Below is Kantor & Kantor LLP’s summary of this past week’s notable ERISA decisions.
In Estate of Oribe Coggins ex rel. Brooks v. Wapato Point Mgmt. Co. Health & Welfare Plan, 2:13-CV-414-RMP, 2014 WL 2161391 (E.D. Wash. May 23, 2014), the Estate of Orbie Coggins alleged that Defendants breached their fiduciary duties by failing to notify Mr. Coggins of the termination of his life insurance benefits coverage. When Mr. Coggins died, the beneficiaries of his estate sought the life insurance benefits under the company policy that had been terminated unbeknownst to Mr. Coggins. The court determined that the plaintiff has no remedy under ERISA because it is undisputed that Mr. Coggins was not covered by the life insurance at the time of his death and that there is no evidence that the employer defrauded Mr. Coggins or engaged in other egregious conduct that might justify reinstatement of benefits through an equitable remedy. The court also determined that even if the defendants violated their fiduciary duties, the plaintiff seeks damages for only past harm, which does not support a valid equitable claim under ERISA. Mr. Coggins was also covered by a collective bargaining agreement which included a grievance procedure that his beneficiaries did not exhaust. As such, the court determined that the plaintiff is estopped from claiming the benefits of the CBA without carrying the burden of exhausting the contract’s administrative remedies.
ERISA’s Fiduciary Duty
In Prince v. Procter & Gamble Co., 1:13-CV-902, 2014 WL 2154890 (S.D. Ohio May 22, 2014), the plaintiff sought, among other things, an award of severance benefits for the defendants’ alleged breach of fiduciary duty under ERISA because plaintiff’s “first line supervisor” allegedly failed to disclose that defendants were seriously considering the Procter & Gamble Integrated Organization Voluntary Separation Plan (the “Plan”) when Plaintiff submitted his notice of retirement. The court dismissed the plaintiff’s claim because it found that the omissions and responses of plaintiff’s “first line supervisor” implicate no ERISA fiduciary duty on the basis of which Plaintiff can obtain relief. Under Sixth Circuit law, once an ERISA beneficiary has requested information from an ERISA fiduciary who is aware of the beneficiary’s status and situation, the fiduciary has an obligation to convey complete and accurate information material to the beneficiary’s circumstance, even if that requires conveying information about which the beneficiary did not specifically inquire. However, the court found that there was no basis for treating plaintiff’s first line supervisor as an ERISA fiduciary charged with the responsibility to communicate with plaintiff regarding severance benefits. It relied in part on the Department of Labor’s ERISA regulations which recognize that an employee (such as plaintiff’s first line supervisor) is not engaged in a fiduciary function in advising participants of their rights and options under the plan. Since the plaintiff failed to show that his supervisor was acting in a fiduciary capacity in communicating with him, even if the supervisor did make misrepresentations or omissions, the court found no breach of fiduciary duty would like against any defendant.
Conflict-of-Interest Discovery. In ruling on Liberty Life’s motion for a protective order prohibiting the plaintiff, a long-term disability claimant, from conducting two depositions for purposes of showing Liberty Life’s conflict of interest, the court in Cipriani v. Liberty Life Assur. Co. of Boston, 4:12-CV-01335, 2014 WL 2115121 (M.D. Pa. May 21, 2014) allowed depositions of Stephanie Berry and one of plaintiff’s treating physicians consulted in the review process. Berry is the Liberty Life claim representative principally responsible for Liberty Life’s final administrative decisions on plaintiff’s LTD claim. Liberty Life objected because it asserts these depositions are directed solely to the merits of Liberty Life’s administrative decision, which is not appropriate discovery in an ERISA action in this posture. However, the court found plaintiff’s proffered evidence of bias and other good-faith allegations rose to the level such that potential procedural irregularities or biases merit further discovery. The court further found that “some discovery is warranted to investigate, not whether Liberty Life’s decision was reasonable based on the merits of the administrative record, but whether its position as the entity both determining the merits of a claim and paying benefits presented a structural conflict that did indeed morph into an actual conflict in this instance.” In allowing the depositions, the court instructed that they should be narrowly tailored to investigating conflict of interest only and not reexamine the merits of Liberty Life’s decision or supplement the administrative record with merit-oriented factual information.
Denial of LTD Benefits Upheld. In Kruk v. Metro. Life Ins. Co., Inc., 13-2854-CV, 2014 WL 2055883 (2d Cir. May 20, 2014), the 2nd Circuit Court of Appeal upheld a district court’s award of summary judgment in favor of defendants Metropolitan Life Insurance Company, Inc. (“MetLife”) and Pechiney Plastics Packaging Inc., on the plaintiff’s claim to long-term disability benefits, where the plaintiff contended that the district court erred in concluding, as a matter of law, that no genuine disputed issue of material fact called into question MetLife’s determination, made as administrator of Pechiney’s Disability Plan, that she was eligible for long-term benefits based on mental disability, but not based on physical disability. The 2nd Circuit rejected the plaintiff’s challenge to the independence of reviewing physicians hired by MetLife and her complaint about MetLife’s failure to request an independent medical examination. “In short, the question is not whether the record would have permitted a plan administrator to find otherwise, but whether the record compelled the different conclusion urged by Kruk. Like the district court, we conclude it does not.”
Denial of Pension Benefits. In Wright v. Basic Am. Foods, 4:13-CV-00125-REB, 2014 WL 2093768 (D. Idaho May 20, 2014), the court held that the Defendant’s Pension Plan Administrative Committee (the “Committee”), which is vested with full discretionary authority to administer and interpret the Pension Plan did not abuse its discretion in calculating Wright’s pension benefits according to the Plan and the applicable plan amendment. The court found immaterial an alternate formula that would calculate different pension benefit amounts due to a perceived ambiguity in Plan language because the Committee’s conduct and decisions as to Wright’s pension amounts are supported by a good faith, reasonable interpretation of the Plan.
* 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 attorney 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 Parkway, Ste. 105 Alameda, CA 94501; Tel: 510-992-6130.