This week’s notable decision highlights the recent controversy over a “P” word. That’s right, you guessed it: Pleading. Following the U.S. Supreme Court’s decision in CIGNA Corp. v. Amara, 563 U.S. 421 (2011), courts are being forced to reconsider a long-standing rejection of simultaneous pleading of Section 502(a)(1)(B) and Section 502(a)(3) claims. In Amara, the Supreme Court held that Section 502(a)(3) authorized equitable relief in the form of plan reformation, even though the plaintiffs also claimed relief under Section 502(a)(1)(B). Although Amara did not explicitly state that litigants may seek equitable remedies under Section 502(a)(3) if Section 502(a)(1)(B) provides adequate relief, Amara’s holding in effect does precisely that.
In Currier v. Entergy Corporation Employee Benefits Committee et al., No. CV 16-2793, 2016 WL 6024531 (E.D. La. Oct. 14, 2016), a case involving a denied disability benefit claim, the court denied Defendants’ motion to dismiss Currier’s Section 502(a)(3) claim in light of Amara. The weight of the recent authority provides that a plaintiff can alternatively plead a Section 502(a)(3) claim. In this case, the court could not determine at the motion to dismiss stage whether Currier’s breach of fiduciary duty claims regarding deliberate misrepresentations are sufficiently distinct from the claims requesting enforcement of the plan so as not to effectively constitute “repackaging” of the latter.
Do you want to learn more about the state of ERISA equitable remedies? Join me at ACI’s 20th National Advanced Forum on Litigating Disability Insurance Claims conference on February 1-2, 2017 at the W Miami Hotel in Miami, FL. Here is the link to the PDF brochure: https://s3.amazonaws.com/marketing-aci/PDFs-F17/889I17_S.pdf. I will be presenting on a panel addressing “The Evolving State of New Remedies and Equitable Relief Under ERISA 502(a)(3): The Latest Court Decisions Affecting the New Remedies Landscape, the Fallout from Rochow v. LINA, Strategies for Addressing 502(a)(3) Relief Claims, and More.” If you would like to attend at the reduced speaker referral rate, please contact Joe Gallagher by November 1st and mention my name. He can be reached directly at 212-352-3220 ex. 5511 or firstname.lastname@example.org.
This past week was light on ERISA decisions, but enjoy!
Below is Kantor & Kantor LLP’s summary of this past week’s notable ERISA decisions.
Breach of Fiduciary Duty
- In putative class action alleging mismanagement of 401(k) Plan, the court found that the Complaint does not sufficiently allege that Deutsche Investment Management Americas Inc. and RREEF America, LLC provided investment advice to the Plan for a fee. Because the Complaint fails to allege that DIMA and RREEF are fiduciaries, the breach of fiduciary duty claims are dismissed as against them. Moreno, et al. v. Deutsche Bank Americas Holding Corp., et al., No. 15 CIV. 9936 (LGS), __F.Supp.3d__, 2016 WL 5957307 (S.D.N.Y. Oct. 13, 2016) (Judge Lorna G. Schofield).
- The Secretary sufficiently alleged that BCG’s fees were excessive, where he alleged that the Plan paid millions of dollars in excessive expenses, most of which benefitted the Plan’s third party administrator, FCE, and the plan representative, BCG, and that the Plan has spent millions of dollars more than would be reasonable for a partially self-funded plan of this size and nature. Further, the Secretary has sufficiently alleged that the Chimes defendants received payments and discounts from the BCG defendants in connection with the Plan’s retention of BCG. Perez v. Chimes D.C., Inc., No. CV RDB-15-3315, 2016 WL 5938827 (D. Md. Oct. 12, 2016) (Judge Richard D. Bennett).
- In matter where Plaintiff argued that Defendant’s actions in billing personal materials to a client affected the ESOP’s share value and Bayland’s profitability, and that Bayland’s profitability ultimately impacted Bayland’s contribution to the plan, there is no breach of fiduciary duty where Defendants did not use Plan assets for their own benefit and Plaintiff does not indicate what type of harm he suffered. Cashman v. Bayland Buildings, Inc., Steve Ambrosius, & Abraham Farley, No. 15-C-0808, 2016 WL 5921810 (E.D. Wis. Oct. 11, 2016) (Judge William C. Griesbach).
- Certifying the following Classes: (a) All individuals who sponsored benefit plans providing themselves and any of their employees with healthcare coverage obtained by the purchase of insurance coverage or administration of self-funded plans by Defendant, HCSC, or through a benefit plan underwritten, administered or otherwise provided by Defendant, HCSC, in the States of Illinois, Texas, Montana, New Mexico and Oklahoma. (b) All individuals and their beneficiaries who are or, at all times relevant to this cause of action, were recipients of health care coverage provided to them and their beneficiaries through their employers by health care coverage plans underwritten, administered, or otherwise provided by Defendant HCSC in the States of Illinois, Texas, Montana, New Mexico and Oklahoma. (c) All individuals and their beneficiaries who, at all times relevant to this cause of action, obtained health care coverage by individual purchase of such coverage from Defendant, HCSC, or through a benefit plan underwritten, administered, or otherwise provided by Defendant, HCSC, but not subject to ERISA in the States of Illinois, Texas, Montana, New Mexico and Oklahoma. (d) All individuals and their beneficiaries who are, or at all times relevant to this cause of action, were covered by health care insurance solely within the borders of the State of Illinois and therefore are protected by the power of the Illinois Department of Insurance to regulate policies issued within its borders by a health care insurer such as Defendant HCSC. Priddy v. Healthcare Servs. Corp., No. 14-3360, __F.Supp.3d__, 2016 WL 5923412 (C.D. Ill. Oct. 11, 2016) (Judge Richard Mills).
- Denying reconsideration of September 19, 2016 order granting class certification and denying alternative motion to certify an interlocutory appeal under 28 U.S.C. § 1292(b). Wit v. United Behavioral Health, No. 14-CV-02346 JCS, 2016 WL 5930576 (N.D. Cal. Oct. 12, 2016) (Magistrate Judge Joseph C. Spero).
Disability Benefit Claims
- Defendant’s interpretation of the term “permanently” in long term disability plan—the inability to perform job functions last more than several months—is not unreasonable. Defendant did not abuse its discretion in denying Plaintiff benefits where the evidence showed that Plaintiff was only temporarily disabled from June 25, 2012 to December 26, 2013. Pitts v. SCANA Corp. Health & Welfare Plan, No. 8:15-CV-01988-JMC, 2016 WL 5956282 (D.S.C. Oct. 14, 2016) (Judge J. Michelle Childs).
- Following Amara, a plaintiff can alternatively plead ERISA Section 502(a)(1)(B) and Section 502(a)(3) claims. Because there is a possibility that the breach of fiduciary duty claims regarding deliberate misrepresentations are sufficiently distinct from the claims requesting enforcement of the plan so as not to effectively constitute “repackaging” of the latter, the court denies Defendants’ motion to dismiss the Section 502(a)(3) claim. Currier v. Entergy Corporation Employee Benefits Committee et al., No. CV 16-2793, 2016 WL 6024531 (E.D. La. Oct. 14, 2016) (Judge Lance M. Africk).
- The disability plan specifically and clearly grants discretionary authority to Prudential. The court rejected Plaintiff’s argument that section 8.3(b) of the Plan says nothing about allocating the right and discretion to interpret the terms and conditions of the Plan, such that the power is reserved by the Plan exclusively to the Committee, and not Prudential. The court distinguished the Plan Administrator and the Claims Fiduciary. Hudson v. Prudential Insurance Co. of America, No. 6:15-CV-1204, 2016 WL 6038033 (W.D. La. Oct. 13, 2016) (Judge Rebecca F. Doherty).
- Dismissing Plaintiff’s lawsuit for failing to exhaust administrative remedies, where the Court found that Reliance’s 90 days to make a decision was tolled pursuant to 29 C.F.R. § 2560.503-1(i)(4), which allows for tolling in the event that the Plan requires further information necessary to deciding a claim. The deadline was tolled on two occasions when Reliance requested information and also an independent medical examination. The court dismissed the lawsuit so that Reliance could conduct the examination. The court also stated that it would consider any claim for fees and costs incurred by Reliance for Plaintiff’s prematurely-filed lawsuit. Warmbrodt v. Reliance Standard Life Ins. Co., No. 4:16-CV-70 SNLJ, 2016 WL 5933988 (E.D. Mo. Oct. 12, 2016) (Judge Stephen N. Limbaugh, Jr.).
- Defendants’ decision to deny Plaintiff’s long term disability claim was not arbitrary and capricious, where it was based on two medical reviews of her claim by Drs. Matthew Lundquist (Internal Medicine/Occupational Medical Physician) and Roy Sanders (Psychology). The court denied Plaintiff’s request for remand on the basis that medical records arising after the administrative record closed vindicates her doctor’s opinion that Plaintiff is disabled. Thompson v. ConAgra Foods, Inc., No. 1:14-CV-00041 KGB, 2016 WL 5886883 (E.D. Ark. Oct. 7, 2016) (Judge Kristine G. Baker).
- Plaintiff is not estopped from arguing her ADA claim on the basis that it is fundamentally inconsistent with her ERISA claim, where Plaintiff has made no clear assertion that she cannot perform the essential functions of her position with an accommodation. Even if the facts Plaintiff alleges to support her ERISA and ADA claims conflict, Rule 8(d)(3) provides that a party may state as many separate claims or defenses as it has, regardless of consistency. Anderson-Posey v. Unum Life Insurance Company Of America & CVS Pharmacy, Inc., No. 16-CV-0086-CVE-FHM, 2016 WL 5955902 (N.D. Okla. Oct. 13, 2016) (Judge Claire V. Eagan).
- In long term disability dispute, the court found that Plaintiff is entitled to conflict of interest discovery, where she alleged that: (1) after finding Plaintiff disabled for seven years, Prudential terminated Plaintiff’s benefits without identifying a single medical finding that showed her impairments had changed or improved, (2) in 2011, a medical review by Prudential’s John Leclerq determined that Plaintiff’s disability would not improve and that Prudential should “pay through the maximum duration date of 11/15/2038”; (3) although Plaintiff had been found to be disabled for many years by numerous physicians, both employed by Prudential and otherwise, Prudential had another insurance medical examination performed in 2014 by Dr. William Head Jr., who Plaintiff alleges is “notorious for aggressively seeking to sell his IME opinion to whomever is willing to pay for it”, (4) Dr. Head’s November 13, 2014 report never explained how any of Plaintiff’s records showed that Plaintiff’s condition had improved enough that she had regained the ability to do full time work, (5) Dr. Head’s report was rejected in March 2015 by Dr. Armistead Williams III, who had previously treated Plaintiff, and (6) in April 2015, Prudential terminated Plaintiff’s benefits in reliance solely on Dr. Head’s report. Plaintiff is directed to serve revised discovery requests that are less broad and is entitled to four depositions. Kostas v. Prudential Insurance Company of America, No. 16-CV-1033 (VSB), 2016 WL 5957306 (S.D.N.Y. Oct. 13, 2016) (Judge Vernon S. Broderick).
- In lawsuit involving a denied disability benefit claim, the court granted Plaintiff’s motion to strike Defendants’ expert witness Justin Robbins, M.D., since his report was not before the Administrator when she denied Plaintiff’s claim. The report was dated after Plaintiff already filed suit. Because Defendants cannot prove that an exception should apply, the report should not be included in the administrative record. Hutchings v. Lyons, No. 4:15-CV-00538, 2016 WL 5942319 (E.D. Tex. Oct. 13, 2016) (Judge Amos L. Mazzant, III).
- Denying motion to remand Plaintiff’s complaint that St. Anthony’s Medical Center deprived her of benefits under her health insurance plan by refusing to submit its charges for the allegedly covered services to her plan and instead seeking payment from a third-party liability insurer. Since Plaintiff can only prevail on her claims if she was entitled to benefits under her health insurance plan in the first instance, and the court will have to make that determination based on the terms of Plaintiff’s plan, the claims fall within the scope of § 502(a) and are completely preempte Hern v. St. Anthony’s Medical Center, No. 4:16-CV-1296 JAR, 2016 WL 6031911 (E.D. Mo. Oct. 14, 2016) (Judge John A. Ross).
- Death benefit policy is an ERISA-covered plan and Plaintiffs’ breach of contract claim is preempted by ERISA and therefore subject to dismissal. Boone v. Life Ins. Co. of N. Am., No. 2:16-CV-646-FTM-99CM, 2016 WL 5943596 (M.D. Fla. Oct. 13, 2016) (Judge Sheri Polster Chappell).
Life Insurance & AD&D Benefit Claims
- Granting Defendant’s motion for judgment on 29 U.S.C. § 1132 (a)(1)(B) claim where insured’s full time date of hire was 12/2/2013, the Plan states “[i]f you are a newly hired full-time employee, coverage begins on the first of the month following 30 days after your date of hire,” and the insured perished on January 20, 2014. However, 29 U.S.C. § 1132(a)(3) claim for estoppel and surcharge may proceed and Plaintiff may conduct limited discovery related to the benefit enrollment and claims handling process and conflict of interest. Derryberry v. Pharmerica Corp., No. CIV-16-207-C, 2016 WL 5876128 (W.D. Okla. Oct. 7, 2016) (Judge Robin J. Cauthron).
Medical Benefit Claims
- Blue Cross did not abuse its discretion in denying residential treatment for Plaintiff’s anorexia nervosa and related physical conditions because residential treatment was no longer “medically necessary” after she had received sixty days of such treatment at the Monte Nido center in southern California. Krysten v. Blue Shield of California, No. 15-CV-02421-RS, 2016 WL 5934709 (N.D. Cal. Oct. 11, 2016) (Judge Richard Seeborg).
- Plaintiffs fail to state a claim for vested lifetime healthcare benefits upon which relief can be granted. In addition, Plaintiffs have failed to allege facts showing a clear and unambiguous promise to vest employees with irrevocable lifetime healthcare benefits, such that they have failed to state a claim for promissory estoppel. Motion to dismiss granted. Kepner v. Weyerhaeuser Company, No. 6:16-CV-01040-AA, 2016 WL 5939153 (D. Or. Oct. 10, 2016) (Judge Ann Aiken).
- The STD plan is not a welfare benefit program and is not covered under ERISA because the STD plan meets the criteria of a payroll practice in that payments under the program are a substitute for the covered employee’s wages and are paid out of BIPI’s general assets. Because there is no privity between Plaintiff and Aetna, the court grants Aetna’s motion to dismiss Plaintiff’s breach of contract claim against it. Nardello v. Boehringer Ingelheim USA Corp., No. CV JKB-15-3792, 2016 WL 5940844 (D. Md. Oct. 13, 2016) (Judge James K. Bredar).
Statute of Limitations
- In putative class action alleging mismanagement of a 401(k) Plan, the court found that dismissal under Rule 12(b)(6) based on ERISA’s three-year statute of limitation is denied because Defendants have not shown that it is clear from the face of the Complaint or any judicially noticed court filings that Plaintiffs actually knew of the fee or performance data for the comparable alternative funds more than three years before the commencement of this suit. Dismissal based on ERISA’s six-year statute of limitation is also denied where the Complaint sufficiently alleges that monthly payments to fund advisors were prohibited transactions and statute does not run from the initial decision to include the proprietary funds in the Plan. Moreno, et al. v. Deutsche Bank Americas Holding Corp., et al., No. 15 CIV. 9936 (LGS), 2016 WL 5957307 (S.D.N.Y. Oct. 13, 2016) (Judge Lorna G. Schofield).
- Hartford Life denied Plaintiff’s claim for long term disability benefits on December 6, 2011, and issued its final written decision affirming the benefit denial on August 24, 2012. The Plan contains a 3-year limitations period that begins to run at the time “proof of loss” is due, which in this case was March 5, 2012 (90 days after the start of the period for which Hartford Life would have been liable for payment). The last day Plaintiff could have sued for benefits under the plan was March 5, 2015, but she did not file suit until March 30, 2016—more than a year after the limitations period expired. Motion to dismiss granted. Jones v. Hartford Life & Accident Ins. Co., No. 2:16-CV-316, 2016 WL 5887601 (E.D. Tex. Oct. 7, 2016) (Judge Rodney Gilstrap).
- In lawsuit asserting that Defendant is not entitled to withhold payment of medical benefits as a “set-off” against moneys that Defendant claims are owed to it as a result of a previous accident, the court found that Defendant’s motion to dismiss based on its res judicata argument is procedurally proper and Defendant was not required to bring the motion as a summary judgment motion. This court’s previous grant of summary judgment in favor of Defendant qualifies as a final judgment on the merits in a prior suit for the purposes of res judicata. Mclaughlin v. Board of Trustees of The National Elevator Industry Health Benefit Plan, No. CV 16-3121, 2016 WL 5955530 (D.N.J. Oct. 13, 2016) (Judge Anne E. Thompson).
* Please note that these are only case summaries of decisions as they are reported and do not constitute legal advice. These summaries are not updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. If you have questions about how the developing law impacts your ERISA benefit claim, contact an experienced ERISA attorney. Case summaries authored by Michelle L. Roberts, Partner, Kantor & Kantor LLP, 1050 Marina Village Pkwy., Ste. 105, Alameda, CA 94501; Tel: 510-992-6130.