It was another slow-ish week in ERISA-land, so we have no notable decision to highlight. However, read on to learn more about how (1) a wrongful death claim prompted by an astronomical increase in the price of an asthma inhaler is not preempted by ERISA (Schmidtknecht v. OptumRx Inc.), (2) pharmacy benefit managers have temporarily stopped enforcement of Arkansas legislation attempting to rein them in (Express Scripts Inc. v. Richmond), and (3) moving to Mexico, although it sounds nice, can jeopardize your disability benefits (Archer v. Unum Life Ins. Co. of Am.). Of course, we have other cases as well involving various claims by plan participants, medical providers, and insurance companies for your reading pleasure.

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

Breach of Fiduciary Duty

Eighth Circuit

Chirinian v. Travelers Companies, Inc., No. 24-cv-3956 (LMP/DTS), 2025 WL 2147271 (D. Minn. Jul. 29, 2025) (Judge Laura M. Provinzino). Plaintiff Charlie Chirinian filed this putative class action alleging that Travelers Companies Inc. and the administrative committee of its employer-sponsored healthcare plan are imposing a tobacco surcharge which is in violation of ERISA and the requirements of 29 C.F.R. § 2590.702(f)(4). In her first cause of action Ms. Chirinian asserts that defendants illegally surcharged her and other plan participants for their tobacco use in violation of ERISA’s nondiscrimination rule in 29 U.S.C. § 1182. Additionally, Ms. Chirinian alleges that Travelers breached its fiduciary duties to plan participants by “administering a Plan that does not conform with ERISA’s antidiscrimination provisions,” “acting on behalf of a party whose interests were averse to the interests of the Plan and the interests of its participants,” and “by failing to act prudently and diligently to review the terms of the Plan and related plan materials.” Her fiduciary breach claims are brought under Section 502(a)(2). Defendants moved to dismiss the complaint. They argued that Ms. Chirinian lacks Article III standing to pursue her claims, her claims are entirely time-barred under the plan, and putting those issues aside, her complaint fails to state a claim upon which relief can be granted. In this order the court granted in part and denied in part defendants’ motion to dismiss. The court addressed the threshold issue of standing first, and largely concluded that Ms. Chirinian has standing to press her claims, though not insofar as she seeks to pursue prospective injunctive relief. As a former plan participant, the court agreed with defendants that Ms. Chirinian cannot allege a real or imminent threat of ongoing or future harm based on the conduct regarding the tobacco surcharge. Moreover, because Ms. Chirinian personally lacks standing to seek prospective injunctive relief, the court concluded that she also could not seek such relief on behalf of the plan. More broadly, however, the court rejected defendants’ standing arguments. It concluded that Ms. Chirinian suffered a concrete harm when she was required to pay the tobacco surcharges that Travelers was allegedly not legally authorized to levy. This harm, the court added, is traceable to Traveler’s decision to levy the tobacco surcharge, and it can be redressed by a refund of money to the participants who were illegally charged. As a result, the court found that Ms. Chirinian has standing to pursue her action. Next, the court concluded that Ms. Chirinian’s claims are not time-barred. The plan’s limitation period requires that a participant bring a lawsuit within one year of the act or omission that gives rise to the claim. The court concluded that Travelers “acted” each time it imposed an allegedly unlawful tobacco surcharge on Ms. Chirinian. It then determined that, “Chirinian filed suit on October 17, 2024, meaning that Chirinian may challenge the tobacco surcharges imposed since October 17, 2023. Because Chirinian paid tobacco surcharges until August 3, 2024, she is not time-barred from challenging the tobacco surcharges Travelers levied on her from October 17, 2023, to August 3, 2024.” Having ruled on these threshold issues, the court proceeded to analyze the merits of Ms. Chirinian’s claims. It tackled the claim alleging violations of the antidiscrimination rules first. Ms. Chirinian asserts that Travelers’ tobacco cessation program fails to meet the requirements of 29 C.F.R. § 2590.702(f)(4) in three ways. First, she takes issue with the program’s timing restrictions and the fact that the individuals participating in the tobacco cessation program must enroll by March 31 of the plan year and complete the program by December 15 of that same plan year. The court did not agree that this provision was problematic. To the contrary, it found that the plan complies with 29 C.F.R. § 2590.702(f)(4)(i) because it offers participants the opportunity to qualify for the reward under the program at least once per year. The court stated that “ERISA requires nothing more of Travelers.” The court therefore rejected Ms. Chirinian’s first theory of how the program violates ERISA’s requirements. It rejected her second theory as well, wherein she argued that the plan materials do not disclose the availability of a legally compliant reasonable alternative standard. It noted that this argument was premised on Ms. Chirinian’s argument that Travelers failed to offer participants the full reward. But the court did not agree and found the complaint failed to plausibly allege as much. Ms. Chirinian had better luck with her third and final argument challenging the plan’s compliance with ERISA’s antidiscrimination rules. She alleges that the plan materials do not include a statement that recommendations of an individual’s personal physician will be accommodated as required by 29 C.F.R. § 2590.702(f)(4)(v). Taking a look at the plan, the court agreed. It therefore denied the motion to dismiss the antidiscrimination claim. “Because Chirinian has plausibly alleged that the Plan does not satisfy “all” of the requirements of 29 C.F.R. § 2590.702(f)(4), Chirinian has plausibly alleged that Travelers violated ERISA’s antidiscrimination rules by imposing a tobacco surcharge.” Finally, the court addressed the breach of fiduciary duty claims. The court granted defendants’ motion to dismiss these claims as it agreed with Travelers that Ms. Chirinian fails to plausibly allege that the plan suffered any losses as a result of the alleged breaches having to do with the tobacco surcharge. In fact, the court considered that the opposite was likely true – that the alleged breaches likely served to benefit the plan because the plan’s assets were increased by the allegedly unlawful tobacco surcharges. Based on the foregoing the court dismissed without prejudice the two fiduciary breach claims.

Disability Benefit Claims

Ninth Circuit

Archer v. Unum Life Ins. Co. of Am., No. 2:23-cv-01128-LK, 2025 WL 2107491 (W.D. Wash. Jul. 28, 2025) (Judge Lauren King). Before the onset of her disability, plaintiff Pamela Archer was a nurse. Her employers included the U.S. Army during the first Gulf War, and later Providence Health & Services. In late 2012, Ms. Archer stopped working due to a combination of ailments. She began receiving long-term disability benefits under an ERISA-governed policy insured by Unum the following year. In October of 2019, Ms. Archer moved to Mexico. A year later she informed Unum of her living situation in response to a form the insurer sent her inquiring about her condition. Then a year and a half later, in April of 2022, Unum suspended Ms. Archer’s benefits. Unum informed Ms. Archer that her eligibility for benefits had ended in April 2020 after six months of her living in Mexico, because her policy contained an out-of-country provision which explains that benefits will stop if a claimant resides outside of the United States for a total period of 6 months in any given year. “Unum further notified Archer that its payment of benefits over a period when she was no longer eligible, i.e., between April 20, 2020 and April 27, 2022, resulted in an overpayment of $62,893.14 which Unum sought to recover.” Ms. Archer challenged the termination of her benefits. Following an unsuccessful administrative appeal she filed an action under ERISA alleging Unum wrongfully terminated her ongoing disability benefits and violated its fiduciary duties by failing to inform her of the international residency provision. Although Ms. Archer concedes that she did not comply with the policy’s U.S. residency requirement, she maintains that she was unable to do so because of travel challenges surrounding the COVID-19 pandemic. Unum responded to Ms. Archer’s action by filing its own counterclaim for overpayment of benefits. The parties submitted competing motions for judgment on the record pursuant to Rule 52. Applying de novo review, the court found in favor of Unum regarding Ms. Archer’s claim for benefits and breach of fiduciary duty. To begin, the court determined that Unum lawfully terminated the benefits, because its decision was consistent with the unambiguous terms of the plan. As the policy required Ms. Archer to spend more than 50% of any 12-month period in the United States, it was clear to the court that there was no dispute Ms. Archer did not do so, and as such that she was in violation of a requirement for benefit eligibility under the policy. Furthermore, the court determined that it was not impossible for Ms. Archer to comply with the international residency provision because she was a U.S. citizen who could have traveled back to her home country at any time, even during the height of the COVID travel restrictions and lockdowns. Indeed, the court noted that the record clearly establishes that regardless of the pandemic it was Ms. Archer’s intent to make Mexico her primary residence for more than six months out of the year. Moreover, the court was unpersuaded that Ms. Archer could not safely fly during this time period, and noted that she did so, traveling throughout Mexico and even into the United States. For these reasons, the court declined to waive Ms. Archer’s noncompliance with the policy provision based on her assertion of impossibility, and found that Unum properly terminated her continuing benefits based on the plain language of the plan. The court then held that Unum’s failure to warn Ms. Archer about the international residency provision did not amount to a breach of fiduciary duty. “Even crediting Archer’s plausible but unsupported assertion that she was subjectively unaware of the international residency provision, she does not assert that Unum failed to provide her with the relevant Plan or Policy documents in the first instance. And the Policy language regarding when a beneficiary is considered to reside outside the United States is conspicuous, plain, and clear.” The court added that this was true for the overpayment provision in the plan as well and that she therefore had constructive notice of the relevant plan provisions. Additionally, the court disagreed with Ms. Archer that Unum’s 18-month delay in enforcement constituted a breach of fiduciary duty or that a delay could otherwise waive enforcement of a plan provision. Accordingly, the court found that Ms. Archer was not entitled to equitable relief based on a breach of fiduciary duty. The court thus entered judgment in favor of Unum on both of Ms. Archer’s claims. However, the court did not reach a decision on Unum’s counterclaim. Instead, it ordered supplemental briefing on the issue of the appropriate termination date and the meaning of the language regarding the timing of payment cessation. Until it has this briefing, the court deferred resolution of the overpayment claim and a decision on the amount of repayment Ms. Archer owes.

Tenth Circuit

Ramos v. Schlumberger Grp. Welfare Benefits Plan, No. 22-CV-0061-CVE-JFJ, 2025 WL 2098102 (N.D. Okla. Jul. 25, 2025) (Judge Claire V. Eagan). Plaintiff Ramon Ramos filed this action to challenge the denial of his claim for short-term disability benefits by the Schlumberger Group Welfare Benefit Plan. Mr. Ramos argued that he had documented psychiatric, neurological, and cognitive limitations that prevented him from working in his position as an environmental specialist. In an earlier order the court remanded the case for clarification of the plan administrator’s decision to deny plaintiff’s second voluntary appeal. The plan administrator issued the required clarification of its previous decision during the remand, although Mr. Ramos argued that it failed to do so within 30 days of the court’s ruling. The court reopened the case for new briefing on the merits of the ERISA claim, but rejected Mr. Ramos’ argument that the plan administrator’s decision on remand was untimely. The parties then filed their briefing on the merits of the plan administrator’s denial, and the court agreed that the ERISA claim was ready for adjudication. Accordingly, the court issued this decision, which constituted its final review of the adverse decision. As an initial matter, the court addressed the parties’ dispute over the applicable standard of review. The court determined that the proper standard of review was arbitrary and capricious as the plan clearly grants the administrator discretionary authority and because it found that the “alleged procedural irregularities in this case are not of the same type or severity that would warrant de novo review of plaintiff’s ERISA claim.” The court added that the errors Mr. Ramos cited as reasons to alter the standard of review have been “rejected in previous rulings by the Court or are substantive in nature, and the Court finds no reason to vary from the standard of review typically applicable to ERISA claims when the decision maker has the discretionary authority to make benefits determinations.” The court therefore assessed the denial under deferential review. Mr. Ramos argued that he produced a substantial amount of medical evidence that supported his symptoms. The plan responded that Mr. Ramos could not meet his burden to prove that its contrary interpretation of the medical evidence was an abuse of discretion and maintained that it was not required to defer to his treating physician’s findings that he had functional limitations that prevented him from working. The court first held that it was reasonable for the plan’s reviewing doctors to discount the results of plaintiff’s poor neurocognitive testing because they reasonably explained their position that he feigned an impairment and put an intentional lack of effort into the testing. Mr. Ramos next argued that there were problems with the plan’s independent medical examination of him. He noted that the plan administrator failed to provide the doctor performing the test with certain critical pieces of medical information. In addition, Mr. Ramos called into question how independent the independent medical examination was given Cigna’s role in setting up the exam and “dictat[ing] the focus” of it. The court, however, disagreed. It found the plan’s failure to provide the doctor with the relevant medical reports immaterial, harmless, and ultimately having “had no bearing on the results” of the test. The court was not persuaded by Mr. Ramos’ suggestion that the doctor’s findings would have been affected had he been provided with these documents. As to Cigna’s involvement in the independent medical examination, the court concluded that Mr. Ramos failed to demonstrate that Cigna “participated” in the exam “or directed” its outcome. Moreover, although the court acknowledged that it appeared to be unfair that Cigna set up the exam, it stated that Mr. Ramos could not show that it resulted in bias on the part of the doctor performing it, or that the results would have been different if the administrator did not directly set up the test. The court further rejected Mr. Ramos’ argument that the plan administrator disregarded the medical findings of his treating physicians as merely his own self-reporting of his symptoms. Rather, the court found that the plan administrator’s conclusion that the evidence did not support a finding of any functional limitation caused by mental impairments to be supported by substantial evidence. Finally, the court stipulated that in its view the parties’ dispute over the consideration of “objective medical evidence” had no bearing on the outcome of Mr. Ramos’ claim for benefits. Thus, based on the foregoing, the court concluded that the plan administrator had not acted arbitrarily or capriciously when it determined that the medical evidence did not establish that Mr. Ramos was disabled under the terms of the plan. The court therefore affirmed defendant’s decision to deny Mr. Ramos’ claim for short-term disability benefits.

ERISA Preemption

Seventh Circuit

Schmidtknecht v. OptumRx Inc., No. 25-CV-93, 2025 WL 2096866 (E.D. Wis. Jul. 25, 2025) (Judge Byron B. Conway). This wrongful death action arose after a young man, Cole Schmidtknecht, suffered a deadly asthma attack on January 15, 2024. Cole had suffered from asthma all his life. His asthma was treated with a prescribed inhaler that was covered through his insurance with United Healthcare. On January 10, 2024, Cole went to his local Walgreens pharmacy to refill his prescription. It was then that the pharmacist told him that his insurer no longer covered his inhaler and that his prescription would cost him $539.19. Cole only had enough money for his typical co-pay, which was less than $70. He had received no advanced warning of this coverage change, and Walgreens made no effort to assist him in obtaining an alternative covered treatment. Unable to afford the cost of the prescription, Cole left without his inhaler. Five days later, Cole experienced a severe asthma attack. By the time his roommate got him to the hospital, Cole was unconscious, pulseless, and blue. Cole was immediately put onto a ventilator, but sadly he did not recover. He was pronounced dead six days later. After their son’s death, Cole’s parents, Shanon and William, filed this wrongful death action against Optum Rx, Inc. and Walgreens. They allege that Optum Rx violated a Wisconsin law requiring that it give notice to Cole that his prescription would no longer be covered. Plaintiffs maintain that the pharmacy benefit manager chose to stop covering Cole’s prescribed inhaler not because of any legitimate medical reason, but based purely on its own financial incentives. Optum Rx moved to dismiss the family’s complaint. It argued that the wrongful death action is preempted by both Sections 514(a) and 502(a) of ERISA. The court disagreed and denied the motion to dismiss. At the outset, the court stated that plaintiffs are not attempting to assert a claim directly under the Wisconsin laws which regulate pharmacy benefit managers, but rather that they point to the state statutes “as establishing the duties that Optum Rx owed to the Cole and thus as a foundation for a wrongful death claim.” By contrast, the court found that the ERISA plan is not the foundation of the parents’ claim, nor a necessary component of it. “Optum Rx has not shown that the plaintiffs’ claim will require the court to cross the line into interpretation or application of the terms of the plan. Rather, in relation to the plaintiffs’ claim as pled in the amended complaint, the facts related to the plan appear to be undisputed, secondary, and superficial. The plan provides merely the context for the dispute akin to how a plan may provide the foundation for a fraud or misrepresentation claim.” The court emphasized that plaintiff’s theory of harm is not premised on Optum Rx’s denial of benefits, but instead focuses on an argument that the pharmacy benefit manager was negligent because it failed to give Cole notice that it would no longer be covering his medication and that his out-of-pocket costs would skyrocket as a result. This theory, the court determined, is not necessarily preempted by ERISA, given that “Optum Rx has failed to demonstrate that either ERISA or the plan documents address whether a participant is entitled to notice regarding changes to prescription drug benefits or the nature and extent of any such notice.” Accordingly the court concluded that the wrongful death claim may be viable in some form. As a result, the court denied Optum Rx’s motion seeking the claim’s dismissal.  

Eighth Circuit

Express Scripts Inc. v. Richmond, No. 4:25-CV-00520-BSM, 2025 WL 2111057 (E.D. Ark. Jul. 28, 2025) (Judge Brian S. Miller). A group of pharmacies and pharmacy benefit managers filed this action alleging that a new Arkansas law, Act 624, which restricts pharmacy benefit managers’ ability to own and operate pharmacies in the state, violates the Commerce Clause, the Privileges and Immunities Clause, the Supremacy Clause because it is preempted by TRICARE, ERISA, Medicare, the Bill of Attainder Clause, the Takings Clause, and the Equal Protection Clause. Plaintiffs moved for a preliminary injunction, enjoining Act 624 from taking effect on January 1, 2026. In this order the court granted the motion and blocked the law during the pendency of the case. The court concluded that Act 624 “likely violates the Commerce Clause and it is likely preempted by TRICARE.” With regard to the Commerce Clause, the court was inclined to agree with plaintiffs that the law overtly discriminates against them as out-of-state companies and that the state has failed to show that it has no other means to advance its interests. As for the federal TRICARE program which provides health insurance plans to service members of the U.S. armed forces, the court determined that it is likely the Act is both explicitly and impliedly preempted by the statute. It stated that Act 624 conflicts with TRICARE’s health care delivery provision because it prohibits pharmacies owned by pharmacy benefit managers “from delivering healthcare to Arkansas patients. This prohibition is inconsistent with the TRICARE program that has existing contracts with some of the plaintiffs.” Moreover, the court noted that Act 624 “frustrates the ‘stability,’ ‘uniform[ity],’ and ‘national’ character of TRICARE.” Although the court concluded that plaintiffs are likely to prevail on their Commerce Clause and TRICARE preemption claims, this sentiment did not carry over to all of plaintiffs’ claims. “Plaintiffs, however, are unlikely to prevail on their Privileges and Immunities, ERISA preemption, Medicare preemption, Bill of Attainder, Takings, and Equal Protection claims.” Examining ERISA preemption specifically, the court found that Act 624 does not have an impermissible connection with ERISA as it does not regulate the pharmacy benefit managers “in their capacity as employee benefit plan administrators. Rather, it merely regulates the requirements for obtaining a retail pharmacy license.” The court stated that the Arkansas regulation will certainly affect ERISA plans’ shopping decisions and have an indirect economic influence on the plans, but these downstream effects would “not bind plan administrators to any particular choice and thus function as a regulation of an ERISA plan itself.” In addition to ascertaining that plaintiffs are likely to prevail on two of their eight claims, the court also determined that the pharmacies and pharmacy benefit managers would suffer irreparable harm if a preliminary injunction were not issued because they face the threat of unrecoverable economic loss. Further, the court concluded that the balance of equities and public interest also favor plaintiffs and that no harm could come from enjoining the enforcement of an unconstitutional law. Accordingly, while not all of plaintiffs’ arguments were ultimately persuasive to the court, it nevertheless agreed with them that it is necessary to enjoin Arkansas Act 624 from taking effect.

Ninth Circuit

Stapleton v. United Healthcare Benefits Plan of CA, No. 1:25-cv-00351-SAB, 2025 WL 2142349 (E.D. Cal. Jul. 29, 2025) (Magistrate Judge Stanley A. Boone). Pro se plaintiff Jackie Stapleton sued United Healthcare Benefits Plan of California in the small claims division of California state court alleging that it owes her damages for its refusal to cover the full cost of her medically necessary ambulance ride which occurred on July 1, 2022. United removed the matter to federal court after it realized that the healthcare plan at issue is governed by ERISA. Arguing that the state law claims are completely preempted by ERISA Section 502(a) and that the court has federal question jurisdiction over this matter, United moved for dismissal of Ms. Stapleton’s complaint. Ms. Stapleton moved to remand her action. Magistrate Judge Stanley A. Boone issued this decision recommending that the court deny plaintiff’s motion to remand and grant United’s motion to dismiss with leave to amend. Both conclusions hinged on Judge Boone’s preemption analysis. Judge Boone viewed Ms. Stapleton’s action as one seeking to recover the cost of the ambulance bill that she believes should have been covered in full under the terms of her ERISA-governed health insurance plan. Thus, he agreed with United that this case is plainly about a denial of benefits, and that it therefore clearly could have been brought as a claim under Section 502(a)(1)(B). Furthermore, Ms. Stapleton’s challenge to United’s interpretation of the plan, and by extension its coverage determination, presents no independent legal duty divorced from ERISA. Because Judge Boone concluded that both prongs of the Davila preemption test are satisfied, he found that the state law claims at issue are completely preempted by ERISA and that removal under Section 502(a) was proper. It was therefore Judge Boone’s recommendation that the court deny the motion to remand. By the same token, the Magistrate concluded that dismissal of the preempted state law claims was appropriate and that United’s motion to dismiss should be granted. However, it was also Judge Boone’s opinion that Ms. Stapleton should be afforded the opportunity to amend her complaint to assert a new cause of action under ERISA. Accordingly, while he recommended that the court dismiss the complaint, he advised that it do so without prejudice and with leave to amend.

Medical Benefit Claims

Ninth Circuit

Cal. Spine & Neurosurgery Institute v. Zoetis, Inc., No. 24-cv-06528-NW, 2025 WL 2097481 (N.D. Cal. Jul. 25, 2025) (Judge Noël Wise). Plaintiff California Spine and Neurosurgery Institute filed this ERISA action against defendants Zoetis Inc., United Healthcare Services, Inc., and United Healthcare Insurance Company after the surgery center was reimbursed 2.1% of the billed costs for surgery services it provided to an insured patient. In its action, California Spine asserts two causes of action: (1) failure to pay ERISA plan benefits under Section 502(a)(1)(B) and (2) breach of fiduciary duties of loyalty and due care in violation of Section 502(a)(3). Defendants moved to dismiss the complaint. They argued that the provider is barred from suing under ERISA based on the plan’s anti-assignment provision, and that regardless the complaint fails to state claims for benefits or fiduciary breach. Moreover, defendants argued that United Healthcare Insurance Company is an improper party. The court addressed the anti-assignment provision first. Although as a general matter anti-assignment provisions in ERISA plans are valid and enforceable, the court emphasized that there are exceptions that render them unenforceable. Here, California Spine argued that United waived the anti-assignment provision. Plaintiff alleged that although United was aware during the administrative claims process that it was acting as its patient’s assignee it never asserted the assignment provision as the basis for the denial or even mentioned its existence. Under Ninth Circuit precedent, the court concluded that these facts were sufficient to allege that United waived its anti-assignment provision defense. Next, the court assessed whether California Spine adequately stated a claim for ERISA benefits. It concluded that it had as the complaint identifies the specific ERISA plan, and alleges that a United representative confirmed in advance of the surgery that the plan would cover the surgical services and that “co-insurance would be at 90% of usual and customary and the Provider’s co-insurance would be at 60% and not based on a Medicare Fee schedule.” Additionally, the court found plaintiff adequately stated a claim for breach of fiduciary duties by alleging “Defendants misrepresented coverage, misrepresented reimbursement rates, and issued deficient explanations of benefits.” Further, plaintiff asserted that these actions were not undertaken with the care of a prudent administrator and that it suffered damages as a result of United’s failure to honor the rates it quoted prior to the surgery, which it had relied on. Finally, the court denied defendants’ motion to dismiss United Healthcare Insurance Company as a defendant. The court noted that plaintiff pointed to an authorization for the surgical services that was issued by United Healthcare Insurance Company and alleges that both United defendants are third-party administrators of the plan. The court found these allegations sufficient to adequately plead a connection between United Healthcare Insurance Company and the conduct at issue in the case. For these reasons, the court denied the motion to dismiss.

Fifth Circuit

Columbia Medical Center of Plano Subsidiary, L.P., v. Anthem Blue Cross Life and Health Ins. Co., No. 4:24-cv-137, 2025 WL 2107996 (E.D. Tex. Jul. 28, 2025) (Judge Amos L. Mazzant). Plaintiffs in this action are hospitals in Texas that serve the Plano and Dallas metropolitan area. The hospitals entered into an agreement with Blue Cross and Blue Shield of Texas which provided that they would treat patients with Blue Cross health plans and then be reimbursed for those treatments. Plaintiffs allege that they rendered medically necessary services to three patients with Blue Cross healthcare plans, that they submitted the claims to Blue Cross, and that Blue Cross rejected the claims and denied the appeals because preauthorization was purportedly not obtained prior to providing service. Blue Cross has currently not paid anything on the claims at issue. Accordingly, the hospitals filed this action seeking the payments. They assert claims under ERISA and contract law. Blue Cross moved to dismiss the claims. The court analyzed the ERISA claim first. Blue Cross urged the court to dismiss the ERISA claim pursuant to Rule 12(b)(1), arguing that the providers failed to plausibly allege valid assignments of benefits which deprives them of standing to bring claims under ERISA. In response, the hospitals argued that the court should assess the issue of assignments pursuant to Rule 12(b)(6). The court found that “Defendant’s argument carries the day. Defendant’s Motion, as to Count I, must be analyzed under Rule 12(b)(1) because standing under ERISA invokes the Court’s subject matter jurisdiction.” The court then determined that Blue Cross’s attack on the assignments was factual. “Here, Defendant has launched a factual attack because it has challenged the underlying facts supporting the Complaint – whether the assignments exist at all – rather than merely challenging the allegations on their face.” Accordingly, the court expressed that plaintiffs needed to put forth evidence of valid and enforceable assignments of benefits from the patients rather than just allege their existence in order to survive the Rule 12(b)(1) motion to dismiss for lack of jurisdiction. As a result, the court dismissed the ERISA claim, but without prejudice. As for the contract claims, the court denied Blue Cross’s motion to dismiss finding that the complaint states plausible claims for relief and meets the elements to state its claims. Therefore, defendant’s motion to dismiss the contract claims pursuant to Rule 12(b)(6) was denied. Should they choose to do so, plaintiffs were given leave to amend their complaint to address the deficiency in their allegations regarding the assignments. Accordingly, the motion to dismiss was granted in part without prejudice, and otherwise denied. 

Pleading Issues & Procedure

First Circuit

Turner v. Liberty Mutual Ret. Benefit Plan, No. 20-11530-FDS, 2025 WL 2108841 (D. Mass. Jul. 28, 2025) (Judge F. Dennis Saylor IV). Plaintiff Thomas Turner was hired by Safeco Insurance Company in 1980. He worked for Safeco for the next 28 years, until it was acquired by Liberty Mutual Insurance Company in 2008, at which time he became an employee of Liberty Mutual. At the center of this putative class action is Liberty Mutual’s calculation of cost-sharing obligations for post-retirement medical benefits, and its decisions regarding whether to credit workers’ pre-merger years of service with Safeco. Mr. Turner has always maintained that after the acquisition of Safeco by Liberty Mutual, he was repeatedly advised that he would receive cost-sharing credit for his retiree health benefits based on a calculation of his years of service with both Safeco and Liberty Mutual. However, when he retired in 2018, Liberty Mutual made him choose between his Safeco and Liberty Mutual benefits. Mr. Turner challenged this determination of his post-retirement medical benefits and argued that Liberty Mutual was required to credit his years of service to both Safeco and Liberty Mutual. When it did not do so, Mr. Turner turned to litigation. On August 14, 2020, he filed this action against the Liberty Mutual defendants on behalf of himself and others similarly situated. He asserted four causes of action which included a claim for determination of plan terms and clarification of benefits, a claim for equitable relief based on allegations of fiduciary breach, a claim alleging defendants failed to provide plan documents, and a claim for failure to disclose plan limitations. On summary judgment, the court concluded that Mr. Turner’s post-retirement medical benefit under the Liberty Mutual plan was not a vested benefit, and that the unambiguous terms of the plan did not provide cost-sharing credit for his year with Safeco. The court also granted summary judgment in favor of defendants on the failure to provide plan documents and failure to disclose plan limitations claims. Despite finding in favor of defendants on counts one, three, and four, the court denied their motion for summary judgment on the fiduciary breach claim for equitable relief. It found that there were triable issues of fact regarding precisely what representations Liberty Mutual had made to Mr. Turner concerning whether his years of service with Safeco would be credited to him for the purpose of calculating his cost-share obligations under the Liberty Mutual retiree health plan. As a result, litigation continued. Mr. Turner subsequently filed a motion for class certification. On July 15, 2024, the court denied the motion for certification on the ground that the proposed class was based in part on a newly asserted claim that Mr. Turner was denied benefits under both the Safeco and the Liberty Mutual plans. “The initial complaint had alleged that plaintiff was denied benefits under only the Liberty Mutual plan; according to the initial complaint, plaintiff’s benefits under the Liberty Mutual plan were to be calculated based on the credit that he accrued – that is, his total years of employment – at both Safeco and Liberty Mutual. However, it did not allege that plaintiff was entitled to and denied benefits under both plans.” Mr. Turner now seeks leave to amend his complaint to address the pleadings concerning the combined-benefits theory, based on an assertion that he was improperly denied both his grandfathered Safeco benefits and his earned Liberty Mutual benefits. The court denied Mr. Turner’s request for leave to amend in this decision. First, the court held that the motion was unduly and unjustifiably delayed as it was filed five years after Mr. Turner initially brought this action. In the time since, discovery has closed and the court has ruled on two summary judgment motions and a motion for class certification. The court held that “[s]uch a significant delay is alone sufficient to deny the motion.” In addition to the motion’s lack of timeliness, the court also determined that allowing Mr. Turner to amend his complaint at this juncture would impose substantial and unfair prejudice on the defendants. Even assuming without deciding that the amendment would not entail significant or extensive new discovery, the court said that “amendment would nevertheless be unfairly prejudicial, as it would likely meaningfully affect defendants’ litigation strategy.” Consequently, the court concluded that the combined delay and prejudice cautioned against granting the motion for leave to amend the complaint. For these reasons, the court denied the motion.

It is a light and breezy week here in California and at Your ERISA Watch. So, we have no case of the week and just a few covered decisions.  Of note is an interesting attorneys’ fee decision from the Sixth Circuit, and two decision on petitions for interlocutory review under 28 U.S.C. § 1292(b), one granting the defendants’ petition in a pension annuitization case, and the other denying such a petition in a healthcare lawsuit bright by the former Seretary of Labor. 

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

Attorneys’ Fees

Sixth Circuit

Canter v. Blue Cross Blue Shield of Mass., Inc., No. 24-3926, __ F. App’x __, 2025 WL 2058997 (6th Cir. Jul. 23, 2025) (Before Circuit Judges Moore, Griffin, and Ritz). Plaintiff-appellant Keith Canter received health insurance through an ERISA-governed healthcare plan administered by Blue Cross Blue Shield of Massachusetts, Inc. In 2015, Mr. Canter underwent back surgery and submitted two claims for $41,034 and $43,988. Blue Cross denied coverage of both claims, which prompted Mr. Canter to sue under ERISA. Mr. Canter was successful in his lawsuit and the district court granted summary judgment in his favor. It then remanded the case to Blue Cross to reconsider the benefit decision. Blue Cross reversed its benefits decision on remand and awarded Mr. Canter $85,022 for the two claims that were previously denied. Mr. Canter moved to reopen the case following the remand decision and moved for an award of prejudgment interest and attorney’s fees. The court ultimately awarded Mr. Canter $15,267.01 in prejudgment interest, $622.75 in costs, and $204,771 in attorney’s fees for work in obtaining the remand, for a total of $220,660.76, which was in addition to the Blue Cross’s $85,022 payment. Mr. Canter then filed a second motion for attorney’s fees, seeking compensation for the work his lawyer performed after the administrative remand. The district court conducted a second fee analysis wherein it considered only the work done after the remand. It then denied post-remand fees. Mr. Canter appealed that order before the Sixth Circuit. The court of appeals affirmed the district court’s post-remand order denying fees in this decision. Before discussing Mr. Canter’s arguments, the appeals court stressed that it reviews a district court’s grant or denial of a fee award for abuse of discretion and that, in general, it will “defer to a district court’s determination of a fee award, given ‘the district court’s superior understanding of the litigation and the desirability of avoiding frequent appellate review of what essentially are factual matters.’” With that being said, the Sixth Circuit could find no abuse of discretion or error in the district court’s decision. Mr. Canter first challenged the district court’s use of the Sixth Circuit’s five King factors: (1) the degree of the opposing party’s culpability or bad faith; (2) the opposing party’s ability to satisfy an award of attorney’s fees; (3) the deterrent effect of an award on other persons under similar circumstances; (4) whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA; and (5) the relative merits of the parties’ positions. The Sixth Circuit took no issue with the lower court’s application of these factors or its decision to undertake the King analysis in the first place. The appellate court found no issue with the district court’s division of Mr. Canter’s attorney’s work into the work that contributed to obtaining a remand and the post-remand work, or its decision to limit the scope of the fee analysis to the second category of work. As a practical matter, the district court adopted this analytical framework as a way of differentiating the second fee motion from the first. Since Mr. Canter’s two fee motions presented a clear division between the pre- and post-remand work, the Sixth Circuit concluded that it was entirely appropriate for the district court to separate them when conducting its analysis. The Sixth Circuit held, that “the court conducted a full and detailed King analysis that clearly outlined its reasons for distinguishing the post-remand work and declining to grant fees for that work.” Next, Mr. Canter argued that he was entitled to fees for litigating against Blue Cross to obtain his original fee award. Though the court of appeals acknowledged that “fees for fees” are certainly recoverable, it nevertheless emphasized that “the district court was not required to separate out fees for this kind of work from the overall post-remand litigation, which extended beyond Canter’s claim to fees for fees.” Thus, the court of appeals declined to disturb the district court’s “reasoned analysis as to the appropriateness of attorney’s fees for post-remand work in this case.” Finally, the court of appeals briefly went through alleged factual errors Mr. Canter argued were present in the district court’s decision, including its characterization of his post-remand work and its assessment of the success he achieved, and explained why in its view these arguments failed. Accordingly, the Sixth Circuit affirmed the district court’s post-remand fee decision.

ERISA Preemption

Ninth Circuit

Kenyon v. Reliance Standard Life Ins. Co., No. CV 25-11-BLG-TJC, 2025 WL 2029919 (D. Mont. Jul. 18, 2025) (Judge Timothy J. Cavan). Plaintiff Anthony P. Kenyon worked from 2004 until 2020 as a pipefitter for an employer in Montana. Through his employment Mr. Kenyon became a member of the United Steel Workers Local 11-443 union. As a union member Mr. Kenyon became a participant in a long-term disability insurance policy through Reliance Standard Life Insurance Company. By January 2020, Mr. Kenyon had to stop working due to recurrent pneumonia and infections caused by an immunodeficiency. Although it took a bit of back and forth, Reliance eventually approved Mr. Kenyon’s claim for coverage under the policy. Then in July 2020, Mr. Kenyon elected to roll a portion of his pension into an individual retirement account and took the balance as a lump sum payment. This litigation stems from Reliance’s decision to offset Mr. Kenyon’s disability benefit payments by the value of the lump sum pension payment. After unsuccessfully appealing Reliance’s determination, Mr. Kenyon brought this action against Reliance in state court in Montana. In his complaint Mr. Kenyon asserts state law claims for declaratory judgment, breach of contract, and violation of Montana’s Unfair Trade Practices Act. Reliance removed the action to federal court invoking federal question jurisdiction. Before the court were Reliance’s motion to dismiss and Mr. Kenyon’s motion to remand. Both motions turned on the issue of ERISA preemption. The court addressed the motion to remand first. As an initial matter, the court disagreed with Mr. Kenyon that the disability policy fell under the “safe harbor” exemption to ERISA. Rather, the court found that there was ample evidence that the steel workers union endorsed the plan for the purposes of the safe harbor regulation and established and maintained the plan to bring the plan within the scope of ERISA. The court noted, among other things, that the union was designated as the plan administrator, that it had the right to modify or terminate the plan, and that it had designated duties and responsibilities under the policy including issuing a certificate of insurance to each insured, maintaining records, and paying all premiums to Reliance when due under the policy. The court therefore determined that the policy is governed by ERISA. It then considered whether Mr. Kenyon’s claims are completely preempted by the federal statute, and found that they were. The court agreed with Reliance that each of the three state law causes of action could be brought as claims under ERISA, and that none of them were based on any independent legal duties. Instead, as alleged in the complaint, the claims arise from Reliance’s obligations under the policy, its actions handling Mr. Kenyon’s benefits, and its benefit calculation decision as a plan fiduciary to offset the benefit amount by the pension rollover payment. Accordingly, the court held that Reliance met its burden of showing that removal of the action was proper based on federal question jurisdiction. The court therefore denied the motion to remand. Finally, as each state law claim in the complaint was found to be completely preempted by ERISA Section 502(a), the court determined that the complaint was subject to dismissal under Rule 12(b)(6). The court thus granted Reliance’s motion to dismiss. However, it stated that it would grant Mr. Kenyon leave to file an amended complaint to amend to state a federal cause of action under ERISA.

Exhaustion of Administrative Remedies

Fourth Circuit

Young v. Western-Southern Agency, Inc., No. 2:23-cv-00764, 2025 WL 2080259 (S.D.W.V. Jul. 23, 2025) (Judge Thomas E. Johnston). Plaintiff Randy Young initially filed this lawsuit against defendant Western and Southern Life Insurance Company in state court in West Virginia. However, Western and Southern removed the case to federal court based on federal question jurisdiction. On September 20, 2024, the court determined that the Long-Term Incentive Retention plan at the center of the lawsuit is an ERISA-governed top-hat plan. Rather than dismiss Mr. Young’s action, the court permitted him to refile his complaint as an action under ERISA. Mr. Young did so. Western and Southern then filed a motion to dismiss the amended complaint. In support of its motion to dismiss, Western and Southern advanced three arguments: (1) Mr. Young’s claim for relief under ERISA is barred by his failure to exhaust administrative remedies; (2) his claim is also barred by his failure to timely file suit under the plan’s six-month deadline; and (3) Mr. Young is ineligible for the plan benefits because he was terminated for cause. In this decision the court agreed with defendant on all three points and therefore granted the motion to dismiss. First, the court stated that there was no dispute that Mr. Young failed to appeal his denial through the plan’s administrative channels. Mr. Young argued that exhausting the administrative remedies would have been futile because the same party who denied his claim would conduct the review. To this court, this “bare allegation” did not make a “clear and positive showing to warrant suspending the exhaustion requirement.” Thus, the court agreed with Western and Southern that Mr. Young’s complaint should be dismissed for failure to exhaust the internal administrative remedies. Second, the court held that the complaint should independently be dismissed for Mr. Young’s failure to timely file suit. The court noted that Mr. Young did not argue that the six-month period in the plan was unreasonable, nor did he provide an applicable statute of limitation that he believed would control. As the plan required that he file his action within six months of the final denial and because he did not commence his suit in that time, the court held that the action is time-barred. Finally, putting aside the issues of exhaustion and timeliness, the court determined that the uncontroverted evidence supports Western and Southern’s assertion that Mr. Young was ineligible for benefits under the plan because he was terminated for cause and Section 4.7 of the plan states that “[t]he contingent right of a participant or beneficiary to receive future payments hereunder with respect to both vested and nonvested performance units shall be forfeited . . . if the participant is involuntarily terminated from employment for cause by the company or any affiliate.” Mr. Young responded that the plan did not have the power to take away his vested and nonforfeitable benefits. However, the court held that ERISA’s strict vesting requirements do not apply to top-hat plans like the plan at issue. Thus, it said, “the funds do not rightfully belong to Plaintiff because they were forfeited under Section 4.7 of the LTIR plan, so unjust enrichment does not apply.” For these reasons, the court granted Western and Southern’s motion and dismissed the complaint.

Medical Benefit Claims

Second Circuit

Murphy Med. Associates, LLC v. Cigna Health and Life Ins. Co., No. 3:20-cv-1675 (VAB), 2025 WL 2022056 (D. Conn. Jul. 18, 2025) (Judge Victor A. Bolden). Plaintiffs Murphy Medical Associates, LLC, Diagnostic and Medical Specialists of Greenwich, LLC, North Stamford Medical Associates, LLC, Coastal Connecticut Medical Group, LLC, and Steven A.R. Murphy, M.D. are associated healthcare providers that operated COVID-19 testing sites. They have brought suit under ERISA and state law against Cigna Health and Life insurance Company and Connecticut General Life Insurance Company (collectively “Cigna or defendants”) to recover payment for COVID-19 testing and testing-related services that were denied reimbursement. Defendants countersued the providers for various claims related to alleged overpayments that they maintain plaintiffs collected. In previous orders the court granted in part and denied in part defendants’ motion to dismiss, and granted defendants’ motion for sanctions and precluded the plaintiffs from offering evidence in support of approximately 10,000 itemized claims. As a result of that last decision, plaintiffs were only permitted to introduce evidence to support the remaining 3,508 itemized claims. Plaintiffs moved for the court to reconsider its decision, but on September 20, 2024, the court declined to do so. Defendants subsequently moved for summary judgment on plaintiffs’ claims brought under ERISA, the Connecticut Unfair Trade Practices Act, and for tortious interference with beneficial or contractual relationships. In this decision the court granted in part and denied in part defendants’ motion for summary judgment. The court began with the ERISA claims. As an initial matter, the court agreed with defendants that in light of its order precluding plaintiffs from offering evidence as to the approximately 10,000 itemized claims, summary judgment in favor of Cigna was appropriate as to these claims. The court then focused on the remaining 3,508 itemized claims. It denied the motion to dismiss these ERISA claims. First, the court rejected defendants’ arguments challenging the validity of the assignments. It determined that the language of the assignment agreements could be interpreted to demonstrate the patients’ intent to assign any right to payment to the providers, and noted that courts in the District have found similar assignments sufficient to establish ERISA standing. Moreover, the court determined that plaintiffs’ representations to the patients that they would not seek payment from them insufficient to establish, as defendants argued, that the patients owed no debt to the providers for the medical services that could be recovered through their insurance. And while defendants argued that the assignment agreements only confer standing as to some of the providers, the court held that plaintiffs raised a genuine dispute of material fact as to the relationship between all of the providers, such that they could arguably be considered essentially a single healthcare provider. The court also declined to dismiss the ERISA claims for failure to exhaust administrative remedies owing to the fact defendants did not submit record evidence establishing that an administrative appeals process was available under the relevant plans for the itemized claims. Finally, the court concluded that dismissal of plaintiffs’ ERISA claims based on plaintiffs’ failure to post a cash price for the testing services was improper under the language of the CARES Act. For these reasons, the court denied defendants’ motion for summary judgment as to the itemized ERISA claims. However, the court granted summary judgment to Cigna on the two remaining state law causes of action. The court held that plaintiffs’ Connecticut Unfair Trade Practices Act failed because the Connecticut state legislature has not issued any statement that a violation of the COVID statutes, the FFCRA or the CARES Act, by a health plan is actionable under the Act. With regard to the tortious interference claim, the court agreed with defendants that plaintiffs presented no admissible evidence that Cigna made any defamatory statements about them. Accordingly, the motion to dismiss was granted in part and denied in part as explained above.

Sixth Circuit

Perrone v. BCBS Life Ins. Co., No. 1:24-cv-1313, 2025 WL 2027540 (W.D. Mich. Jul. 21, 2025) (Judge Hala Y. Jarbou). Plaintiff Jacob Perrone filed this action against Blue Cross Blue Shield of Michigan after the insurance company refused to cover the cost of his partial hospitalization program at an out-of-network residential mental health treatment facility during the months of March and April of 2021. Mr. Perrone asserts three causes of action in his complaint: (1) a claim for wrongful denial of benefits under Section 502(a)(1)(B); (2) a claim for equitable relief under Section 502(a)(3) based on an alleged violation of the Mental Health Parity and Addiction Equity Act; and (3) a state law claim for breach of contract. Blue Cross moved to dismiss the Parity Act violation and the breach of contract claims. The court in this order denied the motion to dismiss the claim under Section 502(a)(3), but granted the motion to dismiss the breach of contract claim. Blue Cross argued that the Parity Act violation must be dismissed because there is no private right of action available under the Mental Health Parity and Addiction Equity Act. The court, however, responded that this argument ignores the fact that Mr. Perrone explicitly invokes the Parity Act’s ERISA provision and the private right of action available to those denied plan benefits. As such, Blue Cross’s argument that Mr. Perrone lacks a remedial right to invoke the mental health parity requirement failed. The court did, however, agree with the insurer that the breach of contract claim was preempted by ERISA. The court determined that the claim self-evidently related to the benefit plan as it sought payment of benefits under the policy. As a consequence, the court found the state law breach of contract claim duplicative of ERISA’s enforcement mechanism for Mr. Perrone’s claim for recovery of benefits under the ERISA plan itself. The court therefore granted the motion to dismiss the breach of contract claim.

Pleading Issues & Procedure

Fourth Circuit

Konya v. Lockheed Martin Corp., No. 24-750-BAH, 2025 WL 2050997 (D. Md. Jul. 22, 2025) (Judge Brendan Abell Hurson). Plaintiffs in this putative class action are four retirees of defendant Lockheed Martin Corporation who allege that the defense contractor has violated ERISA in the transfer of their defined benefit pension benefits to a private and allegedly high-risk annuity with Athene Annuity & Life Assurance Company of New York through a process known as a pension risk transfer. Plaintiffs allege that the pension risk transfer was in violation of Lockheed’s statutory and fiduciary duties, and resulted in a prohibited transaction under ERISA. On March 28, 2025, the court issued an order denying Lockheed’s motion to dismiss the action. The court disagreed with defendant’s reading of the Supreme Court’s decision in Thole v. U.S. Bank, 590 U.S. 538 (2020), and their associated argument that plaintiffs do not have standing to bring suit because they have been paid all of their benefits to date. Instead, the court concluded that plaintiffs adequately alleged that Lockheed’s transfer of the plan assets and liabilities to Athene represented mismanagement so egregious that it substantially increases the risk that future pension benefits will go unpaid.  This lawsuit does not exist in a vacuum, however. Other large defined pension plans in the country have also annuitized some of their pension liabilities with Athene, and retirees affected by those transfers have brought similar lawsuits concerned by the risk of future harm. On the same day this district court issued its denial of defendant’s motion to dismiss, Judge Loren AliKhan of the United States District Court for the District of Columbia granted a motion to dismiss filed by corporate defendants in a case with facts similar to the present case in Camire v. Alcoa USA Corp., No. CV 24-1062 (LLA), 2025 WL 947526 (D.D.C. Mar. 28, 2025). (Your ERISA Watch reported on both decisions in our April 9, 2025 issue.) Before the court here was Lockheed’s motion for an interlocutory appeal to address this “burgeoning split” on whether challenges to pension risk transfers involving Athene are viable in light of Thole. In this decision the court granted defendant’s motion and stayed the case pending appeal, holding that Lockheed presented a controlling question of law about which there is a substantial basis for difference of opinion among the district courts and that an order from an immediate appeal may materially advance this litigation. As to the controlling question of law, the court held that its ultimate decision rendered was a legal one “namely whether those facts, if true, represent ‘mismanagement . . . so egregious that it substantially increased the risk that [Plaintiffs’ retirement plan] would fail and be unable to pay the participants’ future pension benefits.’” Moreover, the court added that “the question is controlling in the sense that if a higher court decided the question differently, the case would not move forward in its present form.” In addition to finding that a controlling question of law exists, the court also agreed with Lockheed that there is a substantial basis for a difference of opinion on the question to be presented for appellate review, as evidenced by the two divergent district court opinions issued on the same day. It is clear, the court said that the “courts themselves disagree as to what the law is.”‘ Finally, the court determined that resolving the issue related to the application of Thole to the allegations at hand has the potential to ease future litigation by simplifying the trial and making discovery less costly and more straightforward. Accordingly, some guidance by the court of appeals, the court found, will help avoid unnecessary litigation here. For these reasons, the court found that the requirements for an interlocutory appeal under 28 U.S.C. § 1292(b) were met on the question proposed by Lockheed “namely ‘whether Plaintiffs have plausibly alleged a sufficient injury for purposes of Article III’ under the unique scenario presented here.”  For those readers not familiar with interlocutory appeals under § 1292(b), the district court’s order does is a necessary but not sufficient basis for the appeal. The Fourth Circuit must now decide whether it wishes to hear the appeal and has pretty much unfettered discretion in doing so, even if it agrees with the district court that the § 1292(b) criteria are met. Full disclosure: attorneys at Kantor & Kantor represent that plaintiffs in Konya, along with attorneys from several other law firms.  

Sixth Circuit

Shakespeare v. MetLife Legal Plans, Inc., No. 2:25-cv-02250-TLP-atc, 2025 WL 2051113 (W.D. Tenn. Jul. 22, 2025) (Judge Thomas L. Parker). While she was employed at Prime Therapeutics LLC pro se plaintiff Tan Yvette Shakespeare participated in a prepaid legal services plan insured by MetLife, which she alleges by its terms promised legal representation for family law matters, including divorce. But when Ms. Shakespeare requested a counsel to represent her in her divorce, she maintains that MetLife provided an attorney who did not represent her in an appropriate professional manner before abruptly withdrawing from representation in the middle of the divorce proceeding. Ms. Shakespeare says that losing her counsel caused the state court to enter default judgment against her resulting in financial harm and loss of property. In January 2025, Ms. Shakespeare sued MetLife and Prime Therapeutics in state court in connection with this experience, asserting state law claims for breach of contract, bad faith, and negligence. Defendants removed the case to federal court and then moved to dismiss the complaint. The court referred the matter to Magistrate Judge Annie T. Christoff. Judge Christoff entered a report and recommendation on April 30th recommending that the court deny defendants’ motion to dismiss. MetLife timely objected. In this decision the court found no error in the report’s analysis and adopted it in full, overriding MetLife’s objection and denying defendants’ motion to dismiss. To begin, the court agreed with Judge Christoff that without more facts about the legal services plan and more evidence about Prime Therapeutics’ conduct related to it, the court could not find that Prime endorsed the plan as a matter of law. As a result, the court agreed with the Magistrate Judge that it is too early to decide whether the plan meets ERISA’s safe harbor exemption requirements, and by extension too soon to decide the ERISA preemption issue. The court thus denied the motion to dismiss based on ERISA preemption. Moreover, the court agreed with Judge Christoff that Ms. Shakespeare’s complaint alleges enough facts supporting each element of her breach of contract, negligence, and bad faith denial of insurance claims. Accordingly, the court overruled the objections levied by MetLife. Instead, it adopted the report and recommendation, and denied the motion to dismiss.

Kraft Heinz Food Co. v. Fritz, No. 3:24 CV 1822, 2025 WL 2062250 (N.D. Ohio Jul. 23, 2025) (Judge James R. Knepp II). Decedent Larry Leo Fritz, II initially designated his two children, James E. Fritz and Larry Leo Fritz, III, as the beneficiaries of his benefits plan maintained under a Kraft Heinz savings account. However, just four days before he was involuntarily admitted to a psychiatric unit and six weeks before his death, Mr. Fritz’s online account was used to change the beneficiary of the plan to name his mother, Rita A. Fritz, as the sole beneficiary. Rita was caring for her son during this period preceding his death. One month after their father died the Fritz siblings filed a lawsuit in Huron County Probate Court in Ohio against their grandmother, Rita, to invalidate the designation, claiming incapacity or undue influence. Approximately three months later, Kraft Heinz Food Company filed this interpleader action against Rita and the siblings to facilitate payment of benefits under the plan. The Fritz siblings moved to dismiss or stay proceedings in this action under the Colorado River doctrine, claiming that the Huron County probate case is a parallel state proceeding that would resolve the underlying issue in this dispute. Kraft opposed the motion and argued that the federal court has exclusive jurisdiction over the claims at issue. The court disagreed with Kraft’s jurisdiction arguments. The court observed that under ERISA state courts “have concurrent jurisdiction of actions’ brought by a beneficiary to recover benefits, enforce rights under the plan, or clarify rights to future benefits.” It added, “[t]he Huron County Probate action is one where the Fritz Siblings are acting as beneficiaries to recover benefits under the Kraft Plan. As such, state courts have concurrent jurisdiction over the issue and a Colorado River analysis is proper.” The court then conducted an inquiry to ascertain whether abstention was appropriate under Colorado River. It concluded that it was. The court determined that the interpleader action and Huron County Probate action are parallel proceedings involving the same underlying dispute to resolve the same issues. Since the actions are parallel, the court  proceeded to consider “(1) whether federal or state law provides the basis for decision of the case; (2) whether either court has assumed jurisdiction over any res or property; (3) whether the federal forum is less convenient to the parties; (4) avoidance of piecemeal litigation; and (5) the order in which jurisdiction was obtained.” As to the first factor, the court noted that ERISA does not contain any provisions regulating the problem of beneficiary designations that are forged or the result of undue influence, and that courts look to principles of state law for guidance on these issues. With regard to the second factor, the court stated that neither party indicates any court has taken jurisdiction over the property at issue. The court also found that adjudication of the Kraft plan in federal court would lead to piecemeal concurrent litigation over the same dispute in both state and federal court, which would be inconvenient and problematic. Therefore, the court determined that ongoing federal and state court proceedings are not more convenient here than just the state court proceedings. Finally, the court acknowledged that the state court action was brought before Kraft filed its complaint in federal court. Weighing all of this, the court found that the Colorado River factors favor abstention in this case. However, rather than dismiss the case, the court decided the best course of action would be to stay proceedings pending adjudication of the underlying issues in the Huron County Probate Court. The court therefore granted the siblings’ motion to stay.

Eighth Circuit

Su v. BCBSM, Inc., No. 24-99 (JRT/DLM), 2025 WL 2043663 (D. Minn. Jul. 21, 2025) (Judge John R. Tunheim). Defendant BCBSM, Inc. is a third-party administrator for several self-funded ERISA healthcare plans in Minnesota. BCBSM provides these plans with access to the Blue Cross provider network and its negotiated rates. It then administers employee claims for coverage and decides whether to approve or deny claims. If BCBSM approves a claim, it pays the negotiated amount to the provider from its own funds and then the healthcare plans reimburse it. Former Acting Secretary of Labor Julie A. Su initiated this action against BCBSM alleging that it is in violation of its fiduciary duties by charging the ERISA welfare plans for the tax that Minnesota imposes on providers’ gross revenues. BCBSM moved to dismiss the lawsuit for lack of standing and for failure to state a claim. On August 22, 2024, the court denied the motion to dismiss. It determined that the Secretary’s alleged loss in the amount of $67 million sufficient to assert standing. The court also concluded that the Secretary had plausibly alleged that BCBSM was acting as a functional fiduciary when it passed on the tax liabilities to the plans because it was exercising authority over the plan’s assets. “The Court reasoned that when BCBMS paid a claim, plan funds were automatically encumbered, meaning BCBMS was exercising control over plan assets and thus owed duties as a functional fiduciary.” In response, BCBSM moved for the court to certify its order for immediate appeal. Specifically, it moved to certify the question of whether fiduciary duties should be imposed when a third-party administrator uses its own funds rather than plan money and is subsequently reimbursed. Noting that a “motion for certification must be granted sparingly,” when the movant demonstrates “that the case is an exceptional one in which immediate appeal is warranted,” the court applied heavy scrutiny to BCBSM’s motion. It ultimately determined that while BCBSM posed a controlling question of law, one which may materially advance the ultimately termination of this litigation, it nevertheless failed to demonstrate a substantial ground for difference of opinion. In fact, the court held that the “the only potential basis for a substantial ground for difference of opinion lies in the speculation of the First Circuit.” That speculation came from a line in a decision out of the First Circuit hypothesizing that a third-party administrator could avoid fiduciary liability by adopting a reimbursement scheme similar to BCBSM here. However, as the district court here noted, “the First Circuit was not presented with the question before the Court, and it specifically described its holding as narrow…Ultimately, Massachusetts Laborers’ provides nothing more than pure conjecture about how the First Circuit may decide an issue with which it has yet to be presented.” As such, the court determined that BCBSM failed to demonstrate a substantial ground for difference of opinion on the relevant question. Accordingly, the court denied BCBSM’s motion for immediate interlocutory appeal.

Aldridge v. Regions Bank, No. 24-5603, __ F. 4th __, 2025 WL 1983483 (6th Cir. Jul. 17, 2025) (Before Circuit Judges Gibbons, Larsen, and Murphy)

The bankruptcy of restaurant chain Ruby Tuesday and the loss of pension benefits under two “top hat” pension plans for Ruby Tuesday managers is the genesis of this week’s case of the week. The Sixth Circuit was called upon to answer two questions: (1) whether ERISA preempts the managers’ state law contract-based claims; and (2) whether ERISA Section 502(a)(3), 29 U.S.C. § 1132(a)(3), allows them to seek the value of their lost claims in the form of equitable surcharge. It answered yes to the former question and no to the latter.

Before we get to the court’s reasoning, a little background on “top hat” plans and the facts of the case is in order. As the court pointed out, to qualify for “top hat” status, a plan must cover only a “select group” of managers or highly compensated employees, and it must be “unfunded.” 29 U.S.C. § 1051(2). If the plan meets these requirements, ERISA exempts the plan from a number of its statutory requirements, including its fiduciary duty, funding, and vesting rules.

If a plan uses a device called a “rabbi trust” to put aside money for the plan, it is still considered to be unfunded for purposes of the top hat requirement. Under a rabbi trust, the funds must be used to pay benefits and not for general corporate purposes, but the assets are not the beneficial property of the plan participants, and they may still be used to pay creditors in the event of a bankruptcy. That is the structure that the Ruby Tuesday plans used, and the court held that this structure sufficed to make the plans top hat plans under ERISA. 

Regions Bank was appointed the trustee of the rabbi trusts and tasked with administering the plans under a written agreement with Ruby Tuesday dating back to 1992. The complaint alleges that Regions breached this agreement in several ways prior to the bankruptcy. First, plaintiffs allege that there was a change of control at the company in 2017, which triggered a requirement, which was not met, that the plans be funded up to the present actuarial value of all benefits. Second, plaintiffs allege that the plan was terminated in 2019, which triggered a right for participants to take a lump sum payout of benefits, but Regions failed to inform the participants of this right. Third, plaintiffs allege that Regions breached the trust agreement by acting pursuant to an oral instruction to cease all payments starting in August of 2020, when it was permitted to do so only pursuant to written instructions, which Regions did not receive until September 2020.

Because Regions itself recognized this latter problem, it filed an interpleader action asking a district court to decide who had the right to the funds from August and September. However, after Ruby Tuesday filed a bankruptcy petition in October 2020, and the bankruptcy court ordered that the money in the trust fund be transferred to the bankruptcy estate for the benefit of Ruby Tuesday’s creditors, Regions dismissed its interpleader action. The participants then settled with the bankruptcy estate, receiving some fees and fund assets in exchange for a waiver of their right to appeal the transfer of the funds’ assets to the bankruptcy estate.

Shortly thereafter, some of the participants sued Regions, alleging an ERISA claim for equitable relief in the form of “surcharge” pursuant to Section 502(a)(3), and also asserting state-law claims for breach of fiduciary duty, breach of trust, breach of contract and negligence. The district court “dismissed the state-law claims at the pleading stage on the ground that ERISA preempted them.” It later granted summary judgment to Regions on the ERISA claim, reasoning that plaintiffs’ “request for lost benefits did not qualify as the type of ‘equitable relief’ that the Participants may seek under 29 U.S.C. § 1132(a)(3).”

The Sixth Circuit first addressed Regions’ argument that ERISA’s “complete preemption” doctrine applies to the managers’ state-law claims. The court, however, declined to resolve the issue for three reasons. First, the court pointed out that the doctrine is primarily concerned with federal court jurisdiction, and because the district court had supplemental jurisdiction over the state-law claims, the case raises no jurisdictional issues. Second, the court reasoned that a finding that ERISA expressly preempts the claim would lead to the same result as a finding that ERISA completely preempts the claim because the plaintiffs forfeited any argument that they could restate their state-law claims as ERISA claims. Third, the court reasoned that because “express preemption” under ERISA applies more broadly than “complete preemption,” “judicial-economy concerns thus favor jumping to the broader express-preemption doctrine without first considering the narrow complete preemption issue.”

And so the court did, after taking brief detours to set out the history of Supreme Court decisions addressing ERISA’s express preemption and to explain that ERISA applies to the top hat plans at issue even though many of ERISA’s provisions do not. Looking to the state-law causes of actions asserted by plaintiffs, the court concluded that all four had a “connection with” the plans for purposes of ERISA preemption analysis.

The court found this “true for both procedural and substantive reasons.” As a procedural matter, the court found that plaintiffs’ state-law “claims all seek the same thing: the benefits allegedly due them under their ERISA-covered Plans.” Because ERISA itself contains a provision for seeking benefits, allowing “alternative enforcement methods” under state law would undermine the congressional policy choices embodied in ERISA.

As a substantive matter, the court saw plaintiffs’ state-law claims as an attempt to “impose additional duties on Regions on top of the duties that ERISA imposes.” Doing so “would undercut ERISA’s uniformity goals” by subjecting “plan administrators not just to ERISA’s fiduciary duties but also to the potentially conflicting standards of conduct of all 50 States.” This was true, in the court’s view, even though “ERISA exempts administrators of top-hat plans from its federal fiduciary duties,” because this decision was a deliberate congressional choice to impose a less-intrusive regime on plan sponsors with respect to top hat plans. Thus, as the court saw it, ERISA preempts not just the state-law remedies, but the substantive “right to state-law rules of fiduciary conduct.”

With respect to the plaintiffs’ assertions of contractual rights, the court held that plaintiffs must seek to enforce any such rights through “the vehicle that ERISA provides: a suit to enforce the terms of a plan under § 1132(a)(1)(B).” This was true even though plaintiffs asserted that they sought to enforce not the terms of the plans themselves, but the terms of the rabbi trust. The court reasoned that it “must look through the ‘label’ of the Participants’ state-law claim and consider its substance: a claim against a plan administrator for plan benefits based on its alleged misconduct.” Because “Regions would have had fiduciary duties under ERISA if it had managed ordinary plans rather than top-hat plans,” it “qualifies as ‘a traditional ERISA plan entity,’” meaning that plaintiffs “may bring their claims against the bank only under ERISA’s regime.”           

So, with that, the court turned at last to plaintiffs’ ERISA claim for equitable relief under Section 502(a)(3). Noting that the term “equitable” in ERISA “recalls the time in our history when governments divided their benches into distinct courts of equity and courts of law,” the court stated that “compensatory damages” are the “classic form of legal relief” that courts of law would grant and injunctions are the “classic form of equitable relief” that “equity courts would grant.”

Then, more directly addressing the issue at hand, the court noted that the phrase “equitable relief” in Section 502(a)(3) could convey either a “broad idea or a narrow one” with respect to remedies. “Thankfully,” the court concluded, it did not need to “independently choose between these broad and narrow readings” because “[f]or decades, the Supreme Court has held that Congress chose the narrower view of ‘equitable relief.’” The Sixth Circuit read these decisions as holding that “a request for ‘compensatory damages’ – that is, a request for ‘monetary relief’ measured by the plaintiff’s ‘losses’ – falls on the nonactionable legal side of the divide.” The Sixth Circuit also pointed out that courts apply more “nuanced rules when a party requests money” as a matter of “restitution,” requiring the tracing of “specific” plan funds.

“Before addressing that remedies question” at issue in this case, the court started “with a liability disclaimer: it is ‘far from clear’ that the Participants’ allegations suffice to hold Regions liable under § 1132(a)(3).” This was because plaintiffs “have identified no plan terms that Regions violated” and in fact argued that Regions violated not the plan, but only the trust agreement. But because neither party addressed the predicate question of liability, the court moved on to the remedies issue.

The court “immediately rule[d] out” that plaintiffs were seeking “equitable restitution” because “Regions turned over the Plans’ assets to the bankruptcy court and no longer possesses them.” The court then turned to the actual remedial issue in the case, whether the plaintiffs’ request for “equitable surcharge” is a request for available equitable relief under Section 502(a)(3). The plaintiffs, of course, rested their argument that it does on the Supreme Court decision in Cigna Corp. v. Amara, which the Sixth Circuit read as “suggest[ing] that equity courts could grant a beneficiary “monetary ‘compensation’ for a loss resulting from a trustee’s breach of duty.”

The Sixth Circuit noted that “several courts relied on that decision to conclude that ERISA plan participants may seek this type of monetary award against ERISA fiduciaries under § 1132(a)(3).” “Yet,” the court noted, “the Fourth Circuit has since disagreed” in Rose v. PSA Airlines, Inc. The Sixth Circuit read the Rose decision as holding that “an ‘equitable surcharge’ for a beneficiary’s losses qualifies as a damages remedy that Mertens does not permit ERISA plaintiffs to recover under § 1132(a)(3).”

“For four reasons,” the court “side[d] with the Fourth Circuit.” First, the Sixth Circuit held that the Supreme Court’s discussion of surcharge in Amara was unessential to its holding and thus dicta.

Second, the Sixth Circuit held that the Amara court’s dicta about surcharge conflicted with the holding of the Supreme Court in Mertens v. Hewitt Associates. The Sixth Circuit rejected the Supreme Court’s attempt in Amara to distinguish Mertens on the grounds that the Mertens’ rejection of damages was not directed at a recovery from a breaching fiduciary, holding that this distinction did not make a difference. 

Third, the Sixth Circuit pointed out that its own (pre-Amara) precedent rejected a surcharge remedy against a breaching fiduciary as constituting impermissible legal damages under Mertens. Although the court noted that “some of our unpublished cases have mentioned surcharge in passing as a potential remedy after Amara,” the court nevertheless noted that it should “refuse to follow the Supreme Court’s dicta if we have a ‘substantial reason’ for the refusal – such as ‘subsequent statements’ by the Court ‘undermining’ the ‘rationale’ of its earlier dicta.”

Fourth, the Sixth Circuit found such statements in the Supreme Court’s decision in Montanile v. Bd. of Tr. of Nat’l Elevator Indus. Health Plan, which the court read as “distanc[ing] itself from Amara’s dicta.”

Finally, the court refused to fashion a new cause of action as plaintiffs requested, noting that its general federal common law authority did not give it license to do so.  The court thus affirmed the district court’s decision with respect to both preemption and remedies.

Your ERISA Watch editors see a remedies showdown looming.  As always, we will be there for you when it happens.

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

Breach of Fiduciary Duty

Seventh Circuit

Bangalore v. Froedtert Health, Inc., No. 20-cv-893-pp, 2025 WL 1927534 (E.D. Wis. Jul. 14, 2025) (Judge Pamela Pepper). Plaintiff Nitish Bangalore participated in defendant Froedtert Health, Inc.’s 403(b) retirement plan. In this putative class action Mr. Bangalore alleges that the fiduciaries of the plan have violated their duties of prudence and monitoring by incurring excessive recordkeeping and administrative fees and by offering funds in the plan that were “needlessly expensive.” The pleading standard for these types of ERISA fee cases was in flux in the Seventh Circuit after the Supreme Court weighed in in Hughes v. Northwestern University, 595 U.S. 170 (2022). However, in subsequent decisions, including in its own decision in the Hughes case, the Seventh Circuit fleshed out what types of allegations in these cases are sufficient for a district court to infer fiduciary misconduct. Now that the contours of what a plaintiff must plead have been more concretely defined in the circuit, this district court was ready to weigh in on defendants’ motion to dismiss plaintiff’s second amended complaint. First, the court declined to dismiss the claims of imprudence and monitoring related to allegations of excessive recordkeeping fees. The court found that at this stage of the litigation the plans plaintiff chose as comparators were sufficiently similar to the “mega” plan at issue. “The comparator plans listed in the second amended complaint are sufficiently comparable in terms of both participant size and assets under management, especially given the plaintiff’s allegations in the second amended complaint that in 2021, the defendants’ plan was larger than 99.91% of all defined contribution plans in the United States. Taking that allegation as true (as the court must at the pleadings stage), it would be relatively difficult to find plans even closer in size and assets under management to the defendants’ plan. The complaint sufficiently identifies comparable plans with lower recordkeeping fees than the defendants’ plan.” Moreover, the court was unwilling to pull apart plaintiff’s calculation of the recordkeeping fees, stating that it would not be appropriate to do so at the motion to dismiss stage as it “would equate to the court considering the truth of the allegations in the second amended complaint.” Instead, accepting the allegations and calculations as true and accurate, the court concluded that it could infer imprudence based on recordkeeping fees that were between 2.3 and 4.4 times higher than every comparator fund. This was especially true, the court noted, because plaintiff alleges that recordkeeping services are fungible and all recordkeepers offer services of a materially identical level and quality. Thus, the court was satisfied that plaintiff sufficiently pled his claim that defendants paid higher fees for the same services. The court therefore denied the motion to dismiss the imprudence claim, and the derivative failure to monitor claim related to the excessive recordkeeping fees. The claims related to the excessive investment management fees was a different story, however. With regard to the fund-related claims, the court agreed with defendants that plaintiff failed to identify more than one lower-cost fund to demonstrate that the fiduciaries chose excessively expensive investment funds. Likewise, the court held that the complaint failed to plead facts that the comparator funds had similar investment strategies, management styles, or risk profiles as the challenged funds to allow it to determine that they truly were comparable. Without this level of detail, the court found that the complaint did not have enough to state a violation of the duty of prudence based on excessive investment management fees, and therefore granted the motion to dismiss both the underlying fiduciary breach claim and the derivative failure to monitor claims related to the challenged funds. Finally, defendants moved to dismiss plaintiff’s request for injunctive relief, arguing that he faces no risk of ongoing harm as a former employee. Mr. Bangalore stated at oral argument that he was not pursuing injunctive relief because he is a past participant. As a result, the court granted the motion to dismiss the request for injunctive relief from the second amended complaint. For these reasons, the court granted in part and denied in part defendants’ motion to dismiss. To the extent claims were dismissed, the court stated that its dismissal was with prejudice.

Eighth Circuit

Owens v. Life Ins. Co. of N. Am., No. 4:24-CV-792 HEA, 2025 WL 1952487 (E.D. Mo. Jul. 16, 2025) (Judge Henry Edward Autrey). Plaintiff Audrey Owens became an employee of the defense contractor Leidos, Inc. in May of 2018 when Leidos took over operations of another defense contractor that employed her. Prior to the Leidos takeover, Ms. Owens was enrolled in a welfare plan that provided long-term disability benefits. Ms. Owens alleges that as an employee of Leidos, she was a vested participant in a group insurance policy issued by Cigna that provided long-term disability benefits. About a month after Ms. Owens became an employee of Leidos she became disabled due to gastrointestinal issues, degenerative neck and spine conditions, and issues with her gallbladder. On June 27, 2018, she underwent surgery to remove her gallbladder. Despite the surgical intervention her symptoms never abated, and she was unable to continue working. Accordingly, Ms. Owens made a claim for benefits under the long-term disability benefit plan. On February 1, 2019, Cigna denied the claim. The basis for the denial was that Ms. Owens was not covered under the plan at the time she became disabled. In this ERISA action Ms. Owens is suing the Employee Benefit Committee of Leidos alleging that it breached its fiduciary duties to her and failed to provide plan documents upon written request. Ms. Owens seeks unpaid past benefits, reinstatement under the long-term disability plan, an order requiring Cigna to begin future long-term disability benefits, statutory penalties under § 1332(c), and attorneys’ fees and costs. Defendant Benefits Committee moved to dismiss the claims asserted against it. It argued that the fiduciary breach claim is untimely, and that all factual allegations in the amended complaint fail as a matter of law. The court denied the motion to dismiss in this decision. As an initial matter, the court found that it was not clear from the record when the last day the Benefits Committee could have cured its alleged breach and enrolled Ms. Owens in the Plan. The court stated, “Benefits Committee is raising the defense of timeliness, and it has not shown, based on the allegations in Amended Complaint, that the latest date on which it could have cured the alleged breach or violation was prior to June 6, 2018. Therefore, the Court finds Benefits Committee has not established that Plaintiff’s claim for breach of fiduciary duty is untimely, and the motion to dismiss is denied as to this issue.” The court then turned to whether the complaint states a claim for breach of fiduciary duty against the Benefits Committee. Ms. Owens alleges that the Committee violated its duties under ERISA by failing to give her proper and adequate information about enrolling in the plan. Alternatively, she alleges that the plan was a continuation of the prior plan in which she was enrolled, and that the long-term disability plan grandfathered in claims under the prior benefit plan. The Benefits Committee argued that, contrary to Ms. Owens’ allegations, it provided her with all of the required information regarding the plan in accordance with the governing regulations. In support of this assertion, it attached email correspondence it allegedly sent to Ms. Owens to its motion to dismiss. The court held that these emails were not embraced by the pleadings, and instead were provided “in opposition to the pleadings.” Because the emails were offered as a way to discredit and refute Ms. Owens’ allegations, the court concluded that they could not be considered on a Rule 12(b)(6) motion to dismiss. Moreover, the court was unwilling to convert the motion to dismiss as one for summary judgment under Rule 56, as there are open questions about whether the emails were sent to Ms. Owens’ personal email address or only to her work address and work computer, which she did not have access to while on medical leave. Moreover, the emails contained links to the relevant information, and the court could not say whether these links worked, and even assuming they did, whether they could only be accessed by employees at work through Leidos’ secure network. Thus, the court “demur[ed] considering the email exhibits without a more fully developed record following discovery” and instead decided the motion to dismiss based on the allegations in the complaint itself. Accepting Ms. Owens’ allegations, the court found that she sufficiently stated a fiduciary breach claim against the Committee, and therefore denied the motion to dismiss the claim. The court further denied the motion to dismiss the claim for penalties for failure to provide plan documents, as defendant’s arguments rested on the court finding that Ms. Owens was not a plan participant with a colorable claim for benefits, which the court would not do at this stage of the litigation. The Benefits Committee’s motion to dismiss was therefore denied in whole.

Ninth Circuit

Smith v. Recreational Equipment Inc., No. 3:24-cv-06032-TMC, 2025 WL 1953042 (W.D. Wash. Jul. 16, 2025) (Judge Tiffany M. Cartwright). In its defined contribution retirement plan defendant Recreational Equipment Inc. (“REI”) has a policy of charging recordkeeping and administrative fees only to participant accounts with balances of at least $5,000. Plaintiffs Macy Smith and Sally Johnson are two such participants of the plan who are challenging this policy in this putative class action ERISA lawsuit. They contend that REI, its Board of Directors, and the Retirement Plan Committee are breaching their duties of loyalty, prudence, and monitoring under ERISA by imposing fees in this way. Defendants moved to dismiss. They argued that the settlor doctrine bars plaintiffs’ claims because the $5,000 threshold is written into the terms of the retirement plan. Additionally, defendants contend that even if the claims are not barred by the settlor doctrine, the complaint nevertheless fails to plausibly allege a breach of fiduciary duty. The court took up the issue of the settlor doctrine first. The court agreed with defendants that one section of the plan, “read in isolation,” does impose an unambiguous and mandatory requirement that participant accounts with at least $5,000 must be charged recordkeeping and administrative fees. However, a different section of the plan allows the Plan Committee to not only exempt certain accounts from per capita charges based on a threshold set by the Committee that is greater or less than $5,000, but also to set separate thresholds for different types of per capita charges. If this second section didn’t exist, the court expressed that it would likely conclude that the plan’s allocation of expenses is a plan design decision encompassed by the settlor doctrine. But because it does, the court held that the plan does not forbid the Committee from setting the balance threshold for fees to whatever amount it choses, which amounts to discretionary authority, triggering fiduciary obligations. Accordingly, the court determined that the settlor doctrine does not preclude plaintiffs’ claims. In any case, the court’s analysis did not stop with this holding. Rather, the court assessed the legal theory undergirding plaintiffs’ allegations and found it wanting. In essence, plaintiffs take issue with the fact that participants with less plan assets are being subsidized by participants with more money in their accounts. But the court concluded there is nothing inherently wrong with this practice. To the contrary, the Department of Labor has blessed the pro rata method of allocating expenses, and essentially what REI is doing here is no different. The court agreed with defendants that there is no fiduciary duty “to ensure participants pay a proportionately equal share of plan expenses.” Plaintiffs are not alleging that the recordkeeping and administrative fees are overall unreasonable, instead they claim that they are unreasonably distributed. The court determined that “this legal theory ignores the obvious fact that every method of allocating RKA fees could be described as resulting in some plan participants subsidizing the costs of administration for others. In the pro rata method, participants with higher balances could be said to subsidize administration fees for those with lower balances. In the universal per capita method – which Plaintiffs seem to advocate in their complaint – participants with lower balances could be said to subsidize those with higher balances, since a participant with only $500 in their account would pay the same fee (but a far greater portion of their assets) as a participant with $500,000. There is nothing unique or even avoidable about the result of Defendants’ hybrid method, where RKA fees are assessed per capita, but only for accounts with a balance above a certain threshold.” The court added that assessing fees to participants with larger balances is within the range of reasonable judgments a fiduciary can make, and the decision to do so was not self-serving or disloyal. Accordingly, the court granted the motion to dismiss the claims of imprudence and disloyalty, as well as the derivative failure to monitor claim. As a final note, the court agreed with defendants that plaintiffs cannot sue under Section 502(a)(2) of ERISA because they are seeking to recover individual losses, rather than losses to the plan. It stated, “the relief sought is one based not on a loss to the whole Plan or any Plan assets, but to individual participants of the Plan. This is particularly evident because if the Court granted the relief Plaintiffs seek, other Plan participants with account balances less than $5,000 be required to pay higher annual fees. Since Plaintiffs seek only ‘a remedy for individual injuries distinct from plan injuries,’ their claims under Section 1132(a)(2) must also be dismissed on this basis.” Finally, the court stipulated that its dismissal was with prejudice, as it found that plaintiffs could not cure these shortcomings in the complaint through any amendment.

Disability Benefit Claims

Ninth Circuit

O’Connor v. Life Ins. Co. of N. Am., No. 24-3928, __ F. App’x __, 2025 WL 1937085 (9th Cir. Jul. 15, 2025) (Before Circuit Judges Thomas and De Alba and District Judge Rakoff). Plaintiff-appellant Francesca O’Connor filed this action to challenge a denial of benefits under a long-term disability policy administered by Life Insurance Company of North America (“LINA”). At issue was whether the operative policy’s pre-existing conditions limitation was valid and enforceable under Delaware law (the policy was issued in Delaware and subject to Delaware law). In a technical and short decision, the Ninth Circuit concluded that it was, and thus Ms. O’Connor cannot prevail on her claim. The Ninth Circuit wrote, “Section 3517(b) of the Delaware Insurance Code requires pre-existing condition limitations to ‘only apply to a disease or physical condition for which medical advice or treatment was received by the person during the 12 months prior to the effective date’ of coverage. O’Connor’s argument that the [pre-existing conditions limitation] is ‘wholly unenforceable’ under the doctrine of reasonable expectations is without merit because the [limitation] is ‘clear, plain, and conspicuous.’” Though the Ninth Circuit recognized that the pre-existing conditions limitation does conflict with Delaware law insofar as it purports to exclude conditions “for which a reasonable person would have consulted a Physician,” it nevertheless noted that this unenforceable clause within the limitation was not the basis on which LINA rejected Ms. O’Connor’s claim for benefits. Therefore, the Ninth Circuit held that the district court properly concluded that the pre-existing conditions limitation, as applied to Ms. O’Connor’s claim for benefits, was enforceable, and that this dispositive ruling foreclosed her claim for benefits. On this basis, the Ninth Circuit affirmed.

Discovery

Eighth Circuit

Jones v. Zander Grp. Holdings, Inc., No. 8:24CV428, 2025 WL 1918834 (D. Neb. Jul. 11, 2025) (Judge Joseph F. Bataillon). Plaintiff William “Chip” Jones, II filed this putative class action in the Middle District of Tennessee alleging that his former employer and some related entities have violated ERISA in connection with their actions rolling over funds in his employee stock ownership plan account into a 401(k) account after his employment with defendants ended. During discovery defendants issued document and deposition subpoenas to attorneys Mr. Jones consulted with at a law firm in Omaha, Nebraska prior to, and during, the rollover of the funds. Though the case is taking place in Tennessee, Mr. Jones filed a motion to quash the subpoenas directed at the lawyers and at their law firm in the District of Nebraska. On May 27, 2025, magistrate judge Michael D. Nelson granted Mr. Jones’ motion. (Your ERISA Watch reported on the decision in our June 4, 2025 newsletter). Defendants responded to the decision by filing objections to the magistrate judge’s order. The court overruled the objections in this brief decision. As an initial matter, the court noted that magistrate judges are afforded broad discretion in the resolution of non-dispositive discovery disputes, such that a district court may set aside a part of the magistrate judge’s order only if it finds it “clearly erroneous or contrary to law.” Having reviewed the matter, the court could not find anything in Judge Nelson’s order clearly erroneous or contrary to law. To the contrary, the court determined that he had correctly determined that the information defendants were seeking was both irrelevant to the underlying lawsuit, and protected by attorney-client and work-product privileges. Accordingly, the court declined to overturn any aspect of the magistrate’s order and affirmed its decision to grant Mr. Jones’ motion to quash the subpoenas.

Life Insurance & AD&D Benefit Claims

Fifth Circuit

The Prudential Ins. Co. of Am. v. Richardson, No. 4:24-CV-04979, 2025 WL 1918745 (S.D. Tex. Jul. 10, 2025) (Judge Kenneth M. Hoyt). Prudential Insurance Company of America filed this lawsuit in interpleader against defendants Tatjana Richardson and Kinberly Richardson-Whitfield seeking court involvement in the dispute over the proper beneficiary of decedent Russell W. Richardson. Since filing this action, Prudential has deposited the proceeds of Mr. Richardson’s life insurance benefits with the registry of the court and has been dismissed from this action. Plaintiff Kimberly Richardson-Whitfield moved for judgment under Rule 12(c) on Tatjana Richardson’s claim for the insurance proceeds. Ms. Richardson-Whitfield is Mr. Richardson’s ex-wife. Ms. Richardson is Mr. Richardson’s surviving spouse. The court granted Ms. Richardson-Whitfield’s motion for judgment on the pleadings in this order. The court held that the undisputed evidence shows that Kimberly Richardson-Whitfield remained the named beneficiary of the life insurance policy even after the couple’s divorce, and that under federal law “control of beneficiary designations remains in the hands of the insured who has the sole authority to change the beneficiary designation.” Thus, despite the terms of the former couple’s divorce decree stating that the husband would retain entitlement to all of his own employment benefits, the court concluded that the beneficiary designation nevertheless controls. Accordingly, the court agreed with Ms. Richardson-Whitfield that there is no dispute she is entitled to the funds as the designated beneficiary of her ex-husband’s policy, and is thus entitled to judgment in her favor.

Medical Benefit Claims

Sixth Circuit

Gipson v. Med. Mutual of Ohio, No. 1:24-cv-00103, 2025 WL 1921431 (M.D. Tenn. Jul. 11, 2025) (Judge William L. Campbell, Jr.). Plaintiffs in this action were participants in insurance plans issued by defendant Reserve National. During the time period at issue, Reserve National went from being a subsidiary of defendant United Insurance Company of America (which in turn was a subsidiary of defendant Kemper Corporation), to being acquired by defendant Medical Mutual. The healthcare plans plaintiffs were enrolled in included a portability provision that allowed the insureds to port their coverage so they could continue receiving benefits despite a change in employment or cancellation of the underlying group policy. The plans also included supplemental coverage for cancer treatment. “Plaintiffs had each secured continuing coverage through the portability provision and were receiving benefits for cancer treatment when, in December 2022, they were notified that their ‘Cancer coverage has terminated effective 2.28.2023.’” The cancellation letters were sent from Kemper Corporation. In their complaint plaintiffs allege that as part of the Medical Mutual acquisition defendants Kemper, United Insurance, and Medical Mutual collectively executed a plan to terminate substantially all of the ported group supplemental coverage Reserve National had on its books in order to reduce the liabilities acquired by Medical Mutual and to make the sale of Reserve National more attractive. After their insurance was cancelled, plaintiffs filed this ERISA lawsuit challenging defendants’ actions, including Medical Mutual’s refusal to pay for their continuing cancer treatments. Plaintiffs bring claims for declaratory and injunctive relief and for breach of fiduciary duty. Kemper and United Insurance moved to dismiss all of the claims against them. They argued that the policy termination took place after United sold Reserve National to Medical Mutual meaning that at the time of the allegedly improper conduct neither of them had a relationship to plaintiffs and that they cannot be held liable for the actions of Reserve National or Medical Mutual that took place following the sale. The court denied the motion to dismiss in this decision holding that at this stage of the litigation, “Plaintiffs have adequately alleged that Kemper and United Insurance were involved in the decision to terminate the policies at issue and were involved in the administration of claims before and after the termination such that dismissal of claims against them is not appropriate at this juncture.”

Ninth Circuit

Solis v. T-Mobile US, Inc., No. 24-2412, __ F. App’x __, 2025 WL 1937089 (9th Cir. Jul. 15, 2025) (Before Circuit Judges Murguia, Nelson, and Sung). Two participants in the T-Mobile healthcare plan, Jannet Solis and Michael Ortega, challenged denials of their benefit claims by United Healthcare, the claims administrator, for out-of-network hiatal hernia repair and gastric sleeve surgery. On March 14, 2024, the district court entered an order finding United’s explanations for the denials deficient under ERISA, but nevertheless determined that United did not abuse its discretion in denying the claims and so entered judgment in their favor. Plaintiffs appealed that order. In this decision the Ninth Circuit overturned the district court’s decision and remanded to it to either retry the case after proper augmentation of the administrative record, or alternatively to remand the case back to United to reevaluate the merits of the healthcare claims. Although the Ninth Circuit concluded that the district court correctly identified the standard of review, it found that the lower court “committed legal error by not allowing for augmentation of the administrative record despite finding United’s initial claims denial explanations deficient under ERISA.” The court of appeals agreed with the district court that United’s unilluminating denials were insufficient under ERISA as they did not cite any specific plan provision, provide any specific explanation, or permit plaintiffs to adequately respond during the administrative claims process in an effort to perfect their claims. In fact, the Ninth Circuit pointed out that the district court itself needed post-trial briefing from United to understand the basis for the denials. Accordingly, the court of appeals agreed with appellants that they did not receive adequate notice of United’s denial explanations. The court of appeals determined that the district court had “erroneously concluded that United’s procedural violations amounted to harmless error that did not affect the administrative review.” As a result, the Ninth Circuit found that the district court improperly denied plaintiffs’ request to submit supplemental evidence after bench trial and that the declarations they sought to add “contained direct responses to United’s claims denial explanations advanced during litigation.” These declarations, it went on, are the type of extra-record material that the Ninth Circuit requires district courts consider in order to remedy procedural irregularities and to essentially recreate what the administrative record would have been if United had not violated ERISA. Accordingly, the Ninth Circuit vacated the district court’s judgment in favor of defendants and remanded to it for further factfinding and review.

Pleading Issues & Procedure

Third Circuit

Cockerill v. Corteva, Inc., No. 21-3966, 2025 WL 1921645 (E.D. Pa. Jul. 11, 2025) (Judge Michael M. Baylson). This class action litigation was filed by DuPont employees and retirees in 2021. Plaintiffs alleged that when their employer split into three companies – DuPont de Nemours & Company, Dow Inc., and Corteva, Inc. – they were misled about early retirement benefits and improperly denied optional retirement benefits. Although plaintiffs were employees of the old DuPont and continued to work at the new company with the DuPont name, they lost their ability to obtain these retirement benefits because the pension plan had been moved into the new Corteva entity. In 2024, the court held a six-day bench trial, and on December 18, 2024 issued a ruling finding against defendants on Counts II, IV, and VI, the majority of plaintiffs’ claims. (Your ERISA Watch reported on this decision in our first newsletter of the year.) The court held that defendants’ interpretation of the plan regarding optional retirement benefits for the over-50 class members was arbitrary and capricious, that they breached their fiduciary duties based on affirmatively misleading statements about how the spin-off would affect the pension benefits, and that defendants violated ERISA’s anti-cutback provisions because their arbitrary and capricious interpretation had the effect of amending the plan to cut back optional retirement class members’ benefits. Then, in this year, the court conducted a further bench trial on the issue of remedies and in May awarded exclusively equitable relief and entered final judgment in favor of plaintiffs. On June 25, 2025, defendants filed a notice of appeal and a motion to stay enforcement of the court’s judgment pending resolution of the appeal. Plaintiffs opposed, arguing that defendants could not demonstrate likelihood of success on the merits or irreparable harm such that the “rarely granted” and “extraordinary remedy” was warranted here. The court agreed with plaintiffs, “particularly since the judgment is equitable in nature.” The court took the majority of its time discussing defendants’ likelihood of success on the merits. It rejected defendants’ arguments about standing, detrimental reliance, alleged errors in its fiduciary breach analysis, an argument that knowledge is necessary for liability on the fiduciary breach claim, that the court applied the wrong standard of review, and that plaintiffs failed to prove the challenged conduct caused them to forgo applying for benefits. In sum, the court concluded that “Defendants have not demonstrated a sufficient likelihood of success on appeal as to any of the issues raised.” It then held that defendants could not demonstrate they would suffer irreparable harm if the judgment is enforced during the appeal. Rather, it found defendants will only suffer “a purely economic injury,” which in the Third Circuit is insufficient to satisfy the irreparable injury requirement unless it is so great that it threatens the existence of their business. Such was not the case here, and defendants did not argue it was. “Defendants make no attempt to argue that paying these benefits threatens the solvency of the Plan or the viability of their multi-billion-dollar entities.” Accordingly, the court agreed with plaintiffs that defendants could not meet the Third Circuit’s heavy threshold to award a stay. However, instead of denying the motion outright, the court granted a stay for ten days in order to provide defendants with an opportunity to seek immediate relief in the court of appeal. Defendants chose to do so. The court of appeals speedily denied defendants’ motion on July 17, 2025. Accordingly, defendants will not be able to halt the judgment against them while they challenge the court’s verdict on appeal. (Disclosure: Kantor & Kantor attorneys represent the plaintiffs in this action.)

Provider Claims

Second Circuit

Rowe Plastic Surgery of N.J., LLC v. Aetna Life Ins. Co., No. 23-CV-3632-SJB-LKE, 2025 WL 1940325 (E.D.N.Y. Jul. 15, 2025) (Judge Sanket J. Bulsara). Plaintiffs Rowe Plastic Surgery of New Jersey, LLC and East Coast Plastic Surgery, P.C. filed this action against Aetna Life Insurance Company challenging the reimbursement rate the insurer paid for surgery the plaintiffs performed on a patient. If this case sounds like déjà vu all over again to any readers, that’s because it is one of more than 30 similar cases filed by the same plaintiffs against health insurance companies. In fact, last week Your ERISA Watch reported on a nearly identical lawsuit, and indeed a nearly identical decision from the court. The two lawsuits, both brought by Rowe and East Coast Plastic Surgery against Aetna, were stayed pending resolution of plaintiffs’ appeals of dismissals of two of their actions before the Second Circuit. In both cases, the Second Circuit affirmed the dismissals and agreed with the district courts that plaintiffs failed to state their claims because the state law causes of action were either preempted by ERISA, insufficient under state law, or both. Now that those appeals have been decided, plaintiffs moved for leave to amend their complaint. Like the decision from last week, the court denied the motion to amend and ordered the parties to proceed to summary judgment. The court wrote that, “[t]his case, and the approximately 30 other similar lawsuits, are based on the same theory: phone calls confirmed that the insurance company would pay at least 80% (in some instances 90%) of a reasonable and customary fee, and the conversations created enforceable contracts that were breached.” That assumption, the court said, is flawed and misunderstands preemption under ERISA, as well as state contract law. As in plaintiffs’ other cases, the court concluded that the state law claims in both the original complaint and in the proposed amended complaint are both preempted by ERISA and fail as a matter of state law. Regardless of how plaintiffs frame their allegations or what language they use, the court was clear that the only reason the providers called Aetna in the first place was to ascertain that payments would be made to them under the plan. At its core, the court determined that this lawsuit “[n]o matter how much this is dressed up in state law garb and additional facts, the claims grow out of what was (not) paid under an ERISA plan.” Thus, the court concluded that the proposed amended complaint still presupposes the existence of the relationship between the insurer and the insured through an ERISA healthcare plan, and accordingly, the state law claims are preempted by the federal statute. Putting aside the issue of preemption, however, the court also found flaws with each of the state law claims because the oral conversations at issue are insufficient to be considered a promise to pay on which the providers reasonably relied for their contract or contract-related claims. For these reasons, the court would not allow the providers to amend their complaint and instead ordered the case to proceed to summary judgment.