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ERISA Watch – Lawsuit Challenging Calculation of Long-Term Disability Benefits Is Time-Barred.

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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

Sixth Circuit

Ninth Circuit

  • 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 ERISAVyas v. Vyas, No. CV1502152RSWLDFMX, 2016 WL 4071941 (C.D. Cal. July 28, 2016) (Ronald S.W. Lew).

Class Actions

Ninth Circuit

  • 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

Eighth Circuit

Discovery

Sixth Circuit

  • 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).

Eighth Circuit

  • 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).

ERISA Preemption

Ninth Circuit

  • 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 planRudel v. Hawaii Mgmt. All. Ass’n, No. CV 15-00539 JMS-RLP, 2016 WL 4083320 (D. Haw. Aug. 1, 2016) (Judge J. Michael Seabright).

Ninth Circuit

Life Insurance & AD&D Benefit Claims

Seventh Circuit

Medical Benefit Claims

Ninth Circuit

Pension Benefit Claims

Third Circuit

Pleading Issues & Procedure

Fourth Circuit

 

  • 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.).

Seventh Circuit

Provider Claims

Third Circuit

  • 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 provisionsKaul v. Horizon Blue Cross Blue Shield, No. CV 15-8268, 2016 WL 4071953 (D.N.J. July 29, 2016) (Judge Claire C. Cecchi).

Eighth Circuit

  • 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

Third Circuit

  • 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).

Ninth Circuit

  • 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).

Subrogation/Reimbursement Claims

Ninth Circuit

Withdrawal Liability & Unpaid Contributions

Second Circuit

Fourth Circuit

Eighth Circuit

D.C. 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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