This week’s notable decision is Fine v. Sun Life Assur. Co. of Canada, 2015 WL 1534513 (E.D. Va. Apr. 6, 2015), where the court found that the plaintiff had become ineligible for long-term disability benefits because he made too much money working while disabled. The good news for the plaintiff, however, was that Sun Life could not impose rescission or an equitable lien on most of the disability benefits it overpaid to him.
Although the court’s holding on the merits of the disability claim is disappointing, its decision on Sun Life’s equitable remedies is just fine with us. Read more in this week’s ERISA Watch!
Your reliable source for summaries of recent ERISA decisions
Below is Kantor & Kantor LLP’s summary of this past week’s notable ERISA decisions.
Insurer cannot impose rescission or equitable lien on most of overpaid disability benefits. In Fine v. Sun Life Assur. Co. of Canada, No. 1:14CV551 LMB/TCB, __F.Supp.3d___, 2015 WL 1534513 (E.D. Va. Apr. 6, 2015), a matter involving a claim for LTD benefits, Sun Life counterclaimed against Plaintiff to recover benefits paid to him after January 1, 2012, the date by when it contends he became ineligible for benefits because his disability earnings exceeded 80% of his indexed total monthly earnings. The court found that Sun Life did not abuse its discretion in terminating Plaintiff’s benefits but that equitable considerations now prevent Sun Life from recouping most of the amount previously paid in error. The court was not convinced that Sun Life is entitled to rescission of each of its monthly payments to Plaintiff after January 1, 2012. The court explained that rescinding payments and holding the beneficiary liable for the entire rescinded amount, without regard to what became of the payments after they were received, would have the effect of imposing personal liability on the defendant. Further, no provision of the Policy permits rescission to recover overpayments. The court also rejected Sun Life’s argument that it is entitled to restitution through an equitable lien on the present value of one of Plaintiff’s bank accounts and on a portion of the proceeds from the eventual sale of Plaintiff and his spouse’s apartment. The court found that Sun Life failed to meet its burden of tracing the spent overpayments to a product in Plaintiff’s possession, except for $9,943.61, which was the balance of the bank account (where Plaintiff deposited benefit payments) as of the date Sun Life stopped payment of benefits.
Select Slip Copy & Not Reported Decisions
In Einhorn v. DiMedio Lime Co., No. CIV. 13-3634 RBK/JS, 2015 WL 1646831 (D.N.J. Apr. 14, 2015), a withdrawal liability matter, the court denied without prejudice Plaintiff’s request for $25,950 in attorneys’ fees because Plaintiff did not submit evidence establishing the reasonableness of the requested hourly rate of $300. Plaintiff’s attorney only submitted a “conclusory” affidavit stating that his fee is reasonable.
In Gill v. Bausch & Lomb Supplemental Ret. Income Plan I, 2015 WL 1632518 (W.D.N.Y. Apr. 13, 2015), Plaintiffs prevailed on their lawsuit challenging Defendants’ termination of their monthly SERP I benefit payments pursuant to SERP I’s change-in-control provision, by distributing lump-sum payments to Plaintiffs. Follow success at the 2nd Circuit, Plaintiffs moved for fees and expenses totaling $730,106.30. Defendants’ only challenge was to Plaintiffs’ request to have this Court (1) require Defendant B & L to pay any award for attorneys’ fees and expenses out of its own assets rather than from the assets of SERP I; and (2) preclude Defendants from using assets held by SERP I to pay the attorney’s fee award, or to hold back the attorney’s fees against the balance of Plaintiffs’ lump-sum payments. The court considered ERISA’s anti-inurement and anti-alienation provisions, finding only the latter helpful to Plaintiffs’ position. The court ordered B & L to pay the full amount requested.
In Murphy v. Verizon Commc’ns, Inc., No. 3:09-CV-2262-G, 2015 WL 1647371 (N.D. Tex. Apr. 13, 2015), Plaintiffs filed the action alleging breach of duties to the Plans under ERISA and the failure of Defendants to produce documents and make disclosures to Plan members. Upon issuance of an order granting summary judgment and awarding costs to Defendants, Defendants timely filed separate bills of costs seeking a total of $4,218.22. Of this amount, as costs for transcripts obtained for use in this case, Verizon claims $2,244.73 and SuperMedia claims $450.76. SuperMedia alone claims an additional $1,522.73 in costs for the making of copies necessary for use in the case. The court overruled Plaintiffs’ objections and permitted recovery of Defendants’ non-attorney costs associated with the litigation.
In Dublin Eye Associates, P.C. v. Massachusetts Mut. Life Ins. Co., No. CIV.A. 5:11-128-DCR, 2015 WL 1636160 (E.D. Ky. Apr. 13, 2015), the Plaintiffs sought to stay enforcement of the Judgment awarding attorneys’ fees pending appeal and requested a waiver of the supersedeas bond requirement, contending that the waiver of the supersedeas bond should be granted because Dublin Eye Associates does not have the financial ability to post the bond and that requiring them to do so would put their other creditors in undue jeopardy. The court held that Plaintiffs are personally liable for the Judgment and that there are no extraordinary circumstances that would justify waiving the bond requirement.
In Trustees of Empire State Carpenters Annuity, Apprenticeship, Labor Mgmt. Cooperation, Pension & Welfare Funds v. Sanders Constr., Inc., No. 13-CV-5102 JFB ARL, 2015 WL 1608039 (E.D.N.Y. Apr. 10, 2015), a matter seeking to confirm an arbitration award, the court found that hourly rates of $225 for a senior associate, $200 for a junior associate, and $90 for legal assistants is reasonable. The court awarded plaintiffs $3707.00 in attorneys’ fees and $467.98 in costs.
In Day v. AT & T Disability Income Plan, No. 11-17150, __Fed.Appx.___, 2015 WL 1567857 (9th Cir. Apr. 9, 2015), the Ninth Circuit held that the magistrate judge did not abuse his discretion by adjusting downward the lodestar amount in the attorneys’ fees order because Plaintiff’s counsel spent an excessive amount of time on several tasks as compared to the time spent on similar tasks by Plaintiff’s prior counsel and attorneys in other ERISA cases; used block-billing to record his time; and charged his other clients a lower hourly rate than the lodestar rate he requested. The court also found that the district court did not abuse its discretion in limiting the fee award to the time expended pursuing his short-term disability claim on remand because this was the only claim on which Plaintiff prevailed in court after exhausting administrative remedies. Plaintiff did obtain LTD benefits but entirely through the administrative process and did not obtain any favorable court judgment or order on that issue. Lastly, the district court did not abuse its discretion by restricting the prejudgment interest award to the rate set forth in 28 U.S.C. § 1961 and declining to account for the timing of Plaintiff’s LTD benefits claim when the court calculated the period for which prejudgment interest would be awarded.
In Anderson v. CEMEX, Inc., No. 2:12-CV-136, 2015 WL 1543347 (D. Utah Apr. 7, 2015) (Not Reported in F.Supp.3d), the court awarded Plaintiff $93,597.06 in attorneys’ fees after prevailing on her claim for pension benefits and document penalty claim. This was after the court reduced the amount requested by an additional 20% (in addition to the amount Plaintiff reduced for work relating to the standard of review since the court did not rule on that issue). The court reduced the fees because Defendants did prevail on the issue regarding discovery both initially and on appeal to the district judge and the discovery issues ended up playing a fairly large role in the case.
Disability Benefit Claims
In Glenn v. Am. United Life Ins. Co., No. 14-13945, __Fed.Appx.___, 2015 WL 1638919 (11th Cir. Apr. 14, 2015), the court concluded that Plaintiff did not carry his burden to prove that he suffers from a disabling physical impairment for which he is entitled to receive long-term disability benefits. First, the court found that he did not submit evidence sufficient to indicate that his cognitive impairments result from side effects of his pain medications, as the record shows that his physicians previously believed that the impairments stem from his Bipolar Disorder and depression. The court also found that Plaintiff did not demonstrate that he suffers disabling pain that precludes him from performing the material and substantial duties of his regular occupation because the record contains ample evidence that he could adequately perform his duties. Because it found that the administrator’s decision was not “wrong,” the court did not reach Plaintiff’s argument on appeal that the Administrator did not possess the authority to compel him to undergo a neuropsychological examination. The court also did not reach Plaintiff’s argument that the district court erred in considering Plaintiff’s refusal to undergo a neuropsychological examination.
In Clark v. Janssen Pharm., Inc., No. 14-1701, __Fed.Appx.___, 2015 WL 1567097 (1st Cir. Apr. 8, 2015), the court affirmed the district court’s dismissal of Plaintiff’s claims for short and long-term disability benefits against her employer, her employer’s parent company, and the Reed Group (third-party benefits administrator), because Plaintiff did not demonstrate disability during the seven consecutive day waiting period required by the short-term disability plan. Further, receipt of long-term disability benefits was contingent upon receipt of short-term disability benefits. In this case, Plaintiff terminated employment on the same day she sought disability benefits based on an inability to do her work owing to narcolepsy cataplexy syndrome.
In Sylve v. Lincoln Nat. Life Ins. Co., No. CIV.A. 14-219, 2015 WL 1565035 (E.D. La. Apr. 8, 2015), the court dismissed with prejudice Plaintiff’s claim for long-term disability benefits, finding that Plaintiff failed to exhaust administrative remedies before filing suit. Plaintiff was required to appeal twice, notified to do so by Lincoln National, and he appealed only once. The court rejected Plaintiff’s argument that his attorney’s subsequent contact with Lincoln National, by way of emails, phone calls, or re-sending old letters, constituted a second appeal.
Life Insurance & AD&D Benefit Claims
In Moceri, estate of v. Ratner Companies, LC, No. 2:14-CV-579-FTM-29CM, 2015 WL 1538109 (M.D. Fla. Apr. 7, 2015), MetLife did not notify the employee of her right to continue her life insurance policy following termination of employment until months after her termination and two days after the employee passed away. The court granted MetLife’s motion to dismiss the estate’s breach of fiduciary duty claim, finding that there is no statutory basis for MetLife’s duty to inform the employee of her continuance rights. Further, the policy also does not require that MetLife issue written notice of continuance rights. The court dismissed the claim without prejudice and with leave to amend.
Pension Benefit Claims
In Setzer v. Michelin Ret. Plan, No. 3:13-CV-00192-MGL, 2015 WL 1643422 (D.S.C. Apr. 14, 2015), the court held that the Plan did not abuse its discretion by denying Plaintiff’s benefit claim to change the Joint and Survivor (50%) form of pension benefit payment elected under the Plan after his retirement and the Annuity Commencement Date. Plaintiff divorced his wife after his retirement benefit payments commenced and sought the right to change the spouse beneficiary should he remarry. The court found that ERISA and Fourth Circuit case law preclude Plaintiff’s request. The Plan required that Plaintiff, with his former wife’s consent, elect to forgo the Joint and Survivor form of benefit payment during the Election Period. Plaintiff did not divorce his wife until more than five years after his Annuity Commencement Date and the Fourth Circuit has held that unless the form of benefit is properly changed prior to retirement, a participant is locked into the joint and survivor annuity upon retirement and cannot change the form of benefit even with the spouse’s consent.
Pleading Issues & Procedure
In Day v. AT & T Disability Income Plan, No. 11-17150, __Fed.Appx.___, 2015 WL 1567857 (9th Cir. Apr. 9, 2015), the court determined that it has jurisdiction over the Plaintiff’s appeal of a July 2008 attorneys’ fees order. Defendant argued that Plaintiff’s appeal was untimely because the notice of appeal was not filed within 30 days of a June 2010 judgment which resolved only a benefit offset issue. The district court issued an amended judgment in August 2011 which differed materially from the June 2010 judgment and addressed the merits of Plaintiff’s underlying claim for short-term disability benefits. Plaintiff’s notice of appeal was timely because it was within 30 days of the amended judgment.
In Oswalt v. Sedgwick Claims Mgmt. Servs., Inc., No. 3:14-CV-956-WKW, 2015 WL 1565033 (M.D. Ala. Apr. 8, 2015), the court dismissed without prejudice Plaintiff’s claims against his former employer, BellSouth Telecommunications, LLC, and its disability claims insurer, Sedgwick Claims Management Services, Inc., alleging tort and statutory claims arising under state law. The court found that as a result of Plaintiff’s Chapter 7 bankruptcy proceeding, Plaintiff lacks prudential standing to prosecute the present claims.
Withdrawal Liability & Unpaid Benefit Contributions
Cement Masons Local 527 v. Innovative Concrete, LLC, No. 4:14-CV-1287 CAS, 2015 WL 1623785 (E.D. Mo. Apr. 10, 2015) (finding that plaintiffs have established there is no genuine dispute as to any material fact and that they are entitled to a judgment as a matter of law in the total amount of $8,479.46).
Gesualdi v. Reliance Trucking of CG Inc., No. 14-CV-4112 ADS SIL, 2015 WL 1611313 (E.D.N.Y. Apr. 10, 2015) (granting default judgment).
Trustees of Empire State Carpenters Annuity, Apprenticeship, Labor-Mgmt. Cooperation, Pension & Welfare Funds v. Gregory, No. 14-CV-2900 ADS SIL, 2015 WL 1611307 (E.D.N.Y. Apr. 10, 2015) (confirming Arbitration Award in the total amount of $1,174,026.22, together with reasonable attorneys’ fees and costs of $1,365, but denying Plaintiffs’ application for injunctive relief).
Trustees of the New York City Dist. Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, & Apprenticeship, Journeyman Retraining, Educ. & Indus. Fund v. Innovative Furniture Installations, Inc., No. 14-CV-2508 ER, 2015 WL 1600077 (S.D.N.Y. Apr. 9, 2015) (granting Plaintiffs’ motion for summary judgment confirming arbitration award in favor of Plaintiffs in the amount of $1,061,016.94, with interest to accrue at the rate of 5.25%, and also attorneys’ fees and costs in the amount of $7,231).
* 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. The cases reported above were handled by other law firms but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Kantor & Kantor LLP may be able to advise you so please contact us. Case summaries authored by Michelle L. Roberts, Partner, Kantor & Kantor LLP, 1050 Marina Village Pkwy., Ste. 105, Alameda, CA 94501; Tel: 510-992-6130.