This week’s notable decision is Lapidus v. Life Insurance Company of North America, No. 4:18 CV 01291 JCH, 2019 WL 4089395 (E.D. Mo. Aug. 29, 2019), where the court found that the long-term disability claimant is entitled to benefits. Since LINA, also known as Cigna, found Plaintiff disabled between August 2016 and December 2016, the court considered whether her condition was so different after December 2016 to warrant a denial of benefits. It found that it was not. The court found that a Functional Capacity Evaluation, which suggests that Plaintiff is unable to sit for more than one-third of her workday, may support Plaintiff’s claim that she remained disabled. To the extent the FCE is inconclusive, because Defendant argued that Plaintiff could work full-time with the FCE limitations with breaks throughout the day, the court found that the medical evidence supports a finding of disability. The court explained:
“The opinions of Plaintiff’s treating physicians correspond with Plaintiff’s reports of persistent pain and correspond with the treatments Plaintiff received. Plaintiff was prescribed drugs, injections, a spinal cord stimulator placement, and eventually additional surgery for her pain. While pain is difficult to quantify, the Court can evaluate Plaintiff’s course of treatment regarding that pain. It is also telling that Defendant’s own peer reviewers, and decision letters indicated that Plaintiff was suffering from functional limitations.”
The court found in Plaintiff’s favor on the merits of her disability claim but denied her attorneys’ fees. The court explained that LINA’s mismanagement of Plaintiff’s claim does not conclusively show bad faith and is only one of several factors the court must consider. LINA’s ability to pay is the only factor weighing heavily in Plaintiff’s favor. Though LINA’s denial of benefits was improper, LINA relied on legitimate portions of the policy.
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
In Re Cigna-American Specialty Health Administrative Fee Litigation, No. 2:16-CV-03967-NIQA, 2019 WL 4082946 (E.D. Pa. Aug. 29, 2019) (Judge Nitza I. Quinones Alejandro). The court granted final approval of the proposed class action settlement in this matter involving the allegation that Defendants’ Administrative Fee practice related to in-network services provided through the American Specialty Health Incorporated defendants (“ASH”) violated ERISA. The certified class includes: “Collectively, any Plan Member whose Plan benefits and/or cost share under a Plan were determined based on ASH’s charges to Cigna through the Final Approval Date for the following types of services: chiropractic, acupuncture, massage therapy, naturopathy, physical therapy, or occupational therapy.” The total settlement fund is for $8.25 million. The court awarded Class Counsel attorneys’ fees in the amount of $2.75 million (1/3 of settlement), reimbursement of expenses in the amount of $133,211.80, and $10,000.00 to each of the Class Representatives.
The Bd. of Trustees, in their capacities as Trustees of the Nat’l Roofing Indus. Pension Fund, et al. v. Noorda, et al., No. 216CV00170JADDJA, 2019 WL 4044009 (D. Nev. Aug. 27, 2019) (Judge Jennifer A. Dorsey). The court held that the $5,868.75 discovery-sanction judgment against Defendants will survive the voluntary dismissal of this lawsuit. Defendants reasoned that the Trusts never intended to take the case to trial, so their discovery requests were a harassing and dilatory tactic. The court explained that “Rule 41(a)(2) is not the proper vehicle to dispose of the sanctions issue because the Ninth Circuit has held that the rule does not contain an ‘explicit Congressional authorization’ to impose sanctions.” The sanction in this case was imposed under Rule 37(b)(2)(c), which provides an independent basis to sustain the sanction award upon dismissal. Because the sanction was warranted for discovery conduct, the court did not find that deleting the sanction would be a just and proper condition of dismissal.
Tellep v. Oxford Health Plans, et al., No. 3:18-CV-392-BRM-TJB, 2019 WL 4072061 (D.N.J. Aug. 29, 2019) (Judge Brian R. Martinotti). Upon finding that the health plan at issue is an ERISA plan, the court found the following state law claims preempted by ERISA since they all stem from Defendants’ denial of Plaintiff’s seizure medication: (1) breach of contract; (2) violation of the NJCFA, N.J. Stat. Ann. 56:8-1, et seq.; (3) violation of the UCSPA, N.J. Stat. Ann. § 17B:30-13.1(d); (4) breach of fiduciary duty; (5) violation of the NJLAD, N.J. Stat. Ann. § 10:5-1, et seq.; (6) negligent hiring of employees; and (7) common law negligence.
Tellep v. Oxford Health Plans, et al., No. 3:18-CV-392-BRM-TJB, 2019 WL 4072061 (D.N.J. Aug. 29, 2019) (Judge Brian R. Martinotti). The court found that Plaintiff’s health insurance plan, which he purchased as a self-employed individual, is an ERISA plan. Though Plaintiff claims that his mother, who is covered by the plan, is a “working partner,” when Plaintiff applied for the plan, he listed himself as the sole proprietor of the company. His mother is explicitly listed as a non-owner employee on the application. Because the court found that the plan covers nonowner employees, it falls within ERISA’s compass.
Pleading Issues & Procedure
New Jersey Building Laborers’ Statewide Benefit Funds & The Trustees Thereof v. Llanos Maintenance Service, No. 18CV13118KSHCLW, 2019 WL 4072932 (D.N.J. Aug. 28, 2019) (Judge Katharine S. Hayden). The court denied Plaintiffs’ motion for default judgment against MJO Dry Wall Construction in this action which they initiated to recover on a judgment they had obtained in this district against Defendant Llanos Maintenance Service. Even though Plaintiffs may have grounds for relief against MJO based on imputed third-party liability, the court found that there was no subject matter jurisdiction over non-judgment defendants and Plaintiffs’ complaint must be dismissed.
Samaan, M.D. v. Aetna Life Insurance Company, et al., No. 217CV01690DSFAGR, 2019 WL 4127420 (C.D. Cal. Aug. 30, 2019) (Judge Dale S. Fischer). Plaintiff is an out-of-network gynecological surgery provider who seeks recovery of unpaid benefits for 43 claim events involving his patients who are covered by a self-funded Plan administered by Defendant. The court found that Plaintiff met his burden of showing he had assignments from some, but not all, of his patients. The court determined that the terms of the plan call for abuse of discretion review and ERISA preempts Cal. Ins. Code § 10110.6 as applied to the Plan. The court declined to consider documents that were provided to Defendants outside of the claims review process. The court concluded that Plaintiff failed to meet his burden that he is entitled to payment for the services rendered except for the provision of B6 and B12 injections for two of his patients.
Withdrawal Liability & Unpaid Contributions
Trustees of The Pavers and Road Builders District Council Welfare, Pension, Annuity and Apprenticeship, Skill Improvement and Safety Funds v. Margarella Industrial Construction Corp., No. 16CV00223MKBCLP, 2019 WL 4071931 (E.D.N.Y. Aug. 29, 2019) (Judge Margo K. Brodie). The court adopted the unopposed R&R in its entirety pursuant to 28 U.S.C. § 636(b)(1). The court denied Defendant’s motion to vacate the Settlement Agreement and authorized entry of the Consent Judgment.
In the Matter of the Arbitration Between: Dr. Gerald R. Finkel, as Chairman of the Joint Indus. Bd. of the Elec. Indus., Petitioner, & Allstate Electric Corporation, Respondent., No. 18CV3798CBARML, 2019 WL 4088224 (E.D.N.Y. Aug. 28, 2019) (Magistrate Judge Robert M. Levy). The court confirmed the arbitration award, including the liquidated damages portion, but reduced the amount for payments respondent has made since the award was issued.
Trustees of The Laundry, Dry Cleaning Workers and Allied Industries Health Fund, Workers United v. FDR Services Corp. of New York, No. 17 CV 7145 (VB), 2019 WL 4081899 (S.D.N.Y. Aug. 28, 2019) (Judge Vincent L. Briccetti). The court granted the Union Defendants’ motion to compel arbitration and denied their motion to dismiss as moot. The court also denied FDR’s motion to amend as moot and stayed the claims in the third-party complaint pending arbitration.
Int’l Union of Operating Engineers, Local 150, AFL-CIO v. Landscape Consultants, Inc., No. 18 C 02404, 2019 WL 4138977 (N.D. Ill. Aug. 30, 2019) (Judge John J. Tharp, Jr.). The court granted Plaintiffs’ motion for partial judgment on the pleadings or partial summary judgment because the “undisputed facts show that Phil Robin signed monthly remittance reports agreeing to be bound by the most current version of the Landscape Construction Labor Agreement and manifested its assent to the same through its conduct.”
Raines v. Wingender, No. CV 19-61 (MJD/ECW), 2019 WL 4081058 (D. Minn. Aug. 29, 2019) (Judge Michael J. Davis). The court granted Plaintiffs’ Motion for Entry of Default Order. It found that “Defendant Kenny Wingender, d/b/a BN Service, Inc., has breached his obligations under the Local 427 Collective Bargaining Agreement by failing to timely submit the fringe fund reports and contributions for the months of February 2019 through June 2019. Defendant is liable to Plaintiffs in the amount of $1,916.92, which represents liquidated damages of $1,644.84 and interest of $252.08 for the months of August 2018 through January 2019, based upon reports submitted to date.”