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ERISA Watch – May 14, 2015

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There were two notable decisions this past week. The first is the Third Circuit’s decision in Templin v. Independence Blue Cross, No. 13-4493, __F.3d___, 2015 WL 2151778 (3d Cir. May 8, 2015), where the court held that the catalyst theory was available to show “some success” on the merits without judicial action in deciding whether to award attorneys’ fees. The second notable case is the Fifth Circuit’s decision in Humana Health Plan, Inc. v. Nguyen, No. 14-20358, __F.3d___, 2015 WL 2205661 (5th Cir. May 11, 2015), where the court held that a “Plan Manager” that provided administrative services to an employee benefit plan was not an ERISA fiduciary with a statutory right to seek relief against a plan participant for recovery of plan benefits. Other than these two Circuit decisions, it was an otherwise light week for ERISA. Happy Thursday and stay tuned for more next week!

ERISA Watch – May 14, 2014

Your reliable source for summaries of recent ERISA decisions

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

Third Circuit

In Templin v. Independence Blue Cross, No. 13-4493, __F.3d___, 2015 WL 2151778 (3d Cir. May 8, 2015), Plaintiffs filed suit against Defendants for failing to pay for blood-clotting-factor products. Defendants moved to dismiss for failure to exhaust administrative remedies. The district court denied the motion to dismiss but ordered Defendants to review the claims for benefits. Defendants paid the claims in full and the district court subsequently denied both parties’ motions for attorneys’ fees. On the first appeal, the Third Circuit remanded the case to the district court to consider whether Plaintiffs were entitled to interest on the delayed payment of benefits. The parties settled this claim after Defendants agreed to pay $68,000 in interest to Plaintiffs. The district court then dismissed the case and denied Plaintiffs’ motion for attorneys’ fees because it did not substantively determine the question of interest and the settlement amount was “trivial” when compared to the millions of dollars Plaintiffs originally sought. On the second appeal in this case, the Third Circuit reversed the district court’s denial of attorneys’ fees and held that: 1) the catalyst theory was available to show “some success” on the merits without judicial action; 2) the claimants achieved some degree of success on the merits through their recovery of prejudgment interest from a settlement; and 3) the district court abused its discretion in its consideration of the award of attorneys’ fees by misapplying the first (culpability) and fifth (relative merits) of the Ursic factors. The court expressed no opinion as to whether attorneys’ fees should be awarded to Plaintiffs on remand, where the district court will exercise its discretion and a correct analysis of the Ursic factors.

Fifth Circuit

“Plan Manager” is not in an ERISA fiduciary. In Humana Health Plan, Inc. v. Nguyen, No. 14-20358, __F.3d___, 2015 WL 2205661 (5th Cir. May 11, 2015), the Fifth Circuit determined that the district court erred in determining that Humana, a “Plan Manager” providing administrative services to the API Enterprises Employee Benefits Plan, is an ERISA fiduciary. In this matter, the Plan determined that Defendant’s settlement from an uninsured motorist policy was not subject to the Plan’s subrogation provisions. Humana disregarded the Plan and sued Defendant seeking, inter alia, an injunction prohibiting him from disposing of the insurance payout and an equitable lien to enforce ERISA and the terms of the Plan. The court explained that the subrogation and recovery services clause in the Plan Management Agreement (PMA) did not show that Humana had discretion over the Plan or its assets. Even if the PMA gave Humana broad power, the district court failed to explain why Humana is not a ministerial agent since its various duties outlined in the subrogation and recovery clause describe the tasks performed by many law firms and collections agencies. The mere fact that Humana serves as the Plan’s legal or collections agent is insufficient to show that Humana was the Plan’s fiduciary absent specific facts that show that Humana exercised discretion as described in § 1002(21)(A)(i) and (iii). As such, the court held that Humana does not have the statutory right to seek relief against Defendant under 29 U.S.C. § 1132(a)(3). Because the district court based its decision on its interpretation of the subrogation and recovery clause, the court did not consider other evidence that might show whether Humana exercised actual, decision-making authority over the Plan or its assets.

Select Slip Copy & Not Reported Decisions

Attorneys’ Fees

In Gill v. Bausch & Lomb Supplemental Ret. Income Plan I, No. 6:09-CV-6043 MAT, 2015 WL 2129546 (W.D.N.Y. May 6, 2015), the court declined to exercise its discretion to award prejudgment interest on the award of attorneys’ fees to Plaintiffs. However, the court did award Plaintiffs with post-judgment interest on their award of attorneys’ fees in accordance with 28 U.S.C. § 1961, at the rate of 0.22 percent. The court awarded post-judgment interest starting from the date the court determined that Plaintiffs were entitled to attorneys’ fees, rejecting Plaintiffs’ argument that the interest should accrue when the court entered summary judgment in their favor.

Disability Benefit Claims

In Garrett v. Prudential Ins. Co. of Am., No. 8:14-CV-686-T-27AEP, 2015 WL 2169249 (M.D. Fla. May 8, 2015), the court determined that Prudential’s decision to terminate Plaintiff’s long-term disability benefits was neither de novo wrong nor an abuse of discretion. Plaintiff claimed disability as a result of a myriad of conditions, including Klippel-Feil Syndrome (bone disorder characterized by abnormal joining of two or more spinal bones in the neck), cervical disk disease and herniated discs at C5-6 and C6-7 with radiculopathy, migraines, lumbar disc disease, fibromyalgia, anxiety and depression, thoracic radiculitis, carpal tunnel syndrome, adhesive capsulitis, hepatitis C, adrenal fatigue & depressed immune system, asthma, hypertension, GERD, and gastroparesis. Her disability was supported by her treating physicians and an independent medical examiner who all opined that she is disabled and unable to work. However, Prudential’s peer-reviewing physicians contrarily opined that she had no medically necessary restrictions or limitations and that the treating physicians’ opinions regarding her inability to work were unsupported by objective clinical evidence.

In Rogers v. Reliance Standard Life Ins. Co., No. 14 C 4029, 2015 WL 2148406 (N.D. Ill. May 6, 2015) (Not Reported in F.Supp.3d), the court enforced the disability policy’s discretionary clause and Texas choice of law provisions, finding that neither Illinois nor Texas law could be applied to strip the administrator of deferential review. The court also found that Reliance’s decision to uphold its denial of LTD benefits because Plaintiff did not submit to its requested Independent Medical Evaluation (“IME”) was an abuse of discretion. Plaintiff refused to participate in the IME because it was allegedly requested after Reliance’s 45-day deadline to make a decision on her appeal. The court rejected Plaintiff’s argument that Reliance’s request for an IME during the appeal process was impermissible because the Policy only allows Reliance to request an IME “while a claim is pending.” The court found that the administrative appeal process is still considered part of the pending claim. The court also rejected Reliance’s contention that Plaintiff failed to exhaust her administrative remedies. The court found that nothing in the Policy, including under the “LEGAL ACTIONS” section, discusses administrative remedies. As such, Plaintiff is not required to have exhausted administrative remedies before filing suit. The court ordered the parties to proceed with the IME, which is to be conducted within a practicable time frame and with an agreed-upon physician. The court remanded the claim so Reliance can conduct a new review of Plaintiff’s eligibility with the inclusion of the resulting IME.

In Hinshaw v. Unum Life Ins. Co. of Am., No. CV 14-06157 DDP PLAX, 2015 WL 2127085 (C.D. Cal. May 6, 2015) (Not Reported in F.Supp.3d), the court found that Unum did not abuse its discretion in terminating the pro se plaintiff’s long-term disability benefits. Plaintiff had maintained coaching and tutoring jobs in 2008-2009 and had no post-2011 medical visits. Plaintiff was also not responsive to Unum’s request for further documentation and proof of disability. The court found that Unum reasonably concluded that Plaintiff no longer qualified for benefits under the LTD Plan even though it was based on Unum’s own internal “paper” review conducted by medical personnel. Although the court found that Unum might have conducted a more thorough investigation of Plaintiff’s disability, Unum gave Plaintiff multiple opportunities to provide updated medical documentation of his disability, both during its 2013 review of his eligibility and during his appeal. Unum also requested an in-person visit from a representative, which Plaintiff cancelled.

ERISA Preemption

In Winter v. United Parcel Serv., Inc. Delaware, No. 14-10555, 2015 WL 2169808 (E.D. Mich. May 8, 2015), Plaintiff brought claims against Defendants for fraudulent and innocent misrepresentation, alleging that agents of Defendants induced him to accept a supervisor position by misrepresenting the retirement benefits he would receive if he accepted the position. The court granted Defendants’ motion to dismiss as to all counts, except the claims for rescission, on which it is denied without prejudice, because ERISA precluded Plaintiff from seeking any of its requested remedies except rescission from participant in the Supervisor Plan.

Exhaustion of Administrative Remedies

In Watson v. Teledyne Technologies Inc. Pension Plan, No. CIV.A. 14-0452-WS-M, 2015 WL 2097610 (S.D. Ala. May 5, 2015), the plan administrator denied Plaintiff Smith an additional retirement benefit of $96/month. Plaintiff Smith appealed the administrator’s decision and was awarded this additional amount prospectively, but not retroactively to the date Plaintiff took early retirement. The Plan administrator also notified Plaintiff Watson that he was eligible for the additional $96 monthly benefit but he had to waive the joint and survivor annuity in order to receive the benefit. Without a further claim or appeal to the administrator, Plaintiffs filed suit, alleging two counts under 29 U.S.C. § 1132(a)(1)(B). Defendants filed a motion to dismiss for failure to exhaust administrative remedies. The court granted Defendants’ motion and dismissed Plaintiffs’ complaint without prejudice. The court found that Plaintiffs are seeking Plan benefits in excess of those they were awarded by the plan administrator and the Plan plainly requires them to file a claim with the Committee for those benefits. If the Committee denied the benefits, then Plaintiffs are first required to appeal that decision to the Committee before filing suit.

Pension Benefit Claims

In Corley v. Commonwealth Indus., Inc. Cash Balance Plan, No. 14-5789, __Fed.Appx.___, 2015 WL 2151837 (6th Cir. May 8, 2015), the Sixth Circuit held that the law of the case doctrine precludes the court from reconsidering Plaintiff’s appeal, where the court ruled previously that Plaintiff is not entitled to a larger lump-sum pension payment and his second appeal is based on the same arguments.

Pleading Issues & Procedure

In Managing Directors’ Long Term Incentne Plan ex rel. Comm. v. Boccella, No. 14 CIV. 7033 PAC, 2015 WL 2130876 (S.D.N.Y. May 6, 2015), the court dismissed Plaintiff’s declaratory judgment action against Defendant that she has engaged in prohibited competition activity as defined in the Top Hat Plan and accordingly is not entitled to any benefits under the Plan. The court found that Plaintiff, as a fiduciary, does not have standing under ERISA to bring this action. Specifically, fiduciaries do not have standing under Section 1132(a)(3) to seek clarification of their obligations under ERISA-governed contracts and that such suits are not actions to “enforce” ERISA plan terms. The court also decided to abstain from whatever jurisdiction it has in this case.

Provider Claims

In Peacock Med. Lab, LLC v. UnitedHealth Grp., Inc., No. 14-81271-CV, 2015 WL 2198470 (S.D. Fla. May 11, 2015), Plaintiffs sued Defendants for refusing to pay for urine tests it provided to 132 substance abuse patients. Plaintiffs claim that Defendant violated ERISA by denying, and failing to provide the criteria used in denying their claims, by failing to provide full and a fair review of their denied claims, by breaching their fiduciary duties, and by failing to provide requested plan documents. The court found that neither the Assignment of Benefits nor the Power of Attorney provide the Laboratories standing to bring their ERISA claims, which the court dismissed with prejudice.

In Talarico v. Excellus Health Plan, Inc., No. 6:14-CV-1058 GTS/ATB, 2015 WL 2122176 (N.D.N.Y. May 6, 2015) , Plaintiffs asserted eleven claims, including five under ERISA, against Defendant arising from its reduction and then cessation of payment for services rendered by Plaintiffs between approximately September of 2013 and December of 2014. Plaintiffs moved for a preliminary injunction (1) enjoining Defendant from improperly recouping payments that Defendant has made on past claims submitted by Plaintiffs, by failing to make payments on claims submitted for current charges for covered, medically necessary medical services provided to enrollees in Defendant’s health care plans, (2) enjoining Defendant from telling enrollees in its health care plans that Plaintiffs have been paid for claims on which Defendant has recouped payment, and (3) compelling Defendant to provide Plaintiffs with a detailed accounting of all claims at issue in this action, including providing check numbers and dates on claims submitted by Plaintiffs on which Defendants purports to have made payment directly to its enrollees instead of to Plaintiffs. The court denied Plaintiffs’ motion, finding that they have not demonstrated that irreparable harm would result if their motion is not granted. A few weeks before oral argument Plaintiffs became participating members of Defendant’s recognized network of providers, in which status they became entitled to direct payment for their services (albeit at a discounted rate), but that they subsequently terminated that status. For the closure of a business to constitute irreparable harm, the plaintiffs must have had no choice but to close their business. Here, the court found that Plaintiffs’ decision to close their business appeared to be more voluntary than compulsory.


In FCE Benefit Administrators, Inc. v. Training, Rehab. & Dev. Inst., Inc., No. 15-CV-01160-JST, 2015 WL 2173744 (N.D. Cal. May 7, 2015) (Not Reported in F.Supp.3d), a suit by a third party administrator that provides services for fringe benefit health plans against its former client, the court enforced a mandatory forum selection clause in the TPA Agreement requiring that suit be filed in San Mateo County. However, the court retained jurisdiction over the ERISA claims alleged in the cross-complaint.

In Trustees of Nat. Asbestos Pension Fund v. KC Firestop & Insulation Co., LLC, No. CIV. PJM 14-3873, 2015 WL 2085486 (D. Md. May 4, 2015), the court denied Defendant’s motion to dismiss or transfer venue. The court found that ERISA’s special venue provision trumps the general venue provisions of 28 U.S.C. § 1391(b). Venue is proper in Maryland because the Pension Fund at issue in this delinquent contributions action is administered in Maryland. Regarding possible transfer, the court explained that Trustees of ERISA funds are given the privilege to sue employers who fail to contribute to the fund in the district where the plan is administered without regard to the location of the employers. Even though Defendant may have fewer resources than the Pension Fund, the policy rationale supporting ERISA’s special venue provision requires more than Defendant has argued here to justify transferring this case away from the Pension Fund’s preferred forum.

In Del Aguila v. Genentech-Roche Transitional Benefit Plan, No. C 14-4265 MMC, 2015 WL 2089636 (N.D. Cal. May 4, 2015) (Not Reported in F.Supp.3d), the court granted Defendants’ motion for partial dismissal of Plaintiff’s amended complaint for forum non conveniens. Plaintiff filed suit against Genentech, alleging entitlement to benefits, including stock-settled appreciation rights (“S-SARs”), all of which are governed by the Genentech-Roche Pharma Transitional Benefits Plan (the “Transitional Benefits Plan”). The Roche S-SAR Plan (“S-SAR Plan”) contains a forum selection clause requiring that any disputes arising under or in connection with this Plan shall be resolved by the Courts of Basel, Switzerland. The court found that the Transitional Benefits Plan itself clearly designates the S-SAR Plan as the controlling document for disposition of S-SARs and that the forum selection clause applies to a portion of Plaintiff’s case.

* 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.

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