Flores v. Life Ins. Co. of N. Am., No. 22-55779, __ F. App’x __, 2024 WL 222265 (9th Cir. Jan. 22, 2024) (Before Circuit Judges Collins, Mendoza, and Desai)

This week’s notable decision addresses a procedural issue in ERISA benefit cases: if a plaintiff brings a lawsuit seeking benefits, and the court rules against her because she hasn’t yet complied with the benefit plan’s claim submission requirements, can she bring a subsequent action for those same benefits after she does comply with the requirements? This question split a panel of Ninth Circuit judges.

The plaintiff is Kayla Flores, who sued defendant Life Insurance Company of North America (LINA) in 2020 for terminating her short-term disability (STD) benefits. In her complaint Flores also included a claim for long-term disability (LTD) benefits, even though she had not yet applied for them. The district court overturned LINA’s denial of her STD claim, but rejected her request for LTD benefits because she had not complied with the LTD insurance policy’s proof of loss requirements. (Your ERISA Watch covered this decision in its August 4, 2021 edition.)

Flores then submitted her LTD claim in accordance with the policy’s requirements. LINA denied this claim as well, so Flores brought another lawsuit in 2022. LINA filed a motion to dismiss based on claim preclusion, which was granted by the district court. The district court ruled that Flores had already pursued her claim for LTD benefits in her first action and thus could not do so a second time. Flores appealed.

In this ruling the Ninth Circuit reversed. In doing so, the court applied a four-factor test to determine if Flores’ claim was precluded, although it focused on the fourth and “most important”: “whether the two suits arise out of the same transactional nucleus of facts.” For the court, this question was equivalent to asking “whether the [second] claim could have been brought in the previous action.”

The court concluded that Flores could not have brought the second claim in the first action. This was because “an ERISA cause of action accrues either at the time benefits are actually denied or when the insured has reason to know that the claim has been denied.” Flores’ claim regarding LTD benefits did not accrue until LINA denied her claim in 2022, and thus the court concluded that it could not have been brought in the prior action: “At bottom, Flores I and Flores II could not have been tried together because the latter suit involves Flores’s eligibility for benefits that she applied for after a judgment had been rendered in the former suit.” As a result, her claim for LTD benefits was not barred by claim preclusion.

The Ninth Circuit’s decision was not unanimous, however. Judge Collins dissented, contending that the district court “squarely held” in the first action that Flores was not entitled to LTD benefits, which barred any subsequent claim for those benefits. Judge Collins stated, “Here, it is clear that the two actions arise from the ‘same transactional nucleus of facts,’ because Flores seeks the same LTD benefits, based on the same underlying condition, under the same policy.” 

The majority responded to the dissent by characterizing it as “overstating” the district court’s original ruling. According to the majority, Flores responded appropriately to the district court’s decision by doing “what any diligent plaintiff would have done; she went back and complied with the precondition that the district court stated she had missed.” As a result, “the district court’s determination that Flores was not entitled to LTD benefits before she had complied with the terms of the LTD policy does not bar her subsequent suit for LTD benefits after she complied with the terms of the LTD policy.”

The court thus reversed, and remanded for further proceedings on the merits.

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

Disability Benefit Claims

Seventh Circuit

Kamholtz v. Madison Nat’l Life Ins. Co., Inc., No. 22-CV-617-JDP, 2024 WL 230283 (W.D. Wis. Jan. 22, 2024) (Judge James D. Peterson). Plaintiff Jeanie Kamholtz was a receptionist for Madison Teachers, Inc. who stopped working in January 2021 when pain and spasming in her eyes made it difficult for her to keep them open for extended periods. She applied for long-term disability benefits with her employer’s insurer, defendant Madison National, but Madison National denied her claim. Kamholtz then brought this action under ERISA against Madison National. The parties filed cross-motions for summary judgment, which were decided in this order. The court first determined that because the insurance policy at issue gave Madison National discretionary authority to determine benefit eligibility, it would review the denial under an “arbitrary and capricious” standard of review. Kamholtz argued that the denial should be overturned because Madison National (1) “unreasonably disregarded objective evidence of her pain and instead relied on irrelevant ophthalmologic testing results,” (2) “failed to consider the totality of her mental and physical limitations,” and (3) “failed to give her claim a full and fair review because it didn’t provide her with the independent physician reports for her second appeal in advance of its decision denying her appeal.” The court rejected all three arguments. First, the court found there was “rational support in the record for Madison National’s conclusion that the objective medical evidence did not support Kamholtz’s claim,” because her symptoms were subjective, her eye examinations were normal, and she did not adequately explain how her medical diagnoses were connected to her allegedly disabling symptoms. Second, the court found that Madison National fully considered Kamholtz’s mental health symptoms, and that it was reasonable for Madison National to conclude that these were insufficient to support disability. Third, the court agreed that Kamholtz was not provided with Madison National’s independent physician reports relating to her second-level appeal. However, the court ruled that she was not prejudiced by this error because the reports were similar to previous reports, and Kamholtz did not identify what evidence she would submit to counteract the reports. As a result, remand was not required for this procedural violation. The court thus granted Madison National’s summary judgment motion and denied Kamholtz’s.

ERISA Preemption

Third Circuit

Invictus Special Situations Master I v. Invictus Global Management, LLC, No. CV 24-16-RGA, 2024 WL 175736 (D. Del. Jan. 12, 2024) (Judge Richard G. Andrews). This action is a dispute between a privately held investment fund and its estranged general partner and investment manager, originally filed in Delaware state court. Defendants served interrogatories on plaintiffs, whose responses referred to ERISA. Defendants believed that this triggered ERISA preemption and thus removed the case to federal court. Plaintiffs promptly filed a motion to remand, which the court granted in this order. First, the court determined that defendants’ removal was untimely because it did so more than 30 days after receiving plaintiffs’ interrogatory responses. Second, the court ruled that even if the removal was timely, plaintiffs’ claims were not preempted under the Supreme Court’s Davila test because their “allegations relate to different duties than ERISA.” Specifically, plaintiffs’ complaint alleged that defendants breached various agreements and sought to reform a partnership agreement, and thus defendants’ potential liability does not “exist[] only because of their administration of ERISA-regulated plans.” Defendants’ notice of removal was also “vague as to which counts they believe are preempted.” Thus, the court ruled that removal was improper and remanded the case back to Delaware court.

Exhaustion of Administrative Remedies

Second Circuit

Fitzsimons v. New York City Dist. Council of Carpenters, No. 23-815, __ F. App’x __, 2024 WL 221550 (2d Cir. Jan. 22, 2024) (Before Circuit Judges Park, Lee, and Merriam). This is the first of two decisions issued this week by the same panel of Second Circuit judges involving the same defendant, New York City District Council of Carpenters and Joiners of America, the same attorneys on both sides, and similar issues. The plaintiff in this case is Peter Fitzsimons, who, with his family members who were also plan beneficiaries, alleged that the union’s pension and welfare funds improperly terminated their benefits after the union determined that Mr. Fitzsimons was working as a carpenter for a non-union company. The district court upheld the union’s decision in April of 2023. (Your ERISA Watch covered this ruling in its May 3, 2023 edition.) Plaintiffs appealed, and the Second Circuit affirmed in this ruling. The court rejected plaintiffs’ claim under the Labor-Management Reporting and Disclosure Act, finding that (a) Mr. Fitzsimons had received a full and fair disciplinary hearing from the union, (b) his claims of bias were unsupported, and (c) the LMRA did not allow the court to “interfere at will in the internal affairs of unions.” As for plaintiffs’ ERISA claims, the Second Circuit upheld the district court’s ruling that they had failed to exhaust their administrative remedies: “Fitzsimons failed to take any appropriate administrative action after receiving the Funds’ benefit-determination letters.” The court rejected plaintiffs’ arguments that any appeal would have been futile on the ground that they were “speculative and insufficient.”

Pleading Issues & Procedure

Tenth Circuit

Graham O. v. United Behavioral Health, No. 1:18-CV-31-TS, 2024 WL 170739 (D. Utah Jan. 16, 2024) (Judge Ted Stewart). The three plaintiffs, two parents and their child, J.O., brought this action against United alleging that it improperly denied their claims for medical benefits for treatment received by J.O. The district court agreed, concluding that United had acted arbitrarily and capriciously, and remanded the case to United “to more adequately explain its decision.” On remand, United again denied plaintiffs’ claims, and plaintiffs filed this motion to reopen the case. United opposed the motion, contending that its denials “were supported by substantial evidence.” The district court granted plaintiffs’ motion, concluding that it was “ill-suited to resolve” the arguments on the merits asserted by United. The court thus directed the parties to file cross-motions for summary judgment to address the issue of whether United’s new denial should be upheld.

Provider Claims

Second Circuit

The Medical Soc’y of the State of New York v. UnitedHealth Grp. Inc., No. 22-2702-CV, __ F. App’x __, 2024 WL 177448 (2d Cir. Jan. 17, 2024) (Before Circuit Judges Calabresi and Nathan, and District Judge Paul A. Engelmayer). This is a class action by several medical providers against health insurer United asserting that United violated ERISA when it refused to pay benefits for outpatient surgery performed at office-based surgery venues (“OBS”). United denied the claims at issue on the ground that the benefit plans “only cover fees for procedures performed at facilities ‘licensed’ in New York, and OBSs are not licensed facilities.” After a five-day bench trial, the district court ruled in United’s favor (a decision covered by Your ERISA Watch in its September 21, 2022 edition), and plaintiffs appealed. Plaintiffs raised two arguments on appeal: “(1) the district court erred by relying on evidence outside the administrative record; and (2) the district court erred by failing to interpret the plain meaning of the plan terms.” In this ruling, the Second Circuit rejected both arguments. The court acknowledged that ERISA benefit denials are typically adjudicated solely on the administrative record, but noted that district courts may exercise their discretion to admit extrinsic evidence for good cause. Good cause existed in this case because plaintiffs’ challenge was to United’s claims-adjudication process, and the extrinsic evidence admitted by the district court, which consisted of “medical coding evidence, industry standards such as Medicare practices, other payors’ OBS facility fee policies, and United’s correspondence with regulators,” related to that process. The Second Circuit also concluded that the district court’s findings of fact – that the OBSs were not “licensed facilities” for the purpose of New York’s Public Health Law – was not arbitrary and capricious, and therefore affirmed the judgment in United’s favor.

Statute of Limitations

Second Circuit

Spillane v. New York City Dist. Council of Carpenters & Joiners of Am., No. 23-247, __ F. App’x __, 2024 WL 221816 (2d Cir. Jan. 22, 2024) (Before Circuit Judges Park, Lee and Merriam). In this second case this week involving the same defendant, attorneys, and the same panel of Second Circuit judges, plaintiff Patrick Spillane, a retired member of the New York City District Council of Carpenters and Joiners of America union, and his wife, Deborah, brought this action against the union for terminating their pension and medical benefits. The union’s decision was based on a finding that Mr. Spillane had performed employment for a non-union contractor, and thus was ineligible for continued union benefits. Plaintiffs filed an action alleging several claims, including under ERISA, but the union’s decision was upheld in its entirety by the district court. (Your ERISA Watch covered this decision in its January 11, 2023 edition.) The Second Circuit’s ruling in this case was the same as in the first: affirmed. The court agreed that plaintiffs had failed to exhaust their claims under the Labor-Management Reporting and Disclosure Act. As for plaintiffs’ ERISA benefit claim, the Second Circuit upheld the district court’s decision that it was time-barred because plaintiffs did not bring suit within 365 days of the denial, as required by the plan, and furthermore the decision to terminate their benefits was not arbitrary and capricious because the union reasonably found that Mr. Spillane was engaged in disqualifying employment. The Second Circuit also rejected plaintiffs’ breach of fiduciary duty claim, ruling that it consisted of “speculation and unsubstantiated name-calling,” and in any event was duplicative of their claim for benefits.

Subrogation/Reimbursement Claims

Ninth Circuit

Protingent Inc. v. Gustafson-Feis, No. C20-1551-KKE, 2024 WL 197368 (W.D. Wash. Jan. 18, 2024) (Judge Kymberly K. Evanson). Defendant Lisa Gustafson-Feis was injured in a motor vehicle accident in 2016. At the time, she was insured under an ERISA-governed medical benefit plan established by plaintiff Protingent, Inc. Protingent placed a lien on the lawsuit arising from Gustafson-Feis’ accident, which eventually settled for $150,000. Gustafson-Feis refused to reimburse Protingent, whose lien totaled $73,326.54, and thus Protingent filed this action under ERISA against her. In this order the court granted Protingent’s motion for summary judgment. The court rejected Gustafson-Feis’ reliance on the make-whole doctrine (under which an insured party injured in an accident must be “made whole” before her insurer can recover compensation) because the plan specifically disclaimed the doctrine: “the Plan ‘is entitled to full reimbursement on a first-dollar basis from any payments, even if such payment to the plan will result in a recovery which is insufficient to make you whole or to compensate you in part or in whole for the damages sustained.’” The court also rejected other various arguments made by Gustafson-Feis, such as (1) Protingent engaged in procedural irregularities, (2) her husband’s claim affected Protingent’s right to reimbursement, (3) the summary plan description prevented Protingent from enforcing the plan terms, (4) Protingent was not diligent in pursuing its lien, and (5) the lien increased over time, suggesting impropriety. Notably, and unusually, the court also ruled that Protingent was “entitled to an award of reasonable attorney fees,” as well as interest, which will be determined pursuant to a subsequent motion.

S. Coast Specialty Surgery Ctr. v. Blue Cross of Cal., No. 22-55717, __ F. 4th __, 2024 WL 105317 (9th Cir. Jan. 10, 2024) (Before Circuit Judges Graber, Mendoza, Jr., and Desai).

South Coast Specialty Surgery Center sought reimbursement from Blue Cross of California, the insurer and claims administrator under a number of ERISA-governed healthcare plans, for the cost of medical services provided to plan participants. After the district court agreed with Blue Cross that South Coast lacked standing to sue for benefits because it was neither a plan participant nor a beneficiary and dismissed the suit, South Coard appealed to the Ninth Circuit, which had little trouble reversing the district court under longstanding circuit precedent.  

The salient factual point was that South Coast had obtained an assignment of benefits from each of the plan participants who received its services. Each assignment stated that it “authorize[s] my Insurance Company to pay by check made payable and directly to: [South Coast] for the medical and surgical benefits allowable, and otherwise payable to me under my current insurance policy, as payment toward the total charges for the services rendered.” It further authorized South Coast “to file a claim with my insurance company on my behalf.”

The district court construed this assignment as giving South Coast the right to receive direct payment from Blue Cross but not the right to sue for nonpayment of benefits. The Ninth Circuit disagreed.

As an initial matter, the court noted that in the past it had referred to the right to sue under ERISA as an issue of “standing.” But this was, the court concluded, a misnomer when considering whether Congress has authorized a party such as South Coast to sue, as distinct from an Article III inquiry into whether South Coast had a sufficient injury to sue, which no party disputed.

With that, the court moved on to the matter at hand. Acknowledging that the district court correctly concluded that South Coast lacked direct authority under ERISA to sue because it was neither a plan participant nor a beneficiary, the court nevertheless pointed out that ERISA permits participants and beneficiaries to assign their claims and to bestow derivative standing on an entity such as South Coast. This was well established in previous decisions from the Ninth Circuit, such as Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1289 (9th Cir. 2014), which Blue Cross did not challenge.   

Finally, applying normal contract law principles, the Ninth Circuit concluded that the forms signed by plan participants at issue in the case constituted valid assignments of the right to sue for nonpayment of benefits. The form clearly “conveys that South Coast and its patients intended that it operate as a valid assignment for the payment of insurance benefits.” Moreover, while the form did “not expressly state that South Coast could sue insurers on its patients’ behalf,” the court concluded that the “scope of South Coast’s patients’ assignment of benefits clearly and necessarily includes the right to sue for non-payment of benefits under section 502(a) of ERISA.”

Thus, the court rejected Blue Cross’ contrary construction – that the participants had assigned the right to receive payment but not the right to sue – as one that makes “neither textual nor practical sense,” and that would “stym[y] Congress’s purpose in enacting ERISA.” The court concluded that: “[c]onstruing an assignment of benefits as including the right to sue for non-payment thus increases patient access to healthcare and transfers any responsibility of litigating unpaid claims to the provider-an entity that is much better positioned to pursue those claims in the first place.” A nice place to end the decision and begin the year. 

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

Attorneys’ Fees

Second Circuit

Chung v. Provident Life & Cas. Ins. Co., No. 21 Civ. 9344 (AKH), 2024 WL 78366 (S.D.N.Y. Jan. 4, 2024) (Judge Alvin K. Hellerstein). The court awarded $374,754.13 in attorneys’ fees following success by the plaintiff in obtaining a post-trial judgment awarding him disability benefits. The plaintiff had apparently already paid his attorneys on an hourly basis and submitted those payments, along with the hourly rates and experience of the attorneys at Riemer Hess who represented him. The court found the amount sought to be reasonable and in fact $30,000 less than what the court described as a presumptively reasonable fee using an unexplained metric employed by that court. The court also awarded $681.63 in costs and 114,332.90 in prejudgment interest at a rate of 9% per annum.

Rhodes v. First Reliance Standard Life Ins. Co., No. 22 Civ. 5264 (AKH), 2024 WL 911322 (S.D.N.Y. Dec. 27, 2023) (Judge Alvin K. Hellerstein). Following a decision concluding that First Reliance had violated ERISA’s claims procedure and thus denied plaintiff full and fair review of his claim for benefits, the court awarded $121,999.28 in attorneys’ fees. This amount included a 10% reduction to account for any inefficiencies in litigating the case and was based on what the court determined to be a reasonable hourly rate by attorneys at Riemer Hess based on their experience and capabilities. The court, however, denied a requested $917.65 in costs, concluding that this amount expended “to keep the medical file current” was better seen as “legal work-up,” and as such was not recoverable.    

Pension Benefit Claims

Seventh Circuit

Lucero v. Credit Union Ret. Plan Ass’n, No. 22-cv-208-jdp, 2024 WL 95327 (W.D. Wis. Jan. 9, 2024) (Judge James D. Peterson). Plan participants in the Credit Union Retirement Plan Association 401(k) Plan, a multiple-employer plan with over 100 employer sponsors, sued a number of plan entities for fiduciary breaches in failing to control the plan’s recordkeeping costs. In this decision, the district court recognized that although in most circumstances, a case challenging fees charged to a 401(k) plan would be an obvious candidate for class certification, this was not such a situation. That is because rather than charging fees to all plan participants using one formula, the plan allowed separate employers to negotiate their own fees with the recordkeeper, resulting in fees that varied widely. In fact, the recordkeeping fees charged to several of the named plaintiffs were within the range that plaintiffs identified in their complaint as reasonable and, for this reason, the district court agreed with the defendants that these plaintiffs lacked standing to sue for the recovery of overly high fees. For similar reasons – because the fees at issue varied so substantially among proposed class members at least until 2021 – the court concluded that the claims of the remaining plaintiff, Brenda Lucero, were not typical of claims of the class members and Ms. Lucero was no adequate to represent the class. After 2021, fees were uniformly assessed but, as it turns out, none of the named plaintiffs were still participants in the plan at that point.  So a class could not be certified for that time period either.  The court therefore denied class certification, stating that the case could proceed on Ms. Lucer’s individual claim alone, although the court also appeared to leave open the possibility of a motion for the opportunity to propose a different, narrower class or to seek to add additional class representatives.        

Provider Claims

Fifth Circuit

Angelina Emergency Med. Assocs. P.A. v. Health Care Serv. Corp., No. 3:18-CV-0425-X, 2024 WL 102666 (N.D. Tex. Jan. 9, 2024) (Judge Brantley Starr). In this decision granting Defendants’ motion for summary judgment with respect to 182 bellweather claims in a massive lawsuit on behalf of over 50 physician associations challenging over 250,000 allegedly underpaid healthcare claims by over 50 Blue Cross entities, the court begins by analogizing the case to Frankenstein’s monster. One suspects that the judge enjoyed Poor Things, which will likely be an Oscar contender, or perhaps he is a Mel Brooks fan. In either case, the judge notes that, despite his resounding ruling in favor of Blue Cross, the monster lawsuit is (to quote another delightful movie) not dead yet. With respect to many of the claims, the court concluded that it lacked subject matter jurisdiction over these claims for one of several reasons having to do with the assignment. First, several of the assignments state that they assign the participants’ claims to the “facility” or the “facility-based physician,” neither of which, in the court’s view, includes the physician associations that brought suit under Texas law. Some of the other assignments, in the court’s estimation, did not assign the right to file suit but only a   right to be an “authorized representative.” Numerous other claims, the court concluded, lacked either a written assignment of benefits or adequate proof that such an assignment existed. In addition, the court concluded that a significant majority of the bellweather claims were precluded by anti-assignment provisions in the governing plans. Although the court recognized that in the Fifth Circuit a party could be estopped from asserting an anti-assignment clause, the court found that the plaintiffs failed to establish such estoppel because any reliance on defendants’ conduct in not asserting the anti-assignment clauses would not be reasonable in light of the clarity of the anti-assignment language. The court concluded that numerous other claims were precluded by the plaintiffs’ failure to exhaust administrative remedies (which the court concluded was contractually required even with respect to several non-ERISA claims) or to show the patent futility of doing so. Finally, the court found that two remaining claims were untimely under the applicable four-year statute of limitations.       

Statute of Limitations

Seventh Circuit

Estate of Maribeth Presnal v. Dearborn Nat’l Life Ins. Co., No. 3:23-cv-0290-HAB, 2024 WL 124787 (N.D. Ind. Jan. 11, 2024) (Judge Holly A. Brady). A widower, Edwin Presnal, was denied benefits under his deceased wife’s, Maribeth Presnal’s, life insurance plan because she was required, but failed, to convert her policy to a personal policy when she ceased employment shortly before her death. He brought suit on behalf of her estate, claiming that her employer and plan sponsor/administrator, Beacon Healthcare System, Inc., breached its fiduciary duty in failing to conduct an exit interview with her when she terminated employment due to cognitive difficulties and failed to inform Maribeth or Edwin of their conversion rights under the plan. Plaintiff also claimed that Maribeth’s cognitive condition tolled her time to make payments and convert her policy. The court concluded that Beacon had no duty to inform plaintiffs of Maribeth’s conversion rights, essentially because she had not asked about them and because the court, although “sympathetic with Plaintiffs’ predicament” was concerned with overburdening plan administrators. The court thus granted Beacon’s motion to dismiss the breach of fiduciary duty claim. Nevertheless, the court held that plaintiff stated a “plausible claim that Maribeth’s right to convert or make her premium payments was equitably tolled because of her mental capacity,” and refused to grant defendants’ motion to dismiss with respect to this claim.

Happy New Year to all our readers. Your ERISA Watch will be a little different for the next few months because our staff writer, Emily Payson, is on maternity leave with her first child (and the first grandchild for Your ERISA Watch co-editor Elizabeth Hopkins). We will continue to have a case of the week most weeks and will cover the most significant decisions but can’t promise to cover all decisions during this period. Thankfully, the year is off to a slow start so for our first issue of 2024, we will cover all six ERISA decisions that were reported within the last week.

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

Disability Benefit Claims

Fourth Circuit

Weisman v. The Guardian Life Ins. Co. of Am., Civil Action No. 7:22-cv-00595, 2024 WL 65427 (W.D. Va. Jan. 5, 2024) (Judge Elizabeth K. Dillon). In a long-term disability decision that should surprise no one, the court granted summary judgment in favor of the plan participant, Dr. Joseph S. Weisman, who presented that he was disabled from being able to perform his work as a neuro-ophthalmologist and ophthalmic surgeon by a progressive neurological condition had led to uncontrollable tremors. Although Guardian approved Dr. Weisman’s claim for short-term disability benefits, it denied his claim for long-term benefits shortly thereafter on the basis that he did not seek treatment for his condition until after he stopped working and was no longer insured under the plan. As an initial matter, the parties disagreed about the applicable standard of review applicable to Guardian’s decision given that Guardian was late in deciding Dr. Weisman’s appeal, but the court concluded it need not resolve the issue. Instead, the court determined that even under a deferential standard, Guardian abused its discretion in denying benefits.  First, the court determined that Guardian was not correct that the plan required that Dr. Weisman be employed when he applied for benefits, only that he had to have become disabled while he was still employed. Second, the court concluded that whether or not Dr. Weisman met the policy requirement that he be under the regular care of a doctor during his disability was not relevant because the court agreed with Dr. Weisman that he had reached his maximum point of recovery and was still disabled. In this regard, the court relied on the opinion of one Dr. Cramer, who examined Dr. Weisman and stated that he had received the appropriate care for his disability. Finally, the court rejected Guardian’s contention that there was inadequate evidence that Dr. Weisman was disabled before he quit his job because he was self-evaluated (and treated) up to that point and only went to Dr. Cramer after he stopped working. The court noted that an insured’s subjective assessment of his own symptoms are relevant as a general matter to determining disability, and even more so when the insured is a doctor who is fully qualified to do so. Moreover, because Dr. Weisman’s assessment was fully supported by the opinion of Dr. Cramer, the fact that she gave her opinion after the fact did not support Guardian’s contention that it should be ignored and given no weight.

Life Insurance & AD&D Benefit Claims

Fifth Circuit

Haynes v. Principal Life Ins. Co., Civil Action No. 3:22-CV-2499-N, 2024 WL 56990 (N.D. Tex. Jan. 3, 2012) (Judge David C. Godbey). In this action claiming disability benefits, the court concluded that the preponderance of the evidence established that Plaintiff Angela Haynes is disabled within the terms of the plan and therefore granted her judgment on the record. Specifically, applying de novo review, the court determined that the medical record amply supported that Ms. Haynes suffered from Ehlers-Danlos Syndrome, which cause a number of symptoms including pain, fatigue, generalized and fluctuating weakness and brain fog, all of which caused her to be disabled from her occupation as an insurance agent. The court found this conclusion supported by her subjective reports of pain and by the conclusions of the social security administration in granting her disability benefits.

Eighth Circuit

Hogan v. Zuger Kirmis & Smith, PLLP, No. 1:23-cv-047, 2024 WL 38706 (D.N.D. Jan. 3, 2024) (Judge Daniel L. Hovland). Christine Hogan was denied life insurance benefits under an ERISA plan after the death of her husband Lawrence Dobson. She brought suit for benefits and fiduciary breach against Zuger Kirmis & Smith, the law firm that formerly employed Mr. Dobson and that sponsored the plan, and against Standard Insurance Company, which insured the plan. Although her husband left the Zuger in 2014, the firm continued to pay premiums on his behalf to Standard until his death in 2021. They also assured Ms. Hogan shortly after her husband’s death that he was “all paid up.” In fact, however, the governing policy stated that coverage automatically terminates at the end of employment. Unsurprisingly, Standard moved to dismiss, and the court granted its motion.  First, the court determined that Ms. Hogan was not entitled to benefits under the plain terms of the plan since her husband had long since ceased employment with Zuger. The court likewise rejected Ms. Hogan’s fiduciary breach claim against Standard, reasoning that estoppel was not available given the plain terms of the policy, Standard was not responsible for notifying the decedent that his coverage had terminated (and in fact had no way of knowing this), nor was it responsible for educating Zuger, the plan administrator, on its obligations.  The court therefore granted Standard’s motion to dismiss the claims against it, concluding that Ms. Hogan’s claims lie solely against the plan administrator.

Ninth Circuit

Principal Life Ins. Co. v. The Estate of Sergio Botello Diaz, No. 1:23-cv-00261-CDB, 2024 WL 35453 (E.D. Cal. Jan. 3, 2024) (Magistrate Judge Christopher D. Baker).In this interpleader action regarding the proper beneficiary of over $1 million in life insurance benefits, Plaintiff Principal Life Insurance Co. sought default judgment against Rogelio Botello Diaz, the son and named beneficiary of the covered plan participant, Sergio Botello Diaz. Principal filed the interpleader action because the elder Diaz was murdered, and the police have neither charged anyone nor cleared anyone in connection with the death.  Principal therefore concluded it could not pay the insurance benefits without peril to Rogelio, the named beneficiary.  And because Rogelio had not answered the complaint, Principal sought default judgment against him, to despot the insurance proceeds with the court (minus costs for Principal), and to then withdraw from the case. The magistrate judge assigned to the case concluded that the case was properly brought as an interpleader and that, despite the large sum of money at issue, that default was appropriate against Rogelio for failing to respond. The magistrate therefore recommended that a judge be assigned to the case and that default judgement be entered against Rogelio and that he be served with a copy of the decision.

Tenth Circuit

Jensen v. Life Ins. Co. of N. Am., Case No. 2:22-CV-293-DAK-DAO, 2024 WL 54433 (D. Utah January 4, 2024) (Judge Dale A. Kimball). This case concerns a life insurance claim by Jill Jensen, the wife and beneficiary of a man, Steven Jensen, who was determined in an autopsy to have accidentally died in his sleep from “oxycodone and clonazepam toxicity.” Mr. Jensen had been prescribed oxycodone for chronic pain and had been taking it, appropriately according to his doctor, for five years before his death.  Two days before his death, a psychiatrist he went to see for his anxiety prescribed him clonazepam and this combination of medically-prescribed drugs proved deadly. The policy governing the ERISA plan only provided benefits for accidental death and the insurance company (“LINA”) claimed that Mr. Jensen’s death did not qualify for two reasons: (1) LINA’s reviewing doctor concluded Mr. Jensen did not take the medications as prescribed and, as a result, overdosed on these medications; and (2) LINA claimed that because the medications which caused his death were prescribed to treat Mr. Jensen’s pain and anxiety, the death therefore came within the policy exclusion for death stemming from illness. LINA abandoned the first claim and only pressed the second in the district court. As an initial matter, the court determined that Utah’s ban on discretionary clauses applied, even though it was first passed eight years after the policy went into effect (but long before Mr. Jensen’s death). Although Utah law generally precludes retroactive application of substantive laws, the court agreed with Ms. Jensen that the law was a procedural change that could be applied retroactively to require de novo review of her claim for benefits which arose after the enactment of the law. However, even under that favorable standard, the court agreed with LINA that the policy unambiguously excluded coverage of the death, which arose from the treatment of illness.

Venue

Sixth Circuit

Walton v. The Guardian Life Ins. Co. of Am., No. 2:23-cv-1693, 2024 WL 47700 (S.D. Ohio Jan. 4, 2024) (Magistrate Judge Chelsey M. Vascura). Plaintiff Denise Walton filed suit for disability benefits against Guardian Life, the insurer for her ERIRA-governed disability plan, in the Southern District of Ohio, rather than in West Virginia where she worked and lived. Guardian moved to dismiss or transfer, claiming that venue was improper and alternatively sought discretionary transfer to West Virginia. The court agreed that venue was not proper in the Southern District of Ohio because the plan was not administered there, the breach did not take place there and because Guardian did not have minimum contacts with the district sufficient to reside or be found there for purposes of venue. Rather than dismiss, however, the court transferred the case to the Northern District of West Virginia.