This week’s notable decision is the plaintiff-unfriendly decision in Haase v. Metropolitan Life Insurance Company, No. CV 15-2864, 2016 WL 4076418 (E.D. Pa. Aug. 1, 2016). Haase is a long-term disability claimant who challenged MetLife’s offset of Workers’ Compensation benefits and alleged an underpayment of benefits starting in 2005. Plaintiff did not file suit related to the alleged underpayment until 2015. The court found that Haase’s claims were time-barred both under the disability plan’s contractual three-year limitation period and also under the default rules. Under the Plan, the three-year limitation period expired in April 2006, which is three years following the deadline for filing “proof of disability.” But, even if the contractual limitations period did not apply to the facts of this case, the court concluded that Haase’s claims would still be time-barred applying the four-year statute of limitation for Pennsylvania breach of contract claims. The accrual date for the statute of limitations is governed by federal law. Applying the Third Circuit’s “clear repudiation” rule, Plaintiff claim accrued as early as the date that Plaintiff received the first check with erroneously calculated benefits, which was sometime in 2003. The very latest his claim could have accrued is in 2008 when Plaintiff’s attorney first notified MetLife of the underpayment. The court found that under both scenarios Plaintiff’s claim is time-barred. Lastly, the court found that the statute of limitations was not tolled while Plaintiff participated in MetLife’s internal appeal process as set forth in the Plan.
ERISA claimants and Plaintiff’s attorneys take heed. Double check a plan’s benefit calculation off the bat, especially where offsets are concerned. Otherwise, you may be time-barred from challenging an underpayment years down the line.
Below is Kantor & Kantor LLP’s summary of this past week’s notable ERISA decisions.
Breach of Fiduciary Duty
- Dismissing Medicare-like Rates (MLRs) claims because Plaintiff cannot establish that BCBSM had a fiduciary duty under ERISA to ensure payment of MLRs for healthcare services obtained by eligible plan participants; also dismissing state law claims based on complete ERISA preemption. Saginaw Chippewa Indian Tribe of Michigan v. Blue Cross Blue Shield of Michigan, No. 16-CV-10317, 2016 WL 4124093 (E.D. Mich. Aug. 3, 2016) (Judge Thomas L. Ludington).
- In matter alleging that former spouse concealed pension plan benefits during divorce proceedings, finding that Plaintiff alleges a viable prohibited transaction and breach of fiduciary duty claim, where she alleges that: (1) the “hidden” Rollover IRA’s are covered by the ERISA framework; (2) Defendant failed to disclose the Lockheed Martin Pension Plan and Rollover IRAs, which constituted a fiduciary acting adversely to the interests of a plan’s beneficiary in a transaction; (3) Defendant was a fiduciary pursuant to ERISA § 3(21)(A) at the time of the divorce proceedings; (4) by concealing the Lockheed Pension Plan and other Rollover IRAs during the divorce proceedings in state court, Defendant was dealing with the assets in his own interest and for his own account, which was a “clear breach” of his fiduciary duty under ERISA. Vyas v. Vyas, No. CV1502152RSWLDFMX, 2016 WL 4071941 (C.D. Cal. July 28, 2016) (Ronald S.W. Lew).
- In certified class action challenging Blue Shield’s denial of artificial disc replacement surgery on the basis of it being “investigational,” granting Blue Shield’s motion on the issue that abuse of discretion is the proper standard of review but denying the motion as it relates to the decision on the merits because (1) triable issues remain regarding the extent and effect of Blue Shield’s structural bias and (2) it is unclear whether the evidence upon which Blue Shield relies is part of the administrative record to which the court must limit its merits review. Escalante v. California Physicians’ Serv., No. CV1403021DDPPJWX, 2016 WL 4086765 (C.D. Cal. July 29, 2016) (Judge Dean D. Pregerson).
Disability Benefit Claims
- On standard of review, finding that Plaintiff waived the conflict of interest issue by not addressing it earlier when the court gave Plaintiff an opportunity to file a motion for expanded discovery concerning conflicts of interest, and in any event, there is no conflict of interest where Ascension Health delegated discretionary authority to Sedgwick; concluding that substantial evidence supported Sedgwick’s determination that Plaintiff could return to a sedentary job and granting summary judgment to Defendants. Kraus v. Ascension Health Long Term Disability Plan & Sedgwick Claims Management Services, Inc., No. 4:15 CV 718 JMB, 2016 WL 4061880 (E.D. Mo. July 29, 2016) (Magistrate Judge John M. Bodenhausen).
- Denying Plaintiff’s Statement of Procedural Challenge in long-term disability matter where Plaintiff argued that he was denied a “full and fair review” of his claim because Defendant Prudential Insurance Company of America failed to provide Plaintiff with the underlying raw test data of its independent examiner when Plaintiff requested a copy of his claim file; specifically denying Plaintiff’s requests that the Court: (1) preclude Prudential from relying on the conclusions of either Richard Gelb, PhD or Kristin Fabiano, PhD; or, alternatively, (2) allow discovery as to the raw data and consequently supplement the administrative record after the raw data has been produced and reviewed. Buchanon v. Prudential Ins. Co. of Am., No. 15-13960, 2016 WL 4087233 (E.D. Mich. Aug. 2, 2016) (Judge Sean F. Cox).
- In long-term disability matter, granting in part Plaintiff’s motion for additional discovery and permitting only request for production of documents and things related to (1) internal communications from Prudential related to the reason Plaintiff’s particular file was brought up for review; and (2) Standard Operating Procedures (“SOP”) used by Prudential to determine when to review and terminate benefits, including SOP outlining any criteria used for triggering a review. Johnston v. Commerce Bancshares, Inc., No. 4:15-CV-0852-DGK, 2016 WL 4083492 (W.D. Mo. Aug. 1, 2016) (Judge Greg Kays).
- State-court action to determine the validity of Hawaii Management Alliance Association’s lien against a $1.5 million third-party tort settlement for $400,779.70 of medical expenses paid pursuant to an ERISA-governed medical benefit plan is completely preempted by ERISA because: (1) Plaintiff could have brought his claim under ERISA Section 502(a)(1)(B) and, (2) Plaintiff’s petition is dependent on ERISA because he would have no claim in the absence of an ERISA plan. Rudel v. Hawaii Mgmt. All. Ass’n, No. CV 15-00539 JMS-RLP, 2016 WL 4083320 (D. Haw. Aug. 1, 2016) (Judge J. Michael Seabright).
- Ordering that Plaintiff may be able to proceed on his UCL claim to the extent it is based on his ERISA claims, which Groceryworks did not challenge in its present motion. Cleveland v. Groceryworks.com, LLC, No. 14-CV-00231-JCS, 2016 WL 4140504 (N.D. Cal. Aug. 4, 2016) (Magistrate Judge Joseph Spero).
Life Insurance & AD&D Benefit Claims
- On claim for accidental death benefits, granting summary judgment in favor of Zurich, where decedent was electrocuted on the job and showed blood positive for THC at the time of death, and where the policy excludes a loss caused by, contributed to, or resulting from being under the influence of drugs. Werbianskyj v. Zurich Am. Ins. Co., No. 3:15-CV-104, 2016 WL 4076367 (N.D. Ind. Aug. 1, 2016) (Judge William C. Lee).
Medical Benefit Claims
- On de novo review, granting judgment in favor of UBH on Plaintiff’s request for reimbursement for residential treatment at Sierra Tucson, where the court found that inpatient treatment was not medically necessary for Plaintiff’s depression and eating disorder. D v. United Healthcare Ins. Co., No. 15CV1012 JM(BLM), 2016 WL 4072725 (S.D. Cal. Aug. 1, 2016) (Judge Jeffrey T. Miller).
Pension Benefit Claims
- Affirming district court’s grant of summary judgment to GM and determining that QDRO obtained after former spouse’s death could not be qualified in order to alienate a post-retirement survivor annuity, which vested upon the spouse’s death. Marva Jane Richardson-Roy v. Abigail Johnson, et al., No. 15-1914, __F.App’x__, 2016 WL 4088732 (3d Cir. Aug. 2, 2016) (Before: GREENAWAY, JR., GARTH and RENDELL, Circuit Judges).
Pleading Issues & Procedure
- In matter involving removed “bad faith insurance claim” against Cigna brought by a surgery center, granting Cigna’s motion to transfer case to the District of Colorado pursuant to the first-to-file rule, which provides that when multiple suits are filed in different federal courts involving the same factual issues, courts usually permit the first-filed action to proceed to the exclusion of the subsequently filed suit. Westminster Surgery Ctr., LLC v. Cigna Health & Life Ins. Co., No. CV GLR-15-3576, 2016 WL 4083355 (D. Md. Aug. 1, 2016) (Judge George L. Russell, III).
- In interpleader action to determine rightful beneficiary of Salaried Savings Plan, finding that doctrine of collateral estoppel does not apply in this case where the Virginia Court of Appeals directed the Circuit Court to enter what the Court of Appeals deemed a QDRO, where the supposed QDRO said that, after entry of the order, Dominion would decide whether it is a QDRO, and where a new issue not resolved in the state court proceedings is whether Dominion properly deems the DRO to be a QDRO. Dominion Res. Inc. v. Estate of David Griffin, No. 3:15-CV-407, 2016 WL 4071969 (E.D. Va. July 29, 2016) (Judge John A. Gibney, Jr.).
- In matter alleging breach of fiduciary duty by Defendants with respect to Plaintiffs’ Anthme 401(k) Plan, concluding that Plaintiffs are not entitled to a jury demand under ERISA Section 502(a)(2) and granting Defendants’ motion to strike the jury demand. Bell v. Pension Comm. of Ath Holding Co., LLC, No. 115CV02062TWPMPB, 2016 WL 4088737 (S.D. Ind. Aug. 1, 2016) (Judge Tanya Malton Pratt).
- Dismissing complaint for failing to set forth facts showing that anti-assignment provisions in self-funded health plan are unenforceable and finding that Plaintiff lacks derivative standing to collect payment as its patient’s assignee; rejecting Plaintiff’s argument that the anti-assignment provisions are unenforceable because: (1) the anti-assignment provisions violate New Jersey law and “federal public policy”; (2) Defendants waived the anti-assignment provisions; and (3) Defendants are estopped from enforcing the anti-assignment provisions. Kaul v. Horizon Blue Cross Blue Shield, No. CV 15-8268, 2016 WL 4071953 (D.N.J. July 29, 2016) (Judge Claire C. Cecchi).
- In lawsuit alleging various state law claims brought by a medical provider against Aetna for payment of surgical procedures for which the provider obtained preauthorization, granting Aetna’s motion for summary judgment on the basis of ERISA preemption; denying Plaintiff’s motion for leave to amend the complaint to allege ERISA claims since Plaintiff did not identify any basis for finding that it acted diligently and satisfied the good cause standard to amend a pleading after the deadline. Chesterfield Spine Center, LLC v. Aetna Life Insurance Company, No. 4:15-CV-133 (CEJ), 2016 WL 4124115 (E.D. Mo. Aug. 3, 2016) (Judge Carol E. Jackson).
Statute of Limitations
- State law claims alleging failure to properly pay long-term disability benefits and interest due under a long-term disability plan are preempted by ERISA but leave to amend denied since the ERISA claim is time-barred; concluding that claims against the administrator for improperly calculating and paying benefits accrued on the date proof of disability was required to be filed, for purposes of three-year contractual limitations period and the claim accrued for purposes of default four-year limitations period when the participant received the first benefits check with erroneously calculated benefits; limitations period would not be tolled. Haase v. Metro. Life Ins. Co., No. CV 15-2864, __F.Supp.3d__, 2016 WL 4076418 (E.D. Pa. Aug. 1, 2016) (Judge Eduardo C. Robreno).
- Finding that pro se plaintiff’s claims related to the denial of long-term disability benefits is time-barred since he did not file suit until two years after the expiration of the limitations period (which was three years following the denial of his administrative appeal) but granting leave to amend to permit Plaintiff to allege facts which would support a theory of timeliness. Zelhofer v. Metro. Life Ins. Co., No. 2:16-CV-00773 TLN AC, 2016 WL 4126724 (E.D. Cal. Aug. 3, 2016) (Magistrate Judge Allison Claire).
- In interpleader action involving distribution of car accident settlement funds, finding that Defendant Southwest Airlines has a first priority lien over plaintiff’s attorney’s fees, and consistent with ERISA, Southwest’s repayment plan is entitled to full reimbursement from settlement proceeds. Dallas Horton & Associates v. Cynthia Harris, et al., No. 215CV1693JCMGWF, 2016 WL 4060306 (D. Nev. July 28, 2016).
Withdrawal Liability & Unpaid Contributions
- Granting motion for default judgment including damages in the total amount of $1,030,265.28, representing unpaid contributions, accrued interest, liquidated damages, attorneys’ fees, and costs; continuing per diem interest at the rate of $291.74, from October 1, 2014 until judgment is entered; and denying the portion of the motion seeking injunctive relief. Gesualdi v. Reid, No. 14-CV-4212(ADS)(GRB), __F.Supp.3d__, 2016 WL 4098554 (E.D.N.Y. July 29, 2016) (Judge Arthur D. Spatt).
- Entering default judgment in favor of Plaintiffs in the amount of $86,226.35 as follows: $33,959.80 in contributions owed; $44,917.05 in liquidated damages; $1,192.00 in attorneys’ fees; $595.00 in costs; and $5,562.50 in interest assessed at the rate of 12% per annum on paid contributions through the date of payment and assessed on unpaid contributions through January 22, 2016 and continuing to accrue through the date of payment. Trustees of the Nat’l Automatic Sprinkler Indus. Welfare Fund v. Altitude Fire Prot., LLC, No. GJH-15-2662, 2016 WL 4082622 (D. Md. July 29, 2016) (Judge George Jarrod Hazel).
- Granting Plaintiffs’ Motion for a Creditor’s Bill in Equity and to Pierce the Corporate Veil. Painters District Council No. 2, et al. v. Sustainable Construction, Group, LLC., et al., No. 4:12-CV-00492 ERW, 2016 WL 4124110 (E.D. Mo. Aug. 3, 2016) (Judge E. Richard Webber).
- Granting Fund’s third motion for default judgment on the proper amount of damages, found to be $209,003.86 of withdrawal liability, interest and liquidated damages calculated according to the methods outlined in the Fund’s Pension Plan documents, and $8,568.50 in attorneys’ fees and costs. Employees Int’l Union Nat’l Indus. Pension Fund v. Glenn’s Bldg. Servs., Inc., No. CV 14-1942 (JDB), 2016 WL 4132192 (D.D.C. Aug. 3, 2016) (Judge John D. Bates).
* 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.