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ERISA Watch – Applying “Discovery Rule,” Sixth Circuit Holds That Pension Benefit Claim Is Time-Barred

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This week’s notable decision is Patterson v. Chrysler Grp., LLC, No. 16-1365, __F.3d__, 2017 WL 104829 (6th Cir. Jan. 11, 2017), a case where a SOL leaves the Plaintiff SOL.  In this matter, the Sixth Circuit Court of Appeals reversed the district court’s decision ordering Defendants-Appellants to pay Plaintiff-Appellee pension and surviving spousal benefits.  The Court determined Plaintiff’s claim to be barred by the statute of limitations.  In this case, Plaintiff and her former spouse, Henry, divorced on September 27, 1993 and the Judgment of Divorce declared that Plaintiff was entitled to one-half of the pension benefits Henry had accrued during his marriage to Plaintiff, with full rights of survivorship, and that these benefits were due to Plaintiff when they became payable to Henry.  Henry began receiving retirement benefits on April 1, 1994, in the form of a “Lifetime Annuity Without Surviving Spouse” option, which violated the Judgment of Divorce. Plaintiff’s first attorney submitted the Judgment of Divorce to the Plan administrator on December 14, 1994, but on January 18, 1995, a Plan representative called the attorney and informed him that the Judgment of Divorce lacked the clerical information required by 29 U.S.C. § 1056(d)(3)(C) to enable the Plan to qualify it as a “qualified domestic relations order” under 29 U.S.C. § 1056(d)(3)(B)(i), and, therefore, the Judgment of Divorce could not override ERISA’s anti-alienation provision.  The Plan denied the request for benefits and sent a letter stating the reasons for the denial.

Thereafter, Plaintiff did not communicate with the Plan again for almost thirteen years, until after Henry died.  On February 1, 2008, with the help of different counsel, Plaintiff submitted the Judgment of Divorce and sought benefits, which the Plan denied.  Then, on February 28, 2014, Plaintiff’s new (and fourth) attorney obtained a Nunc Pro Tunc Order correcting the Judgment of Divorce by adding the missing “clerical” information required by 29 U.S.C. § 1056(d)(3)(C).  The Plan again denied the claim for benefits so Plaintiff filed suit on February 12, 2015.  The Sixth Circuit determined that the Nunc Pro Tunc Order did not give rise to a new cause of action or reset the statute of limitations.  It explained that the district court’s view would create an untenable situation regarding submission of domestic-relations orders to pension plans because a claimant could circumvent the statute of limitations and revive his cause of action by obtaining and submitting a nunc pro tunc version of the denied order to the pension plan, force the plan to reiterate its denial, and effectively reset the statute of limitations. A system in which no claim would truly be time-barred defeats the clearly understood policy goals of statutes of limitations.

Applying the Sixth Circuit’s “discovery rule,” which provides that a limitations period begins to run when the plaintiff discovers, or with due diligence should have discovered, the injury that is the basis of the action, Plaintiff was put on notice that the benefits she sought would be denied to her back on January 18, 1995, when the Plan representative called the first attorney and informed him that the Plan was denying benefits claimed under the Judgment of Divorce.  The most analogous Michigan cause of action to a denial-of-benefits claim under Section 502(a)(1)(B) is breach of contract, which has a six years statute of limitations.  Applying this SOL, the Court determined that Plaintiff’s lawsuit, filed ten years later, is time-barred.

Read about all of the other fascinating ERISA legal developments below!

Below is Kantor & Kantor LLP’s summary of this past week’s notable ERISA decisions.

Breach of Fiduciary Duty

Second Circuit

Harley v. Bank of N.Y. Mellon, No. 1:15-CV-8898-GHW, 2017 WL 78901 (S.D.N.Y. Jan. 9, 2017) (Judge Gregory H. Woods).  WellSpan seeks to recover over $1.7 million lost because of a series of miscommunications between WellSpan and BNY Mellon, wherein BNY Mellon invested $15 million in cash equivalents that WellSpan wanted to invest in equities.  Wellspan brought this action alleging a single count of breach of fiduciary duty in violation of 29 U.S.C. § 1104(a)(1)(B).  Following a five-day bench trial, the court found that BNY Mellon was acting as a directed trustee under ERISA, its service met the minimum level required of a directed trustee, and it is not liable under ERISA.  BNY Mellon’s representative carried out the directives presented to him and ERISA imposed no duty on him or BNY Mellon to take additional steps to ensure that WellSpan’s intentions were ultimately achieved.

Fourth Circuit

Neil v. Foster–Bey, No. 1:16CV1227 (JCC/IDD), 2017 WL 106014 (E.D. Va. Jan. 10, 2017) (Judge James C. Cacheris).  The court denied Defendant’s motion to dismiss rejecting the argument that the Trustee of an Employee Stock Ownership Plan cannot, as a matter of law, violate ERISA by voting stock held by the Plan in a self-interested manner.

Eleventh Circuit

Owens v. Metro. Life Ins. Co., No. 2:14-CV-00074-RWS, 2017 WL 106017 (N.D. Ga. Jan. 11, 2017) (Judge Richard W. Story).  MetLife’s practice is to hold payable life insurance death benefits in its own general account until called upon to transfer funds to cover drafts drawn on Total Control Accounts. On Plaintiff’s claim, MetLife established a TCA account, paying interest at the rate of 0.50%, although the funds remained in MetLife’s general account, earning interest for MetLife at a higher rate than that paid to Plaintiff.  Plaintiff alleges that MetLife breached its fiduciary duty when it profited from investing the benefits for its own account and did not disclose that profit or similar profits to Plaintiff or to the Plan’s sponsor or administrator. She brought suit on behalf of herself and of a class of all others similarly situated.  The court granted Plaintiff’s motion for summary judgment on her claims for breach of the fiduciary duties imposed by ERISA § 406(b)(1), § 406(a)(1)(B), and postmortem interest for the Georgia subclass.  The court denied MetLife’s Motion for Reconsideration or, in the Alternative, Motion for Certification for Interlocutory Appeal Under 28 U.S.C. § 1292(b) and its Motion to Stay Class Certification Briefing Deadlines.

Disability Benefit Claims

Second Circuit

Galuszka v. Reliance Standard Life Ins. Co., No. 2:15-CV-241, 2017 WL 78889 (D. Vt. Jan. 9, 2017) (Judge Christina Reiss).  The court found “good cause” to expand the Administrative Record to include a letter from Plaintiff’s SSDI claim representative, Allsup, Inc. to the SSA, and the SSA’s fully favorable decision awarding Plaintiff SSDI benefits based on a finding that he is disabled within the meaning of the SSA Act.  The court granted Plaintiff’s motion for judgment.  The court found that the record contains ample objective medical evidence documenting Plaintiff’s complex regional pain syndrome.  Further, because his treatment providers have uniformly accepted his complaints of pain as credible, and because the AR is bereft of evidence that Plaintiff has fabricated or exaggerated his pain, the court deems Plaintiff’s persistent complaints of severe pain credible and persuasive.  The court rejected the opinion of Reliance Standard’s reviewing physician, Dr. Jamie Lewis (PM&R) because he did not opine that Plaintiff was capable of performing any of the alternative occupations identified in the Residual Employment (RE) analysis, did not perform a physical or mental examination of Plaintiff, has been observed by the Sixth Court to have questionable conclusions in other cases, and expressed opinions inconsistent with the record as a whole.  The court found that Plaintiff cannot perform the alternative occupations identified in the RE analysis due to his need for frequent breaks, and inability to maintain pace, concentration, and focus as a result of his debilitating pain.

Fourth Circuit

Lee v. Aetna Life Ins. Co., Inc., No. 7:15CV00342, 2017 WL 76942 (W.D. Va. Jan. 6, 2017) (Judge Glen E. Conrad).  The court granted Aetna’s motion for summary judgment seeking an affirmation of its decision to deny Plaintiff’s long-term disability benefits claim.  Plaintiff worked as a Business Manager for iHeartMedia, Inc.  Following surgery to treat her spinal instability and diskogenic back pain, Plaintiff received partial long-term disability benefits while she worked part-time from home.  She eventually increased her hours to full-time, which she was able to manage while working from home.  Her employer accommodated her request to work from home for another six months, before it informed her that it would no longer allow her to work from home.  Plaintiff sought long-term disability benefits, which Aetna denied.  In ruling for Aetna, the court found that the Plan is unambiguous: the test for disability is evaluated in relation to the claimant’s own occupation without regard for, among other things, the claimant’s individual location.  Since Plaintiff had been performing the material duties of her job, full-time, from home for the six months prior to her request for long-term disability benefits, the court found that Aetna’s determination that Plaintiff could not sustain a claim for disability benefits when she could perform the material duties of her job at home but not at iHeartMedia’s work site to be reasonable.  The court determined that Aetna’s decision was supported by substantial evidence, including an independent physician peer review conducted by Dr. Martin Mendelssohn, who opined that Plaintiff could return to work without any accommodation.

Sixth Circuit

Bolden v. Aetna Life Ins. Co., No. 1:16-CV-00118-GNS, 2017 WL 119475 (W.D. Ky. Jan. 11, 2017) (Judge Greg N. Stivers).  Plaintiff brought suit alleging a wrongful denial of long-term disability benefits and seeking the denied benefits, interest, and all other legal or equitable relief, and attorneys’ fees and costs.  The court concluded that Plaintiff has asserted two separate claims:  a Section 1132(a)(1)(B) claim and a Section 1132(a)(3) claim. Based on Rochow v. Life Insurance Co. of North America, 780 F.3d 364 (6th Cir. 2015), an ERISA plaintiff may pursue a claim under Section 1132(a)(3), but only when it is based on an injury separate and distinct from the denial of benefits or where the remedy afforded by Congress under § 1132(a)(1)(B) is otherwise shown to be inadequate.  Here, Plaintiff failed to allege an injury separate and distinct from the denial of benefits or show why the remedy afforded by Congress under § 1132(a)(1)(B) is inadequate.  Thus, the court granted Aetna’s motion to dismiss the claim seeking equitable relief.

Kerridge v. United of Omaha Life Ins. Co., No. 1:15-CV-1039, 2017 WL 82596 (W.D. Mich. Jan. 10, 2017) (Judge Gordon J. Quist).  On de novo review, the court determined that Plaintiff failed to meet her burden of establishing that she is unable to perform any of the duties of her sedentary Financial Analyst position.  The court also declined to consider the favorable Social Security determination that was not before United at the time it issued its final decision.  The court granted United’s motion for judgment on the administrative record.

Guest-Marcotte v. Metaldyne Powertrain Components, Inc., No. 15-CV-10738, 2017 WL 65062 (E.D. Mich. Jan. 6, 2017) (Judge Thomas L. Ludington).  The magistrate judge granted Defendant’s motion for judgment and dismissed Plaintiff’s complaint for short term disability benefits with prejudice.  Plaintiff raised three objections the magistrate judge’s report and recommendation: (1) the Plan/Life Insurance Company of North America erred in using the wrong disability standard; (2) Plaintiff presented sufficient medical evidence to establish she was disabled under the plan; and (3) the Plan/LICNA erred in declining to request a physical examination of Plaintiff.  The court overruled Plaintiff’s objections because they impermissibly attempt to reargue the entire case.  The court adopted the magistrate judge’s report and recommendation in full.

ERISA Preemption

Sixth Circuit

Carney v. Prudential Ins. Co. of Am., No. 1:16-CV-675, 2017 WL 105924 (S.D. Ohio Jan. 10, 2017) (Magistrate Judge Karen L. Litkovitz).  The court found Plaintiff’s state law claims for breach of contract, fraud and deceit, and bad faith failure to pay benefits are preempted by ERISA since they relate to Prudential’s denial of accidental death benefits under an ERISA-governed benefit plan.

Seventh Circuit

Doe v. Aetna Inc., No. 16 C 8390, 2017 WL 118417 (N.D. Ill. Jan. 12, 2017) (Judge Robert W. Gettleman).  Plaintiff sued Defendants in the Circuit Court of Cook County, Illinois, alleging that Defendants, in connection with her ERISA-governed short-term disability benefit claim, disclosed Plaintiff’s medical records without her consent in violation of the Mental Health and Developmental Disabilities Confidentiality Act, 740 ILCS 110/1 et. seq., and the AIDS Confidentiality Act, 410 ILCS 305/1 et seq., that such disclosure amounted to Intentional Infliction of Emotional Distress, and seeking return of those records.  The court determined that ERISA preempts any state law claims and denied Plaintiff’s motion to remand.

Eighth Circuit

Pharm. Care Mgmt. Ass’n v. Nick Gerhart, In his official capacity as Ins. Comm’r of the State of Iowa, et al., No. 15-3292, __F.3d__, 2017 WL 104467 (8th Cir. Jan. 11, 2017) (Before MURPHY and SHEPHERD, Circuit Judges, and PERRY, District Judge).  The issue in this case is whether ERISA expressly preempts section 510B.8 of the Iowa Code.  This Code regulates how pharmacy benefits managers (PBMs) establish generic drug pricing, and requires that certain disclosures on their drug pricing methodology be made to their network pharmacies as well as to Iowa’s insurance commissioner.  The district court determined that it did not and dismissed Plaintiff’s complaint seeking a declaration of preemption. The court reversed the judgment of the district court and remanded for entry of judgment in favor of Plaintiff on the issue of express preemption.  The court found that Section 510B.8 applies to only those PBMs who administer prescription drug benefits for plans subject to ERISA regulation, and specifically exempts certain ERISA plans from its application.  The court found this to be an impermissible reference to ERISA or ERISA plans, such that Iowa Code § 510B.8 is preempted under 29 U.S.C. § 1144(a).  Additionally, the court found that because the duties and restrictions imposed by § 510B.8 on PBMs in their role as third-party administrators for ERISA plans are inconsistent with ERISA’s central design, ERISA’s express preemption clause requires invalidation of the statute as applied to PBMs in their administration and management of prescription drug benefits for ERISA plans.

Life Insurance & AD&D Benefit Claims

Sixth Circuit

Kovacs v. Am. Gen. Life Ins. Co., No. 15-11581, 2017 WL 74397 (E.D. Mich. Jan. 9, 2017) (Judge Gerald E. Rosen).  Applying arbitrary and capricious review, the court granted American General’s motion to affirm its denial of life insurance benefits on the life of Plaintiff’s deceased wife.  Defendant determined that Plaintiff’s wife was no longer eligible for life insurance benefits at the time of her death on December 7, 2014 because her last day of full-time employment was August 31, 2014.  Under the plain language of the life insurance policy, the wife’s coverage terminated “at the end of the month following the date [she] cease[d] to be a member of [the] Eligible Class” of full-time employees of PLC.  Defendant’s determination that her coverage under the policy ended on September 30, 2014, approximately ten weeks before her death on December 7, 2014, is supported by a straightforward reading of the policy terms.

Eighth Circuit

Union Sec. Ins. Co. v. Smith, No. 16-03437-CV-S-BP, 2017 WL 80259 (W.D. Mo. Jan. 9, 2017) (Judge Beth Phillips).  Plaintiff instituted this interpleader action to deposit $150,000 of disputed life insurance funds and leave the competing beneficiaries to press their claims.  The estate moved to dismiss contending that jurisdiction is lacking because (1) it is not clear that an ERISA plan is involved and (2) even if an ERISA plan is involved, Plaintiff’s claim is not a claim for benefits and thus ERISA is not implicated.  The court denied the motion, finding that it has jurisdiction under 28 U.S.C. § 1331 because the controversy involves multiple and conflicting claims to benefits due under an employee welfare benefit plan subject to ERISA.

Tenth Circuit

Seamons v. Deseret Mut. Benefit Administrators, No. 2:14-CV-00499-DN, 2017 WL 79959 (D. Utah Jan. 9, 2017) (Judge David Nuffer).  The court found that DMBA’s decision to deny his life benefit claim for his deceased wife and rescind his coverage was not arbitrary and capricious because DMBA did not act arbitrarily or capriciously in its decision to not further investigate Mrs. Seamons’s medical records, DMBA’s determination that Mrs. Seamons made a misstatement on the Paramedical Exam questionnaire was reasonable and supported by substantial evidence, and the actual cause of Mrs. Seamons’s death is immaterial to DBMA’s decision to rescind coverage.

Medical Benefit Claims

Ninth Circuit

Davidson v. Hewlett-Packard Co., No. 5:16-CV-01928-EJD, 2017 WL 106398 (N.D. Cal. Jan. 11, 2017) (Judge Edward J. Davila).  Plaintiff brought claims arising from Defendants’ decision to end his medical care at a rehabilitation center and transfer him to custodial care at home. Defendants move under Rule 12(b)(6) to dismiss (1) three doctors who are named as individual defendants (and Does 1–50) and (2) the state-law claims.  The court granted the motion because the three doctors are not fiduciaries under ERISA and Plaintiff has not provided alternative grounds for naming them as individual defendants and the five state law claims are preempted by ERISA.

Pension Benefit Claims

First Circuit

Vendura v. Boxer, et al., No. 15-2387, __F.3d__, 2017 WL 104754 (1st Cir. Jan. 11, 2017) (Before Torruella, Lipez, and Barron, Circuit Judges).  The dispute in this case concerns the number of “years of benefit service” that should be credited to Plaintiff in calculating his pension benefits under his pension plan.  A settlement agreement between Plaintiff and NGSMSC kept Plaintiff on board at NGSMSC and provided that he would remain an “employee” of NGSMSC and “receive all benefits and rights to which he is entitled pursuant to all benefit plans for which he is eligible.”  The district court ruled that the settlement agreement alone did not provide Plaintiff any right to accrue years of benefit service beyond those to which he would otherwise have been entitled, and that the Administrative Committee’s interpretation of the NGSMSC Plan, under which the sixty-month cap on the accrual of years of benefit service that Section 2.2, subsection (c) sets forth applies to Plaintiff, was not arbitrary and capricious. Since Plaintiff was not entitled to pension benefits calculated based on his having accrued twenty years of benefit service, Plaintiff also was not entitled to elect a lump-sum distribution of his pension.  The First Circuit affirmed the district court’s decision after determining that the Administrative Committee’s competing interpretation of the relevant subsections was a reasonable one in light of the text and structure of Section 2.2.

Second Circuit

Verdier v. Thalle Constr. Co., Inc., No. 14-CV-4436 (NSR), 2017 WL 78512 (S.D.N.Y. Jan. 5, 2017) (Judge Nelson S. Roman).  The court determined that the Deferred Compensation Plan is an ERISA plan.  Additionally, Plaintiff is entitled to benefits under that Plan, but not the full possible amount because he left early and did not work until retirement as requested by the terms of the agreement.  The court denied Plaintiff’s motion to amend the Complaint to add a claim for punitive damages since that is not available under ERISA.  The court also granted Plaintiff’s request for attorney’s fees and prejudgment interest of nine percent.

Third Circuit

Sikora v. UPMC, No. 2:12-CV-01860, 2017 WL 89044 (W.D. Pa. Jan. 10, 2017).  The court entered summary judgment in favor of UPMC on Plaintiff’s claim for top-hat benefits because Plaintiff did not sign a Post Retirement Service Agreement as he knew he was required to do in order to become eligible for benefits.  Because Plaintiff has no legally cognizable excuse for his failure to do so, UPMC’s decision not to distribute his Plan account balance did not constitute a breach of the parties’ contract.

Fifth Circuit

Little v. Reynolds Am. Inc., No. 3:16-CV-00022-MPM-RP, 2017 WL 89118 (N.D. Miss. Jan. 9, 2017) (Judge Michael P. Mills).  Following Plaintiff’s divorce, he challenged a previous election that he made for a 100% joint and survivor option on the basis that he did not complete the section for “Designation of Joint Annuitant or Beneficiary.”  Defendant denied his request to change his election.  The language of the Plan provides that a participant’s surviving spouse is entitled to receive the benefits of at least 50% and up to 100% upon the selection of the participant.  Plaintiff completed the entire portion of the election form other than designating a beneficiary, although he did provide his wife’s birth certificate and his wife’s name was listed on the top of the form at the time he completed it.  Because Defendant had received the spouse’s birth certificate and the listing of her name on the top of the form, it concluded that Defendant’s failure to complete the “Designation of Joint Annuitant or Beneficiary” portion of the form did not result in his election void becoming invalid. The court was satisfied that there is “concrete evidence” to support the plan administrator’s decision or there is a “rational connection” between the evidence in the record and the final decision.  The court granted summary judgment to Defendant.

Seventh Circuit

United States v. Sheth, No. 09 CR 69-1, 2017 WL 66820 (N.D. Ill. Jan. 6, 2017) (Judge Rebecca R. Pallmeyer).  In this matter involving Defendant’s health care fraud and resulting criminal judgments, the Court of Appeals remanded for discovery and an evidentiary hearing on Defendant’s claim that the restitution judgment has been satisfied by the amounts already forfeited.  At issue are Defendant’s retirement accounts which are protected by ERISA’s anti-alienation provisions and can be collected only if there is a deficiency on the criminal restitution judgment, 18 U.S.C. § 3613(a).  Following discovery, the district court granted the government’s renewed motion for a turnover order for the proceeds of the retirement accounts.

Pleading Issues & Procedure

Third Circuit

Preitz v. Am. Airlines, Inc., No. CV 11-44, 2017 WL 118092 (E.D. Pa. Jan. 11, 2017) (Judge C. Darnell Jones, II).  Plaintiff, a disabled pilot seeking long-term disability benefits, and Defendant reached a settlement of Plaintiff’s claim.  Defendant then went into bankruptcy proceedings and the parties agreed to condition dismissal of this lawsuit on whether a “distribution of the settlement proceeds actually occurs.”  The court declined the parties’ request that this matter remain in suspense indefinitely until the defendants make such distribution.  The court dismissed the case since the bankruptcy court approved the settlement and advised that Plaintiff can still enforce the settlement agreement thereafter as he would any other contract.

Eighth Circuit

Keokuk Area Hosp., Inc. v. Two Rivers Ins. Co., No. 316CV00066SMRSBJ, 2017 WL 83508 (S.D. Iowa Jan. 7, 2017) (Judge Stephanie M. Rose).  The court determined that the Hospital has a right to a jury trial for its section 502(a)(2) breach of duty claim because:  (1) the split of authority creates a questionable case in regard to whether a right to a jury trial exists and the strong federal policy favoring jury trials provides impetus for finding the right to a jury trial in questionable cases; (2) the Hospital’s request for damages does not concern receipt of benefits under the Plan which makes the 502(a)(2) claim legal in nature and deserving of a jury trial; and (3) the Insurance Company does not provide any pushback; it merely cites the Eighth Circuit’s broad language in precluding jury trials for section 502(a)(1)(B) and 502(a)(3) claims and does not explain the inapplicability of that language to the section 502(a)(2) claim at hand.  The court did strike the request for compensatory and punitive damages.

Statute of Limitations

Fourth Circuit

Innes v. Barclays Bank PLC USA Staff Pension Plan Comm., No. 3:15CV00018, 2017 WL 111787 (W.D. Va. Jan. 11, 2017) (Judge Glen E. Conrad).  Applying the clear repudiation concept, the court concluded that Plaintiff’s claim for pension benefits is untimely. Plaintiff was put on notice that her “Pool Payment” would not be treated as pensionable compensation in August of 1994, when she received a “revised” pension calculation showing that her Retirement Restoration Plan benefit totaled $101.20, and that it would be paid in a lump-sum distribution, less applicable tax withholdings.  Because any right that Plaintiff had to monthly pension benefits under the Retirement Restoration Plan was clearly repudiated by Barclays in the mid-1990s, her claim for benefits is barred by the applicable statute of limitations since she did not file a lawsuit until April 22, 2015, which is well beyond the 3-year statute of limitations applicable to contract actions under North Carolina law.

Sixth Circuit

Patterson v. Chrysler Grp., LLC, No. 16-1365, __F.3d__, 2017 WL 104829 (6th Cir. Jan. 11, 2017) (Before: BOGGS, SUHRHEINRICH, and McKEAGUE, Circuit Judges).  The court reversed the district court’s decision ordering Defendants-Appellants to pay Plaintiff-Appellee pension and surviving spousal benefits since it determined her claim to be barred by the statute of limitations.  Plaintiff, through her attorney, submitted a claim to the Plan administrator based on the Judgment of Divorce on December 14, 1994, but on January 18, 1995, a Plan representative called the attorney and informed him that the Judgment of Divorce did not qualify as a QDRO.  Thirteen years later, on February 1, 2008, Plaintiff again submitted the Judgment of Divorce and sought benefits, which the Plan denied.  Then, on February 28, 2014, Plaintiff’s new attorney obtained a Nunc Pro Tunc Order correcting the Judgment of Divorce by adding the missing “clerical” information required by 29 U.S.C. § 1056(d)(3)(C).  The Plan again denied the claim for benefits.  The Sixth Circuit determined that the SOL began to run on January 18, 1995, when the Plan representative called the first attorney and informed him that the Plan was denying benefits claimed under the Judgment of Divorce.  The Nunc Pro Tunc Order did not give rise to a new cause of action or reset the statute of limitations.

Statutory Penalties

Fourth Circuit

Innes v. Barclays Bank PLC USA Staff Pension Plan Comm., No. 3:15CV00018, 2017 WL 111787 (W.D. Va. Jan. 11, 2017) (Judge Glen E. Conrad).  Plaintiff sought to recover statutory damages as a result of the delay in responding to her requests for retirement plan documents. She sent the requests to the Barclays Pension Service Center, a third party that performs certain ministerial and administrative functions on behalf of the defendant. It is undisputed that the Service Center is not the designated plan administrator, and the court, like other district courts in the Fourth Circuit, declined to adopt the “de facto” administrator doctrine.  And even if a statutory penalty could be assessed on the basis of the Service Center’s failure to respond to document requests, the court found that such penalty is not warranted in the instant case when considering several factors including (1) prejudice to the plaintiff; (2) the nature of the administrator’s conduct in responding to the participant’s request for plan documents and (3) frustration, trouble, and expense incurred by the plaintiff.

Subrogation/Reimbursement Claims

Second Circuit

Galuszka v. Reliance Standard Life Ins. Co., No. 2:15-CV-241, 2017 WL 78889 (D. Vt. Jan. 9, 2017) (Judge Christina Reiss).  In Plaintiff’s lawsuit for long-term disability benefits, Reliance brought a counterclaim for equitable restitution in the amount of $40,168.02 pursuant to § 502(a)(3) of ERISA. See 29 U.S.C. § 1132(a)(3), alleging that it has a “lien by agreement to the funds received by Plaintiff in connection with his receipt of Social Security benefits.  At oral argument, Plaintiff’s counsel conceded that Plaintiff owes Reliance $40,168.02 in overpaid benefits under the Policy and that he has not repaid that amount.  The court noted that where a participant in an ERISA plan “dissipates the whole settlement [it received from a third party] on nontraceable items, the fiduciary cannot bring a suit to attach the participant’s general assets under § 502(a)(3) because the suit is not one for ‘appropriate equitable relief.’” Montanile v. Bd. of Trs. of Nat’l Elevator Indus. Health Benefit Plan, 136 S. Ct. 651, 655 (2016).  The court found that because the AR does not reveal whether the funds Plaintiff owes Reliance have been dissipated, or, if dissipated, have been spent on nontraceable items, judgment on Reliance’s counterclaim is not appropriate at this time.  On the merits of the LTD claim, the court ruled in favor of Plaintiff.

Ninth Circuit

Providence Health & Servs. v. McLaughlin, No. C17-24 RAJ, 2017 WL 68426 (W.D. Wash. Jan. 6, 2017) (Judge Richard A. Jones).  The court granted Plaintiff’s Motion for Temporary Restraining Order (“TRO”) restraining Defendants from disposing of or dissipating any portion of the disputed personal injury settlement funds to which Plaintiff claims entitlement based on the health plan’s subrogation and reimbursement provisions.  The court reasoned that Providence has presented sufficient evidence that there is a likelihood of success on the merits of its claims, Providence will suffer irreparable injury if Mr. McLaughlin or his attorneys disburse the funds because, in that case, Providence would be unable to pursue the remedies available under ERISA, and the balance of the equities weighs in favor of granting the TRO.

* Please note that these are only case summaries of decisions 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 a knowledgeable 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. 

 

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