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Your ERISA Watch – District Court Finds Breach of Fiduciary Duty Claim Adequately Plead Where Claimant Was Not Given Life Insurance Conversion Options

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Ho ho ho, merry holidays. This week Kantor & Kantor helped bring justice to the nice and coal to the naughty as we take a closer look at why a district court in Harris v. Life Ins. Co. of N. Am., No. 19-cv-04594, __F.Supp.3d__, 2019 WL 6769660 (N.D. Cal. Dec. 11, 2019) reminded an ERISA fiduciary that failing to do what it said it would do may have equitable consequences.

Plaintiff’s husband received life insurance coverage through an ERISA plan sponsored by his employer, BDO USA, LLP, and insured by Life Insurance Company of North America (“LINA”). Both BDO and LINA were ERISA fiduciaries with respect to the life insurance plan. Plaintiff’s husband stopped working due to terminal cancer in July 2015 and LINA approved his disability benefits. In this situation, under the terms of the life plan, coverage continued for another twelve months – through July of 2016 – after which coverage continued if it was converted or ported.

In November 2015, BDO and LINA corresponded concerning the “need” to notify Plaintiff’s husband about conversion and portability options before July of 2016. However, this did not happen. Rather, BDO and LINA accepted premiums from Plaintiff’s husband through October 2016 – several months beyond the termination of coverage. This led Plaintiff and her husband to believe coverage was still in force.

In a letter dated October 17, 2016, BDO informed Plaintiff’s husband that his last day of employment with BDO was that day and that LINA would contact him with conversion and portability options for his life insurance. The letter, which included information regarding continuation of benefits upon termination, also stated that LINA would provide the necessary paperwork. Neither LINA nor BDO followed up with Plaintiff’s husband or provided paperwork regarding conversion and portability options. Plaintiff’s husband passed away in February 2017 from his cancer and LINA determined he did not have life insurance coverage.

Plaintiff sued BDO and LINA for breach of fiduciary duties. LINA answered. BDO filed a 12(b)(6) motion to dismiss. Plaintiff’s complaint alleged that BDO breached its fiduciary duties to her late husband by: (i) providing incorrect information to them regarding the continuation of his life insurance benefits, (ii) misleading them into believing life insurance benefits were still in effect, (iii) failing to provide him with notice of conversion or portability rights, and (iv) failing to inform LINA that his coverage under the Plan had ended (as was required by a contract between LINA and BDO). In its motion, BDO argued (i) that there is no fiduciary duty under ERISA to provide notice of conversion or portability rights and, even if there were such a duty, (ii) Plaintiff failed to adequately plead that BDO breached it.

The court rejected BDO’s arguments, including that there can never be a fiduciary duty under ERISA to provide notice of conversion or portability rights because the statute does not set forth such an obligation. First, the court recognized that while Plaintiff did not allege to have made inquiries to BDO or LINA concerning the conversion and portability rights, the complaint alleged that BDO and LINA should have known that Plaintiff’s husband would be concerned about the same. The complaint alleged that BDO (i) was aware of Plaintiff’s husband’s serious illness and, (ii) due to his prolonged absence from work and receipt of disability benefits from LINA, knew that he was dying. The court cited to cases from multiple circuits in which courts held a fiduciary’s awareness of a beneficiary’s particular need triggered additional duties to disclose not expressly stated in ERISA’s statutory text.

Second, the complaint alleged that BDO told Plaintiff’s husband in October of 2016 that LINA would contact him concerning conversion and portability of coverage and provide the necessary paperwork. But neither entity followed up on this. Because the complaint alleged BDO made an affirmative representation that information and paperwork would be forthcoming, and because the complaint alleges BDO did not follow through on its assurance, the court found the complaint sufficiently alleged that BDO breached its fiduciary duty.

Third, BDO did not contest that it and LINA accepted premium payments several months past the termination of coverage. The court held that to accept these premiums after coverage had lapsed was a breach of fiduciary duty because it was tantamount to confirming coverage. In so holding, the court noted that, unlike many plaintiffs in such premium-payment cases, Plaintiff’s husband was not paying premiums up to the time of his passing. However, it cited to another case that concluded the cessation of the payment of premiums does not necessarily absolve a fiduciary of his duties.

Plaintiff’s attorney was Kantor & Kantor Partner, Brent Dorian Brehm. He contributed to this week’s notable decision write up.

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.

Attorneys’ Fees

Second Circuit

Jarosz, et al. v. Am. Axle and Manuf., Inc., et al., No. 12-CV-39S, 2019 WL 6723741 (W.D.N.Y. Dec. 11, 2019) (District Judge William Skretny). In this action, qualified participants of Defendant’s pension plan accused Defendant of reducing their pension payments due under the Plan by the amount of certain workers’ compensation payments that they received. Previously, the court granted summary judgment in full for Plaintiffs. As a result, Plaintiffs filed a Motion for Attorneys’ Fees and Costs. In granting Plaintiffs’ motion, the Court first held that Plaintiffs are eligible for an award of attorneys’ fees and costs because they achieved “some degree of success on the merits.” Turning then to the Chambless factors, the Court noted that 1) Defendants are sufficiently culpable, as a violation of ERISA creates culpability per se according to Second Circuit precedent, 2) The Plan is able to pay reasonable costs and attorneys’ fees, as Defendant does not dispute that the Plan could not satisfy a reasonable attorney’s fee award, 3) an award against the Plan will deter plan administrators from refusing to apply the plain language of their plan and ignoring the procedural requirements of ERISA, 4) Plaintiffs did not seek to benefit all participants and beneficiaries of an ERISA Plan, which makes this the only factor which weighs against Plaintiffs’ claims, and 5) the relative merits of the parties’ positions weighs “decidedly in Plaintiffs’ favor.”

Eighth Circuit

Christoff v. Unum Life Ins. Co. of Amer., Civil No. 17-3512 (DWF/KMM), 2019 WL 6715067 (D. Minn. Dec. 10, 2019) (Donovan W. Frank). The court granted Plaintiff’s motion for attorneys’ fees in part and awarded Plaintiff a total of $98,058.20 in fees. Plaintiff sought $206,123.50 for 489 hours of work performed by three attorneys at rates ranging from $470 per hour to $385 per hour.  Plaintiff contended that the amount requested was reasonable, arguing that his counsel’s work was not duplicative because the volume of materials in the record demanded more than one attorney, which in turn required the attorneys to collaborate and review each other’s work. Defendant argued that the hourly rates requested for Plaintiff’s counsel are unreasonably high and vaguely documented. The court did not find that Plaintiff’s counsel’s documentation of hours was vague and thus did not weigh this factor in discounting the lodestar. The court found that an adjustment of the lodestar was appropriate, based on its finding that Plaintiff’s counsels’ rates were too high and not persuasively supported. As a result, the court calculated an appropriate fee based on its knowledge of the rates charged by attorneys in the district and applied the rates of $350 and $320 per hour. Plaintiff also sought costs, which Defendant did not dispute, and which the court found to be reasonable and supported by the record.

Ninth Circuit

Gorbacheva v. Abbott Laboratories Extended Disability Plan, No. 18-15400, __F.App’x__, 2019 WL 6716022 (9th Cir. Dec. 10, 2019) (Before: W. Fletcher, Bennett, and Bade, Circuit Judges). The court found that the district court erred in its award to Plaintiff of attorneys’ fees for obtaining an initial remand of her long-term disability benefit claim. The district court erred in its analysis by rejecting the Plan’s evidence that Plaintiff refused an early settlement offer from the Plan which involved a remand so that the Plan could consider evidence that it had previously failed to acknowledge. The “success” of obtaining a remand was relief that Plaintiff could have achieved had she accepted the Plan’s remand offer. Thus, the court reversed the award of fees to Plaintiff for work incurred after Plaintiff rejected the Plan’s offer. The court remanded the matter back to the district court to recalculate fees to include only those incurred before Plaintiff rejected the Plan’s offer of a voluntary remand.

Class Actions

Third Circuit

Guidry v. Wilmington Trust, N.A., No. CV 17-250-RGA, 2019 WL 6716372 (D. Del. Dec. 10, 2019) (Judge Richard G. Andrews).  In this case alleging violations of fiduciary duty with respect to an ESOP’s alleged overpayment for the purchase of company stock, the court granted Plaintiff’s motion for class certification.  The Class is defined as “all persons who were participants in the Plan and the beneficiaries of such participants.”  The court found that the class definition was not too ambiguous to meet the ascertainability requirement, which, in any event, is not a requirement for classes certified under Rule 23(b)(2).  The Class meets the numerosity requirement because there are approximately 2,000 class members.  The class claims depend on the question of whether the ESOP paid an inflated price for stock which satisfies the commonality requirement.  Plaintiff’s claim is also representative of the other class members even if his claim may be smaller or larger than others, which satisfies the typicality requirement.  The court found that the law firms of Bailey & Glasser, LLP and Feinberg, Jackson, Worthman & Wasow, LLP will fairly represent the interests of the class, rejecting Defendant’s argument that two law firms are not necessary to represent the class.

Disability Benefit Claims

Second Circuit

Sevely v. The Bank of New York Mellon Corp. Long Term Disability Coverage Plan, et al., No. 18-3247, __F.App’x__, 2019 WL 6799640 (2d Cir. Dec. 13, 2019) (Before Dennis Jacobs, Susan L. Carney, and Michael H. Park, Circuit Judges).  The disability plan at issue, in this case, requires a claimant to be unable to perform his occupation due to a sickness or injury, be under the regular care of a doctor, and have a 20% or more loss in monthly earnings due to that sickness or injury.  The court affirmed the district court’s determination that Plaintiff was not “disabled” within the plan’s definition because he received his full salary until he was terminated as part of a reduction in force and not because of his disability. The court rejected Plaintiff’s proffered interpretation of the plan as requiring the loss of earnings to occur during the month following the date an employee ceases work due to the disability since Plaintiff did not cease working because of his disability.  The court was not persuaded by the SSA’s determination of disability since a plan administrator is not required to give deference to the SSA.

Fifth Circuit

Wittmann v. Unum Life Ins. Co. of Am., No. 19-30254, __ F.App’x __, 2019 WL 6699750 (5th Cir. Dec. 6, 2019) (Before King, Jones, and Dennis, Circuit Judges). Anne Wittmann, an attorney, contended she was disabled by “unknown – other than fibromyalgia and pericarditis.” After Wittmann’s claim was denied, and two appeals upheld that determination, she informed Unum about her award of Social Security Disability Income benefits. She forwarded a Consultative Psychological Evaluation Report the SSA had obtained. Giving significant weight to the SSA report, Unum changed course, against the advice of its own reviewing psychologist. Unum paid benefits for the policy-maximum period of two years for mental illness disability. After another appeal to vet any remaining benefits, Wittmann sued. After the district court ruled for Unum, she appealed. Wittmann argued on four grounds that Unum’s denial of long-term disability benefits was an abuse of discretion. First, she averred that Unum lacked substantial evidence for its decision. Second, she posited that Unum’s grant of mental illness benefits indicated bad faith. Third, she proposed that Unum’s decision was otherwise arbitrary. Fourth, she contended that Unum’s conflict of interest affected its benefits decision. The court rejected the first argument because abuse of discretion law does not require a district court to rule in favor of an ERISA plaintiff merely because she supported her claim with a preponderance of the evidence – it requires only that substantial evidence support a plan fiduciary’s decision. It rejected the second argument because acting contrary to an in-house expert’s opinion in favor of what one takes to be the best interpretation of an SSA decision is not an act of bad faith. It rejected the third argument because Wittmann offered nothing to substantiate her assertion that Unum ignored her medical evidence. It rejected the fourth argument because Wittmann’s reliance on the Regulatory Settlement Agreement was insufficient for courts to assume that Unum was biased every time it denied a claim. The district court’s decision was upheld.

Seventh Circuit

Ten Pas v. Lincoln Nat’l Life Ins. Co., No. 18 C 3694, 2019 WL 6716614 (N.D. Ill. Dec. 10, 2019) (Judge Sara L. Ellis). On Sunday, August 31, 2014, Plaintiff had a heart attack that required hospitalization. September 1, 2014 was Labor Day. Within a week of the heart attack, Plaintiff had two strokes and had to stop working. Plaintiff now seeks declaratory judgment that Defendant erred by setting his first day of disability as August 31, 2014, thereby reducing his monthly benefit by several thousand dollars because of a raise he received on September 1, 2014. The court agreed, finding that setting the date of the disability on August 31 contravened the plain language of the ERISA policy and granted summary judgment in favor of Plaintiff. The court explained that pursuant to the policy, an employee is “actively at work” on Saturdays, Sundays, and holidays that are not scheduled workdays, so Plaintiff “was actively at work” on Monday, Labor Day. Therefore, he did not become “disabled” until Tuesday, September 2.

Ninth Circuit

Gorbacheva v. Abbott Laboratories Extended Disability Plan, No. 18-15400, __F.App’x__, 2019 WL 6716022 (9th Cir. Dec. 10, 2019) (Before: W. Fletcher, Bennett, and Bade, Circuit Judges). The district court did not err in concluding that the Plan did not abuse its discretion by denying Gorbacheva’s long-term disability claim. “Gorbacheva’s treatment records differ as to whether the pain from her condition rendered her permanently unable to work. And the Plan’s own medical consultants, including a physician that personally examined Gorbacheva, concluded that she was capable of performing her role. Moreover, although the Plan acknowledged the results of Gorbacheva’s 2013 functional capacity exam, it rejected its conclusions as unreasonable, in part, because of the substantial treatment gap in Gorbacheva’s medical records. Similarly, the Plan considered the [SSA] 2014 decision awarding Gorbacheva benefits, but again rejected it as inconsistent with the remainder of the record.” The court rejected Plaintiff’s argument that de novo review was warranted because the Plan Administrator relied entirely on litigation counsel to review the evidence in the record on remand.  The court found that the Plan Administrator did exercise discretion in deciding the claim, and while “[t]he Plan Administrator’s extensive consultation with litigation counsel during the pendency of her review is troubling,” it was not so irregular to require de novo review.

Discovery

Ninth Circuit

Operating Engineer’s Health and Welfare Tr. For N. Cal. v. Central Valley Construction, No. 4:17-CV-02365, 2019 WL 6700093 (N.D. Cal. Dec. 9, 2019) (Judge Kandis A. Westmore). Attorney for Defendant failed to respond to Plaintiff’s discovery requests for almost a year due to personal hardship. Plaintiff’s attorney attempted to resolve the discovery issue through a meet and confer letter and a telephonic meeting about the deficiencies. Multiple times defense counsel promised opposing counsel he would be responding soon, but the response never came. Plaintiff filed a motion for sanctions and Defendant did not file any opposition. The attorney for the Defendant also failed to appear at a case management conference because he did not properly calendar the date. After multiple court orders requiring Defendant to respond to the discovery requests were ignored, the court issued this decision imposing sanctions on the attorney personally for $6,240.39 in attorney’s fees Plaintiff incurred in seeking the discovery responses. The court did not sanction the defense attorney for failing to appear at the case management conference because at the time of the decision Defendant had retained new counsel.

Tenth Circuit

Smith v. Standard Life Insurance Company, et al., CIV-15-1126-D, 2019 WL 6683111 (W.D. Okla. Dec. 6, 2019) (Judge Timothy D. DeGiusti).  The court granted Plaintiff’s Motion to Vacate Protective Order and Engage in Discovery relating to a motion for an award of attorney fees pursuant to FRCP Rule 54.  Although judgment had been entered for Plaintiff, the court held that Plaintiff was entitled to seek discovery (specifically noting depositions) regarding an amendment to the group life insurance policy governing Plaintiff’s ERISA claims and whether Plaintiff’s lawsuit was a catalyst for the amendment of the group policy. The Court held that depositions and other discovery sought by Plaintiff must be relevant and proportional to his fees motion and must be completed within 45 days of this Order.

Life Insurance & AD&D Benefit Claims

Fifth Circuit

Hillebrandt v. Unum Life Insurance Company of America, No. 19-30348, __F.App’x__, 2019 WL 6705286 (5th Cir. Dec. 9, 2019) (Before Davis, Smith, and Costa, Circuit Judges).  For the reason given by the Magistrate Judge’s report and recommendation, which the district court followed, the court affirmed Unum’s denial of accidental death benefits under the abuse-of-discretion standard of review.  The Magistrate Judge’s detailed report and recommendation may be found here.

Pension Benefit Claims

Ninth Circuit

Knudson v. Oregon Sheet Metal Workers Master Retirement Fund Trust, et. al, No. 18-35857, ___F.App’x.___, 2019 WL 6753166 (9th Cir. Dec. 11, 2019) (Before: McKeown and Christen, Circuit Judges and Harpool, District Judge, Presiding).  Plaintiff appealed the district court’s order granting summary judgment in favor of Defendants. Plaintiff alleged that the Boards of Trustees for the Pension Trust and for the Master Trust abused their discretion by denying Plaintiff early retirement benefits due to his employment as a sheet metal worker, which the plan prohibits. The district court concluded that the Boards did not abuse their discretion and granted summary judgment in favor of defendants. The 9th Circuit affirmed the district court’s decision because the Board’s interpretation that Plaintiff’s employment as a welder constituted employment as a “sheet metal worker” was reasonable.

Plan Status

Sixth Circuit

Local 1982, Int’l Longshoremen’s Ass’n v. Midwest Terminals of Toledo, Int’l, Inc., No. 19-3319, __F.3d__, 2019 WL 6709410 (6th Cir. Dec. 10, 2019) (Before Stranch, Rogers, and Thapar, Circuit Judges). This case involves a dispute over a labor arbitration award issued in 2012 after Plaintiff successfully pursued a grievance against Defendant to establish welfare trust fund plans that complied with ERISA. In 2014, the Circuit Court enforced the Joint Grievance Committee’s award in Local 1982 I. When disputes arose about implementing that award, Local 1982 returned to court seeking clarification. The court “ultimately affirmed remand of the award to the arbitrators for clarification, Local 1982 II, but before that could occur, Midwest’s CFO was appointed to the Committee as the representative for the employers; a deadlock resulted. Local 1982 sought to follow the next step of the grievance procedure in the contract; Midwest refused, arguing that the deadlock terminated the grievance procedure. The district court ordered the parties to proceed to the next step.” The Circuit Court affirmed, explaining that the award did not lose its effect simply because the original Committee could not agree on a clarification of its contents. As established by the governing CBA, Step 3 of the grievance procedure specified that if a grievance “is not satisfactorily settled or adjusted in Step 2, it shall be referred to an Expanded Joint Grievance Committee,” the membership of which is then defined. The Circuit Court previously ordered the parties to fulfill the CBA requirement for the creation of a trust fund, and the process must now continue as set out in the CBA until that is accomplished.

Pleading Issues & Procedure

Sixth Circuit

Laake v. Benefits Comm., W. & S. Fin. Grp. Co. Flexible Benefits Plan, et al., No. 19-3233, __F.App’x.___,  2019 WL 6726206 (6th Cir. Dec. 11, 2019) (Before Batchelder, White, Murphy; opinion by Helene N. White). Plaintiff sued over the denial of her Long-Term Disability benefits. The district court granted Plaintiff summary judgment and remanded the claim to the administrator to determine Plaintiff’s eligibility for benefits. Defendants appealed that order and the district court’s order granting Plaintiff leave to file a motion for attorney’s fees and costs. The Court denied Defendants’ appeal based on a lack of appellate jurisdiction, as the 2004 Bowers decision of the same circuit held that a district court’s order remanding an ERISA claim to the plan administrator was not a final and appealable decision. Defendants’ attempt to distinguish Bowers by arguing it only applies to ERISA remand orders that explicitly retain jurisdiction in the district court was rejected, as the Bowers decision did not justify such a narrow reading of its holding.

Ninth Circuit

Kazda v. Aetna Life Ins. Co., No. 19-CV-02512-WHO, 2019 WL 6716306 (N.D. Cal. Dec. 10, 2019) (Judge William H. Orrick). Plaintiff alleged that Aetna has followed a consistent practice of denying claims for tumescent liposuction to treat advanced lipedema on the basis that the treatment is “cosmetic.” The court denied Defendant’s motion to dismiss because Plaintiff properly alleged that Aetna, as claims administrator, was acting as a fiduciary that developed clinical policy bulletins regarding lipectomy, upon which the claims were denied, and therefore may be liable for breach of fiduciary duty. The court also found that Plaintiff need not plead that the clinical policy bulletins explicitly bar treatment at issue. Plaintiff sufficiently alleged that the language in the clinical policy bulletins is interpreted by Aetna to “systematically deny claims.” The court found that Plaintiff pleaded distinct remedies with both her demand for a surcharge and declaratory relief.

Tenth Circuit

Kurt W., et al. v. United Healthcare Ins. Co., et al., No. 2:19-CV-223, 2019 WL 6790823 (D. Utah Dec. 12, 2019) (Judge Clark Waddoups). In considering Defendants’ motion to dismiss, the court found that the fact that Plaintiffs’ claims overlap with the class action in Wit v. United Behavioral Health did not necessitate dismissal of this action. The court found that Plaintiff Sandra W., the patient’s mother, does not have statutory standing to bring ERISA claims. However, the court found that Plaintiffs Sandra W. and Kurt W. do have constitutional standing because they allege incurring medical expenses as a result of Defendants’ denial of benefits. The court found that violations of the Parity Act need not be express and it is sufficient that Plaintiff alleged that Defendants inconsistently applied criteria to limit or restrict mental health treatment. Plaintiffs adequately identified medical treatments that are analogous to mental health treatment received by Plaintiff E.W. The court found that although Plaintiffs’ complaint did not provide analysis of Defendants’ guidelines, Defendants failed to provide pertinent information to help Plaintiffs fully develop their claims: “Plaintiffs cannot be expected to plead acts that are in possession of Defendants, and they were certainly not be punished for not offering those facts when their repeated requests to learn the same have been ignored.” The court set a timeline for Defendants to provide requested information and granted Plaintiffs leave to amend their complaint.

Severance Benefit Claims

Ninth Circuit

White v. The Senior Leaders Severance Pay Plan of Danaher Corporation et al., No. 18-55891, __F.App’x__, 2019 WL 6817592 (9th Cir. Dec. 13, 2019) (Before: O’Scannlain, Paez, and Owens, Circuit Judges).  The court affirmed the Plan’s denial of severance benefits as not an abuse of discretion.  First, the court found that the district court correctly applied an abuse of discretion standard tempered by a low level of skepticism associated with Danaher’s structural conflict of interest. The court found that Danaher’s in-house counsel’s involvement in the claim did not warrant a higher level of skepticism because there is no evidence of malice or inconsistent reasons for denial.  Danaher’s reasons for terminating Plaintiff fell within the Plan’s definition of “cause” which made him ineligible for benefits.  Lastly, the court determined that Plaintiff was not deprived of a full and fair review because he was not given certain documents; he was given enough information for a “meaningful dialogue.”

Statutory Penalties

Second Circuit

Owo v. Life Ins. Co. of N. Am., No. 19 CIV. 3016 (GBD), 2019 WL 6790786 (S.D.N.Y. Dec. 12, 2019) (Judge George B. Daniels).  The court determined that it is undisputed that Accenture’s STD wage replacement policy is a self-funded payroll practice that is excluded from ERISA, and as such, Plaintiff cannot compel production of the administrative record or pursue a penalty for failure to produce the administrative record under ERISA.  The court dismissed Plaintiff’s ERISA claim.

Sixth Circuit

Bustetter v. CEVA Logistics U.S., Inc., No. CV 18-58, 2019 WL 6719485 (E.D. Ky. Dec. 10, 2019) (Judge David L. Bunning). Bustetter sent five requests for plan documents via certified mail over a 6-month period to his former employer, CEVA, as the plan administrator of the CEVA Welfare Benefit Plan. The requests were received, but CEVA did not respond because Bustetter’s letters were not routed to the proper department. Plaintiff sued CEVA for statutory penalties for not providing plan documents. CEVA contacted Bustetter through their respective attorneys and asked what documents he wanted. Bustetter stated that he would not respond until after CEVA answered the complaint and served him with formal discovery requests. CEVA filed an answer and served Requests for Production requesting copies of the original requests (which CEVA could not locate). After reviewing the original requests, CEVA produced the requested plan documents to Bustetter. The maximum penalty for failing to respond to a participant’s request for documents is $110 a day per violation. 29 U.S.C. § 1132(c)(1)29 C.F.R. § 2575.502c-1. To determine the amount of the daily penalty, the court considered CEVA’s negligence, Bustetter’s actions, the length of the delay, and CEVA’s willingness to cooperate. The court found that CEVA was negligent but did not act in bad faith. And the court found Bustetter suffered no prejudice: “[H]e has not acted like a party who is worried that he would be prejudiced by CEVA’s delay.” He could have sued after his first document request was unanswered, and once litigation started, he didn’t act with a sense of urgency. The court ordered a $25 per day penalty for the 242 days between CEVA’s first failure to respond and when CEVA produced the documents, for a total of $6,050.

Subrogation/Reimbursement Claims

Sixth Circuit

Memberselect Ins. Co. v. Cofinity, Inc., et al., 18-cv-12554, 2019 WL 6728358 (E.D. Mich. Dec. 11, 2019) (Judge Laurie J. Michelson).  The court granted Defendant Cofinity’s unopposed motion for summary judgment holding that Cofinity, and its parent company Aetna Health, Inc., were not responsible for paying over $55,000 in medical expenses incurred in 2014 by Corey Dunbar, a minor who sustained serious injuries in a car accident. Dunbar was covered under his father’s no-fault automobile insurance policy provided by Plaintiff Memberselect Insurance Co., who paid the over $55,000 in medical expenses incurred by Dunbar. Memberselect requested reimbursement from Cofinity, which administered Dunbar’s father’s health insurance plan (EWIF plan), and then filed suit alleging state law claims against Cofinity as the primary insurer under Memberselect’s policy on coordination of benefits. The case was removed to federal court because the dispute involved Cofinity’s ERISA-governed health insurance plan and Dunbar’s mother’s self-funded, ERISA-governed health plan.  The Court held that (1) Memberselect was not required to exhaust its administrative remedies under ERISA because it was not a beneficiary or participant under Dunbar’s ERISA plan; (2) the Court did not apply any standard of review in evaluating this case because it was merely resolving a dispute between two insurance contracts; and (3) when applying federal common law rules of contract the court found the primary insurer to be Dunbar’s mother’s insurance plan because his father’s EWIF plan contained a “Birthday Rule” in which “the plan of the parent…whose birthday is earlier in the year is primary.”  Memberselect’s recoupment claim against Cofinity and Aetna failed, and it should have been brought against Dunbar’s mother insurance plan instead.

Withdrawal Liability & Unpaid Contributions

Eighth Circuit

Nelson v. Advanced Signs, Inc., No. CV 19-1681 (MJD/LIB), 2019 WL 6727115 (D. Minn. Dec. 11, 2019) (Judge Michael J. Davis).  The court granted in part and denied in part Plaintiffs’ Motion for Entry of Judgment and granted Plaintiffs’ Motion for an Award of Attorneys’ Fees and Costs.  Defendant is liable for a total sum of $28,730.70, which consists of $21,835.93 in unpaid contributions; liquidated damages of $3,787.72; interest of $437.45; attorney’s fees of $2,132.50; and costs of $537.10.

Your ERISA Watch is made possible by the collaboration of the following Kantor & Kantor attorneys:  Brent Dorian BrehmBeth Davis, Sarah DemersElizabeth GreenAndrew Kantor, Susan Meter, Michelle RobertsTim Rozelle, Peter Sessions, and Zoya Yarnykh.

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