motion entirely. Finally, the court granted Kindred’s motion to take judicial notice of the plan’s Form 5500s, as they are public documents subject to judicial notice and the court relied on them in reaching its decision. Otherwise, the court denied as moot Kindred’s motion for judicial notice as to the remaining documents.

ERISA Preemption

Eighth Circuit

Luckett v. Guardian Life Ins. Co. of Am., No. 4:24-CV-1467-NCC, 2025 WL 1580390 (E.D. Mo. May 30, 2025) (Magistrate Judge Noelle C. Collins). Curtis Saahir was employed by Laminated and Fabricated Panels, LLC and a participant in the company’s employee life insurance plan, insured by Guardian Life Insurance Company of America. Mr. Saahir named plaintiff Lenard Luckett as the sole beneficiary under the policy. However, after Mr. Saahir died, Guardian paid only a portion of the life insurance proceeds to Mr. Luckett, paying the remaining amount to Mr. Saahir’s heirs. Mr. Luckett responded by filing a lawsuit in state court against Guardian asserting that its actions harmed him by depriving him of the full benefits of Mr. Saahir’s life insurance policy. Guardian removed the action to federal court, arguing that the state law claims are preempted by ERISA. Mr. Luckett moved to remand his action, arguing that ERISA does not apply to his claims. The court first addressed the threshold question regarding plan status. It agreed with Guardian that the group life insurance policy is governed by ERISA because it is offered and maintained by an employer, lays out its provided benefits, class of beneficiaries, source of financing, and procedures for receiving benefits, and does not meet the criteria for ERISA’s safe harbor exception. Specifically, the court concluded that “far from passive collection of premiums, LFP had an active role in the administration of benefits under the Group Plan.” Having found that ERISA governs the policy in question, the court addressed whether ERISA preempts Mr. Luckett’s state law claims. The court easily determined that ERISA does preempt the claims. “Here, the nexus is plain: Plaintiff’s cause of action is based on Defendant’s failure to pay benefits under an ERISA plan.” Quite simply, the court concluded that Mr. Luckett would not have a claim against Guardian but for the existence of the ERISA plan and there is no other independent legal duty that is implicated by Guardian’s challenged conduct. Therefore, the court found that Mr. Luckett’s claims asserted in his complaint seeking benefits under the policy are preempted by ERISA and that removal based on federal question jurisdiction was proper. As a result, the court denied Mr. Luckett’s motion to remand and granted Guardian’s motion to dismiss. Dismissal was without prejudice.

Eleventh Circuit

Foster v. Metropolitan Life Ins. Co., No. 8:24-cv-02617-WFJ-TGW, 2025 WL 1580813 (M.D. Fla. Jun. 4, 2025) (Judge William F. Jung). After a stroke in 2020, pro se plaintiff David A. Foster began receiving disability benefits under an ERISA-governed policy issued by defendant MetLife. In 2023, MetLife learned through Mr. Foster’s W-2 and pay stubs that he had earned income while receiving disability benefits. It calculated that it had overpaid him $530.40, and determined that it would offset his gross earnings by 50%, per the terms of the plan. Mr. Foster responded to this decision by filing a lawsuit in state court alleging MetLife had engaged in business malpractice. MetLife removed the case to federal court and moved to dismiss the complaint, arguing that ERISA completely preempts Mr. Foster’s claim. The court granted the motion to dismiss, agreeing that the claim was preempted by ERISA. It then encouraged Mr. Foster to contact a legal aid group for help and directed him to file an amended complaint asserting a claim under ERISA Section 502(a). Mr. Foster did file a motion to amend, which the court granted. However, rather than heed the court’s advice and plead a claim under ERISA, Mr. Foster stuck with his business malpractice claim and added a claim for discrimination under the Americans with Disabilities Act, as well as a claim of “overall mistreatment.” Defendants once again moved to dismiss. The court agreed with MetLife that Mr. Foster’s business malpractice claim is completely preempted under ERISA and that he failed to state a claim under ERISA. As before, the court determined that both prongs of the two-prong Davila preemption inquiry were satisfied here because Mr. Foster could bring a claim under Section 502(a) to challenge MetLife’s calculation decision, and because his state law claim does not implicate any legal duty. Indeed, the court stated that resolution of whether Mr. Foster is entitled to relief under his state law business malpractice claim necessarily requires interpreting the terms of the ERISA-governed policy to determine if the 50% reduction of monthly benefits based on the beneficiary’s gross income is allowed under the plan. Accordingly, the court once again determined that Mr. Foster’s complaint was completely preempted by ERISA. And, because his amended complaint did not even refer to ERISA, despite the court’s three reminders that he must assert a cause of action under the statute in any future complaint, the court went ahead and dismissed the action with prejudice.

Pleading Issues & Procedure

Ninth Circuit

Bozzini v. Ferguson Enterprises LLC, No. 22-cv-05667-AMO, 2025 WL 1547617 (N.D. Cal. May 29, 2025) (Judge Araceli Martínez-Olguín). Plaintiffs Tera Bozzini and Adrian Gonzales filed this putative class action against the fiduciaries of the Ferguson Enterprises, LLC 401(k) Retirement Savings Plan for alleged violations of ERISA. On August 30, 2024, the court issued a decision granting in part and denying in part defendants’ motions to dismiss. That order allowed plaintiffs the opportunity to file an amended pleading curing the deficiencies identified by the court. (Your ERISA Watch summarized the decision in our September 4, 2024 edition). Plaintiffs’ complaint at the time focused on allegations concerning plan fees, share classes, and underperforming funds. It did not challenge defendants’ alleged mishandling of forfeited employer contributions. Nevertheless, when plaintiffs amended their complaint following the court’s dismissal order, they asserted two causes of action alleging only that – i.e., that Ferguson improperly used the forfeitures to reduce its own contribution obligations instead of offsetting plan expenses. Plaintiffs alleged that the misuse of these plan assets was a breach of the fiduciary duty of loyalty and constituted a prohibited transaction within the meaning of Section 1106. Ferguson moved to dismiss these two causes of action. It argued that these new claims rest on factual allegations and new theories of liability not pleaded in plaintiffs’ prior complaint and that plaintiffs were thus required to obtain its consent or leave of the court before adding them. Additionally, Ferguson argued that the allegations concerning the forfeited employer contributions are insufficient to state either a disloyalty or prohibited transaction claim. The court agreed with both arguments. “In filing their second amended complaint, Plaintiffs have introduced a new legal theory in violation of the Court’s Order. The prior iteration of the complaint, which spanned 100 pages and asserted eight causes of actions, made no mention of forfeited contributions at all, much less that their mishandling gave rise to the duty of loyalty and prohibited transactions claims asserted in that pleading.” Given that plaintiffs failed to obtain either leave of the court or the defendant’s consent, the court agreed with Ferguson that dismissal of these two claims is appropriate. Putting aside this issue, the court further stated that the two claims as currently alleged would nonetheless fail. Regarding the fiduciary breach claim, plaintiffs alleged that Ferguson exercised discretion to direct forfeited funds in a manner that benefited itself rather than the plan participants, thereby violating its duty of loyalty. The court ruled that plaintiffs needed to allege more to state a viable claim. As for the prohibited transaction claim, the court ruled that plaintiffs cannot simply contend that “[b]y taking the funds in the [f]orfeiture account every year to be used for its own benefit, the Defendant was engaging in a prohibited practice… Without more, these allegations fail.” For these reasons, the court granted the motion to dismiss the two challenged causes of action. It then informed plaintiffs that should they wish to seek leave to amend they must file a motion to do so within seven days.

Nestler v. Sloy, Dahl & Holst, LLC, No. 3:24-cv-00842-MO, 2025 WL 1581058 (D. Or. Jun. 3, 2025) (Judge Michael W. Mosman). Plaintiffs Stephen Nestler and Deryck Jackson are participants in the Pacific Office Automation Capital Accumulation Plan. The two men allege in this action that the trust advisor, Sloy, Dahl & Holst, LLC, and the trustee, Alta Trust Company, are violating their fiduciary duties under ERISA by mismanaging the Sloy, Dahl & Host collective investment trusts (the “SDH Funds”). Plaintiffs contend that the SDH Funds have been disastrous for the participants, costing them millions of dollars in lost investment earnings, as these “exceedingly risky and highly volatile” investment vehicles have underperformed benchmarks and peers since their launch on December 31, 2015. In their complaint plaintiffs compared the performance of the SDH Funds to Morningstar Risk Scores, expense ratios, Sharpe Ratios, and Alpha, and presented charts with standard deviations of fund volatility to show that the SDH Funds rank in the bottom of their peers. Plaintiffs assert that the SDH Funds were so badly managed that defendants were in breach of their fiduciary duties under ERISA. Plaintiffs attest that they suffered a concrete loss because of the retention of the SDH Funds and that the values of their retirement accounts would have been significantly higher if they had been managed by a prudent fiduciary. Defendants disagreed and moved for dismissal for lack of subject matter jurisdiction. They argued that plaintiffs cannot demonstrate Article III standing. The court sided with defendants. First, the court held that plaintiffs’ theory of standing was “fundamentally too circular to satisfy an ‘actual or imminent, not conjectural or hypothetical’ injury in fact.” It explained that in its view plaintiffs’ complaint was based on “conclusory labels…without factual support.” The court added that the metrics provided by plaintiffs in their complaint do not provide a useful benchmark by which to measure the SDH Funds’ overall performance, and instead only provide a snapshot glimpse of their performance at a certain point in time. The court went on to state that “[e]ven if Plaintiffs had more factual support to show that the Funds did regularly rank in the bottom percentile of their peer funds, ranking in the bottom percentile of a group of funds does not necessarily amount to underperformance in violation of ERISA. Every time 100 funds are compared on some metric, one fund will be ranked #100. Without more information, one cannot conclude that investors in fund #100 were harmed by underperformance that constitutes a legal breach of fiduciary duty to prudently manage investments.” This was so, it concluded, because underperformance is relative. To be meaningful, the court stressed that the SDH Funds’ performance must be measured against a benchmark that defendants were required to meet. As currently pled, the court held that plaintiffs fail to provide such a benchmark and therefore cannot demonstrate a concrete injury in fact to satisfy Article III. The court therefore granted defendants’ motion to dismiss. However, its dismissal was without prejudice, so plaintiffs may be able to amend their complaint to address these identified shortcomings.

Provider Claims

Fifth Circuit

Lone Star 24 HR ER Facility, LLC v. Blue Cross Blue Shield of Tex., No. SA-22-CV-01090-JKP, __ F. Supp. 3d __, 2025 WL 1570183 (W.D. Tex. Jun. 3, 2025) (Judge Jason K. Pulliam). Plaintiff Lone Star 24 Hour ER Facility, LLC is a freestanding emergency care facility located in Texas. In this action the provider alleges that Blue Cross Blue Shield of Texas is violating ERISA and state law by failing to reimburse it for its emergency services at usual and customary rates. Lone Star alleges that Blue Cross has reimbursed it “in grossly inadequate amounts,” or not at all. Blue Cross moved for dismissal of plaintiff’s negligent misrepresentation and bad faith insurance practices causes of action. Lone Star agreed to voluntarily dismiss these two claims. As a result, the court dismissed the two claims with prejudice. Blue Cross further requested that the court dismiss Lone Star’s requests for declaratory judgment. Lone Star requested the court declare four things: (i) “The Texas Insurance Code and Texas Administrative Code require Defendants, either singularly, jointly or severally, to reimburse Lone Star at a usual, customary and reasonable rate;” (ii) “Defendants must base the usual, customary and reasonable rate at which it reimburses Lone Star based on ‘generally accepted industry standards and practices for determining the customary billed charge for a service and that fairly and accurately reflects market rates, including geographic differences in costs;’” (iii) “Defendants failed to pay Lone Star at usual, customary and reasonable rates;” and (iv) “Lone Star is entitled to recover damages from Defendants, either singularly, jointly or severally in an amount to be determined at a trial on the merits, and all other appropriate relief.” The court broke the requests into two parts. Taking on requests (i) and (ii) first, the court held that the Texas Insurance Code provisions and Texas Administrative Code regulation “state what they state. It is improper and unnecessary for this Court to make a declaration regarding what a statute or regulation states or requires. Any declaration by the Court would not serve a useful purpose in settling a legal issue or uncertainty. For this reason, this Court will exercise its discretion to decline consideration of this request and grant the Motion to Dismiss.” The court added that it could not impose “an obligation that had no basis in statute,” and that any request for it to do so would be inappropriate. Accordingly, the court dismissed the requests for declaratory judgment under (i) and (ii). It then also dismissed the third and fourth requests as well. The court agreed with Blue Cross that these requests are duplicative of both the ERISA and breach of contract causes of action as they seek resolution of issues that must be resolved in disposition of those claims and are therefore a redundant remedy. Thus, the court stated that it would exercise its discretion to decline consideration and that dismissal of these declaratory requests was also appropriate. For these reasons, the court granted Blue Cross’s motion to dismiss and dismissed the negligent misrepresentation claim, the bad faith insurance practices claim, and all of the requests for declaratory judgment.

Statute of Limitations

Seventh Circuit

Electrical Ins. Trustees Health & Welfare Trust Fund v. WCP Solar Services, LLC, No. 24 C 11389, 2025 WL 1567833 (N.D. Ill. Jun. 3, 2025) (Judge Robert W. Gettleman). Plaintiffs are a group of multiemployer plans. They brought this action under ERISA and the Labor Management Relations Act (“LMRA”) against WCP Solar Services, LLC seeking to recover delinquent contributions from the company. Defendant moved to dismiss the complaint, arguing that the funds’ claim is time-barred under ERISA’s statute of limitations. “According to defendant, plaintiffs seek unpaid contributions and related damages under sections 1132 and 1145 of ERISA for defendant’s breach of its contractual obligations. But, it says, ERISA imposes a three-year statute-of-limitations period under section 1113 for bringing any such claim, which began to run on the date plaintiffs obtained actual knowledge of defendant’s alleged breach. Defendant argues that section 1113 bars plaintiffs’ claim here because the exhibits attached to the first amended complaint ‘demonstrate on their face that the plaintiffs had actual knowledge of the alleged delinquencies no later than May 2021’ – more than three years before plaintiffs filed their initial complaint on November 5, 2024.” The court did not agree with this argument. It ruled that Section 1113 explicitly applies to actions concerning a fiduciary breach and is not applicable here to plaintiffs’ action to recover defendants’ unpaid contributions brought under ERISA Sections 1132 and 1145, as well as Section 285 of the LMRA. Rather, the court agreed with the funds that the 10-year period under analogous Illinois law to enforce a written agreement was the appropriate and applicable statute of limitation. The court therefore held that the complaint is not time-barred. Accordingly, the court denied WCP Solar’s motion to dismiss.

Venue

Eleventh Circuit

Williams v. Unum Life Ins. Co. of Am., No. 24-CV-24113-RAR, 2025 WL 1591213 (S.D. Fla. Jun. 5, 2025) (Judge Rodolfo A. Ruiz, II). Plaintiff Mikalley Williams filed this case on October 23, 2024 against Unum Life Insurance Company of America, asserting claims under ERISA. As the court explained, because ERISA benefit cases have limited discovery outside of the administrative record and are usually resolved on the papers without trial, it is the court’s standard practice to set such cases on an expedited case management track prescribed by the local rules of the Southern District of Florida. As a result, the court issued its scheduling order on December 9, 2024, and placed the case on an expedited track with discovery due to close on May 27, 2025 and pretrial motions due by June 10, 2025. Seven months after Ms. Williams initiated this case and served Unum – less than one week before the close of discovery and three weeks before the pretrial motions deadline – Unum moved to transfer venue to the District of Utah. “The apparent impetus for the transfer is that Plaintiff recently obtained discovery from Defendant of certain medical records outside the administrative record that favor Plaintiff’s case. These extra-record documents are admissible in the Eleventh Circuit, see Harris v. Lincoln Nat’l Life Ins. Co., 42 F.4th 1292, 1297 (11th Cir. 2022), but not in the Tenth Circuit, see Jewell v. Life Ins. Co. of N.A., 508 F.3d 1303, 1308 (10th Cir. 2007).” Because Tenth Circuit precedent favors its case, Unum moved to transfer to Utah, the state where Ms. Williams resides. In this order the court denied Unum’s motion. While no one disputed that this action might have been brought in the District of Utah because of Ms. Williams’ connection to the venue, the court did not take kindly to Unum’s obvious gamesmanship behind its motion to transfer so late in the proceedings after the parties had actively litigated and conducted discovery. The court thus ruled that “Defendant’s Motion is not timely, and the interests of justice would not be well served by allowing transfer at this late juncture.” The court added that Unum’s “conduct belies its contention that it would face any true inconvenience by litigating this case in the Southern District of Florida. Transferring this action to the District of Utah would only delay disposition of a case that is ready for adjudication. Under these circumstances, Defendant plainly did not act with reasonable promptness to request transfer.” The court therefore concluded that Unum failed to meet its burden of demonstrating that transfer is appropriate under the circumstances. Accordingly, it denied Unum’s motion.

Cockerill v. Corteva, Inc., No. CV 21-3966, 2025 WL 1523002 (E.D. Pa. May 27, 2025) (Judge Michael M. Baylson).

Although it was a slow week in general for ERISA cases in the federal courts, it was a big week for the plaintiffs in this action and their attorneys, which include Kantor & Kantor. For the past four years plaintiffs, two classes of DuPont workers and retirees, have been litigating over whether they were misled concerning certain early retirement benefits and improperly denied other benefits after the merger of E.I. DuPont de Nemours & Company and Dow Chemical Company. In 2019, these two companies split into three: DuPont de Nemours Inc., Dow Inc., and Corteva.

Plaintiffs were employees of the old DuPont and continued to work at the new company with the DuPont name. However, even though they were working in the same jobs at the same workplaces, plaintiffs lost the ability to obtain early and optional retirement benefits because the old DuPont, and its pension plan, had been moved into the new Corteva entity.

Plaintiffs in one class, who were under the age of 50 at the time of the spin-off, contended that they were still entitled to early retirement benefits once they reached the age of 50 either because of the plan language or because they were not told about this change and so did not know that they had lost valuable benefits. Plaintiffs in the other class, who were over the age of 50, contended that they were not only misled about the impact of the spin-off on their benefits, but were also improperly denied optional retirement benefits when they lost their jobs at the old DuPont because of the spin-off.

The court held a six-day bench trial and issued its findings of fact and conclusions of law on December 18, 2024. The court ruled in favor of plaintiffs on the majority of their claims, holding that: (1) defendants’ interpretation of the plan regarding optional retirement benefits for the over-50 class was arbitrary and capricious; (2) defendants “did not inform Class Members how the spin-off would affect their benefits in a manner that a reasonable employee could understand,” and thus breached their fiduciary duties under ERISA; and (3) defendants violated ERISA’s anti-cutback provisions because their arbitrary and capricious interpretation “had the effect of amending the Plan and cutting back Optional Retirement Class Members’ benefits.”

The court ruled in favor of defendants on two counts, concluding that: (1) the plan’s language regarding early retirement benefits was ambiguous and defendants’ interpretation that under-50 workers were not eligible was reasonable; and (2) plaintiffs had not met their burden of showing that defendants intentionally interfered with their benefits in violation of ERISA Section 510.

The result was a satisfying victory for plaintiffs in both classes. (For those seeking a more detailed recap, Your ERISA Watch reported on this decision in our January 1, 2025 edition.)

In a series of orders issued over the last week, the court has now wrapped up the proceedings. The court issued its judgment on May 30, 2025, directing defendants to “prepare and implement a plan to effectuate all the Court’s conclusions and provide the required benefits to members of the classes as previously certified.” Three days earlier, on May 27, the court issued its order regarding attorneys’ fees and costs.

The court’s fees order began with high praise for plaintiffs’ counsel. The court acknowledged that “[t]he prosecution of an ERISA case is no small undertaking[.]” Regardless, “Plaintiffs’ counsel were always well prepared for every event in this Court, had prepared and filed excellent legal memoranda, and represented their clients, the class representatives, and the members of the putative classes, with great skill and ability[.]”

Indeed, “It would not be an overstatement for this Court to say all of the lawyers, from several different law firms who represented Plaintiffs in this case, were well prepared, had the facts at their fingertips so the presentation at trail and at oral arguments could be made efficiently and without delay or obfuscation.”

Defendants’ lawyers received praise as well: “Defendants’ counsel did not miss any opportunities to represent their clients in the best way possible, in the fine traditions of great Philadelphia lawyers. The Court specifically complimented defense counsel on several occasions on their efforts on behalf of their clients.”

However, because of plaintiffs’ success, which “brought about very substantial benefits in favor of their clients in this important case,” and “will benefit future classes of employees in ERISA litigation,” the court determined that an award of fees was appropriate. Plaintiffs “deserve a substantial amount of attorneys’ fees for their undertaking this case at great risk, and having demonstrated their very strong preparation and their skill in presenting evidence at trial, and defending the verdicts in their favor on post-trial motions, Plaintiffs’ counsel deserve to be appropriately compensated.”

The court then examined the five factors set forth by the Third Circuit in Ursic v. Bethlehem Mines, 719 F.2d 670 (3d Cir. 1983), for evaluating fee requests in ERISA cases. The court determined that (1) defendants were culpable because there was “abundant evidence that Defendants made misrepresentations and even more seriously, cloaked their decisions in subtle but misleading terminology so it was difficult for the employees of the Defendants to know exactly what was happening to them and their pension rights”; (2) defendants had the ability to pay fees; (3) awarding fees would “further the objectives of ERISA and will likely deter behavior that falls short of bad faith conduct”; (4) numerous people would benefit from the court’s ruling; and (5) the relative merits of the parties’ positions favored plaintiffs.

As for the specific rates requested by plaintiffs, the court noted that they “are on the high side,” but it also acknowledged that “[t]here has recently been a large increase in the amount of fees charged by lawyers handling complex litigation,” and thus the rates “are not unreasonably high.” The court stressed that “Defendants’ counsel made no efforts to document what rates they were charging their clients,” which undercut defendants’ arguments that plaintiffs’ claimed rates were excessive.

Defendants contended that the court should use “community legal services” rates in determining the proper award, but the court rejected this, noting that those rates “have been set for attorneys, many of whom are young and starting out on their professional careers[.]” In contrast, plaintiffs’ counsel were “well qualified, and they carried out their agreement to represent the Plaintiffs in this case, with great skill, dedication, excellent professional responsibility and conduct[.]”

The court also emphasized that plaintiffs’ counsel had taken the case on contingency: “Plaintiffs’ counsel have worked on this case for almost five years, without getting paid a dime, for very extensive work. Plaintiffs’ counsel’s performance was exemplary. They were prepared when the Court had hearings and at the trial, their briefs were well done without any miscitations or misleading arguments. Plaintiffs were ‘on point’ all the time.”

Defendants further argued that fees should be reduced because they had presented “good faith defenses.” The court disagreed, noting that defendants “made no company-wide communications as to the reasons for the spinoff or the actual plan for the spinoff.” As a result, many employees did not realize that the spinoff had affected their benefits, and in fact, “the great majority of class members…were severely prejudiced by not realizing that their retirement rights had either been wiped out, or severely reduced.”

In short, the court characterized defendants’ arguments as “basically a combination of hindsight, sour grapes, nitpicking, and unrealistic afterthoughts in trying to save their clients some of the money which Plaintiffs’ counsel deserve.”

As for the hours expended by plaintiffs’ counsel, the court noted that that it had “carefully reviewed the Plaintiffs’ petition, and rejects the Defendants’ claims that there is any overstatement of hours spent[.]” Based on its first-hand observations of counsel’s handling of the case, the court “accepts the Plaintiffs’ representations as to what work was done, how long it took, and what are comparable rates in the marketplace.”

As a result, the court granted plaintiffs’ motion in full, and found their request for $6,099,469.50 in attorneys’ fees and $389,492.85 in costs to be reasonable. In an accompanying order, the court further ruled that a 1.5 multiplier was appropriate “because of the factors present in this case, including: contingency, risk, superlative performance on behalf of their clients, and excellent briefing on all legal issues.” In a subsequent order, the court clarified that, with the 1.5 multiplier, the total fee award was $9,149,204.25. The three class representatives were also awarded service payments for their efforts during the case.

The court noted in its decision that it was “well aware that Defendants have promised to appeal from the final judgment of this Court[.]” As a result, there likely will be more to come on this case, and of course Your ERISA Watch will keep you posted regarding any developments.

Plaintiffs were represented by Kantor & Kantor attorneys Elizabeth Hopkins and Susan L. Meter, in cooperation with attorneys at Edward Stone Law and Feinberg, Jackson, Worthman & Wasow LLP.

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

Breach of Fiduciary Duty

Ninth Circuit

Cramer v. Standard Life Ins. Co. of Am., No. 3:25-cv-00384-GPC-DEB, 2025 WL 1519417 (S.D. Cal. May 28, 2025) (Judge Gonzalo P. Curiel). Plaintiff Janice Cramer’s late husband, Andrew Cramer, was an employee of defendant Point Loma Nazarene University (“PLNU”). While employed by PLNU, Mr. Cramer elected to become insured under a group life insurance policy issued by Standard Insurance Company of America. Mr. Cramer took medical leave in August 2022, and his employment was subsequently terminated at an unspecified date due to his illness. In January 2023, Mr. Cramer died. The complaint alleges that PLNU and Mr. Cramer paid Standard all premiums necessary to maintain both Mr. Cramer’s basic and supplemental life insurance coverage under the plan. Mr. Cramer did not convert his group life insurance coverage to an individual policy. Ms. Cramer alleges that PLNU and Standard breached their fiduciary duties to Mr. Cramer. She contends that PLNU specifically failed to provide her husband notice of conversion rights or offer waiver of life insurance premiums, and because of this Mr. Cramer had no life insurance coverage when he passed away. Ms. Cramer seeks legal and equitable relief under Section 502(a)(3) for PLNU’s alleged fiduciary breach. Before the court here was PLNU’s motion to dismiss. It argued that Ms. Cramer cannot assert her claim against it because she did not exhaust the plan’s internal administrative remedies prior to filing her action. The University further argued that the fiduciary breach claim is a claim for benefits in disguise. The court did not agree. As for exhaustion, the court stressed that the requirement of administrative exhaustion does not apply to a breach of fiduciary duty claim. Moreover, the court determined that the complaint plausibly alleges that defendants breached their fiduciary duties by failing to provide timely notice to Mr. Cramer of his right to convert following termination of coverage and by failing to provide the Cramers with conversion or portability rights under the plan. Even though Ms. Cramer is seeking to be made whole in the form of a monetary sum equal to the benefits she would have received under the life insurance policy, the court stated that this fact does not convert her fiduciary breach claim into a claim for benefits. Rather, under Amara, Ms. Cramer is pursuing an appropriate form of equitable relief, namely surcharge. Additionally, the court disagreed with PLNU that Ms. Cramer cannot pursue a claim for individualized relief under Section 502(a)(3). Finally, the court held that Ms. Cramer could not bring a claim for benefits under Section 502(a)(1)(B) even if she wanted to, as it would not provide her with any adequate relief. “That avenue is wholly closed off to her because she is not part of any plan that she can recover benefits from or enforce rights under.” Accordingly, the court agreed with Ms. Cramer that she must rely on Section 502(a)(3) because she would otherwise “have no remedy at all.” Having determined that there is no depletive claim being made here, Ms. Cramer was not required to exhaust, and that she put forth viable theories of breach, the court found that Ms. Cramer pled enough to allege a breach of fiduciary duty claim that is facially plausible, and therefore denied PLNU’s motion to dismiss. (Kantor & Kantor represents Ms. Cramer in this action.)

Disability Benefit Claims

Eighth Circuit

Bray v. Symetra Life Ins. Co., No. 24-cv-119 (ECT/JFD), 2025 WL 1504311 (D. Minn. May 27, 2025) (Judge Eric C. Tostrud). In 2016, plaintiff Vincent Bray began work as a box stacker at a farm in Minnesota. This was physically demanding work which required Mr. Bray to lift loads weighing up to 75 pounds “over the head and below the waist.” Not long after he started working for the farm, on May 2, 2016, he suffered an on-the-job injury to his left shoulder. The injury required three surgeries and many other lesser medical interventions to treat it. Even after his third surgical procedure, Mr. Bray continued to experience shoulder pain. In fact, over the ensuing years, Mr. Bray developed complications in his other shoulder and his cervical spine, all likely stemming from the original injury. Unable to continue carrying heavy loads, Mr. Bray applied for long-term disability benefits under his employer’s policy with Symetra Life Insurance Company. Symetra determined that Mr. Bray was disabled and approved his claim. Under the policy, the term “disabled” is defined for the first sixty months as a sickness or injury that prevents the claimant from performing the material and substantial duties of his “regular occupation.” After those initial five years, the plan defines “disabled” under a more demanding “any gainful occupation” standard. Mr. Bray continued to receive benefits from March 17, 2018 until July 16, 2022. Symetra terminated Mr. Bray’s benefits during a period when he was incarcerated and unable to provide the insurance company with updated documentation and proof of regular medical care. Following his release from prison, Mr. Bray appealed Symetra’s decision to terminate his benefits. In response to Mr. Bray’s appeal, Symetra hired two medical reviewers. Symetra upheld its decision to terminate Mr. Bray’s benefits effective July 16, 2022. It explained that its reviewers had concluded that Mr. Bray’s medical records did not support restrictions or limitations which would preclude him from performing the material duties of any gainful occupation, and therefore he did not meet the policy definition of disability. After Mr. Bray exhausted the administrative appeals process, he filed this civil action against Symetra asserting a single claim for wrongful denial of benefits under Section 502(a)(1)(B). Mr. Bray and Symetra filed competing motions for judgment on the administrative record. Before the court discussed the termination decision itself, it needed to resolve a threshold dispute over the applicable standard of review. Although there was no question that the plan granted Symetra with discretion to determine benefits eligibility, Mr. Bray argued that a Minnesota statute barring discretionary review applies to his policy and that his claim should be reviewed de novo. The statute at issue applies to policies issued or renewed after January 1, 2016. The plan was issued on January 1, 2014, but was amended on January 1, 2016. Therefore, the question was whether the amendment was an issuance or renewal for the purposes of the Minnesota statute. Ultimately, the court held that it was not, as the amendment made only “discrete” changes to the plan. Thus, the court concluded that the Symetra policy was not issued or renewed in the relevant sense on or after January 1, 2016, and therefore it would apply an abuse of discretion review to Symetra’s decision to terminate Mr. Bray’s benefits. The remainder of the decision was a tale of two halves. The court noted that its result was “a mixed bag that reflects the claim’s unusual procedural history and the evidence in the administrative record.” On one hand, the court agreed with Mr. Bray that Symetra applied the wrong policy provision to justify its decision not to award him benefits between July 16, 2022, and March 16, 2023, by judging his claim against an “any occupation” standard when it should have evaluated it against the “own occupation” standard. Had Symetra applied the own occupation standard, it is clear that Mr. Bray would have continued to receive his benefits, as even Symetra’s reviewers agreed with Mr. Bray’s treating providers that he could not lift more than ten pounds and thus could not perform the heavy lifting his job demanded. Given this error, the court found that Symetra’s denial of benefits over this period was an abuse of discretion. It determined that Mr. Bray should be awarded benefits for this eight-month period. Judgment was therefore entered in favor of Mr. Bray, and against Symetra, for this first half of the equation. The court directed the parties to discuss the amount of benefits due, the amount of pre- and post-judgment interest, and claims for attorneys’ fees and costs. However, the decision did not end there. On the other hand, the court determined that Symetra’s termination of benefits during the “any gainful occupation” period was supported by substantial evidence and reasonable, both procedurally and substantively. “Procedurally, Mr. Bray had a full and fair opportunity to show that he was entitled to benefits after March 16, 2023, but he largely passed on that chance. Regardless, the record evidence establishes that Mr. Bray is not entitled to benefits after that date.” Not only did the court find Symetra’s decision reasonable, but it actually found it to be “the better decision considering the evidence in the administrative record, “ as the “predominant opinion appearing in the administrative record is that Mr. Bray can work with restrictions.” Even Mr. Bray’s own doctors intermittently opined that they believed he could perform sedentary work. As a result, the court found that the record established that Mr. Bray is not entitled to benefits during the “any occupation” period, and accordingly entered judgment in favor of Symetra regarding Mr. Bray’s claim for benefits during the “any gainful occupation” period beginning on March 17, 2023. 

Discovery

Eighth Circuit

Jones v. Zander Group Holdings, Inc., No. 8:24CV428, 2025 WL 1506162 (D. Neb. May 27, 2025) (Magistrate Judge Michael D. Nelson). Plaintiff William H. “Chip” Jones, II initiated a class action lawsuit in the Middle District of Tennessee against his former employer, the Zander Insurance Agency, the agency’s two trust owners, and its trustees, alleging they violated ERISA through their “malfeasance” regarding the rights of participants under two ERISA-governed deferred compensation plans, a 401(k) plan and an Employee Stock Ownership Plan (“ESOP”). In broad strokes, Mr. Jones alleges that in 2021 defendants engaged in conduct which they (a) pushed him and other former employees out of their stock investments through an ESOP stock repurchase, (b) provided statutorily inadequate and improper notice about the ESOP transaction, (c) sent a notice letter that contained information that was misleading, (d) failed to provide requested plan documents, and (e) rolled over funds in the 401(k) plan without written election. Mr. Jones contends that these actions violated the plain language of the ESOP and ERISA. Mr. Jones asserts claims against defendants for violation of Section 204(h), breach of fiduciary duty, statutory penalties for failure to furnish documents upon written request, interference, breach of contract, and unjust enrichment. He seeks to represent a class of all ESOP participants whose accounts were rolled over on or around December 31, 2021. Defendants have filed a motion to dismiss Mr. Jones’ action. That motion remains pending. In the meantime, the parties have engaged in written discovery. As part of that discovery defendants issued document and deposition subpoenas to Mr. Jones’ former attorneys, Peter Langdon and Joan Cannon, and their law firm McGrath North Mullin & Kratz, PC LLO. Mr. Jones moved to quash these subpoenas. Because McGrath North is located in Omaha, the motions to quash the subpoenas directed to the firm and its lawyers were filed in the District of Nebraska. In this decision the Nebraska court granted Mr. Jones’ motions to quash. As an initial matter, the court was skeptical of the relevance of the information and documents sought from McGrath North. Defendants argued that what Mr. Jones believed his rollover options were and why he believed what he believed are relevant to the allegations in the complaint. But the court was not convinced, and stated that it did not have any bearing on whether defendants’ conduct violated the terms of the ESOP, ERISA, or any other law. Defendants further argued that the legal advice McGrath North provided to Mr. Jones is relevant to their argument that Mr. Jones lacks Article III standing. In particular, they allege that Mr. Jones caused his own injury by failing to take actions to prevent his ESOP assets from being rolled over to the 401(k) plan by default to avoid losses flowing from that rollover. The court was again unconvinced by defendants’ argument. The court agreed with Mr. Jones that the harms his complaint alleges are traceable not to his own conduct but to the conduct of the defendants. Furthermore, the court stated that the information, documents, and testimony defendants seek from the firm remain protected by the attorney-client and work-product privileges because Mr. Jones did not place his outside legal advice “at issue” in the underlying lawsuit, or lose privilege to the entirety of his communications by sharing a handful of emails with the Department of Labor in 2022. Thus, the court held that “Defendants have not demonstrated the documents sought from McGrath North are relevant or that any documents sought are nonprivileged.” For similar reasons, the court granted Mr. Jones’ motion to quash the deposition subpoena directed to McGrath North and his former attorneys. “As discussed above, the limited work and legal advice provided to Plaintiff by the McGrath North attorneys has little to no relevance to the underlying litigation. Moreover, to the extent the firm has any marginally relevant information, such information is privileged and is not ‘crucial’ to the underlying case.” For these reasons, the court granted Mr. Jones’ motions to quash defendants’ subpoenas.

Pleading Issues and Procedure

Third Circuit

Mundrati v. Unum Life Ins. Co. of Am., No. 2:23-1860, 2025 WL 1519220 (W.D. Pa. May 28, 2025) (Magistrate Judge Patricia L. Dodge). Plaintiff Pooja Mundrati sued Unum Life Insurance Company of America to challenge its denial of her claim for long-term disability benefits. In a decision issued on March 24, 2025, the court concluded that Unum’s decision was arbitrary and capricious and therefore entered summary judgment in favor of Dr. Mundrati. (Your ERISA Watch covered that decision in our April 2, 2025 edition). As the prevailing party, Dr. Mundrati moved for an award of attorneys’ fees and costs under Section 502(g)(1). Unum was directed to file a response, but rather than responding to the merits of Dr. Mundrati’s motion Unum moved to stay all proceedings pending the resolution of its appeal to the Third Circuit. Finding nothing unusual or complex in Dr. Mundrati’s very standard fee motion under ERISA, the court declined to stay the fee petition until resolution of the appeal. It held that the weight of authority is clear that a pending appeal, standing alone, is not a sufficient reason to postpone resolution of a fee decision. “Moreover, as Plaintiff asserts, she submitted her claim for disability benefits in 2021 and has been waiting over four years to obtain a judgment that she is entitled to benefits. She notes that this Court determined that Defendant’s denial of benefits was arbitrary and capricious. She adds that she has not been employed since 2021 and has been without income since then.” Thus, the court denied Unum’s motion to stay. However, although Dr. Mundrati argued that Unum waived its right to contest her motion for attorneys’ fees, the court granted Unum the opportunity to file a response to her motion, as it found that permitting it the opportunity to respond to the merits was the fairest course of action.

Provider Claims

Third Circuit

The Plastic Surgery Center, P.A. v. United Healthcare Ins. Co., No. 24-8584 (MAS) (TJB), 2025 WL 1531143 (D.N.J. May 29, 2025) (Judge Michael A. Shipp). Plaintiff The Plastic Surgery Center, P.A. is a plastic and reconstructive surgery provider based in New Jersey. Plaintiff is out-of-network with defendant United Healthcare Insurance Company. A patient insured under a plan issued and administered by United required specialized surgical procedures. On October 5, 2020, the surgical center and United entered into a single case agreement wherein United agreed to pay the provider the in-network rate for the preapproved surgeries, and in exchange, the provider forfeited its right to balance bill the patient. The next day, The Plastic Surgery Center performed the procedures on the patient. It then billed United a total of $1,648,962.00. United paid the Center only $48,788.63. In this lawsuit the Center seeks the outstanding balance. Plaintiff filed its action in state court and asserted three causes of action: (1) breach of contract; (2) promissory estoppel; and (3) negligent misrepresentation. United removed the action, and then filed a motion to dismiss the complaint. It offered three reasons for dismissal. First, United argued that the factual allegations supporting the purported contracts are refuted by call transcripts. Second, it argued that ERISA Section 514 preempts plaintiff’s claims. Finally, it argued that the complaint fails to state its claims. The court in this order held that the claims are not preempted by ERISA and that the complaint sufficiently states claims for breach of contract and promissory estoppel, but not for negligent misrepresentation. It therefore granted the motion to dismiss as to the third cause of action, but otherwise denied the motion. As an initial matter, the court declined to consider the call transcripts as they are outside of the pleadings, not relied on in the complaint, and their authenticity is in dispute. The court then addressed the issue of ERISA preemption. It concluded that plaintiff’s claims do not make reference to the ERISA plan as they are not based on the plan but rather on an independent contractual or quasi-contractual duty stemming from the single case agreement between the parties. The court further found that the claims do not have an impermissible connection with the ERISA plan as they do not directly affect the relationship between traditional ERISA entities, they do not interfere with plan administration, and they do not “undercut ERISA’s stated purpose.” Having concluded that the three state law causes of action are not preempted under Section 514, the court proceeded to consider the sufficiency of the pleadings. It found that the complaint adequately alleges facts for the elements of its breach of contract and promissory estoppel claims. However, the court agreed with United that the complaint failed to state a claim for negligent misrepresentation upon which relief could be granted as the complaint does not allege or argue an independent duty imposed by law separate from the single case agreement. “Because Plaintiff’s allegations speak directly to Defendant’s performance under the Agreement, Count Three is therefore barred by the economic loss doctrine.” For this reason, the court dismissed count three. Otherwise, the court denied the motion to dismiss, permitting the surgery center to pursue its two remaining causes of action against United.

The Regents of the Univ. of Cal. v. Horizon Blue Cross Blue Shield of N.J., No. 2:24-cv-7482 (BRM) (CLW), 2025 WL 1502920 (D.N.J. May 27, 2025) (Judge Brian R. Martinotti). The Regents of the University of California, on behalf of the University of California Irvine Medical Center, sued Horizon Blue Cross Blue Shield of New Jersey in New Jersey state court for breach of implied-in-fact contract, or alternatively, quantum meruit. This action involves underpayment of benefits between July and December of 2018 for three patients who were beneficiaries of ERISA-governed health plans sponsored and administered by Horizon and stems from the terms of two written contracts the hospital has with the Anthem Blue Shield family of providers, which it alleges includes Horizon Blue Shield. Horizon Blue Shield removed the action to federal court and moved to dismiss the complaint as preempted by ERISA Section 514. In this somewhat murky decision, the court agreed with Horizon that the state law claims are preempted and that without the ERISA-governed plans, there would be no cause of action. “Although the Complaint does contain allegations concerning at least some of UCI Medical Center’s obligations under its Contracts with BSC and Anthem, respectively, the Court finds the Complaint fails to allege sufficient details showing Horizon’s own obligations under the same, including with respect to both: (1) the Programs, their relevant terms, and how and to what effect they bind Horizon with respect to this action; and (2) the Contracts, their operative terms, and how UCI Medical Center interpreted and applied them in each patient’s case such that Horizon was reasonably expected to pay for the treatment. Without these details, the Court is left to speculate about the effect of the alleged relationship between membership in one or both Programs and performance under one or both Contracts, and, importantly, how the interplay between the Programs and the Contracts gave rise to the alleged payment obligations for Horizon that is independent of its pre-existing administrative responsibilities under the ERISA-governed plans. As a result, the Complaint could be read as an attempt by UCI Medical Center to obscure that the benefits and costs in dispute relate to ERISA-governed plans.” The court was not persuaded by plaintiff’s argument that this case constitutes a “rate of payment” dispute, rather than action seeking the “right to payment” under the terms of ERISA plans. The court stated it was unwilling to speculate about the parties’ prior course of conduct or industry customs absent sufficient factual allegations about these topics or other relevant details concerning the two contracts at issue, the relationships between the parties, or the Anthem network programs. Rather, the court agreed with Horizon Blue Shield that the payments it made were pursuant to the terms of its patients’ ERISA-governed plans, and that the hospital’s claims cannot be separated from the terms of those plans. Accordingly, the court granted Horizon’s motion to dismiss, and dismissed the complaint without prejudice and with leave to amend consistent with this opinion.

Standard of Review

Ninth Circuit

Daniel C. v. Chevron Corp., No. 24-cv-03851-SK, 2025 WL 1537648 (N.D. Cal. May 20, 2025) (Magistrate Judge Sallie Kim). After working for the Chevron Corporation for four years, plaintiff Daniel C. applied for disability benefits under the company’s short-term disability policy due to major depressive disorder. A couple of months after he began receiving short-term disability benefits, Daniel was injured in a car accident and was in a coma for ten days. On June 14, 2018, Daniel applied for long-term disability benefits. He indicated on his application that his disability was post-concussion syndrome and traumatic brain injury. The plan’s claims administrator, ReedGroup, approved his claim for long-term disability benefits. However, on June 30, 2020, ReedGroup informed Daniel that it was terminating his benefits. In this lawsuit plaintiff challenges that decision under ERISA. The parties filed cross-motions for summary judgment. However, the parties agree that the case cannot be decided by summary judgment under de novo standard of review, and they dispute the appropriate standard of review. In this decision the court addressed that dispute, and because it ultimately determined that de novo review applies, denied both motions for summary judgment and left resolution of the merits for another day pursuant to Rule 52. There was no question that the plan vests Chevron with discretionary authority and permits delegation of that authority. At issue was whether Chevron properly delegated its discretionary authority to ReedGroup. It did not do so in the plan document. Instead, the plan document grants discretionary authority to the “claims administrator.” Chevron argued that because the Summary Plan Description (“SPD”) identifies ReedGroup as the claims administrator, the SPD functions as the designation instrument and triggers abuse of discretion review. The court did not agree. It noted that, “the Plan requires that any delegation of fiduciary responsibilities occur ‘pursuant to a written instrument that specifies the fiduciary responsibilities so delegated to each such person.’ Naming ReedGroup in the SPD does not satisfy this requirement. As the Ninth Circuit held in Shane [v. Albertson’s, Inc.], a delegation ‘not in compliance with the…Plan’s stated requirements’ triggers de novo review.” The court added that the SPD cannot function as the delegation instrument because it does not specify the fiduciary responsibilities delegated to ReedGroup, and because it is not a written instrument of the plan. Accordingly, the court concluded that the SPD is insufficient to demonstrate that Chevron made a valid and unambiguous delegation of authority to ReedGroup. Therefore, the court concluded that defendant failed to present sufficient evidence to demonstrate that abuse of discretion review was appropriate, and consequently the court held that it will review ReedGroup’s denial of benefits de novo.

Statute of Limitations

Sixth Circuit

White v. Allstate Ins. Co., No. 1:24-cv-1506, 2025 WL 1532464 (N.D. Ohio May 29, 2025) (Judge J. Philip Calabrese). Pro se plaintiff Kenneth White discovered in November 2022 that his variable life insurance policy with Lincoln Benefit Life Company was surrendered and converted to a new policy on October 16, 2009. That policy lapsed on January 16, 2010. The new policy also had changes from the old one, including removing Mr. White’s children as his beneficiaries and changing his address. Mr. White alleges that all of this took place behind his back, that his signature was forged, and that employees of Allstate Insurance Company (later Lincoln Benefit Life) were not authorized to effectuate these changes or issue the new policy. The present action is the fourth such case Mr. White has filed against Allstate, Lincoln, and the individual insurance agents in connection with these events. His complaint asserts claims for breach of contract, breach of fiduciary duty under ERISA, identity theft, and fraud. Defendants moved to dismiss. They argued that each cause of action is barred under the relevant statute of limitations. The court agreed and granted the motion to dismiss the complaint. Under Ohio law, a cause of action accrues when the wrongful act was committed. Accordingly, the alleged breach of contract accrued when the first policy was allegedly fraudulently converted to the second policy on October 16, 2009. However, Mr. White did not file any lawsuit pursuing his claims until April 2022, well after Ohio’s eight-year limitation period had expired. Mr. White’s other claims fared no better. The identity theft claim had a five-year statute of limitations, while the fraud claim had a statute of limitations of four years. The court found both claims time-barred. Claims for breach of fiduciary duty under ERISA, meanwhile, must be brought “within three years of the date the plaintiff first obtained ‘actual knowledge’ of the breach or violation forming the basis of the claim, but in no event later than six years after the breach or violation.” More than six years have passed between October 2009 and the time when Mr. White first sued the parties in 2022. Thus, the court found the ERISA claim untimely too. Finally, the court determined that Mr. White possessed constructive knowledge and that he failed to pursue his rights with reasonable diligence. Accordingly, it held that he does not qualify for equitable tolling, including under the fraudulent concealment doctrine. The court therefore agreed with defendants that the action was untimely, and so granted the motion to dismiss, closing the case.

Statutory Penalties

First Circuit

Guitard v. A.R. Couture Construction Corp., No. 24-cv-296-LM, 2025 WL 1488508 (D.N.H. May 22, 2025) (Judge Landya B. McCafferty). Plaintiff David Guitard was an employee of A.R. Couture Construction Corporation for approximately thirty-seven years. Through his employment with the company, Mr. Guitard was a participant in its ERISA-governed retirement plan. At issue here was the fact that Mr. Guitard did not always receive annual statements regarding the plan. In particular, he did not receive these statements for plan years 2016-2020, or 2022-2023. Mr. Guitard also lacked his individual account statements for these same years. Mr. Guitard needed this information in order to understand his retirement benefits. As a result, through his counsel, Mr. Guitard wrote to A.R. Couture to obtain the missing statements. For ten months Mr. Guitard was given the runaround, told by his former employer that it would provide the requested statements imminently. It never did. So, Mr. Guitard sued the company under ERISA § 1132(c)(1) seeking an order from the court directing A.R. Couture to provide the requested statements, as well as statutory damages in the amount of $45,000, and reasonable attorneys’ fees and costs. On November 13, 2024, A.R. Couture executed a waiver of service stating that it understood it must file an answer within 60 days from the date the request was sent and that failure to do so would result in a default judgment entered against it. Mirroring the corporation’s failure to respond to Mr. Guitard, A.R. Couture failed to respond to the complaint. The 60-day deadline came and went. The clerk of the court subsequently entered a default against A.R. Couture. Still there was silence. Accordingly, Mr. Guitard moved for default judgment. Satisfied that it has jurisdiction over both the subject matter and the parties, that the allegations in the complaint state a specific and cognizable claim for relief, and that the defaulted party had fair notice of its opportunity to object, the court granted Mr. Guitard’s motion. The court stated, “[t]he facts alleged in Guitard’s complaint are sufficient to establish that A.R. Couture is liable under 29 U.S.C. § 1132(c)(1). Guitard has alleged that he made a written request for the missing annual statements, via counsel, to A.R. Couture by way of the October 27, 2023 letter. He has further alleged that A.R. Couture failed to furnish copies of the requested statements within 30 days. Guitard also plausibly alleges that the Plan is covered by ERISA, and that A.R. Couture is the Plan administrator. These allegations are sufficient to state a claim.” The court additionally determined that Mr. Guitard’s requested relief against A.R. Couture was appropriate. Mr. Guitard calculated damages of $45,000 by multiplying the number of days that elapsed between the passage of the 30-day deadline and the filing of the motion for default judgment – 450 – by the maximum daily statutory damages amount established in 29 U.S.C. § 1132(c)(1) – $100. The court determined that damages of $100 per day was appropriate given the ongoing failure to produce the documents, the fact that Mr. Guitard has a pressing need for the missing statements, A.R. Couture’s failure to explain or defend its delay, and the fact that the company “has engaged in a pattern of actions that could support a reasonable inference of dilatory intent.” The court further agreed with Mr. Guitard that an order requiring A.R. Couture to provide the missing annual plan statements and participant account statements he requested in writing is also reasonable and appropriate. Finally, the court determined that Mr. Guitard is entitled to reasonable attorneys’ fees under Section 502(g)(1). The court noted that despite promises from defendant that the statements would be forthcoming, they never provided them, and concluded that this behavior shows a degree of culpability or bad faith attributable to A.R. Couture. Further, awarding fees would deter other plan administrators from acting in a similar manner, which would benefit members of this plan and others. Although the court determined that a reasonable award of attorneys’ fees is merited under the circumstances, it nevertheless could not award a specific amount without the information necessary to calculate a lodestar. Thus, the court directed Mr. Guitard to file an affidavit that contains the necessary information for the court to make this determination. For these reasons, the court granted Mr. Guitard’s motion for default judgment and ordered A.R. Couture to pay $45,000 to Mr. Guitard and provide him with the missing plan statements and individual participant account statements for the relevant plan years.