Cannon v. Blue Cross & Blue Shield of Mass., No. 24-1862, __ F. 4th __, 2025 WL 855194 (1st Cir. Mar. 19, 2025) (Before Circuit Judges Aframe, Lynch, and Howard)

As our readers undoubtedly know, ERISA contains a notably broad preemption provision designed to ensure that, for the most part, employee benefits are governed by federal law rather than an array of state and local laws. Probably no provision of ERISA has engendered as many Supreme Court decisions or as much controversy, which is unsurprising given that it displaces large areas of important health and welfare matters normally within the purview of the states’ regulatory authority. And the problematic nature of ERISA preemption is nowhere more evident than in the healthcare arena, where insurers and courts alike rely on the fiction that a benefit denial simply operates to deny payment for a prescribed medication or treatment rather than as dictating what treatment the patient actually gets. Which brings us to this week’s Case of the Week.

The suit arose out of the asthma-related death of Blaise Canon, the beneficiary of an ERISA-covered healthcare plan, after the plan administrator, Blue Cross, denied coverage of a particular inhaler. The decision itself is short on details, but it appears that the denial was based on Blaise’s failure to try other asthma inhalers or treatments first and that Blaise did not appeal the denial. Scott Cannon, the personal representative of Blaise’s estate, brought suit in state court asserting among other things, claims for wrongful death and punitive damages.

After the case was removed to federal court, the district court granted summary judgment in favor of Blue Cross, concluding that the claims were preempted both under ERISA’s express preemption provision, 29 U.S.C. § 1144(a) and because the claims conflicted with ERISA’s remedial scheme as set forth in 29 U.S.C. § 1132(a). The First Circuit affirmed on both bases.

With respect to express preemption under § 1144(a), the court noted that the First Circuit had previously held that ERISA preempts wrongful death claims based on an allegedly improper denial of benefits because “[i]t would be difficult to think of a state law that ‘relates’ more closely to an employee benefit plan than one that affords remedies for the breach of obligations under that plan.” The court pointed out that numerous other circuits had reached the same conclusion.

The court rejected plaintiff’s “argument that the Supreme Court’s recent decision in Rutledge [v. Pharm. Care Mgmt. Ass’n, 592 U.S. 80 (2020)] changes this analysis.” Instead, the First Circuit read Rutledge’s non-preemption holding as limited to state laws that incidentally affect cost uniformity plans.

The First Circuit also concluded that the wrongful death claim was preempted because it “duplicates, supplements, or supplants the ERISA civil enforcement remedy” in 29 U.S.C § 1132(a) and thus “conflicts with the clear congressional intent to make the ERISA remedy exclusive.” This was true even though plaintiff was neither a plan participant nor a beneficiary with standing to sue under ERISA. Nevertheless, the court reasoned that Mr. Cannon’s wrongful death claim was “derivative of any claim Blaise could have brought for damages based on breach of the policy.” The court therefore concluded that “[s]ince such a claim brought by Blaise would have been preempted by § 1132(a)(1)(B), Cannon’s derivative wrongful death claim is similarly preempted.”

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

Class Actions

Ninth Circuit

Hagins v. Knight-Swift Transp. Holdings, No. CV-22-01835-PHX-ROS, 2025 WL 861430 (D. Ariz. Mar. 19, 2025) (Judge Roslyn O. Silver). Plaintiffs moved for certification of a class of participants and beneficiaries of the Knight-Swift Transportation Holdings, Inc. 401(k) Retirement Plan. They allege that the fiduciaries of the plan breached their fiduciary duties under ERISA by failing to control costs paid by plan participants both directly and indirectly to the plan’s recordkeeper, Principal Life Insurance Company, and through the retention of excessively expensive retail share classes of ten funds available at lower costs. (You can read Your ERISA Watch’s summary of the court’s denial of Knight-Swift’s motion to dismiss in our May 31, 2023 edition). Because plaintiffs satisfied the requirements of Federal Rule of Civil Procedure 23(a) and (b)(1) the court concluded that certification was warranted and granted the motion seeking to do so. The court began with its discussion of Rule 23(a). There was no dispute that the 23,547 plan participants with active account balances satisfied the numerosity requirement as joinder of them all would be obviously impracticable. There was a dispute, however, about whether plaintiffs could satisfy the requirements of commonality and typicality. Knight-Swift argued that plaintiffs could not meet these requirements because they have failed to show a single course of conduct throughout the class period and because any recovery by the class would involve a highly individualized injury. The court found these arguments unavailing. For one thing, the court rejected the idea that the company’s 2019 merger created a whole new plan such that there are now multiple plans governed by multiple committees throughout the relevant time period. This notion was clearly not true, the court stated, because the plan’s Form 5500 disclosures from 2016 to 2022 each stated the plan was established January 1, 1992 and has been amended throughout the years. Moreover, the court noted that defendants provided no authority to support their position and was concerned “that ERISA’s fiduciary requirements would be rendered virtually meaningless and would be extinguished upon a merger or acquisition if a ‘new’ plan was created.” As for defendants’ argument that this case is incapable of class-wide resolution because of the highly individualized nature of any future recovery, the court was equally unpersuaded. The court agreed with plaintiffs that other district courts presented with an argument functionally identical to this one have rejected it outright. Thus, the court found plaintiffs had satisfied the commonality and typicality requirements. Defendants also challenged the adequacy of representation. They argued plaintiffs lack Article III standing because they did not invest in all of the mutual funds with the share classes at issue and that they have suffered no losses to their individual plan accounts. Again, the court was unpersuaded. In the Ninth Circuit, a named plaintiff bringing claims regarding underperforming funds and high costs can demonstrate “class certification standing” by either investing in at least one of the challenged funds or by challenging plan-wide decision-making that injured all plan participants. Here, the court concluded that plaintiffs demonstrated both and thus have sufficiently alleged a concrete injury as to their fiduciary breach claims. The decision then proceeded to the Rule 23(b) analysis. The court said this case is a classic example where certification under Rule 23(b)(1) is appropriate as plaintiffs seek monetary relief for the plan as a whole based on their theory that the fiduciaries breached their duties to the plan by improperly managing plan assets. Any judgment the court makes will necessarily affect all of the members of the plan and the conduct of the fiduciaries who manage it. Finally, the court found that plaintiffs Hagins and Woodard will adequately represent the class under the requirements of Rule 23, and that their counsel at McKay Law, LLC, Morgan & Morgan, P.A., and Wenzel Fenton Cabasa, P.A. were experienced, competent, and committed to representing the interests of the class. As such, the court appointed them as class representatives and class counsel. For these reasons, plaintiffs’ motion for class certification was granted by the court.

Discovery

Fourth Circuit

Estate of Green v. Hartford Life & Accident Ins. Co., No. 24-cv-1910-ABA, 2025 WL 834068 (D. Md. Mar. 17, 2025) (Judge Adam B. Abelson). Sidney Green worked for a subsidiary of American Airlines, Piedmont Airlines, Inc. and was a member of the Teamsters Local Union No. 355. Mr. Green died in a motorcycle accident on June 1, 2019. His family sought payment of life insurance and accidental death insurance benefits through an ERISA-governed policy administered by Hartford Life and Accident Insurance Company. Hartford denied the claim because Piedmont stated that Mr. Green’s employment had been terminated the week before his death. The Green Family does not believe that Mr. Green was ever fired, and instead maintains that he remained actively employed by the airline as of his death and that he was covered by the plan. In this action they seek the benefits that were denied. The Greens moved to compel both Hartford and Piedmont to produce their communications about the claim. They sought this discovery outside the administrative record to determine whether Mr. Green had in fact been terminated before his death. On January 13, 2025 the court granted the family’s motion to compel Hartford to produce the documents within its possession. Before the court here was the Greens’ motion to compel Piedmont to produce documents itself, including its rules for terminating an employee and for notifying the Union, as well as statements on how the Union was notified, when and by whom, how Mr. Green was terminated, by whom, and for what reason, and how Hartford was notified, by whom, and the authority of that person. In this decision the court granted plaintiff’s motion and ordered Piedmont to produce the documents and provide the interrogatory answers. In so doing, the court explained that evidence bearing on whether Mr. Green was actually fired from his employment before his death “is not only squarely relevant to the fundamental question of whether Mr. Green was a ‘Full-time Active employee’ of Piedmont as a mechanic or related employee,” but also goes directly to several of the Fourth Circuit’s Booth factors district courts must consider to assess the reasonableness of an ERISA benefit decision including: (1) the language of the plan; (2) the purposes and goals of the plan; (3) the adequacy of the materials Hartford considered to make its decision and the degree to which they support it; and (4) whether Hartford’s decision-making process was principled and reasoned. The court further pointed out that the burden on Piedmont to produce the requested documents and provide the interlocutory responses is minimal. Finally, the court noted that only Piedmont is in possession of the missing information. Accordingly, the court agreed with the family that even under the limited scope of review of an abuse of discretion ERISA benefits lawsuit, the dispute cannot be resolved without this pertinent information from the employer. Thus, the court granted the Greens’ motion to compel Piedmont to respond to the Piedmont subpoena.

D.C. Circuit

Kifafi v. Hilton Hotels Ret., No. 98-1517 (CKK), 2025 WL 858810 (D.D.C. Mar. 19, 2025) (Judge Colleen Kollar-Kotelly). This ERISA lawsuit was first filed by plaintiff Jamal J. Kifafi in June 1998. He alleged that Hilton Hotels violated ERISA by improperly backloading retirement benefit accruals toward the end of employees’ careers, failing to provide certain eligible employees early retirement benefits, failing to maintain sufficient data to pay benefits to surviving spouses and former employees, failing to provide benefit statements and plan documents, and breaching fiduciary duties owed to plan participants. In the ensuing years the court has issued seventeen opinions, four of which were appealed. The court ultimately granted summary judgment in favor of Mr. Kifafi on his claims for violations of ERISA’s anti-backloading and vesting provisions. In 2011 the court entered a permanent injunction ordering Hilton to amend the plan’s benefit accrual formula to remedy the backloading violation, to send a notice and claim form to class members, to revise benefit and vesting calculations for individual class members, award back payments for all class members for the increased benefits they should have received in the past, and commence increased benefits for class members going forward. In 2012, the D.C. Circuit Court of Appeals affirmed the court’s rulings on liability and remedies in full. By February 2015, the court concluded that Hilton was in compliance with and had satisfied the terms of its judgment and denied a motion filed by Mr. Kifafi for post-judgement discovery and a motion to modify the judgment in aid of enforcement, concluding he had not made a prima facie showing that defendants had been non-compliant with the court’s order. Mr. Kifafi moved for reconsideration, which the court denied. The D.C. Circuit affirmed the court’s denial of Mr. Kifafi’s motion for reconsideration and its decision not to allow post-judgment discovery. But Mr. Kifafi still believed that Hilton was in contempt of the court’s 2011 judgment, and in May 2020, he moved for an order directing Hilton to show cause why it should not be held in contempt and to prepare an equitable accounting of its efforts to implement the court’s judgment. The court again denied this motion and Mr. Kifafi again appealed. On appeal, the D.C. Circuit vacated the district court’s order and remanded for further proceedings. It concluded that the court retained ongoing authority to evaluate Hilton’s compliance with the permanent injunction and award appropriate relief notwithstanding its statement in 2015 that its jurisdiction over the matter had concluded. On remand, the district court directed Mr. Kifafi to file a renewed motion for post-judgment discovery. He did so and later filed a motion for leave to supplement the record. These motions were addressed in this decision. As a threshold matter, the court granted Mr. Kifafi’s motion to supplement the record with two declarations and correspondence related to the claims of one class member who may not have received the full amount due to her under the terms of the court’s judgment. The court stated that the proposed supplement was needed for the “fair administration of justice.”  However, even with this information and the other evidence Mr. Kifafi included in his discovery motion, the court held that he did not show enough to demonstrate that there are significant questions regarding defendants’ compliance with the 2011 judgment that warrant further discovery. The court maintained the position it first adopted more than a decade ago to evaluate Hilton’s compliance with its judgment: (1) the efforts Hilton has made to reach and pay all class members and (2) the number of class members Hilton has paid or for whom it has otherwise satisfied judgment. The court was clear that it would not find noncompliance based on isolated instances of failure to pay eligible class members and that it would only assess Hilton’s compliance with its judgment based on systemic problems or failures not individual mistakes or instances of poor performance. When measured against these standards, the court found that Mr. Kifafi’s motion came up short. At best, the court viewed the evidence he provided and the instances he identified as proof of “occasional missteps and miscommunications with class members along the way.” While the court did not find that Mr. Kifafi made the required showing to justify reopening discovery at this stage, it nevertheless informed him that he is not precluded from seeking other relief in the future as Hilton has an ongoing obligation to abide by the judgment. “Should Hilton’s efforts to uphold this obligation break down, ‘class members retain the enforcement rights of a party to a permanent injunction.’” As such, the court denied Mr. Kifafi’s motion for post-judgment discovery without prejudice.

ERISA Preemption

Third Circuit

Ahn v. Cigna Health & Life Ins. Co., No. 19cv7141 (EP) (JBC), 2025 WL 830217 (D.N.J. Mar. 17, 2025) (Judge Evelyn Padin). Plaintiff Jeffrey M. Ahn is an ear nose and throat doctor licensed to practice medicine in New Jersey and New York. Dr. Ahn sued Cigna Health and Life Insurance Company for defamation per se, defamation, and tortious interference after the insurance company denied a series of benefit claims on grounds that Dr. Ahn was not licensed to practice medicine. Cigna moved for summary judgment, arguing that the claims were preempted by ERISA. As an initial matter, because Dr. Ahn abandoned his defamation and tortious interference claims, the only remaining count was his claim for defamation per se. Before the court assessed whether this claim was preempted by ERISA, it first reviewed the relevant exhibits to determine whether all of the claims are from ERISA plans. It found that each plan at issue was indisputably governed by ERISA, as they were all established or maintained by an employer for the purpose of providing medical-related benefits to beneficiaries. Satisfied that the plans were ERISA plans, the court turned to the parties’ dispute over ERISA preemption. Cigna argued that the defamation per se claim is preempted because it arises from a central matter of plan administration, the communication of claim adjudications to plan participants and beneficiaries. Cigna elaborated that the explanation of benefits (“EOBs”) which contained the allegedly defamatory statements are the vehicle by which it discharges its duty under ERISA to provide notice to patients whose claims are denied. The court agreed. “Dr. Ahn’s defamation per se claim is premised on statements made in EOBs sent to beneficiaries of ERISA plans. Those EOBs were sent pursuant to Cigna’s obligations under ERISA to provide written notice to patients whose claims were denied, including the specific reasons for the denial. In other words, the fact that Cigna sent the allegedly defamatory EOBs pursuant to their obligations under ERISA shows how Dr. Ahn’s claims relate to ERISA.” Other courts who have addressed the same or similar issues have reached the same conclusion. In a case nearly identical to this one, a court concluded that a doctor’s claim for defamation had an undeniable connection to the ERISA healthcare plan because it required the court to delve into the reasons why the patients’ claims for medical services were denied. Here, the court was of the same mind. It found that Dr. Ahn’s claim concerns the “handling, review, and disposition of a request for coverage,” making it so intertwined with the ERISA plans that it relates to them and is preempted by the federal statute. For this reason, the court granted Cigna’s motion for summary judgment.

Exhaustion of Administrative Remedies

Fifth Circuit

Culumber v. Morris Network of Miss., No. 1:23cv219-HSO-BWR, 2025 WL 837006 (S.D. Miss. Mar. 17, 2025) (Judge Halil Suleyman Ozerden). Pro se plaintiff Toni Miles Culumber sued her former employers the Morris Network of Mississippi Inc., Morris Multimedia, Morris Network, Inc. and Morris Multimedia, Inc. for employment discrimination arising out of three previous Equal Employment Opportunity Commission charges made against the Morris defendants. In her original complaint Ms. Culumber asserted claims under Title VI of the Civil Rights Act, the Equal Pay Act, and the Age Discrimination in Employment Act. On September 30, 2024, Ms. Culumber amended her complaint raising the same discrimination claims and adding claims of false statements, due process and equal rights violations, defamation, false light, violations of the Fair Labor Standards Act, fraud, misrepresentation, wrongful termination, blacklisting, violations of the Family and Medical Leave Act, intentional infliction of emotional distress, and ERISA. Defendants moved to dismiss the claims asserted for the first time in the amended complaint. In this decision the court granted in part and denied in part the motion to dismiss, specifically dismissing the claims for false statements, due process and equal rights violations under the Mississippi and U.S. Constitutions, defamation, false light, fraud, misrepresentation, blacklisting, violations of FMLA, intentional infliction of emotional distress, and the ERISA claims. The court dismissed the ERISA claims for failure to exhaust as Ms. Culumber did not allege or make any “colorable showing” that she exhausted her administrative remedies under ERISA before pursuing these claims in court. Nor did she argue that any equitable exception applies such that she should be exhausted for failing to exhaust the internal claims processes. Insofar as the court granted the motion to dismiss, its dismissal was with prejudice as the time to amend has passed and the court found it clear that any further amendments would be futile. Accordingly, Ms. Culumber was left with some, but not all of her new causes of action, as well as all three of her original claims against her employers following this order by the court. 

Medical Benefit Claims

Second Circuit

Richard K. v. United Behavioral Health, No. 18 Civ. 6318 (JPC) (BCM), 2025 WL 869715 (S.D.N.Y. Mar. 20, 2025) (Judge John P. Cronan). Plaintiffs Richard and Julie K.’s teenage daughter was experiencing severe psychiatric deterioration in early 2015. The parents were concerned and enrolled her at a residential treatment center located in Sedona, Arizona that specializes in providing mental health treatment to adolescents. About a month after she was admitted to the facility, the daughter attempted suicide by drinking a bottle of window cleaner. After a week-long stay at a hospital to stabilize her, Richard and Julie knew she needed serious long-term medical interventions to help her. She was sent back to the residential facility and a team of around-the-clock mental healthcare professionals provided her with the care she needed. The daughter’s treatment was covered under the terms of Richard’s ERISA-governed medical plan and for the first 26 days of her treatment following the suicide attempt the plan’s claims administrator, defendant United Behavioral Health (“UBH”), approved the treatment as medically necessary. But the terms of Richard’s plan demand that treatment stop as soon as a patient can be safely and effectively cared for in a less intensive and less costly environment. The daughter began to make progress with her treatment, despite her initial struggles. Because of this, UBH decided that the child met the criteria for less-intensive care less than a month after her return to residential treatment and denied the claim going forward. The family disagreed with this decision. Their daughter was finally responding well to treatment and the treating healthcare providers advocated for a longer stay. The daughter stayed in treatment for several more months despite United’s adverse coverage decision, which the family appealed. UBH upheld its determination during the internal appeals process. Richard and Julie filed this civil action seeking to recover the costs of their child’s continued stay at the residential treatment center. The parties moved for resolution of Richard and Julie’s claim for benefits through the procedure of a summary trial. Thus, the dispute before the court was whether after the first 26 days of inpatient treatment the teenager who had so recently attempted to kill herself could have been safely and effectively treated through a less intensive partial hospitalization program. The court’s answer in this decision was yes, even under de novo review. “While at the treatment center, K.K.’s mental health improved. By the end of the twenty-six days, her mood and affect were within normal limits, and she displayed no feelings of hopelessness. K.K. also had a linear, logical thought process without any paranoia or delusions. And despite continuing to show defiance toward authority figures, she functioned fine during her day-to-day life and generally participated well in her treatment programs. To be sure, K.K. also harmed herself during her stay, requiring precautionary measures early on. Yet by the end, her thoughts of suicide had gone away completely, and she no longer needed one-on-one observation.” Based on the court’s assessment of the medical record it agreed that the evidence supported UBH’s determination that the daughter’s treatment should have continued in a less intensive setting after those first few weeks of residential treatment and that as of the relevant date continued residential treatment was not medically necessary under the plan as she was no longer in imminent risk of further self-harm. The court ultimately agreed with UBH that, although the girl was not “a picture of health” or ready to stop treatment altogether, she had improved enough that she could handle a step-down in treatment, as required under the terms of the plan and United’ Optum Level of Care Guidelines. Accordingly, the court concluded that the family failed to prove by a preponderance of the evidence that K.K. was entitled to coverage for residential treatment at the facility past March 19, 2015 and therefore entered judgment in favor of UBH.

Third Circuit

Redstone v. Aetna, Inc., No. 21-19434 (JXN) (JBC), 2025 WL 842514 (D.N.J. Mar. 18, 2025) (Judge Julien Neals). Doctors Jeremiah Redstone, M.D. and Wayne Lee, M.D. filed this putative ERISA class action against Aetna, Inc. and Aetna Life Insurance Company alleging the insurance company underpaid benefits under their patients’ ERISA-governed health care plans which participated in Aetna’s National Advantage Program (“NAP”). By way of example the complaint focuses on two patients who underwent breast reconstruction surgeries as part of their treatment for breast cancer while covered under ERISA-governed plans participating in NAP. The doctors allege that these procedures were covered under the terms of the plans and that the surgeries for both patients were preauthorized by Aetna. Following the procedures, the doctors submitted claims for reimbursement. Aetna ultimately approved the claims but paid only a fraction of the submitted invoices. Specifically, the providers billed $226,630 for the first surgery of which Aetna paid $20,149.23 and $102,000 for the second surgery for which they were reimbursed $5,559.37. In their complaint, the doctors allege that Aetna’s failure to reimburse them pursuant to their contract rates with Multiplan has deprived the patients of the protection from balanced billing. Dr. Redstone and Dr. Lee initiated seek to represent a class of individuals insured under ERISA health plans issued or administered by Aetna which participate in the NAP and who submitted a benefit claim which was processed by Aetna and for which the allowed amount as determined by the insurance company was lower than the NAP rate specified under the Aetna plan. Plaintiffs bring three claims under ERISA Sections 502(a)(1)(B), (a)(3)(A), and (a)(3)(B). Defendants moved to dismiss and for leave to file notice of supplemental authority in further support of their motion to dismiss. In this order the court granted the motion to file supplemental authority and granted in part the motion to dismiss. To begin, the court determined that plaintiffs meet Article III standing requirements. In line with the findings of other district courts, the court held that the denial of plan benefits is a concrete injury for Article III standing even when patients have not been directly billed for their medical services because plan participants are contractually entitled to plan benefits and are injured when a plan administrator fails to pay a healthcare provider in accordance with the terms of the benefits plan. Aetna also argued that the doctors are precluded from balance billing their patients because they owe fiduciary duties to them as attorneys-in-fact. The court rejected this argument and agreed with the providers that an attorney-in-fact’s fiduciary obligations does not preclude collecting a valid debt owed to them by the principal. The court also agreed with plaintiffs that they have standing to sue as attorneys-in-fact even though they cannot sue as assignees in light of the plans’ unambiguous anti-assignment clauses. Moreover, the court found the power of attorney documents complaint with New Jersey requirements. Accordingly, the court rejected Aetna’s Rule 12(b)(1) challenge to the complaint, finding plaintiffs have Constitutional standing to pursue their claims for unpaid and underpaid health benefits and derivative standing to pursue their causes of action under ERISA. Next, the court concluded that both the parent company, Aetna Inc., and its subsidiary, Aetna Life Insurance Company, are proper parties in this action as the precise allegations in plaintiffs’ complaint have previously been found sufficient to plausibly allege that Aetna, Inc. is a proper defendant at this stage of proceedings. However, the court agreed with defendants’ next argument: that the complaint fails to adequately specify claims for benefits under Section 502(a)(1)(B). Aetna asserted that plaintiffs failed to adequately state which plan provisions they allegedly violated demonstrating that the benefits are due. Agreeing with this point, the court dismissed the denial of benefits claim. The court thus dismissed the Section 502(a)(1)(B), but did so without prejudice.  Moreover, the court refused to dismiss the Section 502(a)(3) equitable relief claim. It agreed with plaintiffs that assessing whether the claims brought under Section 502(a)(1)(B) and (a)(3) were duplicative is premature at the motion to dismiss stage. Finally, the court granted Aetna’s motion to supplement its briefing with authority from a district court decision which was decided two days after they filed their supplemental standing brief. Nevertheless, the court concluded that the supplemental authority did not change its own analysis here discussing plaintiffs’ power of attorney documents. Accordingly, the court granted in part and denied in part defendants’ motion to dismiss as explained above.

Pension Benefit Claims

Second Circuit

The Verizon Emp. Benefits Comm. v. Nikolaros, No. 23-CV-1982 (RPK) (PK), 2025 WL 845111 (E.D.N.Y. Mar. 18, 2025) (Judge Richard P. Kovner). The Verizon Employee Benefits Committee filed this interpleader action to clarify the proper beneficiary of the death benefit of decedent Nick Nikolaros’ pension plan. Defendants are the three claimants the proceeds: (1) Mr. Nikolaros’ estate, represented by Athina Nikolaros; (2) Mr. Nikolaros’ ex-wife, Parthena Nikolaros; and (3) Mr. Nikolaros’ sister, Georgia Nikolaros. The three claimant defendants cross-moved for summary judgment. Georgia Nikolaros sought a declaration that the benefit is payable solely to her, while Athina and Parthena Nikolaros argued that the benefit should either be split between them equally or paid solely to the estate. In this decision the court declared that the death benefit is payable in full to Mr. Nikolaros’ estate. To begin, the court found that Georgia Nikolaros is not a valid beneficiary. Mr. Nikolaros appointed his sister as his contingent beneficiary when he was thirty years old. Under the plain language of the plan the election of a non-spouse beneficiary becomes null and void on the first day of the Plan Year in which Mr. Nikolaros became 35. Because Mr. Nikolaros never re-designated his sister as his beneficiary, contingent or otherwise, between his 35^th birthday and his death, the court concluded that Georgia was not a beneficiary to her brother’s pension plan. Her motion for summary judgment was therefore denied. Again relying on the language of the plan, the court determined that the ex-wife was not a valid beneficiary either. The plan states that any election purporting to make a spouse eligible for the death benefit will automatically be revoked in case of the subsequent death of the participant if and when that spouse is divorced, except to the extent ordered to the contrary by a qualified domestic relations order (“QDRO”). The court went on to conclude that the ex-couple’s divorce judgment and stipulation of settlement did not constitute a QDRO because it did not, “state the ‘amount or percentage’ of the death benefits payable to Parthena. At most, it contemplates that Parthena would be assigned a portion of the death benefit under the Verizon pension plan by some future-executed QDRO and that, before a QDRO was executed, Nick would maintain Parthena as beneficiary of the death benefits on the pension plan (which, as explained above, he did not do). In fact, later on, the agreement provides that ‘[a] QDRO shall be prepared in accordance with the terms of this agreement’-suggesting that the stipulation was never intended to operate as a QDRO on its own terms.” As the court determined that neither Parthena nor Georgia were valid beneficiaries of the plan at the time of Nick’s death, the court determined that the benefit is payable in full to Mr. Nikolaros’ estate as contemplated by Section 7.8 of the plan. The court therefore ruled on the summary judgment motions before it to reflect this finding.

Third Circuit

Cockerill v. Corteva, Inc., No. 21-3966, 2025 WL 845898 (E.D. Pa. Mar. 18, 2025) (Judge Michael M. Baylson). This case arises from the 2019 spinoff by the historical American chemical company, DuPont, into three separate business organizations: DuPont de Nemours Inc., Dow Inc., and Corteva. The 2019 spin led to the termination, transfer, or reassignment of many of the company’s employees, which disrupted many DuPont employees’ retirement plans. The workers sued the companies under ERISA seeking early and optional retirement benefits that they lost the ability to obtain following the corporate restructuring. On December 18, 2024 the court issued a lengthy liability decision following a six-day bench trial in the summer and fall of that year. (Your ERISA Watch covered that decision in our January 1^st edition of this year). Earlier on, the court had bifurcated the action splitting the issues of liability and damages. Thus, after the court issued its findings of fact and conclusions of the case proceeding to its final stage to address the issue of appropriate remedies. In a subsequent order, the court appointed Pennsylvania attorney Richard L. Bazelon to serve as a special master to oversee the remedies phase. The court then retained Ms. Susan Hoffman as a technical advisor on actuarial principles – a core issue of the ERISA damages and calculations for the DuPont workers. Defendants sought to stymie these two appointments and moved to do so. Defendants styled their motion as an emergency motion to stay technical advisory and special master appointments. At the outset, the court stated that defendants’ motion was not “an emergency,” but rather one for “extraordinary equitable relief, attempting to halt the damages phase of this ERISA case where the Court has already found liability against them.” The court added that their motion omits all of the procedural history of the case and “any mention that they have already been found liable to Plaintiffs; there is no issue here as to liability.” As the court saw it, defendants were attempting in their motion “to interrupt the progress towards a damages verdict, which Plaintiffs deserve and the Court intends to make as promptly as possible. All objections asserted by Defendants in their ‘emergency’ motion can be reserved until final judgment is entered and can be presented on post-trial motions in this Court and/or an appeal.” The court stressed that the only issue remaining is the amount of damages, and expressed its desire to handle the remedies issues “with careful attention to all of the facts and the law.” The court stated that “Defendants mischaracterize the role of Ms. Susan Hoffman,” noting that she is “no longer a practicing attorney and has not been retained for, and will not render, any legal advice to this Court.” Instead, the court stated that “Ms. Hoffman was retained as a technical advisor on the actuarial principles at the core of ERISA damages,” a “topic [that] is wholly appropriate for the use of an independent technical expert given the importance of such calculations.” Similarly, the court stated that neither Ms. Hoffman nor Mr. Bazelon would be deciding damages or equitable relief, noting that “the undersigned recognizes that it is my job and my job alone to make decisions on damages and equitable relief.” Finally, the court rejected defendants’ accusations of alleged ex parte communications between the court and Mr. Bazelon and/or Ms. Hoffman, saying they were “baseless and meritless.” The court pointed out that Federal Rule of Civil Procedure 53 and the Notes of the Advisory Committee on Rules expressly contemplate ex parte communications between an appointing judge and a special master. Moreover, the court noted that it was entitled to retain a technical advisor and noted that there was nothing improper about communications with such an advisor. Moreover, the court found the cases cited by defendants to be “inapposite to their concerns about due process.” Accordingly, the court denied defendants’ motion.

Pleading Issues & Procedure

Third Circuit

Patel v. Cigna Health & Life Ins. Co., No. 24-04646 (JXN) (JBC), 2025 WL 868958 (D.N.J. Mar. 19, 2025) (Judge Julien Neals). Plaintiff Suja Patel, M.D. sued Cigna Health and Life Insurance Company and the National IAM Benefit Trust Fund in state court asserting various state law causes of action stemming from an alleged underpayment of out-of-network medical services. Defendants removed the case to federal court, at which time Dr. Patel amended her complaint to assert a sole cause of action under ERISA Section 502(a)(1)(B). National IAM Benefit Trust Fund subsequently moved to dismiss the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(3) for improper venue. Defendant argued that venue is improper in the District of New Jersey because the plan is administered in Washington, D.C., the decision to deny benefits took place in D.C., and IAM does not reside in and cannot be found in New Jersey. It further argued that the interest of justice does not favor transfer in this instance. The court agreed. It found that the plan is administered in the District of Columbia as stated by the SPD. Further, it concluded that the alleged breach occurred in Washington, D.C. because the decision to partially deny reimbursement took place there. The court also determined that IAM Benefit Trust did not purposefully avail itself in New Jersey because it does not have minimum contacts with the state to satisfy personal jurisdiction. Rather, it merely services plan participants who reside in the state and administers health plans rendered in the state, which, the court said, is insufficient for IAM to “be found” in New Jersey. Finally, the court determined that dismissal is appropriate here, as opposed to transfer, because the statute of limitations has not run in the proper venue and the parties have not yet engaged in discovery. Accordingly, the court granted the motion to dismiss the complaint without prejudice to Dr. Patel to pursue her claims in the District Court for the District of Columbia.

Seventh Circuit

Cent. States, Se. & Sw. Areas Pension Fund v. Knecht, No. 24 CV 02578, 2025 WL 860102 (N.D. Ill. Mar. 19, 2025) (Judge Sharon Johnson Coleman). The Central States, Southeast, and Southwest Areas Pension Fund and its trustee, Charles A. Whobrey, filed this ERISA action to recover alleged overpayments of pension benefits to a bank account shared by defendant Kim Knecht. Sue T. Richard was a beneficiary of the Fund. She received monthly direct deposits of $1,190.00. Ms. Richard died on February 11, 2013, at which time her rights to monthly pension benefits ceased and the Fund’s obligation to remit them terminated. However, Central States did not learn of Ms. Richard’s death until August 2021, and continued to deposit monthly pension benefit payments directly into her old account from March 2013 to August 2021, resulting in an overpayment of $121,380.00. The Fund asserts three counts under ERISA and one under common law fraud against Ms. Knecht who was listed as a co-account holder on Ms. Richard’s account and had access to it. Central States alleges that she fraudulently concealed Ms. Richard’s death from the Fund, knowing that it was depositing a monthly pension benefit payment into their shared account after her death. Ms. Knecht moved to dismiss the case against her for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). The court was clear in this short decision that the only requirements to establish personal jurisdiction in an ERISA action are that the plaintiff is properly served, and that he or she has sufficient minimum contacts with the United States as a whole. Here, there was no dispute that Ms. Knecht was properly served and that she has sufficient contacts with the U.S. as a resident of the state of Louisiana. Therefore, the court found that it has personal jurisdiction over Ms. Knecht and accordingly denied her motion to dismiss.

Ninth Circuit

Pohl v. Int’l All. of Theatrical Stage Emps., No. 24-cv-02120-KAW, 2025 WL 834493 (N.D. Cal. Mar. 14, 2025) (Magistrate Judge Kandis A. Westmore). In this action plaintiff James Pohl challenges his pension benefit calculation finding that he was only 76% vested in the International Alliance of Theatrical Stage Employees Local 16 Pension Plan. Mr. Pohl believes he is 100% vested and that this faulty vesting calculation was based on incorrectly classifying him as a collectively bargained participant. In his lawsuit Mr. Pohl brings ERISA claims against the Plan, the Board of Trustees of IATSE Local 16 Pension Plan Trust Fund, BeneSys Administrators, and the IATSE Local 16 Union. Pending before the court was the Union’s motion to dismiss. The court began its discussion stating that the Union cannot automatically be held liable for the actions of the pension plan or board of trustees, and that Mr. Pohl must specifically allege acts committed by the Union itself in order to state plausible claims against it. In reply, Mr. Pohl argued that the Union is liable as a de facto fiduciary because the employer trustee, Mr. Beaumonte, was acting in his capacity as the Union’s President when he opined about Mr. Pohl’s bargaining status. The court was not convinced. It did not believe that the operative complaint alleged facts demonstrating that Mr. Beaumonte was acting as the Union’s President when he opined on Mr. Pohl’s bargaining status. Rather, the court agreed with the Union that any decisions made regarding plaintiff’s benefits were related to Mr. Beaumonte’s Trustee responsibilities, not the collective bargaining responsibilities related to the Union. “Even if Mr. Beaumonte was acting outside the permissible scope of his role as a Trustee, this does not automatically mean he was acting as Defendant Union’s President. Indeed, there is nothing to suggest that Mr. Beaumonte would have been able to opine about Plaintiff’s bargaining status in his role as Defendant Union’s President. This is particularly the case where the complained of action – interpreting the Plan of Benefits – is a function related to Mr. Beaumonte’s Trustee role, rather than the collective bargaining function related to his role as Defendant Union’s President. Thus, Mr. Beaumonte’s actions are not sufficient to impute liability on Defendant Union.” Accordingly, the court found that the Union was not a proper party to this action concerning benefit determinations “based on the actions taken by the remaining Defendants.” The court therefore granted the motion to dismiss, and because it concluded that further amendment would be futile, granted the motion to dismiss with prejudice. 

Owens v. Blue Shield of Cal., No. 24-CV-00400-HSG, 2025 WL 870355 (N.D. Cal. Mar. 20, 2025) (Judge Haywood S. Gilliam, Jr.). Plaintiff Stephanie Owens was employed by defendant Valerie Fredrickson and Company until her termination on March 12, 2020. While employed, Ms. Owens had received health insurance benefits through Frederickson’s ERISA-governed welfare plan insured by defendant Blue Shield of California. Her health benefits under the plan ceased on March 31, 2020, at which time Ms. Owens elected continued coverage under Cal-COBRA. Blue Shield of California notified Ms. Owens that the Cal-COBRA coverage would be the same as the current benefits provided under the existing group health plan and that Cal-COBRA coverage would terminate should the contract between her employer and Blue Shield terminate. For the next two and a half years Ms. Owens paid monthly premiums and received her Cal-COBRA benefits. While this was ongoing, Ms. Owens was diagnosed with throat cancer and underwent treatment, including radiation treatment. Meanwhile, unbeknownst to her, Valerie Fredrickson and Company was acquired by defendant Gallagher & Co. Because Gallagher offered its own insurance program it canceled the insurance coverage with Blue Shield. But the cancellation did not take effect right away. On December 15, 2022, Blue shield terminated Frederickson’s health insurance coverage retroactive to July. It then notified Ms. Owens that her coverage had been terminated retroactively. She received no advanced warning of the cancellation and Blue Shield had continued to accept her premium payments. As a result of these events, Ms. Owens was without coverage for several months and incurred medical bills for her cancer treatment during this time. She sued Frederickson, Gallagher, and Blue Shield under ERISA to address this harm. Defendants separately moved to dismiss the complaint. In this decision the court granted in part and denied in part the motions to dismiss. At the outset, the court stated that each defendant was attempting to shift responsibility by arguing that the others were responsible for the lack of notice when Ms. Owens’ lost coverage. It noted that this was “the same tactic that Defendants allegedly employed before Plaintiff filed this case.” Despite this blame-shifting, the court added that defendants’ legal arguments basically overlap, as each argued that California law and not ERISA govern this case. Defendants each added that in the event ERISA is found to apply, Ms. Owens fails to state a claim for relief against them. Thus, whether ERISA applies to this case involving the termination of a Cal-COBRA plan was a threshold issue for the court. Relying on Ninth Circuit precedent, the court agreed with Ms. Owens that ERISA governs her case as it involves a Cal-COBRA continuation plan, where an employee receives continuing health coverage under an employer’s ERISA-governed plan after the employee’s employment ends by paying for coverage herself. Continuation plans, like this one, remain subject to ERISA. The court therefore denied the motions to dismiss on this basis. The court thus moved on to assess the sufficiency of each ERISA claim. First, the court denied the motions to dismiss the Section 502(a)(1)(B) claim as to any defendant. It said that defendants were sidestepping the allegations in the complaint that they improperly cancelled the plan retroactively and failed to provide proper notice of the cancellation. The court then took a look at Ms. Owen’s fiduciary breach claims. The court dismissed the Section 502(a)(2) claim as this cause of action seeks to redress losses to a plan and gives a remedy for injuries to ERISA plans as a whole, not to injuries suffered by individual participants as a result of a fiduciary breach. The court found this cause of action clearly inapplicable to the present matter. The court also dismissed the Section 502(a)(3) claim. Although this cause of action did not suffer from the same problem as the Section 502(a)(2) claim, the court took issue with the complaint’s failure to allege what type of equitable relief it was seeking or to differentiate this relief from the claim under Section 502(a)(1)(B) for unpaid medical bills. Ms. Owens also asserts a claim for statutory penalties under Sections 1132(a)(1)(A) and (c) for failure to provide requested plan documents. This cause of action can only be asserted against a plan administrator. The court therefore granted Blue Shield’s motion to dismiss the penalties claim, but denied the motion to dismiss as to the two employers. Finally, the court denied the motions to dismiss Ms. Owens’ claim that defendants failed to provide adequate notice under federal COBRA requirements. “To the extent Defendants suggest that any notice requirements under federal COBRA cannot apply once a plaintiff elects Cal-COBRA coverage, they have not provided any authority for this argument.” Accordingly, Ms. Owens was left with a good chunk of her complaint following this decision.

D.C. Circuit

Chevalier v. BAE Sys., No. 23-1651 (CKK), 2025 WL 870342 (D.D.C. Mar. 20, 2025) (Judge Colleen Kollar-Kotelly). Who is a proper defendant in an ERISA benefits action? This question often vexes courts and the statute itself provides no stated limit anywhere in Section 1132(a)(1)(B) about who can be sued. The court was forced to wrestle with this question as defendant New York Life moved to dismiss plaintiff Melissa Chevalier’s disability benefit lawsuit as asserted against it. It argued that her claims could not proceed against it because it is not the employer or the insurer of the benefit plan but rather the corporate parent of Life Insurance Company of America (“LINA”), the plan’s named fiduciary and claims administrator. Assessing the relevant caselaw was a somewhat unsatisfying exercise for the court, particularly as the D.C. Court of Appeals has not weighed in on the discussion itself and the other Circuits are split. The court decided, at least for the purposes of resolving this motion, to settle on the “restrained functionalist” approach to the issue. “Under this functionalist view, a defendant may be subjected to liability under Section 1132(a)(1)(B) ‘if it exercises actual control over the administration of the plan’ even if it is not formally named as the plan’s administrator and is not the plan itself.” As applied to Ms. Chevalier’s complaint, the court was satisfied that she alleged factual assertions that New York Life corresponded directly with her about her claims under the plan and sent her letters denying her claims and appeals. Accepting these allegations as true, the court found them enough to reasonably infer that New York Life exercised actual control of the disability plan to plausibly state a claim for relief against it under Section 502(a)(1)(B). The decision did not stop here though. New York Life added that, to the extent Ms. Chevalier’s complaint alleges it is more than just LINA’s parent company, the court should not credit those allegations because they are contradicted by two documents it attached to its motion: an administrative services agreement and a summary of the long-term disability policy. The court said there were two problems with this. First, the documents New York Life relies on are not included in the complaint. Second, and more crucially, even accepting these documents from beyond the four corners of the complaint, they do not definitively show that New York Life exercised no actual control over the plan. At best, the two documents show that LINA was formally designated as the claims administrator of the plan. Crucially, the court said the documents do not rebut the inference supported by the allegations in the complaint that New York Life wielded actual functional authority over the plan and handled Ms. Chevalier’s claims for benefits. Moreover, Ms. Chevalier provided evidence that her appeal was handled by New York Life as her denial letter was issued on New York Life’s letterhead and stated explicitly that New York administered her appeal. The court would not discredit this factual allegation on a motion to dismiss. As such, the court denied New York Life’s 12(b)(6) motion and determined for this stage that New York Life is a proper defendant to a claim for wrongful denial of benefits.

Retaliation Claims

Fifth Circuit

Thiel-Mack v. Baptist Cmty. Health Servs., No. 24-2681, 2025 WL 842936 (E.D. La. Mar. 18, 2025) (Judge Jay C. Zainey). At some point in 2022, Baptist Community Health Services, Inc. stopped depositing employee 401(k) salary contributions into employee accounts. Plaintiff Megan Thiel-Mack learned that her contributions were not being delivered to her account in January, 2023. She tried to rectify this problem by contacting the Chief Executive Officer and Chief Operating Officer at the company as well as a representative at the payroll processing company, Paycom. Months later the problem was still not resolved. Ms. Thiel-Mack then withdrew her funds from her 401(k) account. She later spoke to Baptist Community Health Service’s Board President, Michael Flores. According to Ms. Thiel-Mack the executives at the company admonished her for taking her problem to Mr. Flores and for copying persons outside of the company on her emails. Perhaps because of MS. Thiel-Mack’s emails, the 401(k) contribution issue was ultimately rectified in October 2023, when the company completed a Voluntary Fiduciary Correction Plan designed to make each employee’s retirement account whole. But by this point Ms. Thiel-Mack’s relationship inside Baptist Community Health was “severely strained.” On April 24, 2024, Ms. Thiel-Mack was told that her contract would not be renewed and that her employment as the director of behavioral health was terminated. Ms. Thiel-Mack’s termination prompted this ERISA whistle-blower lawsuit against her former employer alleging that her termination amounted to unlawful retaliation under Section 510. In addition to her ERISA claim, Ms. Thiel-Mack also asserts state law direct action claims against insurers, although these claims were not relevant to the present decision ruling on Baptist Community Health’s motion to dismiss complaint. The employer argued that Ms. Thiel-Mack failed to state a claim under the plain text of Section 510 because she alleges she voiced only internal complaints to management at the company, “as opposed to giving information or testimony in an inquiry or proceeding.” Ms. Thiel-Mack, on the other hand, argued that intraoffice complaints like the ones she alleges are a protected activity under ERISA. The court came to a different opinion altogether. It held that, as the answer has yet to be fully determined in the circuit, “the Court finds that the scope and application of ERISA Section 510’s antiretaliation provision is an open question of law in the Fifth Circuit.” The court therefore declined to address the merits of the parties’ arguments further at this stage of the proceedings, concluding that greater factual development is necessary before it can delve into this question of statutory interpretation. Accordingly, the court denied Baptist Community Health Services’ motion to dismiss.

Venue

Tenth Circuit

R. v. United Health Ins. Co., No. 2:24-cv-00033-HCN-CMR, 2025 WL 833041 (D. Utah Mar. 17, 2025) (Magistrate Judge Cecilia M. Romero). Plaintiffs Jill R. and J.R. filed this benefits action against defendants United Healthcare Insurance Company, United Behavioral Health, and the Liberty Mutual Health Plan in the District of Utah challenging denials of claims for residential mental health treatment that took place in facilities located in Utah. Defendants moved to transfer venue to the District of Massachusetts. They argued that Massachusetts is a superior venue because the family resides in the state and the Plan is headquartered there. The mere fact that the parties do not reside in Utah and the Plan is not located there failed to convince the court that the District of Massachusetts was a more convenient forum for this case than plaintiffs’ chosen forum, the District of Utah, which was the location of J.R.’s treatment. Among the many reasons the court reached this decision was the fact that defendants failed to show that Massachusetts has personal jurisdiction over the United Healthcare defendants. In addition, defendants did not identify any potential witnesses or identify the particular state that these individuals are located in. They also claimed, confusingly, that the plan was administered in Connecticut and/or California, neither of which is their chosen transfer forum, and the two locations are on opposite sides of the country. In fact, the only relevant factor that slightly weighed in favor of transfer was the relative congestion of the dockets of the two venues. However, the court decided that this consideration alone was insufficient to move the case. Absent more, and in the interest of justice, the court held that the District of Utah is the appropriate forum, and thus denied the motion to transfer.