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ERISA Watch – Fifth Circuit Holds That Statutory Right to “Proper Plan Management” Under ERISA Does Not Confer Article III Standing

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Happy Tuesday!  This week’s notable decision is Lee v. Verizon Commc’ns, Inc., No. 14-10553, __F.3d__, 2016 WL 4926159 (5th Cir. Sept. 15, 2016)Lee involves a certified class action of a retirement-plan dispute brought by current and former participants and beneficiaries of Verizon’s pension plan, wherein they allege ERISA violations by the pension plan sponsors and administrators as a result of a plan amendment and subsequent annuity purchase in December of 2012.  There are two certified classes:  the Transferee Class comprising Plan participants whose retirement-benefit obligations were transferred to the annuity, and the Non-Transferee Class comprising Plan participants whose retirement-benefit obligations remained with the Plan.  The Fifth Circuit affirmed the district court’s dismissal of the claims of the Transferee Class for failure to state a claim as well as dismissal of the sole claim of the Non-Transferee Class for lack of constitutional standing.  In so doing, it held that Spokeo, Inc. v. Robins, –––U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016) does not affect the court’s previous conclusion that a plaintiff’s bare allegation of incursion on the purported statutory right to “proper plan management” under ERISA is insufficient to meet the injury-in-fact prong of Article III standing.  The court further found that any theory of standing based on the pursuit of injunctive relief has been waived.

There were several other notable decisions from this past week.  Read about them and more below!

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

Attorneys’ Fees

Second Circuit

Class Actions

Fifth Circuit

Disability Benefit Claims

Sixth Circuit

  • Plaintiff’s alleged injury—the denial of benefits—can be remedied by Section 502(a)(1)(B) and no discovery is necessary to make this determination. Because Plaintiff has failed to offer any evidence to show an injury separate and distinct from the denial of benefits or show why the remedy under Section 502(a)(1)(B) is inadequate, the court grants Liberty Life’s motion for partial summary judgment and dismisses Plaintiff’s Section 502(a)(3) claimOwens v. Liberty Life Assurance Company of Boston, No. 4:15CV-00071-JHM, 2016 WL 4746212 (W.D. Ky. Sept. 12, 2016) (Judge Joseph H. McKinley, Jr.).
  • Granting MetLife’s motion for summary judgment since Plaintiff supplied no records indicating that he had been treated by a specialist in psychiatry at the time of the alleged onset date and did not establish disability resulting from anxiety beginning on the alleged onset date; rejecting Plaintiff’s argument that his lack of income rendered him unable to afford medical care since the Plan required him to have already been under the regular care of a psychiatrist at the time of the alleged disability onset. Young v. Metro. Life Ins. Co., No. 2:15-CV-11028, 2016 WL 4926169 (E.D. Mich. Sept. 16, 2016) (Judge Marianne O. Battani).

Seventh Circuit

  • Determining that Principal Life Insurance Company abused its discretion in denying Plaintiff’s claim for long-term disability benefits by concluding that his squamous cell carcinoma was a preexisting condition that was not covered under the group policy, where Plaintiff was not diagnosed with throat cancer until after the relevant lookback period, but during the relevant period Plaintiff saw several doctors who examined and treated the swelling on his neck that was later diagnosed as squamous cell carcinoma; awarding Plaintiff benefits and denying Principal’s request for a remand to decide whether Plaintiff is disabled since by failing to list Plaintiff’s lack of a qualifying disability as a reason for its claim denial, Defendant is foreclosed from raising that issue now. Langdon v. Principal Life Ins. Co., No. 14-CV-6980, 2016 WL 4720025 (N.D. Ill. Sept. 9, 2016) (Judge Robert M. Dow, Jr.).

Discovery

Sixth Circuit

  • In life insurance dispute where applicability of ERISA is contested, ordering that Plaintiff is entitled to discovery regarding the contents of the Gannett benefits website at the time that he utilized it in 2011 through the time that the lawsuit was filed in 2013, as well as the ability of Gannett, Xerox, and/or any website administrator that may currently be employed by Gannett, to produce copies of the website as it appeared during that time period. Masterson v. Xerox Corporation, et al., No. 3:13-CV-692-DJH, 2016 WL 4926439 (W.D. Ky. Sept. 14, 2016) (Magistrate Judge Colin Lindsay).

ERISA Preemption

Third Circuit

Sixth Circuit

  • Action asserting state-law claims of breach of contract, promissory estoppel, fraudulent misrepresentation, and innocent misrepresentation arising from Defendants’ failure to make the monthly payments allegedly promised to Plaintiff in connection with the parties’ settlement of Plaintiff’s workers’ compensation claim are not completely preempted by ERISA. Roback v. United Parcel Serv., Inc., No. 15-14331, 2016 WL 4761804 (E.D. Mich. Sept. 13, 2016) (Judge Gerald E. Rosen).

Seventh Circuit

Ninth Circuit

  • In suit by out-of-network provider against Cigna for failing to pay for the medical care provided to Defendant’s insureds after the provider sought verbal pre-confirmation, finding that the lawsuit is not preempted by ERISA, since under Marin General Hospital v. Modesto & Empire Traction Company, 581 F.3d 941 (9th Cir. 2009), a claim is not preempted when a healthcare provider asserts a right to relief under an oral contract and disclaims reliance on the terms of any ERISA-governed plans. Va. Operating Co., LLC v. CIGNA Healthcare of Ca., Inc., No. CV 16-5168 PA (AFMX), 2016 WL 4770021 (C.D. Cal. Sept. 12, 2016) (Judge Percy Anderson).

Life Insurance & AD&D Benefit Claims

Sixth Circuit

  • Affirming district court’s determination that United’s interpretation of its plan as requiring Brown II to submit evidence of insurability to be covered was arbitrary and capricious since it was based on an arbitrary modification of the plan term “elect”; reversing district court award of summary judgment to United on Section 502(a)(3) claim because Plaintiff may have another remedy if he has asserted an injury separate and distinct from the denial of benefits—such as an injury from United’s acceptance and retention of premiums; affirming award of prejudgment interest awarded under § 502(a)(1) without reliance on § 502(a)(3) for equitable relief; concluding that the district court did not abuse its discretion in finding that the first three factors weighed in favor of awarding attorneys’ fees. Brown, III v. United Of Omaha Life Insurance Company, No. 15-4293, __F.App’x__, 2016 WL 4887516 (6th Cir. Sept. 14, 2016) (BEFORE: KEITH, COOK, and STRANCH, Circuit Judges).

 

  • Because the plan unambiguously requires late entrants to submit evidence of insurability satisfactory to Prudential, and because all relevant forms expressly condition coverage on Prudential’s satisfaction, Prudential’s denial of voluntary life insurance benefits comports with the unambiguous plan language, and is neither arbitrary nor capricious. Further, because contra proferentum does not apply, Prudential’s construction is a “reasoned explanation” supported by the record for the denial and the denial is not arbitrary or capriciousAlquahwagi v. Shelby Enterprises, Inc., No. 14-13691, 2016 WL 4771329 (E.D. Mich. Sept. 14, 2016) (Judge Robert H. Cleland).

Eleventh Circuit

Medical Benefit Claims

Sixth Circuit

Seventh Circuit

  • In action seeking benefits related to Plaintiff’s mental health treatment at a residential treatment center, wherein she asserts that her group health plan’s exclusion of coverage for residential treatment centers violates the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (which generally requires group health insurance plans to provide parity between mental health benefits and medical/surgical benefits), denying Defendant’s motion to dismiss for failure to state a claim. Natalie V. v. Health Care Serv. Corp., No. 15 C 09174, 2016 WL 4765709 (N.D. Ill. Sept. 13, 2016) (Judge Edmond E. Chang).

Pension Benefit Claims

First Circuit

  • In “highly sympathetic case” of a retiree who died one week before his official retirement date, but after his final day of work, affirming the district court’s grant of judgment under ERISA Section 502(a)(1)(B) in favor of UPS on beneficiaries’ claim to the10-year guaranteed benefits payments since the retiree did not live after his Annuity Starting Date as required by the express plan terms; further affirming dismissal of the equitable relief claim since any equitable claim based on alleged misrepresentations made to the retiree when he selected his retirement benefits was released when he signed a release agreement. O’Shea, et al. v. UPS Retirement Plan, et al., No. 15-1923, __F.3d__, 2016 WL 4750214 (1st Cir. Sept. 13, 2016) (Before Thompson, Circuit Judge, Souter,* Associate Justice, and Barron, Circuit Judge).

Third Circuit

Sixth Circuit

Eleventh Circuit

  • In per curiam opinion, finding that the Committee’s decision to apply the Social Security benefit offset provided in Plan § 1.27 was not de novo wrong, where the plain language of this section provides for an offset based on a conditionally available Social Security benefit, “whether or not payment is delayed, suspended or forfeited because of failure to apply, other work, or any other reason.” Plaintiff had a Social Security benefit that had been “delayed, suspended or forfeited” due to his incarceration, but the court found that there is nothing in the Plan language that suggests that Plaintiff must be “legally eligible” for a Social Security benefit before the offset appliesSlakman v. Administrative Committee of Delta Air Lines, Inc., No. 16-10572, __F.App’x__, 2016 WL 4978353 (11th Cir. Sept. 19, 2016) (Before MARCUS, WILLIAM PRYOR and FAY, Circuit Judges).

Plan Status

D.C. Circuit

  • In dispute under Voluntary Employee Beneficiary Association Trust (the “Trust”), which was created to provide supplemental unemployment benefits to teachers in the District of Columbia Public Schools (“DCPS”) who met certain conditions, finding that, despite the language of the Trust’s founding documents, the Trust is a government plan established by DCPS and is exempted from the provisions of ERISA. Saunders v. Davis, No. 15-CV-2026 (RC), 2016 WL 4921418 (D.D.C. Sept. 15, 2016) (Judge Rudolph Contreras).

Venue

Ninth Circuit

Tenth Circuit

Withdrawal Liability & Unpaid Contributions

Second Circuit

  • Granting Plaintiff’s motion for summary judgment and ordering Defendant to pay Plaintiff withdrawal liability in the amount of $66,158.00 within 30 days of the date of this Order; awarding the following amounts in statutory damages to be paid within 30 days of the date of this Order: (1) prejudgment interest in the amount of $19,847.40, with $992.37 monthly interest accruing from August 2015 through the month of payment; (2) liquidated damages in the amount of $19,847.40 with $992.37 monthly interest accruing from July 2015 through the month of payment; (3) attorney’s fees in the amount of $13,797.00; and (4) miscellaneous costs in the amount of $794.52Finkel v. Athena Light & Power LLC, No. 14-CV-3585 (DLI)(PK), 2016 WL 4742279 (E.D.N.Y. Sept. 11, 2016) (Judge Dora Lizette Irizarry).

Third Circuit

 

Sixth Circuit

Ninth 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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