This week’s notable decision involves the denied long term disability dispute in Hennen v. Metropolitan Life Insurance Company, No. 17-3080, __F.3d__, 2018 WL 4376994 (7th Cir. Sept. 14, 2018). The Seventh Circuit overturned the grant of summary judgment to MetLife and remanded the case to MetLife for further proceedings. The dispute centers on MetLife’s application of its “neuromusculoskeletal and soft tissue disorders” provision, which limits payment for disabilities caused by these conditions to just twenty-four months. Exceptions to this limitation are disabilities caused by radiculopathy. MetLife defined radiculopathy as “Disease of the peripheral nerve roots supported by objective clinical findings of nerve pathology.”
Prior to going on disability at the end of 2012, Hennen had undergone three back surgeries over the course of ten years. Following her 2012 surgery to repair her L3-L4 disc herniation, Hennen continued to experience persistent radicular complaints of pain down her legs and struggled with sitting for any extended period of time. A post-surgery MRI showed no nerve compression. Her doctor opined that her symptoms represented some residual nerve pain that should be treated conservatively, without surgery. Her pain management doctor diagnosed her with post-laminectomy pain syndrome and lumbar radiculopathy. Unfortunately for Hennen, attempts to control and manage her pain were unsuccessful. She had an implanted epidural spinal cord stimulator which did not assuage all of her symptoms, and then it was dislodged in a fall and she had to undergo multiple surgeries to fix ongoing issues with it.
Notwithstanding her doctors’ support for her disability caused by radiculopathy, MetLife ultimately terminated Hennen’s long term disability benefits after two years based on the neuromusculoskeletal limitation. It relied on one of its reviewing physicians, Dr. Neil McPhee, who opined (though not asked) that there was no evidence of “active radiculopathy” because the MRI did not reveal ongoing compression of any nerves. Though Dr. McPhee contested that a 2015 EMG showed that Hennen suffered from radiculopathy, he recommended additional electrodiagnostic testing. MetLife did not follow through with this recommendation.
The district court granted summary judgment to MetLife on the basis of its finding that MetLife reasonably interpreted the plan to require proof of “active radiculopathy” in 2014 (at the end of the two-year limitation) and that Hennen did not provide such evidence at that time. Hennen appealed and the Seventh Circuit reversed and remanded the district court’s grant of summary judgment in favor of MetLife upon finding that it “acted arbitrarily when it discounted the opinions of four doctors who diagnosed Hennen with radiculopathy in favor of the opinion of one physician who ultimately disagreed, but only while recommending additional testing that MetLife declined to pursue.”
The court noted two points that need to be addressed on remand. First, where the plan does not define radiculopathy as nerve root disorders resulting from ongoing compression, was it reasonable for MetLife to require ongoing compression of a nerve root when that is only one potential cause of radiculopathy? Second, though MRIs and EMGs are highly relevant in diagnosing radiculopathy, medical literature demonstrates that radiculopathies may occur without MRI or EMG findings. Thus, was it unreasonable for MetLife to discount the clinical observations of Hennen’s treating physicians in favor of testing that is inconclusive for the condition? If MetLife finds that Hennen has satisfied the radiculopathy exception, then it must determine Hennen’s degree of disability, a decision it did not make at the 24-month mark.
MetLife has saved money denying claims based on its determination that active radiculopathy or evidence of nerve compression is necessary to pay benefits beyond 24 months. See e.g., McClenahan v. Metro. Life Ins. Co., 621 F. Supp. 2d 1135, 1148 (D. Colo. 2009), aff’d, 416 F. App’x 693 (10th Cir. 2011), and aff’d, 416 F. App’x 693 (10th Cir. 2011); Iliff v. Metro. Life Ins. Co., No. 4:10-CV-1755 CEJ, 2012 WL 709234, at *5 (E.D. Mo. Mar. 5, 2012); Marden v. Metro. Life Ins. Co., No. 1:11-CV-015, 2012 WL 2020931, at *13 (D.N.D. June 5, 2012). So, I anticipate that MetLife will fight vigorously to keep the radiculopathy exception a high bar to overcome.
There were other notable circuit court decisions. Read about them below!
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Shah, MD v. Horizon Blue Cross Blue Shield of New Jersey, No. CV 15-8590 (RMB/KMW), 2018 WL 4380990 (D.N.J. Sept. 14, 2018) (Judge Renee Marie Bumb). This lawsuit was the first-filed of the 17 suits at issue brought by the same provider against Blue Cross seeking additional health insurance payments. The court considered and weighed all five Ursic factors and denied Blue Cross’s motion for attorneys’ fees because, among other reasons, “at the time the complaint, in this case, was filed, Plaintiff did not have the guidance of the subsequent unfavorable decisions that have since issued from various judges within this District. He does now, and it would appear that he has acted accordingly.”
Matthews v. E.I. du Pont de Nemours and Company, No. CV 14-1455-RGA, 2018 WL 4375084 (D. Del. Sept. 13, 2018) (Judge ). At the third Circuit, Plaintiff obtained reversal on a sub-issue on one of four counts of his complaint about pension benefits. Defendants prevailed on the other counts. The court granted in part and denied in part Plaintiff’s motion for fees and denied Defendants’ cross-motion for fees. The court granted interest on past-due benefits at the rate set forth in 28 U.S.C. Section 1961. The court declined Plaintiff’s request for 8.25% in pre- and post-judgment interest on the award of attorneys’ fees and costs.
North Cypress Medical Center Operating Company, Limited et al. v. Aetna Life Insurance Company, No. 16-20674, __F.App’x__, 2018 WL 4361159 (5th Cir. Sept. 12, 2018) (Before SMITH, WIENER, and WILLETT, Circuit Judges). The court determined that the district court did not abuse its discretion in concluding that attorney fees were not available to NCMC under ERISA because its only claims under that statute were dismissed.
Breach of Fiduciary Duty
In re DeRogatis, No. 16-3549-CV, __F.3d__, 2018 WL 4370990 (2d Cir. Sept. 14, 2018) (Before: Lynch, Carney, Circuit Judges, and Vitaliano, District Judge). Plaintiff appeals two separate cases denying relief against the Pension Fund and Welfare Fund due to a lower pension benefit she received following the death of her husband. Plaintiff alleged that misrepresentation by plan fiduciaries caused her and her husband to delay submitting her husband’s retirement application, thereby inadvertently forfeiting the ability to apply for the 100% Joint Annuity benefit. As relief, she seeks a surcharge to compensate her for the difference between the Preretirement Annuity she is receiving and the 100% Joint Annuity her husband intended her to have. The court affirmed the judgment of the District Court in favor of the Pension Fund on Plaintiff’s claim for benefits and for breach of fiduciary duty. However, it vacated the district court’s judgment in favor of the Welfare Fund and remanded the case for further proceedings. It explained that:
“With respect to the Welfare Fund, however, we perceive a dispute of material fact bearing on the question of fiduciary breach: that is, whether the Fund’s written plan materials, combined with purported misrepresentations by the Fund’s employees, failed to adequately inform the DeRogatises about the effect that Frank’s early retirement would have on the couple’s health benefits under the Welfare Plan. We, therefore, vacate the award of summary judgment to the Welfare Fund and remand to the District Court for consideration of whether, on the present record, a factfinder could reasonably conclude that DeRogatis is entitled to equitable relief. If not, then the Welfare Fund may be entitled to summary judgment, notwithstanding the dispute of fact as to whether the Fund breached a fiduciary duty.”
In re M&T Bank Corp. ERISA Litig., No. 16-CV-375 FPG, 2018 WL 4334807 (W.D.N.Y. Sept. 11, 2018) (Judge Frank P. Geraci, Jr.). In this case, “Plaintiffs allege that Defendants M&T Bank and its retirement plan’s fiduciaries engaged in self-dealing at the expense of the bank’s employees.” The court agreed with Defendants that Wilmington Trust Investment Advisors, which provided advisory services for the Wilmington Funds to the Plan, and Wilmington Funds Management Corporation, which is the Wilmington Funds’ adviser and manager, are not fiduciaries under ERISA and dismissed them from the case. The court found that Plaintiffs’ “Proprietary Funds” count is not barred by ERISA’s statute of limitations. On the Retail Shares Allegations, the court explained that Plaintiffs do not have to have actual knowledge of Defendants’ decision-making processes in selecting investment options for the plan; it is sufficient for Plaintiffs to allege “facts that, if proved, would show that an adequate investigation would have revealed to a reasonable fiduciary that the investment at issue was improvident.” The court dismissed the prohibited transactions between the plan and fiduciary, duty to monitor, and equitable disgorgement claims. The court did not dismiss the prohibited transactions between plan and party in interest claims.
United States of America v. Snyder, No. 1:17CR507, 2018 WL 4335632 (N.D. Ohio Sept. 11, 2018) (Judge Benita Y. Pearson). The court denied Defendant’s Motion for Judgment of Acquittal or, in the Alternative, Motion for New Trial. It found that the Government offered sufficient evidence for a jury to convict Defendant as an aider and abettor to embezzlement of ERISA plan funds under 18 U.S.C. § 664.
Acosta v. Zander Group Holdings, Inc., et al., No. 3:17-CV-01187, 2018 WL 4300153 (M.D. Tenn. Sept. 10, 2018) (Judge William L. Campbell, Jr.). The court denied Defendants Zander Group Holdings, Inc. (“the Company”) and Jeffrey Zander’s motion to dismiss them from the Secretary’s complaint alleging breaches of fiduciary duties and engaging in prohibited transactions with respect to the Company’s ESOP. “Among other allegations, the Complaint contends the Company is a functional fiduciary to the Plan because it acted through Zander, its president, to engage Thompson as Trustee, and had a duty to monitor Thompson’s actions. In addition, the Complaint alleges the Company allowed Zander, as its president, to administer the Plan rather than the Committee it created to do so. Thus, Plaintiff seeks to hold the Company liable for the alleged fiduciary breaches by Zander.” (internal citations omitted).
Krikorian v. Great-West Life & Annuity Insurance Company, et al., No. 16-CV-00094-REB-SKC, 2018 WL 4360539 (D. Colo. Sept. 13, 2018) (Judge Robert E. Blackburn). The court denied Plaintiff’s renewed motion for class certification. The proposed plaintiff class includes plaintiff 401(k) plans working with Empower Retirement under a NAV contract structure but the allegations in the complaint do not describe this group of plaintiffs. “The definition of a Rule 23 class may not be expanded to include plaintiffs not described in the complaint and claims not alleged in the complaint.”
Disability Benefit Claims
Card v. Principal Life Ins. Co., No. 5:15-CV-139-KKC, 2018 WL 4344455 (E.D. Ky. Sept. 11, 2018) (Judge Karen K. Caldwell). The court granted Principal’s motion for summary judgment, finding that its denial of Plaintiff’s long term disability benefits was supported by substantial evidence. “While it is true that there are documents in the Record that support Card’s position that she lacks work capacity, none of these documents support the conclusion that her fatigue is conclusively tied to her [Chronic Lymphocytic Leukemia] diagnosis.” The court found insufficient basis supporting Plaintiff’s claim that the inherent conflict of interest affected Principal’s denial of benefits.
Hennen v. Metropolitan Life Insurance Company, No. 17-3080, __F.3d__, 2018 WL 4376994 (7th Cir. Sept. 14, 2018) (Before EASTERBROOK, RIPPLE, and HAMILTON, Circuit Judges). See Notable Decision summary.
Foglia v. Reliance Standard Life Insurance Company, No. 2:17-CV-97-FTM-99MRM, 2018 WL 4328216 (M.D. Fla. Sept. 11, 2018) (Judge John E. Steele). In this case, involving a denied claim for long term disability benefits for plaintiff impaired by infectious and vascular disease, the court accepted the Report and Recommendation of the Magistrate Judge finding that Reliance Standard’s decision was not de novo wrong, and overruled Plaintiff’s various objections. Reliance relied on “independent evaluations” done by Dr. Jeffrey Danzig (internal medicine) and Dr. Alejandro Arias (neuropsychology). The court gave limited weight to Plaintiff’s SSDI award and his own vocational consultant’s opinion because she did not have “the benefit” of the above doctors’ opinions when she prepared the report.
D.T. by & through K.T. v. NECA/IBEW Family Med. Care Plan, No. 17-CV-00004-RAJ, 2018 WL 4353263 (W.D. Wash. Sept. 12, 2018) (Judge Richard A. Jones). In this dispute over the payment of neurodevelopmental therapies and Applied Behavior Analysis therapy under the NECA/IBEW Family Medical Care Plan, the court granted in part Plaintiff’s motion to compel documents withheld on the basis of attorney-client privilege. Pursuant to the fiduciary exception to attorney-client privilege, Plaintiff is entitled to documents pertaining to any communication reflecting a matter of plan administration and where the advice clearly does not implicate the trustee in any personal capacity. This applies to documents created prior to the date of the final administrative decisions denying the claims for benefits.
Driscoll v. Metlife & Anheuser-Busch Inbev, Inc., No. 15CV1162-JLS(JMA), 2018 WL 4357741 (S.D. Cal. Sept. 12, 2018). In this lawsuit for long term disability benefits brought by a pro se litigant, the court denied Plaintiff’s motion to compel production of discovery responses pertaining to MetLife’s conflict of interest and procedural irregularities because “exceptional circumstances” do not exist such that the introduction of evidence beyond the administrative record could be considered necessary.
Bassel v. Aetna Health Insurance Company of New York, et al., No. 17CV05179ERKRER, 2018 WL 4288635 (E.D.N.Y. Sept. 7, 2018) (Judge Edward R. Korman). The court determined that Plaintiff’s claims of unjust enrichment and violations of both N.Y. Ins. Law § 3224-a (the “Prompt Pay Act”) and N.Y. Gen. Bus. Law § 349, prohibiting deceptive business practices, are fully preempted by ERISA under each prong of the Davila test. “Though he is an out-of-network provider, Bassel accepted a valid assignment of benefits from his patients, and is therefore the ‘type of party’ who can bring ERISA claims.” Plaintiff asserts a colorable claim for benefits since they involve the right to payment under his patients’ plans, and not merely the amount of payment for which he seeks reimbursement. The court found no other independent duty implicated by Aetna’s actions.
Catoggio v. Sheet Metal Workers International Association, No. CV 17-11674 (JLL), 2018 WL 4380997 (D.N.J. Sept. 13, 2018) (Judge Jose L. Linares). “Here, the Court finds that the claims asserted [under New Jersey state law] are not preempted by ERISA. Plaintiff’s request for damages is strictly associated with the discriminatory and retaliatory conduct engaged in by Defendants, and appears to be separate from recovering, enforcing, or clarifying benefits under an ERISA plan. …. Further evidence that the existence of an ERISA benefits plan is not necessarily relevant to Plaintiff’s claims is the fact that, according to Plaintiff, Defendants’ motivation in terminating him was not based on a desire to deprive him of ERISA benefits, but rather was done in retaliation for Plaintiff seeking a transfer and workers’ compensation benefits and to discriminate against Plaintiff because of his injury-based disability.”
Alameda Cty. Med. Ctr. v. Laborers Health & Welfare Tr. Fund for N. California, No. C 18-03565 WHA, 2018 WL 4352990 (N.D. Cal. Sept. 12, 2018) (Judge William Alsup). “This order considers whether Section 502(a)(1)(B) of ERISA completely preempts a state law action for breach of an implied contract and quantum meruit. If the action is completely preempted, then removal was proper. Because plaintiff’s state law action could not be brought as a participant or beneficiary under Section 502(a)(1)(B) and because plaintiff relies on legal duties that are independent of duties under any benefit plan established under ERISA, this order finds that this action is not completely preempted. It strains credulity to believe that defendants would have blessed any and all charges that followed the telephone call to confirm eligibility. Nevertheless, the pleading proceeds on this proposition, far-fetched as it may be. Accordingly, removal from state court was improper and the case must be remanded, as now explained.”
Life Insurance & AD&D Benefit Claims
Tye v. Cigna Corporation, et al., No. 1:17-CV-387, 2018 WL 4292481 (S.D. Ohio Sept. 10, 2018) (Judge Stephanie K. Bowman). The court recommended that Defendants motion for judgment on the Administrative Record be granted. The court determined that Connecticut General Life Insurance Company correctly found that the insured’s medical history was misrepresented on his application and his life insurance coverage would not have been approved if they had known about his “motor vehicle accident involving alcohol and marijuana, [that he] was on multiple medications, had a seizure history, and was using cocaine as of 2/17/2014…”.
Rathman v. Union Security Insurance Company, No. 17-CV-1581 (PJS/LIB), 2018 WL 4353689 (D. Minn. Sept. 12, 2018) (Judge Patrick J. Schiltz). Union Security denied accidental death benefits to Plaintiff since her husband died from injuries sustained in a snowmobile accident and the policy excludes deaths arising from “intoxication while operating a motor vehicle.” The court determined that Union Security’s interpretation of the phrase “motor vehicle” to include a snowmobile is reasonable and granted summary judgment to Union Security.
Medical Benefit Claims
Gallagher v. Empire HealthChoice Assurance, Inc., No. 16 CIV. 9105 (PGG), 2018 WL 4333988 (S.D.N.Y. Sept. 11, 2018) (Judge Paul G. Gardephe). In this case, alleging that Empire’s categorical exclusion of wilderness therapy violates the Mental Health Parity and Addiction Equity Act and seeking a claim for plan enforcement under 29 U.S.C. § 1132(a)(1)(B), and a claim for breach of fiduciary duty under 29 U.S.C. § 1132(a)(3), the court granted in part and denied in part Empire’s motion to dismiss and granted its motion to strike the jury demand. The court found that Empire is not a proper defendant for the § 1132(a)(1)(B) claim because it is a claims administrator with less than total control over the determination of benefits. The court also found that Plaintiff has plausibly pled a violation of the Parity Act.
Polevich v. Tokio Marine Pac. Ins. Ltd., No. CV 17-00001, 2018 WL 4356583 (D. Guam Sept. 13, 2018) (Magistrate Judge Joaquin V.E. Manibusan, Jr.). In this dispute over the payment of treatment for emergency/urgent care treatment by a non-participating provider, the court found no ambiguity in the Policy’s provisions and that Defendants have made all payments required by the Policy. The court recommended that summary judgment be entered for Defendants as to the Breach of Contract claim in the SAC. The court also determined that “that the Plaintiff can not avail himself of an equitable estoppel claim since the representations by the Defendants and their agents did not constitute an interpretation of ambiguous language in the Policy but rather merely provided information – albeit mistaken information – about the Plaintiff’s insurance benefits.”
Pension Benefit Claims
United States Steel & Carnegie Pension Fund v. Readal, No. 2:18-CV-00140-CRE, 2018 WL 4301334 (W.D. Pa. Sept. 10, 2018) (Judge Cynthia Reed Eddy). In this interpleader action to determine the proper beneficiary of the decedent’s Savings Fund Plan benefits, the court denied the Fund’s request for dismissal of the counterclaim alleging that the Fund was negligent under 29 U.S.C. § 1104(a)(1)(B) which caused losses to the Estate between $350,000 and $1.2 million. The court determined that the Fund’s motion is premature because the Court has not yet decided whether interpleader is appropriate. In addition, the Fund did not argue that the Estate has failed to set forth any element of a § 1104(a)(1)(B) claim.
Christoff v. The Paul Revere Life Insurance Company, No. CV 17-3515 (JRT/TNL), 2018 WL 4381000 (D. Minn. Sept. 14, 2018) (Judge John R. Tunheim). The court determined that a company’s decision to supplement its group policy with voluntary individual disability policies did not make those individual policies part of an ERISA plan. The company was merely a conduit for payments of the policy premiums by deducting and remitting payments. The company was not involved in determining employees’ eligibility for and level of benefits or any other discretionary acts. Because the company did not establish and maintain an administrative scheme to administer the Policy’s benefits under the plan, Plaintiff’s claims challenging the termination of benefits under his individual policy are not preempted by ERISA.
Pleading Issues & Procedure
Tyll v. Stanley Black & Decker Life Ins. Program, No. 3:17-CV-1591 (VAB), 2018 WL 4356747 (D. Conn. Sept. 11, 2018) (Judge Victor A. Bolden). In this dispute over double indemnity benefits and death and dismemberment benefits, the court agreed with Defendants that any claim for reformation of ERISA plan instruments must be evaluated under FRCP 9(b). Applying this standard, the court determined that the Complaint, which does not allege mutual mistake, but “merely notes what form of relief she requests,” does not meet Rule 9(b)’s particularity requirement. “The Court cannot determine what particular conduct Defendants engaged in that would be inequitable, other than interpreting the plan provisions differently from Plaintiff in this lawsuit. Even then, there is no allegation of intent or any action on the part of Defendants that lead to Plaintiff’s mistake.” The court dismissed the Amended Complaint.
Burkley v. Alcatel-Lucent Retirement Income Plan, et al., No. 8:17-CV-1337-T-27TBM, 2018 WL 4360620 (M.D. Fla. Sept. 13, 2018) (Judge James D. Whittemore). In this dispute over the proper calculation of Plaintiff’s single life annuity under the pension plan, the court denied Defendants’ motion to dismiss. It determined that the claim for relief in Count II (Section 502(a)(3)) are distinct from and independent of the claim in Count I for unreduced benefits and therefore states a claim for breach of fiduciary duty. The breach of fiduciary duty claim is based on the alleged failure to respond to requests for information and failing to provide complete and accurate responses regarding the benefit calculation. In addition, the relief sought in Count II is not duplicative of the relief sought in Count III (failure to provide Plan documents under Sections 104(b)(4) and 502(c)(1)).
Omega Hosp., LLC v. United Healthcare Servs., Inc., No. CV 16-00560-JWD-EWD, 2018 WL 4343411 (M.D. La. Sept. 11, 2018) (Judge John W. deGravelles). The court granted in part and denied in part United’s second motion to dismiss. The court found that “Omega lacks derivative standing to assert its Section 502(a)(3)(A) breach of fiduciary duty claim seeking prospective relief, and Section 502(a)(3)(B) breach of fiduciary duty claim seeking unjust enrichment due to United’s failure to comply with the terms of the Plans.” However, the court did find that an assignment may confer both authorized representative and assignee status to a provider. The court did find that Omega sufficiently alleged exhaustion of administrative remedies should be excused due to United’s failure to provide meaningful access to administrative remedies. A Section 503 claim does not create a private right of action for compensatory relief but it does allow for equitable relief. Dismissal of the Section 503 claim is warranted here based on the fact that Omega has not alleged that United is “the Plan” and this claim can only be maintained against an ERISA plan.
Statute of Limitations
Singh v. New York City Dist. Council of Carpenters Benefit Funds, No. 17-CV-7159 (VSB), 2018 WL 4335511 (S.D.N.Y. Sept. 11, 2018) (Judge Vernon S. Broderick). In this case, brought by a pro se litigant seeking disability pension benefits, the court granted Defendant’s motion to dismiss his complaint. The court found that the statute of limitations began to run no later than June 1998, the date he was informed by Defendant that he temporarily lost vesting credit when he incurred a one-year break in service in 1994 and would permanently lose all of his credit if he failed to work at least 300 hours by December 1998. The statute of limitations expired six years later, in June 2004—approximately thirteen years before this suit was initiated.
Johnson v. Riverhead Cent. Sch. Dist., No. 14CV7130LDHAKT, 2018 WL 4344957 (E.D.N.Y. Sept. 11, 2018) (Judge Lashann Dearcy Hall). The court determined that Plaintiff has failed to demonstrate a triable issue of fact with respect to his entitlement to damages from Defendant’s COBRA notice violation and summary judgment is appropriate. Though Defendants did not comply with the COBRA notice requirements, statutory damages are not automatic. Here, the record shows that Plaintiff was not harmed or prejudiced by the failure to receive timely COBRA notice. Notably, when offered COBRA coverage, Plaintiff chose not to elect it and instead remained on his wife’s insurance.
Heartland Health & Wellness Fund v. Billeter, et al., No. 2:17-CV-214, 2018 WL 4354934 (S.D. Ohio Sept. 12, 2018) (Judge Susan L. Carney). Plaintiff Fund paid $712,761.51 in medical treatment benefits for Defendant. After she secured a $10 million settlement from her personal injury claim, the Fund brought suit for equitable relief to enforce the Fund’s subrogation and reimbursement rights. The court determined that the Plan sets forth an equitable lien by agreement and that it unambiguously requires a person to pay their own attorney’s fees, and disavows common law defenses. The latter is the one difference from the U.S. Airways, Inc. v. McCutchen case. The court granted the Fund’s motion for summary judgment. The court denied the Fund’s request for attorney’s fees given the 100% recovery “an imposition of additional attorney’s fees on the defendant would be manifestly unjust.”
Your ERISA Watch authored by Michelle L. Roberts, Esq., Partner