We hope all of our readers had a chance to gaze up in wonder this week to witness the solar eclipse. Unfortunately, we did not spot a decision worthy of this awe-inspiring celestial event. But, as always, this week brings us decisions on many important ERISA issues, so keep reading for the ones that inspire you.

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

Breach of Fiduciary Duty

First Circuit

Lalonde v. Massachusetts Mut. Life Ins. Co., No. 22-30147-MGM, 2024 WL 1346027 (D. Mass. Mar. 29, 2024) (Judge Mark G. Mastroianni). To understand this lawsuit, you have to first consider another: a 2013 class action lawsuit called Gordan v. Massachusetts Mut. Life Ins. Co. Gordan challenged the actions of the fiduciaries of the MassMutual Thrift 401(k) Plan. It alleged that the individuals responsible for managing the plan “imposed unreasonable record keeping and administrative costs, selected unreasonably priced and imprudent investment options, caused the plan to engage in prohibited transactions, failed to administer the plan in accordance with its governing documents, and failed to monitor fiduciaries.” The Gordan case ended in 2016 with a settlement of over $30 million. This complaint, brought by plaintiff Judy Lalonde, a former MassMutual employee and a beneficiary of the plan, alleges that mismanagement has continued. “According to Plaintiff, on December 4, 2016, just hours after the Gordan settlement took effect, MassMutual began violating its ERISA obligations by once again failing to offer prudent investment options and failing to meet fiduciary obligations of loyalty.” Ms. Lalonde asserted claims for breaches of fiduciary duties and prohibited transactions. Defendants moved to dismiss the complaint in its entirety. Their reasons for dismissal were threefold. First, defendants argued that, as a member of the Gordan class, Ms. Lalonde had actual knowledge sufficient to trigger ERISA Section 1113(2)’s three-year statute of limitations, rendering her claims untimely. Second, they asserted that the settlement agreement in Gordan either bars Ms. Lalonde’s action entirely or restricts the complaint’s allegations to events occurring after December 3, 2020 (the date when the Gordan court’s period of continuing exclusive jurisdiction expired). Finally, defendants argued for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6), stressing Ms. Lalonde could not plausibly state claims upon which relief may be granted. Starting with its statute of limitations amuse bouche, the court agreed with defendants that Ms. Lalonde’s prohibited transaction claims were time-barred. “Plaintiff’s prohibited transactions claims all turn on the plan’s inclusion of proprietary funds in the investment lineup. According to Plaintiff, these funds were part of the plan as early as December 31, 2016.” The court also stated that it was clear from the face of the complaint that Ms. Lalonde had actual knowledge of these proprietary funds as she invested in them. More to the point, Ms. Lalonde, as a member of the class in the Gordan lawsuit which dealt with similar allegations of self-dealing, could not plausibly argue she was unaware the plan contained proprietary funds. Accordingly, the court dismissed the two prohibited transaction claims as barred by the statute of limitations. For an appetizer, the court indulged in the impact of Gordan on Ms. Lalonde’s litigation. Taking a first bite, the court disagreed with Ms. Lalonde’s reading of the settlement agreement’s release terms to “specifically exclude…claims arising from conduct outside of the Class Period.” The court criticized Ms. Lalonde’s reading of the text. It found that the plain text of the settlement did not support her position, and instead held that the relevant modifying phrase “claims arising from conduct outside of the Class Period” referred only to the prefatory clause’s mention of “labor or employment claims unrelated to the Plans.” Second, the court disagreed with Ms. Lalonde that the Gordan settlement agreement eliminated defendants’ fiduciary obligations in violation of ERISA Section 1110(a)’s anti-exculpatory provision. Defendants, the court found, remained bound by ERISA’s fiduciary obligations under the terms of the settlement. All the settlement did was channel the method of raising liability through the district court judge who approved the settlement. “Allowing Plaintiff to circumvent this mechanism and launch a collateral attack on the terms of the settlement would entangle plan fiduciaries in perpetual litigation.” Therefore, the court ruled that Ms. Lalonde could only “rely on conduct arising after December 2, 2020” in her complaint. Digging into the main course, the court explored the sufficiency of the breach of fiduciary duty claims under Rule 12(b)(6). This portion of the decision was your bog-standard discussion of insufficient benchmarks. In sum, the court relied on out-of-circuit decisions to guide it to the conclusion that Ms. Lalonde’s comparisons relied on the benefits of hindsight to reveal “a modest differential in performance,” insufficient to infer imprudence, disloyalty, or a failure to monitor. These claims were thus dismissed, without prejudice, and defendants’ motion was granted and wholly successful.

Jackson v. New Eng. Biolabs, Inc., No. 23-12208-RGS, 2024 WL 1436048 (D. Mass. Apr. 3, 2024) (Judge Richard G. Stearns). When it comes to Employee Stock Ownership Plans (“ESOPs”) one question presents itself over and over again – what is the fair market value for stock which is not actually on the market? The uncertainty of the answer is part of the problem and part of the reason why ESOPs are vulnerable to stock price manipulation. Even the fiduciaries of the New England Biolabs, Inc. Non-Voting Stock Ownership Plan, the defendants in this litigation, conceded in their motion to dismiss that “[t]here is continuing controversy surrounding the extent to which a lack of marketability discount should be applied in ESOP valuations.” In this action two former employees of New England Biolabs who participated in the plan have sued the fiduciaries on behalf of a putative class for breaches of fiduciary duties, prohibited transactions, and violations of ERISA’s anti-cutback provision. At the center of their action are amendments made to the ESOP in 2019 which “automatically convert[ed] to cash any NEB shares allocated to former employees.” In addition, the amendments eliminated the plan’s put options which had previously permitted a participant “within 60 days of their 60^th or 65^th birthday, to require NEB to purchase shares that ‘were distributed under Article 8’ of the Plan at their ‘fair market value.’” The compulsory divestments occurred one month after the 2019 amendments. According to the complaint, the timing was important. Both plaintiffs’ ESOP accounts were converted to cash and transferred to the plan’s dollar accounts in September 2019. The value of the stock had appreciated 27% between September 30, 2018, and September 30, 2019. “But because the 2019 Amendment was adopted before the end of the 2019 Plan Year, plaintiffs’ Employer Stock Accounts were liquidated using the considerably lower NEB share price as determined on September 30, 2018.” Thus, the compulsory divestments gave the plan liquid assets, and financially harmed the plaintiff retirees. Defendants moved to dismiss all counts. They argued that plaintiffs lacked standing and that their complaint failed to state claims upon which relief could be granted. The court granted in part and denied in part the motion to dismiss. Beginning with a discussion of standing, the court stated that it agreed with defendants that plaintiffs lacked standing to assert their put option claims. “Defendants argue that plaintiffs suffered no consequential injury in fact because plaintiff had taken no distributions of NEB stock before the 2019 Amendment was adopted. Plaintiffs do not allege that they received (or even requested) a stock distribution under Article 8. It follows that they had no right to exercise the put options. Plaintiffs thus lack standing to challenge the loss of the put options.” The court then moved on to evaluate the sufficiency of the remaining alleged claims. It first considered the prohibited transaction claims. These claims alleged that defendants amended the plan and purchased employees’ shares of stock to infuse the Plan with cash. The court found that plaintiffs plausibly alleged their Section 406 claims against the Trustee defendants and New England Biolabs for claims pertaining to 2019 but not 2017 or 2018. The court relied on the plan’s Form 5500s to conclude that to the extent the prohibited transaction claims implicate the 2017 and 2018 fiscal years, they were not sound, because the plan “had ample cash on hand to make the cash distributions without any sale of stock to NEB.” However, the court stated that the year 2019 was different because, unlike in 2017 and 2018, the plan did not have sufficient cash on hand to make the distributions requested in 2019 and so amended the plan to force stock purchases from retirees. Thus, to the extent the prohibited transaction claims pertained to the events of 2019, the court denied the motion to dismiss. Next, the court broke down the fiduciary breach claims into three principal allegations; (1) the failure of Trustee and Committee defendants to investigate the fair market value of the shares; (2) the failure of the Trustee and Committee defendants to adjust the valuation date of the stock price before liquidating the retiree’s accounts; and (3) the failure of New England Biolab to oversee the Trustee and Committee defendants. The court concluded that plaintiffs plausibly alleged that the fiduciaries failed to investigate fair market value but that the complaint did not state a claim for failing to re-calendar the valuation date. The court held that choosing a different valuation date would have required defendants “to ignore the unambiguous terms of the Plan document.” As for the derivative failure to monitor and co-fiduciary liability claims, the court allowed both to continue based on the underlying breach of fiduciary duty claim for failure to investigate the fair market value of the New England Biolab stock. The decision then discussed the anti-cutback claim. It found that New England Biolab did not violate the anti-cutback rule “by eliminating plaintiffs’ ability to hold NEB stock in the Plan,” nor by liquidating plaintiffs’ accounts. Finding no unlawful cutback, the court dismissed the Section 204(g) claim. Finally, the court examined plaintiffs’ requested forms of equitable relief – declaratory and injunctive relief –  pursuant to Section 502(a)(3). Here, the decision circled back to where it began, with another discussion of standing. “The problem for plaintiffs is that they lack standing to pursue these forms of equitable relief…The only viable claims that plaintiffs have involve alleged injuries to the Plan. The equitable relief that plaintiffs seek – a declaration that the 2019 Amendment is invalid as to them and an order requiring administration of the Plan consistent with the 2013 Plan Document – would redress injuries that plaintiffs, not the Plan suffered. The incongruity between the injury the Plan suffered and the harm this equitable relief would redress is fatal to the plaintiffs’ § 502(a)(3) claim.”

Second Circuit

Sarno v. Sun Life & Health Ins. Co. (U.S.), No. 22-CV-968 (JMA) (LGD), 2024 WL 1364341 (E.D.N.Y. Mar. 31, 2024) (Judge Joan M. Azrack). Plaintiff Cathleen Sarno seeks to redress harm caused by the actions of defendants Nikon Inc., the Nikon Inc. Employee Benefit Plan, and Sun Life & Health Insurance Company while her husband was dying from stage IV terminal pancreatic cancer. According to the complaint, defendants did not inform Mr. Sarno of the life insurance plan’s generous Accelerated Benefit, “which Mr. Sarno was qualified to receive and which would have provided a payment of $500,000 before his death.” The complaint further alleges that defendants frustrated and misled Mr. Sarno during their communications with him about his conversion rights and the deadline to submit his application to convert his policy to an individual policy. Because of these actions, the Sarno family lost out on hundreds of thousands of dollars in life insurance benefits. Defendants Nikon Inc. and the Nikon plan moved for dismissal. (Defendant Sun Life did not file a motion to dismiss.) Magistrate Judge Lee G. Dunst issued a report and recommended that the motion be granted and all the claims against the Nikon defendants be dismissed without prejudice. Ms. Sarno objected to the Magistrate’s report. In this order the court adopted in part and overruled in part the Magistrate’s recommendations. Specifically, the court dismissed Counts 1 and 2, the breach of fiduciary duty claims asserted under Section 502(a)(3), asserted against the plan. Additionally, the court dismissed the second fiduciary breach claim and the Section 502(a)(1)(B) benefit claim, against Nikon. To begin, the court disagreed with the Magistrate’s position that the (a)(3) claims were seeking relief duplicative of the (a)(1)(B) claim. To the contrary, the court agreed with Ms. Sarno that equitable forms of monetary relief, including surcharge and reformation, may be available to her to redress the harms alleged in the complaint, even if her claim for benefits under Section 502(a)(1)(B) is ultimately unsuccessful. Instead, the court dismissed Ms. Sarno’s causes of action for failure to state claims, pursuant to Rule 12(b)(6). Analyzing Count 1, the court concluded that the complaint plausibly alleges that Nikon representatives did not inform Mr. Sarno of the accelerated death benefit in breach of their fiduciary obligations to do so. As a result, the court denied Nikon’s motion to dismiss Count 1. However, the court dismissed both breach of fiduciary duty claims (Counts 1 and 2) as asserted against the Plan, because a plan is not a fiduciary. The court also dismissed Count 2 against Nikon. In contrast to the first breach of fiduciary duty claim, the second claim “primarily focused on the acts and omissions of Sun Life concerning Mr. Sarno’s attempts to convert his Group Policy.” The court ruled that Nikon wasn’t liable for Sun Life’s actions or omissions and that Ms. Sarno couldn’t state a claim against Nikon for failure to monitor based on the allegations in the complaint. Nevertheless, the court took the opportunity to clarify that should discovery uncover “any additional facts that would allow Plaintiff to plausibly allege that Nikon is liable under Count 2 the court may permit Plaintiff to amend the complaint accordingly.” Finally, the court dismissed the Section 502(a)(1)(B) benefit claim against Nikon, because the complaint failed to plausibly allege that Nikon was the party responsible for denying the claim for benefits. The court otherwise denied the motion to dismiss. All of the claims which were dismissed were dismissed without prejudice.

Ninth Circuit

Partida v. Schenker Inc., No. 22-cv-09192-AMO, 2024 WL 1354432 (N.D. Cal. Mar. 29, 2024) (Judge Araceli Martínez-Olguín). A former employee of defendant Schenker, Inc. and a participant in its 401(k) Savings and Investment Plan, plaintiff Diego Partida has filed this action on behalf of current and former employees, participants, and beneficiaries of the plan to rectify alleged fiduciary mismanagement and recover losses incurred by those actions. Mr. Partida maintains that the fiduciaries failed to employ a prudent process for selecting and maintaining the plan’s investment options, and that defendants invested in funds with high cost expense-ratios and poor performance histories. Defendants moved to transfer venue to the Eastern District of Virginia. Additionally, defendants filed a motion to dismiss, arguing Mr. Partida does not have standing. They also argued that dismissal was appropriate pursuant to Rule 12(b)(6) for failure to state a claim. The court ruled on both the motion to transfer and the motion to dismiss in this decision. To begin, the court considered the motion to transfer. Weighing the Jones factors, the court found transfer was not appropriate under the circumstances of the case, as it considered most of the factors neutral or weighing against transfer. The court stressed that ERISA is a federal statute, and a claimant may bring an ERISA action in any federal court with a connection to the plaintiff, the defendant, or the allegations at issue. It therefore decided against disturbing Mr. Partida’s choice of forum, his place of residence. Next, the court addressed defendants’ standing arguments. The court wrote that Mr. Partida alleged a concrete financial harm in his investments in one of the plan’s funds and that he therefore has a “direct and substantial interest” in his claims. As such, the court found Mr. Partida had Article III standing to pursue his causes of action. It expressed that defendants’ challenges on these topics would be better addressed during the class certification stage. “Whether Partida will ultimately be allowed to present claims on behalf of others who do not have identical interests is not a question of standing and will depend on ‘an assessment of typicality and adequacy of representation’ that the court does not determine at this stage.” With this threshold question addressed, the court moved on to its analysis of the sufficiency of Mr. Partida’s fiduciary breach claims. Regarding Mr. Partida’s allegations of imprudence, the court wrote, “[d]espite his assertions to the contrary, Partida ultimately attacks the funds’ underperformance, and fails to plead any facts showing how the process in selecting the investments or monitoring the funds was flawed.” Moreover, the court held that Mr. Partida did not sufficiently explain how the better performing funds were appropriate comparators as “he has not provided any factual allegations showing that those funds had the same aims, risks, or potential rewards such that they could be considered meaningful benchmarks.” Additionally, the court dinged the complaint for failing to allege that the challenged recordkeeping and investment fees were excessively costly “relative to the services they actually provided to the plan.” And with regard to allegations of misrepresentations, the court stressed that Partida did “not allege what the misrepresentations were or how he detrimentally relied on [them.]” Accordingly, the court felt that the complaint failed to state a claim for breach of the duty of prudence and therefore dismissed it. Turning to the allegations of disloyalty, the court once again took issue with the sufficiency of the pleadings. “The FAC includes only conclusory allegations that the Plan fiduciaries acted ‘in their own self interest’ and that ‘as a result of their conflicts of interest, Plan fiduciaries selected and retained in the Plan many investment funds that were more expensive than necessary and otherwise were not justified on the basis of their managers and historical performance’…This is insufficient (and) [t]he claim fails on this basis.” Finally, the court dismissed the derivative claim for failure to monitor as well as the prohibited transaction claim. The entirety of the dismissal was without prejudice however, and plaintiff was granted until April 30 to file an amended complaint to address these identified pleading deficiencies.

Disability Benefit Claims

First Circuit

Rogers v. Unum Life Ins. Co. of Am., No. 22-CV-11399-AK, 2024 WL 1466728 (D. Mass. Mar. 31, 2024) (Judge Angel Kelley). Scientist Robert A. Rogers commenced this action against Unum Life Insurance Company after his long-term disability benefit claim was denied. Dr. Rogers suffers from several physical, autoimmune, and psychiatric health conditions. He was granted short-term disability benefits, Family Medical Leave benefits (both the STD and FMLA benefits were administered by Unum), and was awarded disability benefits by the Social Security Administration. However, despite the lack of any evidence of medical improvement, Unum denied Dr. Rogers’ claim for long-term disability benefits. Importantly, Unum’s policies, which were set after a 2004 Regulatory Settlement Agreement with the Department of Labor, require it to give weight to a claimant’s treating physicians and that denial letters “must include specific reasons why the opinion is not well supported by medically accepted clinical or diagnostic standards and is inconsistent with other substantial evidence in the record.” Because Unum’s denials to Dr. Rogers did not comply with this policy, and because Unum failed to explain why it approved FMLA benefits while denying long-term disability benefits, the court denied Unum’s motion for summary judgment, even under deferential review. However, the court did not grant summary judgment to Dr. Rogers. Instead, the court did something a bit unusual. It said that it requires more information to determine whether the denial was an abuse of discretion. “Specifically, the Court requires the plan administrator produce an amended final determination letter that includes specific reasons why each attending physician’s opinion is not well supported by medically accepted clinical or diagnostic standards or is inconsistent with other substantial evidence in the record. Accordingly, the letter must address the FMLA finding.” Until the court receives this letter, essentially an improved and corrected denial, each party’s motion for summary judgment was granted without prejudice. 

Second Circuit

Khesin v. Hartford Life & Accident Ins. Co., No. 22-1766, __ F. App’x __, 2024 WL 1404576 (2d Cir. Apr. 2, 2024) (Before Circuit Judges Jacobs, Parker, and Perez). Plaintiff-appellant Daniel Khesin became disabled in 2017 from a central nervous system autoimmune disorder called neuromyelitis optica. Mr. Khesin stopped working and applied for disability benefits and waiver of life insurance premium benefits. Hartford Life & Accident Insurance Company initially denied both claims for benefits, but ultimately reversed its denial decision for the long-term disability benefits. Hartford paid these benefits for two years. However, when the benefit eligibility test changed under the plan from “own occupation” to “any occupation,” Hartford terminated the benefits. This time, Mr. Khesin’s internal appeal was not successful. Accordingly, he filed this action seeking judicial review of Hartford’s denials of his long-term disability and life waiver of premium benefits. Under arbitrary and capricious review, the district court affirmed both denials and granted judgment in favor of Hartford. Mr. Khesin appealed. The Second Circuit issued this short unpublished order affirming the district court’s judgments. The court of appeals found no clear error with the district court’s conclusion that “Hartford considered Khesin’s non-exertional limitations.” The court highlighted that Hartford made its decision relying on seven consultants who reviewed the medical records, and noted that these reviewers “considered and discussed Khesin’s subjective complaints of pain, fatigue, or lack of concentration.” This was sufficient, the Second Circuit found. Next, the appeals court rejected Mr. Khesin’s application of its Demirovic standard to his waiver of premium claim. In Demirovic v. Building Service 32 B-J Pension Fund, 476 F.3d 208 (2d Cir. 2006), the Second Circuit formulated a new standard requiring disability benefit plans with the phrase “any gainful employment” to “show adequate consideration of a claimant’s vocational characteristics” and perform a vocational analysis. The Second Circuit was unwilling to expand Demirovic’s logic to waiver of life insurance premium benefits. “Here, the ‘any reasonable job’ language in the LWOP plan is not analogous to the ‘any gainful employment’ language in the disability-benefits plan in Demirovic. As the district court correctly concluded: ‘LWOP benefits, unlike LTD benefits, do not implicate ‘the most important purpose of ERISA,’ because they do not provide income insurance like LTD benefits.’” Concluding that life waiver of premium benefits fundamentally differ from long-term disability benefits, the Second Circuit found the district court did not err in ruling that Hartford was not required to obtain a vocational analysis. Finally, the court of appeals disagreed with Mr. Khesin that the district court erroneously relied on a number of post-hoc rationalizations. For these reasons, the Second Circuit was satisfied that the lower court appropriately applied arbitrary and capricious review to the administrative record and thus did not err in granting judgment in favor of defendant on both claims.

Fourth Circuit

Balkin v. Unum Life Ins. Co., No. GLS 21-1623, 2024 WL 1346789 (D. Md. Mar. 29, 2024) (Magistrate Judge Gina L. Simms). Plaintiff Kelly Balkin, an associate attorney at Hogan Lovells, US, LLP, filed this lawsuit under ERISA Section 502(a)(1)(B) to challenge defendant  Unum Life Insurance Company’s denial of her claim for long-term disability benefits. Ms. Balkin maintained that she is disabled from performing the physical and cognitive requirements of her profession because of her autoimmune symptoms caused by Crohn’s disease, fibromyalgia, and chronic fatigue syndrome. She averred Unum’s denial was “riddled with flaws” and shifting rationales and was the result of bias. Ms. Balkin and Unum each moved for judgment in their favor under Rule 56 review. In this decision the court ruled in favor of Unum and entered judgment in its favor. First, the court found that Unum had reserved its rights to later assert the pre-existing condition limitation as a denial basis. Second, although Ms. Balkin provided the court with statistical data about the bias of Unum’s reviewing doctors – including claimant disability benefit approval rates ranging from 0 to 4.5% – the court concluded that “statistics of denial rates alone [are] not probative” and found Ms. Balkin did not offer additional evidence to convince it that the bias “actually affected the decision to deny her benefits.” Further, the court agreed with Unum that Ms. Balkin’s self-reported pain levels did not match objective medical findings, especially as she did not appear to her own doctors to be in “acute distress.” Nor was the court persuaded that Unum needed to perform in-person exams on Ms. Balkin in order to assess her or that it needed to hire specialists in rheumatology or gastroenterology to review her files. All told, the court was convinced that Unum’s review was administered fairly and the result of a principled and deliberate process. Accordingly, the court concluded that substantial evidence supported the denial. It also held that Unum’s vocational assessment was appropriate, and properly considered Ms. Balkin’s brain fog. Finally, on the medical side of the review, the court found Unum reviewed and discussed all pertinent medical information. Thus, the court concluded “Unum did not abuse its discretion in finding that Plaintiff failed to demonstrate her disability under the Plan,” and so upheld the denial under deferential review. For these reasons, Ms. Balkin was unsuccessful in her motion for judgment to overturn the adverse benefit decision.

Eighth Circuit

Riggs v. Hartford Life & Accident Ins. Co., No. 4:22-cv-1017-DPM, 2024 WL 1346512 (E.D. Ark. Mar. 29, 2024) (Judge D.P. Marshall Jr.). For five years plaintiff Brenda Riggs received long-term disability benefits under her employer-sponsored disability plan. Notably, Ms. Riggs received continuous benefits during both the plan’s “own occupation” and the “any occupation” standards. Her pain and limitations related to her chronic cervical spinal conditions had not improved or changed in the summer of 2022 when Hartford Life & Accident Insurance Company and DXC Technology Services LLC terminated her benefits. Instead, what changed were the plan’s claim administrator and plan sponsor. The claim administrator Sedgwick was replaced with Hartford and the plan sponsor changed after Ms. Riggs’ employer, Hewlett Packard, merged with DXC Technology. In this action Ms. Riggs challenged Hartford and DXC’s decision to terminate benefits and moved for judgment on the administrative record. Her motion was granted, judgment was found in her favor, and defendants were ordered to reinstate Ms. Riggs’ benefits. As a preliminary matter, the court declined to resolve the parties’ dispute over the appropriate review standard. Concluding that Ms. Riggs was entitled to her benefits under either de novo or arbitrary and capricious review standard, it opted to review for an abuse of discretion. The court found one: “Ignoring relevant evidence is an abuse of discretion.” While Ms. Riggs was able to provide a tremendous amount of evidence to demonstrate the severity of her disability, including results of a functional capacity evaluation, the opinions of her treating medical providers, a vocational specialist report finding no jobs suitable for her, and the awards of disability benefits from both the Social Security Administration and the ERISA plan for the previous five years, defendants were unable to provide much convincing evidence to the contrary. In fact, one of the plan’s own reviewing doctors wrote that Ms. Riggs “has significant and verified degenerative disease with supporting imaging findings and the requirement for continual pain intervention.” This same doctor even determined that there was “no expectation at this point that the claimant’s condition will improve.” However, despite these findings, the reviewing doctor concluded that Ms. Riggs could return to sedentary work without restrictions. Given the imbalance between the strength of each party’s evidence, the court held that defendants failed to offer substantial evidence to support their decision and accordingly overruled the benefit denial. 

Wilkins v. Ascension Health Long-Term Disability Plan, No. 4:22-cv-00428-SEP, 2024 WL 1367050 (E.D. Mo. Mar. 31, 2024) (Judge Sarah E. Pitlyk). March 2020 was an uncertain time. A novel and mysterious coronavirus was spreading rapidly and people across the world were dying in large numbers. Plaintiff Kimberly Wilkins, a nurse employed at St. John’s Hospital in Warren, Michigan, was anxious and afraid. Her anxiety became so severe that on March 27, 2020, she stopped working and applied for disability benefits under her ERISA-governed plan. From March to September of 2020, Ms. Wilkins received short-term disability benefits while under the care and treatment of a team of psychologists. After her short-term disability benefits ran out, Ms. Wilkins attempted to return to work. She found she could not and applied for long-term disability benefits. Her claim was approved by Sedgwick, the claims administrator of the plan, which concluded that Ms. Wilkins could not safely perform the essential duties of her job “because of panic attacks, difficulty concentrating, limited focus, and impaired memory.” Ms. Wilkins continued to receive benefits up until February 15, 2021. At that time Sedgwick concluded that Ms. Wilkins no longer qualified for benefits as her medications were providing her with some relief and the “available medical information does not support clinical severity to preclude you from performing the essential duties of your own occupation as a Registered Nurse.” Ms. Wilkins commenced this litigation, following an unsuccessful administrative appeal, seeking to reinstate her long-term disability benefits. The parties each moved for summary judgment. The court in this order granted the Plan’s motion for judgment on Ms. Wilkins’ benefit claim, denied the Plan’s motion for judgment on its overpayment counterclaim, and denied Ms. Wilkins’ summary judgment motion in its entirety. To begin, the court found that abuse of discretion review applied because the claims administrator had discretionary authority to determine benefits eligibility. Under the “lenient standard” afforded by arbitrary and capricious review, the court found the decision to terminate benefits “reasonable and supported by substantial evidence,” and that “no procedural irregularities in the claim processing… suggest an abuse of discretion.” In particular, the court highlighted the fact that Sedgwick relied on “six independent medical-record reviews conducted by five doctors from a range of specialties that covered Plaintiff’s medical conditions,” and that all of the reviewing doctors “concluded Plaintiff was not disabled and could perform her duties as a registered nurse.” It also stressed that the Plan was not under any obligation to favor the opinions of Ms. Wilkins’ team of doctors over those of the reviewing doctors. It was also important to the court that the reviewing doctors did not ignore evidence of Ms. Wilkins’ disability and thoroughly explained points of disagreement. Based on these findings, the court granted summary judgment in favor of defendant on Ms. Wilkins’ claim for benefits. However, it held that genuine disputes of material fact pertaining to the status of Ms. Wilkins’ Social Security Administration award precluded summary judgment for the Plan on its counterclaim seeking alleged overpayment of benefits. Without specific information showing whether Ms. Wilkins kept her SSA award “separate from her general assets or dissipated the entire fund on nontraceable assets,” the court stated that it could not grant summary judgment on the counterclaim.

Lundberg v. UNUM Life Ins. Co. of Am., No. 22-cv-2188 (ECT/DLM), 2024 WL 1461433 (D. Minn. Apr. 4, 2024) (Judge Eric C. Tostrud). Plaintiff Bradley J. Lundberg sued Unum Life Insurance Company of America seeking a court order reinstating his terminated long-term disability benefits. Mr. Lundberg got just that in this decision from the court ruling on the parties’ cross-motions for judgment on the administrative record under de novo review. Mr. Lundberg had worked for Blue Cross and Blue Shield of Minnesota as a “senior recovery specialist.” He stopped working in 2018 due to “medically complex” symptoms from a neuro-ophthalmological disorder called anterior ischemic optic neuropathy (“AION”). Mr. Lundberg’s condition caused deteriorating ocular health, chronic headaches, disequilibrium problems resulting in falls (one of them major), and an array of vision problems including irregular eye movements and what one doctor described as functional blindness. Unum agreed that Mr. Lundberg’s symptoms prevented him from performing his sedentary work reading documents and using the computer. It approved his claim for benefits and paid them for more than three years. However, in 2021, Unum determined that Mr. Lundberg had improved and was no longer disabled. The court rejected Unum’s termination decision in this order, holding that “a preponderance of the evidence supports [Mr. Lundberg’s] benefits claim.” It stressed that the record was full of evidence that “Mr. Lundberg suffered from ongoing, functionality-impairing symptoms from AION when Unum terminated benefits.” Thus, the court held Unum failed to provide sufficient evidence to support its position that Mr. Lundberg’s condition improved so as to be non-disabling. To the contrary, it was clear to the court that the medical record established that Mr. Lundberg’s symptoms prevented him from reading for longer than five to ten minutes or using a computer for more than fifteen minutes. Based on the totality of the record, the court awarded judgment in favor of Mr. Lundberg and reinstated his benefits. The parties were directed to confer on an appropriate award of damages, including the amount of benefits due, the amount of prejudgment interest, and the amount of attorneys’ fees and costs.

Discovery

Eighth Circuit

Hahn v. Unum Life Ins. Co. of Am., No. 4:23-CV-750 RLW, 2024 WL 1463705 (E.D. Mo. Apr. 4, 2024) (Judge Ronnie L. White). While employed as a psychiatric nurse, plaintiff Tonya Hahn was assaulted by a patient. The injuries she sustained from the assault rendered her  disabled. In this action, Ms. Hahn seeks judicial review of Unum Life Insurance Company of America’s termination of her long-term disability benefits in February 2022. Ms. Hahn asserts claims for benefits and fiduciary breach. As part of this action, Ms. Hahn has moved for limited discovery, seeking written discovery on Unum’s internal claims handling practices and those of its medical reviewers, as well as four depositions, including the deposition of a Rule 30(b)(6) witness. Unum opposed the discovery motion. In the alternative, Unum argued that written discovery would be sufficient to the extent the court agreed Ms. Hahn’s discovery was warranted. Unum was unsuccessful in eliminating discovery altogether, but it did successfully persuade the court to limit the scope of discovery. The court allowed discovery into topics of Unum’s conflict of interest, its claims handling processes, and its compliance with ERISA regulations. The court did not allow for any extra-record discovery into whether Unum considered Ms. Hahn’s medical records. It also agreed with Unum that limiting discovery to written discovery seemed appropriate, and therefore denied, without prejudice, Ms. Hahn’s deposition requests. Finally, the court held that discovery pertaining to Ms. Hahn’s breach of fiduciary duty claim would be helpful and thus granted her discovery motion for interrogatories as related to the determination of whether Unum breached its fiduciary duties. Therefore, Ms. Hahn’s motion was granted in part and she is permitted to conduct limited discovery. To the extent the motion was denied, the denials were without prejudice. The court held that Ms. Hahn may file a renewed discovery motion to conduct depositions, after conducting written discovery, “on the basis that good cause for such depositions exists.”

ERISA Preemption

Second Circuit

De Wong v. Cheng, No. 23-CV-8666 (VSB), 2024 WL 1465356 (S.D.N.Y. Apr. 4, 2024) (Judge Vernon S. Broderick). Plaintiff Yuet Ngor Cheung De Wong filed a complaint in New York state court against her son’s former employer, Altice USA Inc., the insurer of his life insurance policy, The Lincoln National Life Insurance Company, and his girlfriend, Laurine Lu Cheng. Ms. Wong’s son, Aquilino Wong, died in March 2023. In her complaint, Ms. Wong alleges that she was wrongly removed as a beneficiary of Mr. Wong’s life insurance benefits because of undue influence by Ms. Cheng. Ms. Wong’s complaint included five causes of action including conversion, unjust enrichment, and breach of contract. Defendants removed the state lawsuit to federal court. Ms. Wong then voluntarily dismissed Lincoln. Defendant Altice moved to dismiss for failure to state a claim upon which relief can be granted. Rather than dismiss the action, the court remanded to state court. It concluded that because Ms. Wong was not a named beneficiary of the life insurance policy at the time of her son’s death, she lacked standing to bring a claim under ERISA Section 502. Accordingly, the court found that the state law claims were not completely preempted by ERISA, and that it lacked subject matter jurisdiction over the case. Finally, the court declined to exercise supplemental jurisdiction over the remaining state law claims, and instead chose to remand the action back to New York state court. The motion to dismiss was thus denied.

Ninth Circuit

Goel v. United Healthcare Servs., No. 2:23-cv-10071-HDV (SSCx), 2024 WL 1361800 (C.D. Cal. Mar. 29, 2024) (Judge Herman D. Vera). Dr. Sanjiv Goel M.D. provided emergency cardiovascular surgery to a patient insured by a self-funded ERISA-governed welfare plan administered by defendant United Healthcare Services, Inc. Dr. Goel was paid some amount for the services he provided, but was not paid an amount commensurate with what he believes is appropriate compensation for the surgery. In this action Dr. Goel seeks to address United’s underpayment. Dr. Goel filed his lawsuit in California state court and asserted causes of action under state law. United removed the case to federal court. Dr. Goel in response moved to remand back to state court. Meanwhile, Untied moved for dismissal of the action. The court’s analysis of both motions centered on ERISA preemption. Applying the two-part Davila test, the court concluded that (1) Dr. Goel could have pled an ERISA cause of action, and (2) Dr. Goel could not assert any independent legal duty outside of ERISA. Although Dr. Goel argued that his state law unfair business practices claim for violation of the Knox-Keene Act provided an independent legal duty, the court disagreed because United is a plan administrator and not a health care service plan, meaning it is not a party subject to the Knox-Keene Act. Finally, because the court determined that all of Dr. Goel’s state law causes of action are preempted by Section 514(a) of ERISA, it granted United’s motion to dismiss them. However, dismissal was without prejudice, and Dr. Goel may amend his complaint to plead claims under ERISA.

Medical Benefit Claims

Fourth Circuit

Faren v. ZeniMax Online Studios, LLC, No. EA-23-1270, 2024 WL 1374778 (D. Md. Mar. 29, 2024) (Magistrate Judge Erin Aslan). From 2018 to 2022 plaintiff Leona Faren worked as a media artist for defendant ZeniMax Online Studios, LLC. Her tenure at ZeniMax turned ugly after her supervisor outed her as transgender in January 2021. Over the next year, Ms. Faren faced daily harassment. She reported these issues to ZeniMax’s HR department. The situation resolved the following January, when ZeniMax offered Ms. Faren a severance agreement. Ms. Faren signed the severance agreement on May 13, 2022, terminating her employment at ZeniMax. The terms of the agreement provided Ms. Faren with 18 months of continuation coverage for her medical, dental, and vision benefits under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). Problems with Ms. Faren’s COBRA benefits are the subject of this litigation. Essentially, Ms. Faren states that she elected continued converge and paid her premiums, but her insurance was cancelled and the situation was never remedied. Ms. Faren was ultimately left uninsured and saddled with out-of-pocket medical costs from medically necessary surgeries and prescription drugs. In this action Ms. Faren asserted causes of action under ERISA Section 510 for interference and retaliation, Section 404 for breach of fiduciary duty, and Section 601 for violations of COBRA. ZeniMax moved for dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The court granted ZeniMax’s motion, without prejudice, in this order. First, the court agreed with ZeniMax that Ms. Faren could not state claims under Section 510 because the complaint lacked details that ZeniMax had a specific intent to interfere or retaliate. “Ms. Faren alleges that [defendants] failed to provide her with continuation coverage and retroactively canceled her insurance ‘to avoid bearing the cost of her medical expenses, and in particular, those procedures relating to her transition.’…These allegations, without more, are ‘nothing more than [Ms. Faren’s] own subjective speculation.” Turning to the fiduciary breach claim, the court held that Ms. Faren failed to plead “facts alleging the [ZeniMax] acted as a fiduciary within the meaning of ERISA, i.e., that [it] controlled or managed the plan or performed specified discretionary functions with respect to the plan. Furthermore, it is evident that Ms. Faren’s breach of fiduciary duty claim is little more than a repackaged claim for benefits that is not cognizable as pleaded in the Amended Complaint.” Regarding COBRA, the court wrote “denial of benefits…is not cognizable under the COBRA enforcement provisions.” Because defendants provided Ms. Faren with the required COBRA notice and timely responded to her information requests, the court found “no factual basis for imposition of penalties under Section 503(c)(1). Lastly, the court stressed that even if the amended complaint pled facts sufficient to allege plausible claims, the four counts would “nevertheless be dismissed because they fail to state plausible claims that are entitled to relief.” Once again, the court maintained that Ms. Faren was seeking relief probably remedied under Section 502(a)(1)(B), and not under the catchall provision 502(a)(3). For these reasons, the entirety of Ms. Faren’s complaint was dismissed.

Pension Benefit Claims

Third Circuit

Rajpurohit v. Becton, Dickinson, & Co., No. 22-cv-7612 (MEF)(CLW), 2024 WL 1477652 (D.N.J. Apr. 5, 2024) (Judge Michael E. Farbiarz). A former employee alleges in this action that he was wrongfully denied a payout from a 401(k) account maintained by his former employer. He has sued his former employer, the plan, the plan’s committee, and its agent alleging defendants breached their fiduciary duties to maintain records in accordance with ERISA and that they also breached their fiduciary duties by forging a document which purported to show that he had already been paid out on his account. In addition, plaintiff brought a Section 502(a)(1)(B) claim for benefits, and a 502(g) claim for attorneys’ fees. Defendants moved to dismiss. They argued that the claims were untimely under the relevant statutes of limitations. They also challenged the merits of the claims. The motion to dismiss was largely unsuccessful. First, the court rejected the untimeliness arguments. Accepting the allegations of the complaint, the court agreed with the plan participant that issues he had in 2011 with an unrelated pension plan did not mean that he had actual knowledge that this plan would have record-keeping issues as well or that his 401(k) account would go “entirely missing.” Furthermore, the court concluded that the “last act” was not some fiduciary breach that took place long ago, but rather “a broad, long-standing record-keeping breach – that switched from passive (the Plaintiff’s 401(k) account was lost) to active (when the Plaintiff was provided a ‘false’ document about his 401(k), to obscure that it had been lost.)” Thus, the court determined the last act happened when defendants provided plaintiff with the false document in 2021, making his complaint timely. Turning to the merits, the court began with the breach of fiduciary duty claim, and determined that the claim was plausible as alleged. However, the court dismissed the claim against the plan, as a plaintiff may not sue a retirement plan itself for a breach of fiduciary duty claim. The court also dismissed the claim as alleged against the former employer and the agent. It concluded that the complaint did not adequately allege facts to establish that either of these defendants were fiduciaries. Thus, plaintiff’s claim of fiduciary breach remained only against the committee – the entity granted full discretionary authority and charged with administering the plan. Next, the court analyzed the wrongful denial of benefits claim and determined that it too was sufficient to withstand a Rule 12(b)(6) challenge. However, much like the fiduciary breach claim, the court dismissed the Section 502(a)(1)(B) claim against certain defendants, namely the agent and the employer. It determined that there were no meaningful allegations as to the agent, and that the former employer was not the proper entity to sue for wrongful denial of benefits because it was not alleged to be the plan administrator. Finally, because plaintiff was left with both his breach of fiduciary duty and his benefit claim, the court declined to dismiss the attorneys’ fee claim as it “is too early to know who the prevailing party might be.” For these reasons, defendants’ motion to dismiss was granted in part and denied in part as detailed above.

Sixth Circuit

Clemons v. Norton Healthcare Inc., No. 3:08-cv-00069-RGJ, 2024 WL 1366833 (W.D. Ky. Mar. 29, 2024) (Judge Rebecca Grady Jennings). Since 2008, the plaintiff-retirees of Norton Healthcare, Inc. who participate in its cash balance retirement plan have been litigating the calculation of their pension benefits, which they believe were unpaid in violation of the terms of the plan and ERISA. At one point in time, the district court found for plaintiffs on liability. But that decision was undone by the Sixth Circuit in 2018, when it ruled that the plan’s language was “patently ambiguous” and that the ambiguity could not be resolved in favor of the plaintiffs through the use of contra proferentum given Firestone deference. Your ERISA Watch summarized the Sixth Circuit’s ruling as our notable decision on May 14, 2018. The district court’s findings of liability and damages award were vacated by the court of appeals decision, and many remaining legal and contractual issues were remanded for the district court to determine. The parties subsequently cross-moved for summary judgment. In this byzantine decision. the court granted in part and denied in part each party’s summary judgment motion. The court ruled in favor of defendants on all issues involving the calculation of the class members’ monthly retirement income, but ruled partially in favor of each party on issues related to whether the lump-sum benefits were the actuarial equivalent of the basic-form benefit and whether the actuarial assumptions used by Norton were valid. Regarding Norton’s calculation of the monthly retirement income and its position that the 2004 amendments to the plan didn’t eliminate the early retirement reducers for grandfathered benefits, the court wrote, “Applying Norton’s interpretation to the mechanics of the Plan is a frustrating exercise, but it has a reasonable basis. § 4.05(b), the definition of early retirement, and the cross-reference to 4.05(b)(5) in 4.02(b)(6) would be rendered meaningless otherwise. Thus, a reasonable factfinder could not find Norton’s interpretation of the Plan arbitrary and capricious, and the Court must defer to it. Summary judgment is Granted in favor of Norton on this issue.” However, Norton was not so successful when it came to issues of actuarial equivalence. The court found that the Plan and ERISA require lump sum benefits to be actuarially equivalent to the basic form of benefits. Under the terms of the Plan, the basic form benefit guarantees monthly benefit payments for sixty months (plus the remaining length of the retirees’ life beyond that initial 5-year guaranteed period.) However, the court found that the lump-sum payment did not consider the sixty-months certain feature. Thus, the court concluded, not “including the value of the sixty-months certain feature is a violation of ERISA and the Plan.” As a result, the court ordered “an upward adjustment of 1.5%” in calculating the actuarial equivalent lump-sum to ensure “retiring members get the value of the sixty-month-certain benefit.” Plaintiffs were accordingly granted summary judgment on this one issue. In all other respects, the court concluded that the calculations were compliant with ERISA’s actuarial equivalence requirements and summary judgment was accordingly granted to defendants on the remaining disputes over the calculation formula. Thus, at the end of the 16-year delay, the retirees were largely unsuccessful in their challenge, while Norton, thanks to judicial deference, was mostly able to preserve its interpretation of the convoluted plan language.

Pleading Issues & Procedure

Second Circuit

Farah v. Emirates, No. 21-CV-05786-LTS, 2024 WL 1374778 (S.D.N.Y. Mar. 31, 2024) (Judge Laura Taylor Swain). In the spring of 2020, during the height of the COVID-19 lockdowns, many airlines furloughed their employees. In April 2020, Emirates Airlines furloughed much of its workforce, including named plaintiffs Kayenat Farah, Joseph Cammarata, Charlotte Armstrong, and Violet Simpson. Then, in the summer of 2020, these same workers were laid off, their employment permanently terminated. Following their terminations, plaintiffs submitted claims for benefits under the Emirates Severance Plan. Their claims were denied. Plaintiffs believe that they were discriminated against and treated differently from Emirates’ non-American employees and former employees. On behalf of themselves and similarly situated individuals, plaintiffs have sued Emirates Airlines and the Severance Plan, asserting claims under ERISA, New York’s WARN Act, Title VII, and New York’s Human Rights Law. Defendants moved to dismiss and moved to strike plaintiffs’ jury demand. Their motions were entirely denied by the court in this decision. To begin, the court analyzed the sufficiency of plaintiffs’ three ERISA claims: (1) a claim to recover benefits; (2) a claim for breach of fiduciary duties of prudence and loyalty; and (3) a claim for violating statutory filing requirements and failing to furnish information to plan participants upon written request. First, drawing inferences in favor of plaintiffs “and accounting for the limited information available to them without the benefit of discovery,” the court concluded that “the allegations could support an inference that the Severance Plan was an ERISA-governed plan. Therefore, the Court finds that Plaintiffs have adequately pled claims for relief under ERISA for denial of benefits, breach of fiduciary duty, and failure to furnish plan information upon written request. Defendants’ motion to dismiss counts 1-3 of the Amended Complaint is accordingly, denied.”  The decision went on to examine the state and federal discrimination claims, and found that they also satisfied Rule 8 pleading. Finally, the court denied as premature the motion to strike the jury demand, concluding that Emirates failed to establish a prima facie case for immunity as it is not itself owned by a foreign state but is instead owned by an intermediary corporation “which is, in turn, controlled by the Government of Dubai.”

Boyette v. Montefiore Med. Ctr., No. 22-cv-5280 (JGK), 2024 WL 1484115 (S.D.N.Y. Apr. 5, 2024) (Judge John G. Koeltl). Plaintiffs Sheila A. Boyette and Tiffany Jiminez brought this putative class action against the Montefiore Medical Center, the Board of Trustees of Montefiore, the TDA Plan Committee, and individual fiduciary defendants for violating their duty of prudence by failing to leverage the plan’s great size to obtain lower costs and reduce recordkeeping and administrative expenses to participants. Plaintiffs’ complaint was previously dismissed by the court. Your ERISA Watch summarized the court’s dismissal without prejudice in our November 22, 2023 newsletter. In response, plaintiffs moved pursuant to Federal Rule of Civil Procedure 15(a)(2) for leave to file a Third Amended Complaint. The court denied the motion for leave to amend in this decision. Broadly, the court concluded that granting leave to amend “would be futile because substantively the same defects present in the Second Amended Complaint continue to exist in the proposed Third Amended Complaint, except for the Court’s conclusion that both plaintiffs lack standing…In any event, because the Third Amended Complaint fails to assert a claim for relief that is plausible on its face… the plaintiffs’ Third Amended Complaint fails on the merits.” Much like the court’s analysis of plaintiffs’ earlier pleadings, the court was not satisfied with the proposed amended complaint’s lack of specificity detailing what services were provided by the comparator plans versus those provided by the Montefiore Plan’s recordkeepers. As it felt that all of the same substantive problems remained in the amended pleading, the court rejected the proposed amended complaint and denied plaintiffs’ motion.

Third Circuit

Burns v. Cooper, No. 23-5086, 2024 WL 1385935 (E.D. Pa. Apr. 1, 2024) (Judge Juan R. Sanchez). In 2019, plaintiff Jamiylah Burns obtained a $75,000 judgment against her ex-husband, defendant Blakely Cooper, in a state court defamation action. Although the judgment was upheld on appeal, Mr. Cooper has not paid. He claims he is unable to do so. Ms. Burns believes Mr. Cooper is using his ERISA-governed 401(k) plans as a way to shield his money from the judgment he owes her. “Burns contends Cooper has ‘repeatedly fluctuated his 401(k) contributions’ to both his Merck plan and his 401(k) plan with is former employer, Pfizer, Inc., ‘for the purpose of evading payment of the money owed to her.’” As a result, Ms. Burns initiated execution proceedings in Montgomery County Court and served writs of execution upon Merck, Sharp & Dohme LLC, and Pfizer pursuant to Pennsylvania law. Garnishee Merck moved to dismiss and quash the writ of execution Ms. Burns filed. The court granted its motion finding the funds exempt from garnishment and execution under ERISA’s anti-alienation provision. It held that Ms. Burns’ case did not fall under any one of the “very few exceptions” to 29 U.S.C. § 1056(d), stressing that “the Supreme Court has made clear that approval of any generalized equitable exceptions to the anti-alienation provision are not appropriate.” Moreover, the court found Ms. Burns’ state law claims were preempted under Section 514 as they obviously relate to an employee benefit plan. Thus, finding no grounds to disregard the anti-alienation provision, the court concluded that Mr. Cooper’s 401(k) funds were exempt from execution and therefore granted the motion to dismiss and quash the writs of execution.

Fourth Circuit

Gasper v. EIDP, Inc., No. 3:23-CV-00512-FDW-SCR, 2024 WL 1446594 (W.D.N.C. Apr. 3, 2024) (Judge Frank D. Whitney). Plaintiff David Gasper sued E.I. DuPont de Nemours and Company, Corteva, Inc., the Pension and Retirement Plan, and the Benefits Plans Administrative Committee under ERISA after his claim for pension benefits was denied. Mr. Gasper’s action hinges on the effect of a 2013 family court domestic relations order on Mr. Gasper’s pension benefits. In his complaint, Mr. Gasper asserted claims under ERISA Sections 502(a)(1)(B), (a)(3), 104(b)(4), and 502(g). Defendants moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) on Mr. Gasper’s second cause of action, asserted under Section 502(a)(3). They argued that Mr. Gasper has an appropriate remedy available under Section 502(a)(1)(B) which makes his equitable relief claim under Section 502(a)(3) improper. The court agreed and granted the motion. “Plaintiff’s second claim for relief simply repackages the same argument for a single injury. Plaintiff alleges no additional facts or injury other than the wrongful denial of benefits, and Plaintiff’s requested relief under ERISA § 502(a)(3) ‘would all serve the ultimate purpose of allowing plaintiff… to recover wrongfully denied benefits.’” Accordingly, the court held that the relief Mr. Gasper sought under Section 502(a)(3) did not qualify as equitable relief and was instead nothing more than a claim for benefits in disguise, duplicative of his Section 502(a)(1)(B) claim. His second cause of action was therefore dismissed as defendants requested.

Seventh Circuit

Hensiek v. Board of Dirs. of Casino Queen Holding Co., No. 3:20-cv-377-DWD, 2024 WL 1345641 (S.D. Ill. Mar. 29, 2024) (Judge David W. Dugan). Everyone is trying to deflect responsibility in this casino stock ESOP class action. The selling shareholder defendants and the fiduciary defendants are each trying to pass the buck to the other by asserting, among other things, claims of indemnity, negligent misrepresentation, and contribution. And, as pertinent here, they have also each moved to dismiss the other third-party complaints asserted against them. In short, none of the defendants wants to be left holding the hot potato when the music finally stops and judgment comes down. After all, as Your ERISA Watch has reported in our previous coverage of this case, plaintiffs’ allegations of wrongdoing here are particularly egregious (including a 17.5% interest rate of the ESOP’s debt to the holding company and the 15-year payment plan of the $210 million real estate transaction for property valued at $12.1 million). However, the court was having none of it, as it made clear in this decision denying the motions to dismiss. This case necessarily presents fact-intensive issues that need to be proved and resolved after discovery, the court held. Who knew what when, who was motivated by what, and who is ultimately responsible and liable for the alleged harm, are all questions with answers that will just have to wait. The same was true for the statute of limitations and ERISA preemption questions. So too for damages, which the court again stressed is a topic that is not appropriately addressed at this stage of litigation. Accordingly, the court denied the motions to dismiss the third-party complaints, concluding the allegations satisfied pleading requirements. Like the defendants, Your ERISA Watch readers will also just have to wait to see what happens next. After all, litigation, much like Casino Queen’s riverboat activities, is always a gamble. But at least when it comes to ERISA, the house does not always win.

Ninth Circuit

Furst v. Mayne, No. CV-20-01651-PHX-DLR, 2024 WL 1366884 (D. Ariz. Mar. 31, 2024) (Judge Douglas L. Rayes). On March 3, 2023, the court granted the plaintiff’s motion for leave to amend his breach of fiduciary duty action under ERISA to add a common law breach of fiduciary duty claim, pled in the alternative, in the event the plan at issue was found not to be governed by ERISA. The time for filing the amended pleading came and went. Plaintiff missed the 14-day deadline. Then, during a telephonic conference with the court on May 25, 2023, the plaintiff realized his error and later that day filed the amended complaint, asking the court to retroactively extend the deadline to accept the amended complaint as timely. In this decision the court denied the motion for retroactive extension and granted defendants’ motion to strike the tardy amended complaint, leaving the original complaint operative. Plaintiff did not provide any compelling reason for missing the deadline. The court stated that Ninth Circuit and Supreme Court precedent agree that “inadvertence, ignorance of the rules, or mistakes construing the rules” of unambiguous civil procedures and deadlines does not constitute “excusable neglect.” While the court acknowledged that plaintiff’s mistake was not the product of bad faith, it nevertheless concluded that defendants would be prejudiced by accepting the amended complaint. “Plaintiff filed his amended complaint 69 days late…To permit Plaintiff to inject a new claim with requests for relief into the case now would necessitate reopening discovery and probably a second round of dispositive motions. Thus, in addition to being unjustified, Plaintiff’s delay in filing his amended complaint would prejudice Defendants, upend the case management schedule, and protract this litigation.” On the other hand, the court found that plaintiff would not be prejudiced by denying his motion. It made clear that because the parties agree ERISA governs the plan, the common law claim pled in the alternative would be preempted, rendering it unnecessary. In sum, the court did not find this to be a “situation in which the Court should excuse a party’s neglect to avoid an injustice.”

Provider Claims

Ninth Circuit

FHMC LLC v. Blue Cross & Blue Shield of Ariz., No. CV-23-00876-PHX-GMS, 2024 WL 1461989 (D. Ariz. Apr. 3, 2024) (Judge G. Murray Snow). Emergency healthcare provider plaintiff FHMC, LLC sued Blue Cross and Blue Shield of Arizona, Inc. under state law and three federal statues – the Patient Protection and Affordable Care Act of 2010 (“ACA”), the No Surprises Act, and ERISA – to challenge Blue Cross’ alleged systemic underpayment of medical bills. Blue Cross moved to dismiss the complaint for failure to state a claim. Its motion was granted in this order. The court held neither that the ACA nor the No Surprises Act provide a private right of action for healthcare provider to sue an insurance company for underpayment of benefits. The court also determined that FHMC did not sufficiently state claims under ERISA, as it failed to identify the existence of specific ERISA plans or point to provisions within ERISA plans entitling them to benefits. Rather, FHMC pled only that their claims “may involve insurance plans under” ERISA. Accordingly, the court dismissed all of the federal claims. The state law claims were also dismissed, as the court declined to exercise supplemental jurisdiction over them. Dismissal of FHMC’s complaint was without prejudice.

Statute of Limitations

Second Circuit

Knight v. Int’l Bus. Machs. Corp., No. 22-CV-4592 (NSR), 2024 WL 1466817 (S.D.N.Y. Apr. 4, 2024) (Judge Nelson S. Roman). A putative class of participants of the International Business Machines Corporation (“IBM”) Personal Pension Plan brought this action pursuant to ERISA Sections 502(a)(2) and 502(a)(3) for violations of ERISA’s anti-forfeiture, actuarial equivalence, and joint and survivor annuity requirements against IBM, the Plan, and the Plan Administrator Committee. Defendants moved to dismiss, arguing all of plaintiffs’ claims were barred by the relevant statutes of limitation. The court agreed and granted the motion to dismiss with prejudice. To begin, the court held that the plan’s contractual two-year limitation was enforceable. It stated that the Plan’s limitation period began to run when plaintiffs were provided with Pension Projection Statements which expressly explained that the joint and survivor annuity calculations used the Unisex Pension 1984 mortality tables. “In other words, the Pension Projection Statements disclosed to Plaintiffs the material facts of their statutory claims,” meaning the claims began to accrue on the date when plaintiffs received the statements. As all of the plaintiffs received their statements more than two years before the action was filed, the court dismissed plaintiffs’ statutory claims as untimely. The same was true of plaintiffs’ breach of fiduciary duty claim. There, the court found that plaintiffs had “actual knowledge” of the alleged fiduciary breach when they were informed about the mortality actuarial assumptions in the statements. “Accordingly, because the Plaintiffs had actual knowledge of the facts underlying their claims more than three years prior to the filing of the June 2, 2022 complaint, Plaintiffs’ claims for breach of fiduciary duty are dismissed.”