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ERISA Watch – Disability Plan Administrator Must Respond to Discovery Requests Concerning Documents Brought to its Attention

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Welcome back!  Hope everyone had a wonderful Thanksgiving break.  We were pleased to return to a good discovery decision in one of our long-term disability cases, Suson v. PNC Financial Services Group, et al., No. 15C10817 (N.D. Ill. Nov. 28, 2016), handled by my partner, Michelle Roberts.  This decision follows a discovery dispute and motion to compel information and documents pertaining to Suson’s short-term disability (“STD”) claim.  Suson was twice awarded STD benefits following an absence form work due to disability and a failed attempt to return to work.  Following exhaustion of her STD benefits, the PNC Plan denied Suson’s claim for LTD benefits.  In the transition process, Suson’s attorney made attempts to obtain the STD claim file and was given assurances that the LTD department would review the entire STD claim file.  In addition, in Suson’s administrative appeal of her denied LTD claim, she pointed out that PNC’s STD plan approved her STD benefits.  At issue in the motion to compel is a request for admission of fact that PNC has the authority to direct Hewitt Associates to produce a STD claim file to the claim administrator of the Plan and document requests seeking the complete file considered to approve Suson’s STD benefits and documents disclosing the eligibility criteria for STD benefits.  The court granted Plaintiff’s motion to compel discovery pertaining to her STD benefits.  It explained that the administrator knew about Plaintiff’s STD benefits and even though the STD files were not part of the administrative record, “they were only a phone call away.”  Just like how we are only a Pokestop away….


P.S. No Pokemon were harmed in the making of this holiday card, but Michael is still shaking his head at me.  Happy Holidays!


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

Attorneys’ Fees

Second Circuit

Sixth Circuit

Breach of Fiduciary Duty

D.C. Circuit

  • The court denied National Association for Fixed Annuities’ (“NAFA’s”) renewed motion for a preliminary injunction staying the applicability date of three new Department of Labor rules regulating conflicts of interest in the market for retirement investment advice. The court concluded that NAFA is not entitled to an injunction pending appeal or while its members transition to the new rules since the likelihood of success on the merits prong weighs heavily against NAFA.  Enjoining the rule would delay the protection of retirement investors from conflicted advice and potential losses to their retirement savings and interfere with the implementation of three regulations that were lawfully adopted after nearly six years of study, public comment, and consideration.  NAFA failed to carry its heavy burden of showing that its members are “certain” to sustain injuries that are so extraordinary that preliminary relief is warrantedNat’l Ass’n for Fixed Annuities v. Perez, No. CV 16-1035 (RDM), __F.Supp.3d__, 2016 WL 6902113 (D.D.C. Nov. 23, 2016) (Judge Randolph D. Moss).

Disability Benefit Claims

Second Circuit

  • The relevant date for determining which version of the Plan applies is the date of the final disability determination. Since Plaintiff’s claim was not vested under the Plan, the court applied a Plan amendment involving discretionary authority that became effective after Plaintiff began receiving benefits.  Aetna’s denial letter did not comply with the standard imposed by ERISA requiring that a plan administrator’s notice letter be written in a manner calculated to be understood by the participant.  The court granted Plaintiff’s motion for summary judgment only to the extent that the denial of LTD benefits is reversed.  Matter remanded to Aetna for further administrative proceedingsStandish v. Fed. Express Corp., No. 6:15-CV-6226(MAT), 2016 WL 6821849 (W.D.N.Y. Nov. 18, 2016) (Judge Michael A. Telesca).


Seventh Circuit

  • In ESOP matter, Defendants moved to compel on various documents the Secretary withheld due to various privileges: attorney-client, government investigative file, government deliberative process, work product, and common interest.  Counsel for the Secretary instructed the department’s investigator, Charles Visconti, not to answer various questions at his deposition.  The court denied Defendants’ motion to compel the deposition testimony of Mr. Visconti.  The court also granted in part and denied in part Defendants’ motion to compel the production of documentsPerez v. Mueller, No. 13-CV-1302, 2016 WL 6882851 (E.D. Wis. Nov. 22, 2016) (Magistrate Judge William E. Duffin).

ERISA Preemption

Second Circuit

Ninth Circuit

  • Because KFHP’s interpretation of its plans and administration and payment of members’ claims bears directly on the letters KFHP sent its members (containing allegedly defamatory statements about HLF), the court held that to the extent HLF’s Counterclaim is based on those communications, it is preempted. The court also found that HLF has failed to sufficiently plead the elements of an unfair competition claim arising from KFHP’s communications with hospitalsSidlo v. Kaiser Permanente Ins. Co., No. CV 16-00073 ACK-KSC, 2016 WL 6818942 (D. Haw. Nov. 17, 2016) (Judge Alan C. Kay, Sr.).

Eleventh Circuit

  • The court denied Plaintiff’s motion to remand his lawsuit for life insurance benefits, where the Complaint exhibits are policy documents reflecting on their face that the subject policy is a group insurance contract between Prudential and “NEA Members Insurance Trust,” and the SPD references compliance with ERISA. The court found that there are numerous indications in the documents that the plan was conceived and established as an ERISA plan.  As such, the claims are completely preempted by ERISAMcIntosh v. Prudential Ins. Co., No. CV 16-0523-WS-C, 2016 WL 6832639 (S.D. Ala. Nov. 18, 2016) (Judge William H. Steele).

Pension Benefit Claims

Third Circuit

  • Allstate’s 1991 amendments of the Plan phasing out an early retirement subsidy and 1993 amendments excluding “exclusive agent independent contractors” (“EA”) from earning “service” toward eligibility for the subsidy does not violate ERISA’s anti-cutback provision. However, factual issues remain on Plaintiffs’ “Beef-Up claim” (based on 1989 Plan early retirement subsidy) and, to the extent unidentified Plaintiffs claim they should receive credit for service as an employee regardless of their forced conversion to an EA contract, those Plaintiffs may proceed to an eventual individual resolutionRomero v. Allstate Ins. Co., No. CV 01-3894, 2016 WL 6876307 (E.D. Pa. Nov. 22, 2016) (Judge Kearney).

Plan Status

Sixth Circuit

Pleading Issues & Procedure

Third Circuit

  • In matter by medical provider against twenty-six named defendants, the court granted Plaintiff’s motion to remand due to procedural defects in the removal process. The court explained that the rule of unanimity is strictly enforced and applied regardless of the number of defendants in the case.  Attempts to amend or later justify non-joinder of defendants are rejected.  Because at least one defendant did not timely join in the notice of removal, the case is remandedBrain v. Aetna Life Ins. Co., No. CV 16-1797 (WJM), 2016 WL 6892076 (D.N.J. Nov. 22, 2016) (Magistrate Judge Falk).

Eleventh Circuit

Provider Claims

Second Circuit

  • In lawsuit by medical provider against benefit fund, the court granted Defendant’s motion to dismiss. It found that only Patient AM, not plaintiffs POA and Dr. Cohen, can maintain a cause of action under ERISA Sections 502(a)(1)(B) and 502(c)(1)(B).  Patient AM did not assign his/her rights as a beneficiary under the Plan to the other plaintiffs.  But, Patient AM has failed to state a claim on both causes of action and failed to exhaust his/her administrative remediesProf’l Orthopaedic Associates, PA v. 1199 Nat’l Benefit Fund, No. 16-CV-4838 (KBF), 2016 WL 6900686 (S.D.N.Y. Nov. 22, 2016) (Judge Katherine B. Forrest).

Ninth Circuit

  • An ASSIGNMENT OF BENEFITS form which states: I hereby authorize and request that payment of authorized insurance company benefits be made on my behalf directly to DUAL DIAGNOSIS … for the amount due to me for any medical or psychological/psychiatric treatment or services that are rendered to me by DUAL DIAGNOSIS … does not permit Plaintiffs to sue for fiduciary breach for their patients.  The court declined to dismiss Plaintiffs’ ERISA Section 502(a)(1)(B) claim, where they alleged that they provided medical services to their patients which were covered by each patient’s ERISA plan, received an assignment of ERISA benefits from each patient, submitted a claim for those benefits, which they were entitled to receive by virtue of the assignments, but that the Blue Cross Defendants refused to pay.  The court found that neither a denial nor adverse benefits determination occurred when the Defendants paid the patients, so the court dismissed Plaintiffs’ claims for breach of fiduciary duty without prejudiceDual Diagnosis Treatment Ctr., Inc. v. Blue Cross of California, No. SACV150736DOCDFMX, 2016 WL 6892140 (C.D. Cal. Nov. 22, 2016) (Judge David O. Carter).

Subrogation/Reimbursement Claims

Sixth Circuit

  • Plaintiff filed this action to enforce the terms of an ERISA Plan regarding the Plan’s reimbursement and lien rights in a settlement fund currently being held in escrow as security for that lien. In a counterclaim, Kilduff alleges that the Plan should have paid more of her medical bills.  The court granted the Plan’s motion to dismiss Defendant’s amended counterclaim and its motion for judgment on the pleadings or default regarding Plaintiff’s complaint.  The court found that the net effect of any additional payments to providers would not have granted any relief to Kilduff under the PlanSterling Collision Centers, Inc. v. Kilduff, No. 16-10103, 2016 WL 6873399 (E.D. Mich. Nov. 22, 2016) (Judge John Corbett O’Meara).
  • The court granted summary judgment in favor of Standard on its breach of contract counterclaim, finding that it is entitled to $40,633.75 from Plaintiff, the amount that she was overpaid as a result of her receiving Kentucky Retirement Systems benefits and SSDI benefit payments. The court dismissed Standard’s restitution and recoupment counterclaim as it seeks the same relief as its breach of contract counterclaim.  For the same reason, the court also dismissed Standard’s declaratory relief counterclaim on the basis that any LTD benefit payable would be less than the amount she owes StandardGraves v. Standard Ins. Co., No. 3:14-CV-00558-CRS-DW, 2016 WL 6875786 (W.D. Ky. Nov. 21, 2016) (Judge Charles R. Simpson, III).

Withdrawal Liability & Unpaid Contributions

Second Circuit

Tenth Circuit

* 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. 


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