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Your ERISA Watch – District Court Finds Oxford’s Denial of Teen’s Residential Treatment Arbitrary and Capricious Due to Reliance on UBH Guidelines

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For those of us waiting for a court to follow the reasoning in the remarkable Wit v. United Behavioral Health, 2019 WL 1033730 (N.D. Cal. Mar. 5 2019) decision earlier this year, we got it last week with the decision in S.B. v. Oxford Health Ins., Inc., No. 3:17-CV-1485 (MPS), __F.Supp.3d__, 2019 WL 5726901 (D. Conn. Nov. 5, 2019). In sum, Judge Michael Shea found that Oxford’s denial of a 16-year-old’s residential treatment for an eating disorder was arbitrary and capricious and remanded to Oxford for further consideration.

To start, the court did not accept Plaintiff’s argument that a de novo standard of review should apply because United Behavioral Health Services, Inc. (“UBH”), not Oxford, made the benefit determination. Plaintiff contended that although UBH made the benefit determination, there is no indication that the Plan gives UBH discretionary authority. The court found that the Plan language contemplates the delegation of authority to third parties with the definition of “Us, We, Our” which included not only Oxford but also anyone to whom Oxford “legally delegate[s] performance,” including UBH.

The court deemed that Oxford’s denial “fails to satisfy even the deferential standard of review” due to Oxford’s reliance on the UBH Guidelines. The court found that the Plan permits Oxford to develop standards governing medical necessity determinations so the development and guidance of the UBH Guidelines was not, in and of itself, a violation of the terms of the Plan. However, such guidelines were “intended to elaborate on the eligibility requirements in the Plan, such as the definition of medical necessity – not transform them.” The UBH Guidelines require satisfaction of “why now” factors addressing changes or symptoms that precipitated admission. The court found “It is largely this feature of the guidelines that led one court to conclude that the UBH Guidelines were arbitrary and capricious in themselves,” citing Wit. By contrast, the Plan’s definition of medical necessity is focused on what is necessary to treat a patient’s underlying condition. The court found that the introduction of the UBH Guidelines exceeds the discretion granted to Oxford to develop standards because the UBH Guidelines represent “a new requirement for coverage, rather than an elaboration on the definition of medical necessity set forth in the Plan.” Moreover, each of the denials explicitly rely on the UBH Guidelines and “reflect the general bias of the UBH Guidelines toward crisis management” rather than treatment of the underlying condition. For example, UBH’s inquiry was focused on Plaintiff’s medical stability, immediate safety, and harm to herself.

The court also found that Oxford’s rationale for denying coverage was an abuse of discretion because the decisions were largely conclusory, unsupported, or of limited relevance to the medical necessity determination. For example, the treatment notes do not conclude that Plaintiff was fully cooperative with her treatment, as claimed in UBH’s denial. Even so, it was not clear to the court how Plaintiff’s partial cooperation with treatment supported UBH’s conclusion that residential treatment is no longer medically necessary. The court looked to the American Psychiatric Association (“APA”) Guidelines which state that being cooperative in highly structured treatment is an indication that residential treatment is appropriate. In another example, the court found that Plaintiff’s ability to complete daily activities is tangential to whether the treatment was effective to treat her condition, does not support the conclusion that residential treatment was not medically necessary, and seems largely inapplicable to patients with eating disorders. To the extent that the UBH Guidelines act to deny coverage by limiting residential treatment to crisis management – “such as when a patient is so malnourished as a result of her eating disorder that she can no longer attend to the tasks of daily living” – the UBH Guidelines exceed the authority provided by the Plan.

The court found that UBH’s denials contained other observations with little apparent connection to the nature of Plaintiff’s condition, such as UBH’s statement that plaintiff did not appear to have “significant mood symptoms.” The absence of significant co-occurring disorders does not support denial. UBH’s claim that Plaintiff “could keep herself safe” did not support denial because if Plaintiff were suicidal, inpatient hospitalization would be indicated both by the APA Guidelines and UBH’s own guidelines. UBH’s denial based on Plaintiff’s weight was improper because “there is no indication that Plaintiff had learned to overcome the eating disorder behaviors that prevented her from maintaining a healthy weight.”

The court found that Avalon’s reasons for continuing Plaintiff’s residential treatment are rationally related to treating Plaintiff’s underlying eating disorder and correspond to the APA Guidelines, while the “same cannot be said for Oxford’s reasoning.” The court found it was arbitrary and capricious for Oxford to reject Avalon’s well-reasoned, specific, and substantiated explanation” for continuing Plaintiff’s residential treatment.

The court held the appropriate remedy was remand to Oxford and directed Oxford to reconsider the evidence, applying the appropriate definition of medical necessity which is based on the Plan, “is not exclusively focused on the ‘why now’ factors that precipitate admission, but rather on whether the services in question are necessary to effective treat the underlying condition.”

Plaintiff’s lead attorney, Elizabeth Green of Kantor & Kantor, LLP, contributed 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

Third Circuit

Sec’y of U.S. Dep’t of Labor v. Koresko, et al., 09-988, 2019 WL 5722287 (E.D. Pa. Nov. 5, 2019) (Judge Wendy Beetlestone). In 2009, the Department of Labor (“DOL”) sued Defendants for violations of the Employee Retirement Income Security Act (“ERISA”). In August 2015, the Court appointed Wilmington Trust (“Wilmington”) to serve as trustee for the restitution funds, and tasked Wilmington with managing and distributing the funds to those affected by Defendants’ scheme (“the Trust participants”). The Plan Sponsors objected to Wilmington’s plan, which involved tax withholdings, and moved the court for a decision. In August 2019, the Court ordered that Wilmington’s plan would be followed.  The Plan Sponsors now move for attorney’s fees under Federal Rule of Civil Procedure 54(d)(2) and 29 U.S.C. § 1132(g)(1) against Wilmington to reimburse them for the fees expended in objecting to Wilmington’s initial tax withholding decision. The court held that the Plan Sponsors’ objection to Wilmington’s tax withholdings does not qualify as an “action” for ERISA purposes. The court concluded that because the Plan Sponsors instituted no “formal complaint” against Wilmington and because Wilmington was not a “party” to any ERISA “action” against the Plan Sponsors, the Plan Sponsors cannot recover attorney’s fees under § 1132(g)(1) against Wilmington.

Breach of Fiduciary Duty

Sixth Circuit

Sec’y of U.S. Dep’t of Labor v. Kavalec, No. 1:19-CV-00968, 2019 WL 5684462 (N.D. Ohio Nov. 1, 2019) (Judge Pamela A. Barker). The DOL brought suit against Robert Kavalec, et. al., alleging, inter alia, that Defendants, as trustees of the multiemployer health and welfare plan (“Fund”), violated ERISA by paying themselves compensation from the Fund.  Defendants moved to stay the case until March 1, 2020. In support of their request for stay, Defendants argued the DOL would not be prejudiced by a stay because it began investigating the claims at issue four to five years ago and delaying the case a few months would not cause prejudice. Defendants then argued they would be prejudiced if the case was not stayed because the Fund is obligated to pay the legal fees for the individual Defendants and the initial claim to the insurer was denied. If the case was not stayed, Defendants would incur legal fees paid by the Fund which would deplete the Fund’s available resources. Defendants further argued they would be prejudiced because without payment of legal fees by the Fund or insurance, they would be forced to proceed without legal representation. Finally, Defendants argued the stay would promote judicial economy because the Fund will terminate effective March 1, 2020, and no claims would be payable after February 28, 2020, which will allow the Fund to know with more certainty its payment obligations. The Court agreed with Defendants and granted the motion to stay.

Disability Benefit Claims

Fifth Circuit

Goodman v. Reliance Standard Life Ins. Co., No. 6:18-CV-00623, 2019 WL 5791753 (W.D. La. Nov. 5, 2019) (Judge Robert R. Summerhays). Darrell Goodman sued Defendant alleging it wrongfully terminated his long-term disability benefits. Goodman based his disability claim on multiple heart attacks, heart failure, respiratory failure, and cardiogenic shock. Reliance evaluated the claim and approved LTD benefits under an “own occupation” definition of disability. On April 26, 2016, Reliance proactively terminated Goodman’s benefits beyond October 21, 2016 – the date the plan’s definition of disability switched from “own” to “any occupation”, providing substantially the same earning capacity. Reliance identified multiple occupations it asserted Goodman was able to perform. Goodman appealed. Reliance arranged for Brian Barrilleaux, M.D., Board Certified in Internal Medicine, to review Goodman’s medical records and perform an examination. After Dr. Barrilleaux concluded Goodman was able to resume full-time work, Reliance upheld the termination of benefits. Each party filed motions for summary judgment and the court evaluated the motions under the abuse of discretion standard of review. The court recognized Reliance’s self-interest because it both insured and administered the plan. However, it viewed Reliance’s decision “with only a modicum less” deference because Goodman presented no evidence beyond Reliance’s structural conflict of interest to show how that conflict affected Reliance’s decision. Recognizing that Goodman’s treating physicians did suggest physical limitations for employment, the court reviewed information from those same physicians “which contradicted those limitations.” Those contradictions, combined with Dr. Barrilleaux’s findings that Goodman had “enjoyed excellent recovery” from his medical conditions, convinced the court that Defendant’s decision was supported by substantial evidence and was not arbitrary and capricious.

Sixth Circuit

Meiman v. Aetna Life Ins. Co., No. 2:18-CV-75 (WOB-CJS), 2019 WL 5782099 (E.D. Ky. Nov. 5, 2019) (Judge William O. Bertelsman). On de novo review, the court affirmed Defendant’s decision to terminate Plaintiff’s LTD benefits. Defendant had been paying benefits to Plaintiff for over 10 years, having determined on multiple occasions that, although transferable skills analyses identified potential jobs Plaintiff could perform, labor market surveys indicated that the available jobs failed to meet the Plan’s wage requirement. In terminating Plaintiff’s benefits, Defendant relied on a new transferable skills analysis without conducting a labor market survey. The court found there was no requirement under the Plan or Sixth Circuit law for a labor market survey, and the transferable skills analysis alone satisfied Defendant’s obligation to have evidence that identifies representative jobs that meet the Plan’s wage requirement. The court noted that even though Defendant could not previously identify jobs that met the Plan’s wage requirement, the new transferable skills analysis provided sufficient evidence of changes in labor market and economic conditions. The court also noted that the jobs identified in the transferable skills analysis were illustrative and did not need to be examples of specific jobs that would meet all of Plaintiff’s individual needs. Plaintiff argued that because she had been out of the workforce for an extended time, the transferable skills analysis was flawed and she would only qualify for entry-level jobs that did not meet the wage requirement; however the court rejected this argument based on Plaintiff’s work history and current social activities, which suggested she was capable of more skilled work.

Ninth Circuit

Gordon v. Metropolitan Life Ins. Co., No. 5:10-cv-05399-EJD, 2019 WL 5788597 (N.D. Cal. Nov. 6, 2019) (Judge Edward J. Davila). Plaintiff sued MetLife for long-term disability benefits, asserting that he was disabled due to stress, anxiety, and depression, as well as from musculoskeletal complaints. The district court originally determined that MetLife’s decisions were subject to the deferential abuse of discretion standard of review, and ruled in favor of MetLife. 2017 WL 3917336. This determination was reversed by the Ninth Circuit because MetLife failed to issue a final decision on Plaintiff’s appeal from the initial denial. 747 F. App’x 594. On remand, under de novo review, the district court again ruled in favor of MetLife. The court found that Plaintiff had not proven that he was receiving treatment for his conditions on a continuing basis, and that he had not proven that he was unable to earn more than 80% of his earnings in his own occupation in the local economy. Specifically, the court concluded that although Plaintiff suffered from stress in his job, that stress did not rise to a level that created psychiatric restrictions and limitations from working. The court further found that while Plaintiff may have suffered from joint and back pain, he did not receive continuous appropriate care and treatment from a physician during the pertinent time period as required by the plan.

Tenth Circuit

Ortiz v. The Hartford, No. CV-00636-RB-KK, 2019 WL 5697784 (D.N.M. Nov. 4, 2019) (Senior Judge Robert C. Brack).  This case involves the denial of long-term disability benefits by The Hartford Insurance Company. After paying benefits for two years, Hartford terminated Plaintiff’s claim under the newly applicable “any occupation” definition of disability within the policy. In granting summary judgment for Hartford, the court found that Hartford did not abuse its discretion when denying Plaintiff’s claim, as it was supported by sufficient medical and vocational evidence. The court also refused to consider Plaintiff’s Social Security award because it was issued a year after the final denial by Hartford. The court explained that binding Tenth Circuit precedent “has consistently held that when social security decisions arise after the close of the ERISA records, there is nothing for the administrator assess, and the administrator needn’t reevaluate the ERISA claim. This court must only look at the administrative record, weighing both the evidence for and against [Plaintiff.]”

Eleventh Circuit

Ferrizzi v. Reliance Standard Life Ins. Co., No. 18-11803, __F.App’x__, 2019 WL 5813992 (11th Cir. Nov. 7, 2019) (Before William Pryor, Jill Pryor, and R. Lanier Anderson, Circuit Judges). Defendant denied Plaintiff long-term disability benefits alleging a pre-existing condition. The district court granted Defendant’s motion for summary judgment. The issue before the Eleventh Circuit related only to the substance abuse/drug dependency claim arising from Plaintiff’s administrative appeal. The Eleventh Circuit affirmed the district court’s decision, finding that Reliance’s decision was reasonable. Defendant initially denied LTD benefits because one of the disabilities claimed by Plaintiff were seizures for which he received treatment during the lookback period, and as such, was excluded by the policy as a pre-existing condition. Plaintiff appealed, alleging that his primary disability was addiction to opiates following surgery, for which no treatment was received during the lookback period. Reliance determined, and both the district court and Circuit Court agreed, that Plaintiff received “medical treatment” for his addiction on at least one occasion during the lookback period when a doctor refused to prescribe more drugs, and as such, his addiction was a pre-existing condition under the policy.

Discovery

Eleventh Circuit

Woznicki, et. al., v. Raydon Corporation, et. al., No. 6:18-CV-2090, 2019 WL 5703085 (M.D. Fla. Oct. 25, 2019) (Judge Gregory J. Kelly). Raydon Defendants’ motion for entry of protective order was granted in part and denied in part. Plaintiffs sued the Raydon Defendants for breaching fiduciary duties they owe to the participants in the Raydon ESOP plan and for participating in prohibited transactions in violation of ERISA. Plaintiffs served Raydon with a Rule 30(b)(6) deposition notice with sixteen topics. Defendants filed a motion for a protective order, asking the court to strike or quash the deposition notice. The court shot down Defendants’ argument that Plaintiffs should seek the information through interrogatories first, saying parties to litigation are allowed to choose from the discovery tools available. Defendants also argued several of the topics sought “to invade the attorney-client privilege and work product protection.” The court responded that privilege is not a reason not to testify; instead, privilege should be asserted to specific questions during the deposition. The court limited two of Plaintiffs’ deposition topics that asked about class members’ knowledge – a topic about which a corporate representative would not have knowledge. The remainder of the motion was denied.

ERISA Preemption

Fifth Circuit

Cardiovascular Surgery of Alexandria, LLC, et al. v. Kerry, No. 1:18-cv-00986 (W.D. La. Nov. 5, 2019) (Judge Joseph H.L. Perez-Montes). In a Sua Sponte Jurisdictional Briefing Order, the court assessed its jurisdiction over Plaintiffs’ Complaint that sought a declaratory judgment asserting that federal law preempts state law on matters related to ERISA and that Louisiana courts lack authority to adjudicate this matter seeking garnishment of pro se Defendant Kerry’s ERISA benefit plan based on a state restitution order. Specifically, the Court observed that Plaintiffs’ Complaint cites federal statutes invoking declaratory relief and garnishment of an ERISA pension benefit plan through the federal Mandatory Victim Restitution Act. After reciting the elements of complete and conflict preemption, the Court concluded that Plaintiffs had not properly demonstrated standing nor subject matter jurisdiction on the face of the Complaint and thus failed to establish that federal law creates a cause of action or a right to relief dependent on a substantial question of federal law. The Court ordered that Plaintiffs file a Jurisdictional Memorandum within 14 days setting forth the basis for the Court’s subject matter jurisdiction over Plaintiffs’ state law restitution claims, including garnishment, against Kerry’s ERISA pension benefit plan.

Medical Benefit Claims

Second Circuit

S.B. v. Oxford Health Ins., Inc., No. 3:17-CV-1485 (MPS), __F.Supp.3d__, 2019 WL 5726901 (D. Conn. Nov. 5, 2019) (Judge Michael P. Shea). See Notable Decision summary.

Plan Status

Fifth Circuit

Chauvin v. Symetra Life Insurance Company, No. CV 19-10493, 2019 WL 5684257 (E.D. La. Oct. 31, 2019) (Judge Eldon E. Fallon).  This case involves the denial of short-term disability benefits under the disability Plan provided by the Terrebone Parish School Board. Plaintiff filed her action under ERISA. Defendants responded by filing a motion for summary judgment based on Plaintiff’s failure to state a claim, arguing that Plan was exempt from ERISA in light of the “governmental plan” exception under 29 U.S.C. § 1003(b).  Plaintiff argued based on Graham v. Hartford Life, 589 F.3d 1345 (10th Cir. 2009), that a plan is not exempt if participation is voluntary and the plan is funded through payroll deductions. However, the court noted that this reliance was misplaced, as that case discussed labor unions obtaining coverage for its members, rather than government employers. Here, because the School Board applied for and contracted with the insurer to provide disability benefits to its employees and is the named policyholder, the plan is exempt from ERISA despite the fact that participation was voluntary and funded by payroll deductions.

Pleading Issues & Procedure

Second Circuit

Saraceni v. M&T Bank Corp., No. 19-CV-1152, 2019 WL 5784936 (W.D.N.Y. Nov. 6, 2019) (Judge Lawrence J. Vilardo). Plaintiff alleged breach of contract and ERISA claims against M&T Bank Corporation. After Plaintiff moved for a preliminary injunction, several motions to seal documents were filed. Because these documents were not filed in connection with summary judgment or introduced at trial–where a strong presumption of public access to documents exists–the presumption of public access to these filings was somewhat lower. Applying this tempered standard, the court ruled two documents M&T argued were confidential did not overcome the presumption because both included only public information and M&T’s business use did not make them confidential. These documents were unsealed. The court ruled two other documents did overcome the presumption, at least for the preliminary stage of litigation, because the documents contained confidential information that could cause M&T competitive harm if released publicly. These documents remained sealed.

Ninth Circuit

The Board of Trustees of the Glazing Health and Welfare Trust, et al. v. Chambers, No. 16-15588, __F.3d__, 2019 WL 5797212 (9th Cir. Nov. 7, 2019) (Before: Sidney R. Thomas, Chief Judge, and William A. Fletcher, Ronald M. Gould, Jay S. Bybee, Consuelo M. Callahan, Milan D. Smith, Jr., Sandra S. Ikuta, Morgan Christen, John B. Owens, Ryan D. Nelson, and Bridget S. Bade, Circuit Judges). The Court, in an en banc rehearing, examined and affirmed Ninth Circuit precedent concerning the proper analytical framework to apply when determining whether the repeal, amendment, or expiration of legislation renders a lawsuit challenging the legislation moot. Here, a divided three-judge panel concluded that there was no evidence in the record indicating a reasonable expectation that the Nevada legislature would enact the same or substantially similar legislation after it passed and the replaced Senate Bill (SB) 223, which amended state vicarious liability and lien collections laws to impose certain administrative requirements on labor union trusts when they pursue debt collection on behalf of union members.  SB 223 was challenged in court by some of the trusts in the instant action and the district held SB 223 to be preempted by ERISA because it regulated the relationships between ERISA plans and employees. The Nevada Labor Commissioner appealed this decision but in the meantime the Nevada legislature replaced SB 223 with SB 338 doing away with the provisions the district court held to be preempted by ERISA. Because nothing in the record indicated that SB 223 would be resurrected in the same or similar fashion, the Court held that the Nevada Labor Commissioner’s appeal was moot and remanded the case to the district court with instructions to vacate the judgment and dismiss the complaint.

Eleventh Circuit

Woznicki v. Raydon Corporation, et al., No. 6:18-cv-2090-Orl-78GJK, 2019 WL 5702728 (M.D. Fla. Nov. 4, 2019) (Judge Wendy W. Berger). Defendants moved to dismiss an ESOP case that alleges the Board, as trustees of the ESOP, breached their fiduciary duties and engaged in prohibited transactions when they sold one hundred percent of their stock to the ESOP for $60,500,000 at the time the Board knew it had lost a major government contract. Plaintiff also alleges two of the Defendants engaged in a prohibited transaction when they received $5,000,000 from the corporation in exchange for noncompete agreements. Defendants argued the First Amended Complaint was a “shotgun” pleading because it incorporated by reference the factual allegations. The court, describing a shotgun pleading as a “venial sin”, succinctly explained the three types of shotgun pleadings: 1. A complaint with multiple counts that adopts the allegations of all previous counts, 2. A complaint replete with conclusory, vague and immaterial facts not obviously connected to a cause of action, and 3. A complaint that fails to separate the claims into separate counts. The court ruled the First Amended Complaint was not a shotgun complaint and denied Defendants’ motion to dismiss as to all counts except count IV. The court found Count IV did not sufficiently allege a prohibited transaction related to the noncompete agreement because Plaintiff did not allege the ESOP was a party to the transaction. Count IV was dismissed without prejudice.

Remedies

Sixth Circuit

Mulder v. Local 705, Int’l Bhd. of Teamsters, Pension Fund, No. 18-2002, __F. App’x__, 2019 WL 5704363 (6th Cir. Nov. 5, 2019) (Before Merritt, Moore, and White, Circuit Judges). Plaintiff brought an action seeking interest on a lump-sum payment of delayed pension benefits, additional benefits to which he alleged he was entitled, and statutory penalties. The Sixth Circuit reversed the district court’s denial of Plaintiff’s claim for prejudgment interest and dismissal of his claim for statutory penalties. Plaintiff applied for “30-and-Out” pension benefits under the Plan and eventually was approved, but received only a fraction of the amount that he was entitled to because Defendant concluded that Plaintiff did not have 30 years of benefit service credits. Fourteen years later, Defendant paid Plaintiff a lump sum of $235,446.52, which reflected 30 years of benefit service credits. Plaintiff sought interest on this amount, and the Sixth Circuit agreed that he was entitled to it because awards of prejudgment interest were compensatory, rather than punitive. The courts should focus on the position the parties would be in absent the withholding, and consider several factors, including: remedial goal to place the plaintiff in the position that he or she would have occupied prior to the wrongdoing; the prevention of unjust enrichment on behalf of the wrongdoer; the lost interest value of money wrongly withheld; and the rate of inflation.

Statutory Penalties

Fifth Circuit

Theriot v. Building Trades United Pension Trust Fund, et al. , No. CV 18-10250, 2019 WL 5693045 (E.D. La. Nov. 4, 2019) (Judge Lance M. Africk).  Plaintiff alleged Defendant failed to timely produce plan documents in violation of ERISA, 29 U.S.C. § 1024(b)(4), entitling Plaintiff to penalties under 29 U.S.C. § 1132(c). Defendant argued Plaintiff did not have standing to request documents. Plaintiff was not a participant or beneficiary in the plan and made the request as a representative of her mother’s estate, and at the time she made the request, Plaintiff had not yet been appointed as the independent administrator of the estate. However, the court determined she had standing because under Louisiana succession law, Plaintiff was a universal successor to the estate and had authority to act on behalf of the estate at the time she made the request. The court then considered whether Defendant had complied with the request. Plaintiff requested “a complete copy of the plan agreement” in November 2017, and Defendants sent a copy of the plan agreement current through 2017. Plaintiff argued that Defendant should have also produced certain additional documents, but the court determined that Plaintiff’s request was not sufficiently clear such that a reasonable plan administrator would have known that she was requesting other documents beyond the 2017 plan. Plaintiff also requested several additional documents in 2018, and the court determined that certain of the 2018 requests were not sufficiently clear, that some of the documents were not necessary for Defendant to produce because they were not relevant to understanding her rights under the plan, that some of the documents did not exist, and that some were outside the scope of § 1024(b)(4). The court noted that even if Plaintiff was entitled to some or all of her requested documents, the court still would not exercise its discretion to award statutory penalties because Fifth Circuit courts typically do not award penalties under § 1132(c) unless the claimant shows the administrator acted in bad faith or the claimant was prejudiced. The court determined that Plaintiff was not prejudiced because she requested documents after the appeal deadline had passed and she had failed to provide evidence of bad faith beyond “mere conclusory allegations.”

Sixth Circuit

Mulder v. Local 705, Int’l Bhd. of Teamsters, Pension Fund, No. 18-2002, __F. App’x__, 2019 WL 5704363 (6th Cir. Nov. 5, 2019) (Before Merritt, Moore, and White, Circuit Judges). Plaintiff brought an action seeking interest on a lump-sum payment of delayed pension benefits, additional benefits to which he alleged he was entitled, and statutory penalties. The Circuit Court reversed the district court’s denial of Plaintiff’s claim for prejudgment interest and dismissal of his claim for statutory penalties. ERISA requires the administrator of an ERISA plan “to maintain records with respect to each of his employees sufficient to determine the benefits due or which may become due to such employees.” 29 U.S.C. § 1059(a)(1). ERISA authorizes a penalty of up to $110 per day when a plan fails to provide certain documents that are requested by a beneficiary. 29 U.S.C. § 1132(c)(1); 29 C.F.R. § 2575.502c-3. Plaintiff alleged that Defendant failed to provide him with the PensionPLUS booklet despite repeated requests for same. The Sixth Circuit determined that the district court erroneously decided this claim based on whether Defendant timely provided the SPD, rather than whether Defendant timely provided the PensionPLUS booklet. The Court remanded for further consideration of the statutory penalties claim without taking a position on the arguments presented by Defendant.

Subrogation/Reimbursement Claims

Fourth Circuit

Zell v. Norma Zell for the Estate of John E. Zell, et al. v. Neves, No. 7:19-cv-01304-TMC, 2019 WL 5780399 (D.S.C. Nov. 5, 2019) (Judge Timothy M. Cain). Plaintiff settled a wrongful death case arising from an automobile accident, and then sued in state court for a declaration that the employer health plan had no right to recover any of the settlement proceeds under the plan’s subrogation provisions. The plan removed the case to federal court based on ERISA, and filed a motion to dismiss, asserting that Plaintiff had failed to exhaust her administrative remedies. The district court found that Plaintiff’s state law claims were preempted by ERISA because they related to an employee benefit plan. The court further found that the South Carolina insurance law relied upon by Plaintiff that prohibited subrogation in cases involving underinsured motorist coverage was saved from preemption under ERISA’s “saving clause.” 29 U.S.C. § 1144(b)(2)(A). However, because the plan was self-funded, and not insured, the court found that South Carolina’s subrogation law did not apply. The court further found that the Plaintiff had not exhausted her administrative remedies under the plan because she did not utilize the plan’s claims or appeal process before filing suit, and thus granted the plan’s motion to dismiss.

Withdrawal Liability & Unpaid Contributions

Eighth Circuit

Greater St. Louis Construction Laborers Welfare Fund, et al. v. Unified Contracting Services, LLC, No. 4:18-CV-01125-SNLJ, 2019 WL 5802708 (E.D. Mo. Nov. 7, 2019) (Judge Stephen N. Limbaugh, Jr.).  The court granted Plaintiffs’ motion for default judgment in part, finding that Defendant is liable to Plaintiffs in the amount of $6,882.21 for delinquent contributions, $1,376.44 for liquidated damages, and $2,474.00 and $498.58 in attorneys’ fees and litigation costs, respectively.  The court denied without prejudice Plaintiffs’ request for accounting fees, finding that the $6,293 sought is substantially higher than what is seen on average and Plaintiffs provided no explanation for the expense.

Tenth Circuit

Eighth District Electrical Pension Fund, et al. v. Power Foundations, LLC, No. 19-CV-00972-CMA-NRN, 2019 WL 5784943 (D. Colo. Nov. 6, 2019) (Judge Christine M. Arguello).  In this lawsuit to collect delinquent fringe benefit contributions from Defendant, the court granted Plaintiffs’ motion for default judgment.  It found Plaintiffs were entitled to $18,418.69 in damages, consisting of $15,020.09 in principal contributions, $1,819.82 in interest, and $1,578.78 in liquidated damages.

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

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