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Your ERISA Watch – District Court Rules Against Dearborn for “Moving Target” Claims Analysis in Disability Benefit Dispute

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This week’s notable decision is another Kantor & Kantor victory in a long-term disability benefit matter, Groch v. Dearborn Nat’l Life Ins. Co., No. 2:18-cv-06614 CBM (Ex), __ F. Supp. 3d __, 2020 WL 6374619 (C.D. Cal. Oct. 29, 2020).

Plaintiff brought this action for long-term disability (“LTD”) benefits under an ERISA-governed employee benefit plan insured by Defendant Dearborn National Life Insurance Company (“Dearborn”). As is typical of most LTD policies, Plaintiff was initially entitled to benefits if he demonstrated that he was unable to perform the duties of his “own occupation.” After 24 months of benefits, he had to demonstrate he was disabled from “any occupation” for which he might be qualified to continue receiving benefits.

Plaintiff filed his claim based on cervical and lumbar pain, as well as impairment from the medications he was forced to take to combat that pain. Dearborn repeatedly approved benefits at the outset of Plaintiff’s claim, eventually informing him that it was approving the claim through the entire “own occupation” benefit period. However, Dearborn almost immediately backtracked on this decision when it received a vocational review stating that there were no gainful alternative occupations for Plaintiff, meaning he was likely eligible for “any occupation” benefits as well. Dearborn commissioned an in-house medical review, which opined that Plaintiff could work in his old job.

Based on this review, Dearborn stopped paying benefits—without sending Plaintiff a denial letter—and sent him to an independent medical examination (IME). The IME physician concluded, after a 26-minute exam and a cursory review of Plaintiff’s records that omitted and misrepresented crucial information, that Plaintiff could return to his old job.

After this exam, Dearborn finally issued a denial letter. Plaintiff submitted an appeal, to which he attached the results of a functional capacity evaluation (FCE), as well as a vocational evaluation, both of which supported his claim. Dearborn referred Plaintiff’s file for review by Dr. Philip Marion, “a well-known reviewer often retained by the insurance industry.” Dr. Marion concluded that Plaintiff could return to work and based on this report Dearborn upheld its denial.

Plaintiff filed suit, and the parties submitted cross-motions for judgment. Under de novo review, the court ruled in favor of Plaintiff and against Dearborn. In doing so, the court found the following:

  • Plaintiff was credible and presented substantial evidence supporting his disability, including numerous medical records containing objective testing such as MRIs and X-rays. The frequent changes in Plaintiff’s medication and treatment were strong evidence that his condition was not under control.
  • Plaintiff’s medications impaired his ability to work because of their cognitive side effects, which even Dearborn’s IME physician admitted. Furthermore, Dearborn’s other medical reviews failed to consider these side effects in determining whether Plaintiff was disabled.
  • Plaintiff’s FCE, which is a “reliable and objective” method of testing functionality, supported his claim, yet Dearborn ignored it.
  • Plaintiff’s medical and vocational reviews were more credible than Dearborn’s because Dearborn “cherry-picked” information that supported its decision and used a “moving target” claims analysis. Furthermore, Dearborn’s physicians failed to discuss crucial medical records and did not address the actual requirements of Plaintiff’s occupation. The IME report was “highly suspect” because of its timing (after Dearborn terminated benefits) and because of the doctor’s inconsistent positions and change of opinion.

As a result, the court concluded that Plaintiff was entitled to benefits. Dearborn contended that the court should only award benefits for the remainder of the “own occupation” period, and remand to Dearborn for a further determination of whether Plaintiff was entitled to benefits under the “any occupation” definition of disability.

However, the court rejected this argument, ruling under Ninth Circuit authority that “the appropriate remedy in a case where benefits have been awarded and terminated is that benefits should be awarded until the administrator properly applies the plan’s provision.” Furthermore, the court noted that Dearborn had already evaluated Plaintiff’s eligibility under the “any occupation” definition because its initial vocational reviewer had found no gainful occupations suitable for Plaintiff. As a result, the court ordered that benefits be paid for the maximum five-year period.

Plaintiff is represented by Corinne Chandler, Glenn R. Kantor, Kantor and Kantor LLP, Northridge, CA, Susan L. Meter, Kantor and Kantor LLP, San Diego, CA.

This week’s notable decision was prepared by Kantor & Kantor attorney, Peter Sessions. Peter has been practicing in the insurance and ERISA-related fields of law for more than 20 years and has special expertise in appellate litigation.

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

Attorneys’ Fees

Second Circuit

Mason Tenders District Council Welfare Fund v. Gibraltar Contracting, Inc., et al., No. 1:18-CV-3668-MKV, 2020 WL 6363960 (S.D.N.Y. Oct. 29, 2020) (Judge Mary Kay Vyskocil). “On October 6, 2020, Magistrate Judge Cott issued a Report and Recommendation recommending that a ‘20% across-the-board reduction in the attorneys’ fees requested, for an award of $139,737.20, and an award of $7,339.25 in costs, for a total of $147,076.45.’” Neither party filed objections. On de novo review, the court found that the across-the-board cut was justified considering (1) a senior associate with the second-highest hourly rate doing “a large portion of the document review even though such a task would have been better suited for a junior associate;” (2) the slightly excessive number of hours billed for depositions; (3) the vagueness of certain billing entries; and (4) some use of block-billing.

Ninth Circuit

Hermann v. Lifemap Assurance Co., No. 3:17-cv-01336-MO, 2020 WL 6363838 (D. Or. 2020) (Judge Michael W. Mosman). Plaintiff’s request for attorneys’ fees was denied by the district court despite Plaintiff’s success on the merits. On appeal, the Ninth Circuit concluded that the district court erred by only considering the five Hummell factors in assessing Plaintiff’s entitlement for fees. It held that the district court must also consider the “prevailing beneficiary” rule which stands for the principle that a prevailing ERISA beneficiary “should ordinarily recover an attorney’s fee unless special circumstances would render such an award unjust.” On remand, the district court reversed its initial determination, finding that this case did not present special circumstances which would render an award for attorney fees unjust. The court also awarded the full amount requested by Plaintiffs’ attorneys:  $750/hour for San Francisco based attorney Jim Keenley, and between $300-$450 per hour for attorneys from the Megan E. Glor Firm, located in Portland. The court rejected Defendant’s argument that Keenley’s rate should be based on the Portland market largely because Plaintiff could not find an attorney in her home state of Idaho. It also noted that Ms. Glor’s 28 years of experience justified her rate of $450 considering the median rate for Portland attorneys with 21-30 years’ experience was $415/hour, while the 75th percentile rate is $475 per hour. The court also rejected all challenges to the number of hours put into the case, finding that none of counsel’s time was spent in a manner that was “excessive, redundant, or otherwise unnecessary.”

Breach of Fiduciary Duty

Third Circuit

Boley, et al. v. Universal Health Services, Inc., et al., No. CV 20-2644, 2020 WL 6381395 (E.D. Pa. Oct. 30, 2020) (Judge Kearney). This is a putative class action brought by participants in the Universal Health Services, Inc. Retirement Savings Plan alleging that the plan fiduciaries breached their fiduciary duties by retaining expensive and underperforming funds and failing to monitor the excessive recordkeeping fees and administrative costs, among other allegations. The fiduciaries moved to partially dismiss the claims on the basis that they lack constitutional standing to pursue claims related to alleged losses in discrete investments that they never selected. The court denied the motion, finding that the employees “allege individualized injury— and therefore Article III standing – with respect to each of their claims based on the Fiduciaries’ process applicable to all funds offered to them.” They may proceed under § 1132(a)(2) on behalf of the plan or other plan participants even if relief sweeps beyond their own injuries. The court declined to determine whether the employees are appropriate proper class representatives to bring claims on behalf of all plan participants.

Eighth Circuit

Scalia v. Sartell Group Inc., the Sartell Group 401(k) Plan, et. al., No. 20-CV-1088, 2020 WL 6286199 (D. Minn. Oct. 27, 2020) (Judge Susan Nelson). Secretary of Labor brought this lawsuit against the fiduciaries of the Sartell Group 401(k) Plan for breach of their fiduciaries duties. After the lawsuit was filed, they restored the funds to the Plan that were the subject of the lawsuit and reached an agreement with the Secretary to resolve the case. The court entered a Consent Order and Decree finding that the fiduciaries were jointly and severally liable for the losses to the Plan, ordered Pam Sartell to complete fiduciary training, enjoined Forest Sartell from acting as a fiduciary to an ERISA plan, and that the fiduciaries should be assessed a penalty pursuant to 29 U.S.C. § 1132(l).

Disability Benefit Claims

Fifth Circuit

Crump v. Aetna, No. 1:19-CV-109-SA-DAS, 2020 WL 6265072 (N.D. Miss. Oct. 23, 2020) (Judge Sharion Aycock). Pro se Plaintiff contested the termination of his claim for LTD benefits. Plaintiff’s own occupation was light duty. Aetna determined Plaintiff was capable of sedentary work and terminated his claim when the definition of disability in the LTD policy changed from Own Occupation to Any Occupation. The court granted Aetna’s motion for summary judgment, finding that Aetna had not abused its discretion when it terminated Plaintiff’s claim. Aetna had gathered Plaintiff’s medical records, had conducted multiple medical record reviews from various doctors, and had given Plaintiff multiple chances to submit additional medical evidence. Aetna’ motion was granted, and the case was dismissed.

Seventh Circuit

Patterson v. Life Insurance of North America, No. 20-CV-688-JPG, 2020 WL 6321485 (S.D. Ill. Oct. 28, 2020) (Judge J. Phil Gilbert). Plaintiff filed suit under the Illinois Wage Payment and Collection Act (“IWPCA”), 820 ILCS 115/1 et seq., for the failure to pay short term disability (“STD”) benefits. Defendant argued that the STD benefits do not qualify as “wages” under the statute. The court noted that both parties have missed the ERISA issue and from the face of the complaint it looks like the benefits are likely payable through an employee benefit plan governed by ERISA. If ERISA applies, the court would simply recharacterize it as an ERISA claim and allow it to proceed. Since Defendant has not established as a matter of law that Plaintiff has not stated a claim to STD benefits under ERISA, the court denied the motion without prejudice.

Ninth Circuit

Groch v. Dearborn Nat’l Life Ins. Co., No. 2:18-cv-06614 CBM (Ex), __ F. Supp. 3d __, 2020 WL 6374619 (C.D. Cal. Oct. 29, 2020) (Hon. Consuelo B. Marshall). See Notable Decision summary above.

McCoy v. Aetna Life Ins. Co., et al., No. 8:19-CV-00575-AB, 2020 WL 6342719 (C.D.Cal. Oct. 28, 2020) (Judge Andre Birotte, Jr.). Plaintiff filed suit in response to the denial of her claim for long-term disability benefits. Plaintiff argued that Aetna wrongfully terminated her claim based on 1) the reports of non-examining physicians, 2) the report of a vocational expert which did not properly account for her occupation, and 3) Facebook posts. The court disagreed, finding that the medical and vocational reports were persuasive and were reasonably relied upon by Aetna. It also found that Aetna’s reliance on Facebook posts, in conjunction with the deficiencies of other aspects of her claim, was similarly reasonable.

Gary v. Unum Life Ins. Co. of Am., No. 19-35439, __F.App’x__, 2020 WL 6268406 (9th Cir. Oct. 26, 2020) (Before Berzon, Collins, and VanDyke, Circuit Judges). Plaintiff appeals the district court’s summary judgment in favor of Defendant, upholding Unum’s denial of her claim for long-term disability benefits based on her Ehlers-Danlos Syndrome (EDS) and related conditions. The parties agreed that the abuse of discretion standard applied. The court held that a higher degree of skepticism was warranted because Unum’s consultants cherry-picked certain observations from medical records numerous times. Unum also only hired consultants specializing in orthopedic surgery, family medicine, and psychology to assess Plaintiff’s claim—not an EDS specialist. Because of the uniqueness of EDS, Unum’s choice not to conduct its own in-person examination of Plaintiff could also support a higher level of skepticism. Because the district court applied the incorrect level of skepticism to its abuse-of-discretion review, the court reversed the district court’s grant of summary judgment to Unum. On remand, the district court should apply the appropriate, heightened level of skepticism in determining whether Unum abused its discretion.

Discovery

Second Circuit

Smith v. First Unum Life Insurance, No. 19 CIV. 00298 (NSR), 2020 WL 6281451 (S.D.N.Y. Oct. 21, 2020) (Judge Nelson S. Roman). Plaintiff sued after Unum denied his claim for being filed over a year after his date of disability. Plaintiff filed his claim shortly after his employer stopped paying his salary—in March 2018. Unum denied the claim as beyond the one-year filing window in the Plan. It asserted Plaintiff’s date of disability was in January 2017. Even though Plaintiff was being paid his salary in January 2017, Unum included a 2016 bonus as part of Plaintiff’s pre-disability earnings—a bonus Plaintiff had not received in January of 2017. Plaintiff sought written discovery and three depositions. The court applied the non-mandatory “reasonable chance” standard for determining requests for discovery outside of the administrative record. The court concluded there was sufficient factual basis to justify limited discovery into whether bias influenced Unum’s denial of Plaintiff’s claim. The denial letters demonstrated that Unum initially failed to explain how it determined Plaintiff’s date of disability until Plaintiff later appealed the initial determination. Unum’s approach gave rise to questions concerning whether Unum retro-engineered a self-serving explanation for its appeal decision after initially denying Plaintiff’s claim without explanation. Based on this irregularity, the court concluded there was a reasonable chance that limited discovery would result in Unum’s production of extra-record evidence that would be admissible under the “good chance” standard. The court also concluded that the appropriate balance to strike was to order Unum to produce sufficient documents to establish the training, protocols, manuals, or guidelines that were applicable to the denial of Plaintiff’s LTD claim, to the extent they exist. To vet financial bias, the court ordered Unum to produce sufficient documents to establish: (1) whether and how Unum provides financial incentives and disincentives to its employees responsible for making LTD claim determinations; and (2) whether, and in what amount, Unum Decision Makers received financial incentives, disincentives, or performance based bonuses. Finally, the court allowed a Rule 30(b)(6) deposition regarding the influence of Unum’s conflict of interest on its denial of Plaintiff’s LTD claim.

Eighth Circuit

Nauss v. Sedgwick Claims Mgmt. Servs., Inc., Case No. 4:20-CV-00304 JAR (E.D. Mo. Oct. 23, 2020) (Judge John A. Ross).  In an ERISA short term disability case subject to abuse of discretion review, Plaintiff sought to depose a Sedgwick employee and a corporate representative. Plaintiff failed to allege a conflict of interest in his request and therefore failed to meet that prong, and failed to allege any procedural irregularities, instead appearing to seek discovery into the merits of the claim.

Ninth Circuit

Hasslacher v. Life Ins. Co. of N. Am., No. CV-19-05272-PHX-SMB, __F. Supp. 3d__, 2020 WL 6266336 (D. Ariz. Oct. 22, 2020) (Judge Susan M. Brnovich). In a de novo LTD case, Plaintiff argued that discovery was warranted due to LINA’s self-dealing, the Regulatory Settlement Agreement it entered with state insurance regulators in 2013, and to explore the credibility of the doctors who evaluated Plaintiff’s claim and to determine whether “any weight should be afforded LINA’s doctors’ opinions.” Plaintiff also claimed that discovery into LINA’s bias was necessary because Plaintiff’s ailments were not within Dr. Belcourt and Dr. McCrary’s area of medical practice. Lastly, Plaintiff moved to supplement the administrative record with responses to the reports of the doctors hired by LINA’s vendors, including responses by two of her own doctors and affidavits authored by Plaintiff and her husband regarding her exam with Dr. McCrary. Plaintiff argued that the responses were necessary because LINA did not give Plaintiff an opportunity to respond since it denied her claim and disclosed the doctors’ reports after the filing the complaint in this case, which Plaintiff alleged that LINA was required to do pursuant to ERISA. Regarding discovery, the court was not convinced that discovery was appropriate in this case. Evidence of bias on the part of LINA, its vendors, its doctors, and reviewers, were not necessary for the court’s de novo review because the court will give “no credence to the plan administrator.” Indeed, the decision of the insurance company personnel was irrelevant to the court’s decision in de novo review, and thus, discovery into bias was also irrelevant. Although Plaintiff sought discovery on the number of claims handled by LINA’s vendors, doctors, and reviewers, such statistics were deemed meaningless in the absence of evidence showing that the claims were wrongfully denied. The court did allow Plaintiff to supplement the administrative record because the doctor’s reports LINA relied upon in denying Plaintiff’s appeal were not provided to Plaintiff.

ERISA Preemption

Seventh Circuit

Cretella v. Azcon, Inc., No. 20-CV-1482, 2020 WL 6321944 (N.D. Ill. Oct. 28, 2020) (Judge Sharon Johnson Coleman). Plaintiff alleged she was terminated in violation of the Illinois Insurance Code based on Azcon’s termination of Plaintiff’s employment for failing to consent to the agreement for a Company-Owned Life Insurance (“COLI”) policy. Defendant removed based on ERISA preemption since Azcon is 100% owned through an ESOP and the COLI policies fund the repurchase obligation of the ESOP, which is an ERISA-governed plan. The court granted the motion to remand since Plaintiff is not seeking to recover benefits under the terms of an employee benefit plan. The relationship between the claim and the employee benefit plan is too tenuous, remote, and peripheral for ERISA’s preemption provision to apply.

Life Insurance & AD&D Benefit Claims

Second Circuit

DeGreenia-Harris v. Life Ins. Co., Of N. Am., No. 2:19-CV-00218, 2020 WL 6281573 (D. Vt. Oct. 27, 2020) (Judge Christina Reiss). Plaintiff submitted a claim for accidental death benefits on the death of her husband. The Plan Administrator denied Plaintiff’s claim for accidental death benefits on the ground that it was not a Covered Accident since an autopsy showed Mr. DeGreenia had intoxicants in his system and his death was the foreseeable result of his voluntary conduct. Plaintiff sought to supplement the record with documentation showing that the accident was caused by mechanical failure of a snowcat decedent was driving. The court reviewed the case de novo, and concluded that there was good cause to supplement the record because Defendant was aware of these documents and thus had an independent duty to ensure that the record before it was sufficient for a fair and accurate claim determination.

Medical Benefit Claims

Fifth Circuit

Soileau & Assocs., LLC v. Louisiana Health Serv. & Indem. Co., No. CV 18-710-WBV-DMD, 2020 WL 6270156 (E.D. La. Oct. 26, 2020) (Judge Wendy B. Vitter). In this dispute over the payment of health services, the court denied Plaintiffs’ motion for reconsideration of the court’s previous decision prohibiting Plaintiffs from offering any expert opinions or reports from medical experts who would opine on the medical necessity of the treatment. The court explained that this “evidence is not part of the administrative record and does not fit within the Fifth Circuit’s narrow exception for supplemental expert evidence allowed in an ERISA case brought pursuant to 29 U.S.C. § 1132(a)(1)(B).” This does not prohibit Plaintiffs “from introducing supplemental evidence from these physicians that is not part of the administrative record, but falls squarely within one of the limited exceptions recognized by the Fifth Circuit in Crosby v. Louisiana Health Service and Indem. Co., 647 F.3d 258, 263 (5th Cir. 2011).”

Ninth Circuit

Meadows of Wickenburg Inc. v. United HealthCare Ins. Co., No. CV-20-01285-PHX-SPL, 2020 WL 6290472 (D. Ariz. Oct. 27, 2020) (Judge Steven P. Logan). Plaintiff is a behavior health treatment facility, joined by individuals treated at Meadows and insured by Defendant, who brought the action for breach of implied contract and breach of fiduciary duties arising from Defendant’s denial of authorization of Plaintiff’s treatment at Meadows. Defendant brought a motion to dismiss. The court found no independent basis for the implied contract claim aside from the ERISA plan because of an “impermissible connection.” The court found monetary relief is improper under Section 502(a)(3) and granted Plaintiff leave to amend the complaint to reflect the distinction between claims under Section(a)(1)(B) and (a)(3).

Pension Benefit Claims

First Circuit

Minturn v. Monrad, et al., Case No. 20-10668, 2020 WL 6363909, (D. Mass. Oct. 29, 2020) (Judge Nathaniel M. Gorton). Plaintiff filed this lawsuit to recover retirement benefits owed to him. Plaintiff worked in various roles for Defendants, including a clerk, Vice President, Chief Legal Officer and in 1980 he became a trustee. An agreement was executed by and between the trustees which set forth both current and retirement compensation, among other things (the “Agreement”). Plaintiff retired in 2013 and received retirement payments until April 2019 when the payments ceased without notice or a reason provided. Plaintiff alleged claims under 502(a)(1)(B) and 502(a)(3) and for breach of contract. Defendants filed a motion to dismiss claiming that (1) plaintiff was not a participant, because he was not an employee, but a trustee; (2) defendants lack the discretion necessary for the payment scheme described in the Agreement to qualify as an employee benefit plan; (3) the Trust is not an administrator of the alleged plan; and, (4) as there is no ERISA plan then there is no subject matter jurisdiction and the court should not exercise supplemental jurisdiction over the breach of contract claim. The court found that Plaintiff alleged sufficient facts to defeat Defendants’ motion to dismiss, except as to any claims that seek to hold the Trust liable, because Plaintiff did not allege that the Trust had a role in the distribution of funds under the Agreement.

Sixth Circuit

Pledger v. FCA US LLC – UAW Pension Agreement, Case No. 20-11125, 2020 WL 6305075 (E.D. Mich. Oct. 28, 2020) (Judge Robert H. Cleland). This case involved a dispute over eligibility for pension benefits. On April 10, 1995, Plaintiff became employed at Chrysler.  Plaintiff was off work at various times due to a worker’s compensation injury, termination with reinstatement and finally termination on February 16, 2000. Plaintiff filed a wrongful termination action in state court and settled her case for $65,000 in March 2001. On January 21, 2019, Plaintiff submitted a claim for pension benefits which was denied on the grounds that Plaintiff only had 56 months of vested service and she was 4 months shy of the 60 months necessary to receive a pension. Plaintiff appealed to the FCA US LLC UAW Pension Board of Administration (the “Board”) and the initial decision was upheld on appeal. Plaintiff filed this lawsuit and the parties filed cross motions for judgment. Plaintiff claimed that $42,800 of the settlement in March 2001 constituted back pay that can be attributed to her hours of service.  Specifically, the settlement agreement provided that $42,800 “includes back pay and other wages.” The Board claimed that the settlement agreement did not attribute the $42,800 to time worked or the number of hours associated with that payment. The parties also argued two different sections of the Plan which were arguably contradictory. The court applied the arbitrary and capricious standard of review and entered judgment in favor of Defendant. The court determined that the settlement agreement was general and did not unambiguously describe hours of service. Further, although Plaintiff had presented a reasonable interpretation of the plan, Defendant’s interpretation was rational and plausible.

Seventh Circuit

Ewell v. UMWA 1974 Pension Tr., No. 20-CV-202-RJD, 2020 WL 6363698 (S.D. Ill. Oct. 29, 2020) (Judge Reona J. Daly). Plaintiff alleged his pension benefits were improperly terminated and reduced. Plaintiff contacted Defendant prior to taking another job to inquire if doing so would have an effect on Plaintiff’s pension. Defendant responded that his employment would have no effect on his pension. However, Defendant subsequently notified Plaintiff that due to his employment, his pension benefits should have been reduced and would be reduced and Plaintiff owed Defendant a refund for overpaid benefits. The court considered Defendant’s motion to dismiss the First Amended Complaint (“FAC”). Defendant argues Plaintiff failed to allege “extreme circumstances” to stop the employer from enforcing the plan’s written terms. The court agreed that the FAC does not set for allegations of “extreme circumstances,” but rather that Defendant “knowingly, and not accidentally” made a misrepresentation. The court also found the Seventh Circuit has not recognized an ERISA estoppel claim for a funded, multiemployer plan. The court dismissed the FAC with prejudice because this is an issue that cannot be cured by the filing of an amended complaint.

Eighth Circuit

Destifanes v. Bricklayers Local #1 of Mo. Supplemental Pension Fund, Case No. 4:20-CV-00750-NCC, (E.D. Mo. Oct. 29, 2020) (Magistrate Judge Noelle C. Collins). Plaintiff Carla Destifanes filed a complaint for declaratory relief seeking the pension benefits of her deceased spouse. The plan benefits inure to the surviving spouse. The deceased had left his wife and named another woman, Beth Destifanes, as his designee. Plaintiff Carla alleged that their marriage had never been dissolved and deceased was not legally married to Beth. The deceased died intestate. His brother opened a case in probate court and both women filed motions in probate court seeking a determination that she was the surviving spouse. Beth filed a motion in the federal court case seeking a stay of proceedings until the probate case resolved. The pension fund filed a motion asking to interplead and deposit the funds with the court until the issue was resolved. The court agreed to stay the case until the probate matter resolved, and declined to accept the deposit of funds, agreeing to reconsider the matter after the probate matter resolved.

Provider Claims

Fifth Circuit

Cigna Healthcare of Tex. Inc. v. VCare Health Servs., PLLC, Case No. 20-cv-0077-D, 2020 WL 6321919 (N.D. Texas Oct. 28, 2020) (Senior Judge Sidney A. Fitzwater). The Cigna plaintiffs are managed care companies that administer employee health and welfare benefit plans. VCare Health Services and other defendant-providers are out-of-network healthcare providers that received payments on healthcare claims (some allegedly fraudulent) that they submitted to Cigna. The providers are allegedly controlled by defendant Trivikram Reddy (“Reddy”) and Boggan. Cigna alleges that Defendants, through Reddy and Boggan, engaged in numerous fraudulent billing practices and illegal “fee forgiveness.” Cigna brought claims under ERISA for overpayments and declaratory judgment among other state law claims. On Defendants’ motion to dismiss, Cigna maintained that its claim for overpayments under § 502(a)(3) are equitable, not legal. In its amended complaint, Cigna alleged that Defendants are subject to an equitable lien by agreement created by the benefit plans administered by Cigna. Boggan contended that Cigna has not pleaded a claim against her under § 502(a)(3) of ERISA because it does not allege that Boggan was subject to an equitable lien by agreement or that she was in possession of overpaid funds and thereby subject to an equitable lien in restitution. The court held that Cigna failed to plausibly plead a claim for overpayments under ERISA because a recovery under a theory of equitable lien by restitution—as opposed to agreement—requires a clear tracing of the fund or property in the defendants’ possession and Cigna does not allege that Boggan has actual or constructive possession of any of the overpaid funds.

Severance Benefit Claims

Fifth Circuit

Romo v. Waste Connections US, Inc., No. 19-11008, 2020 WL 6266175, __ F. App’x __ (5th Cir. Oct. 23, 2020) (Before Circuit Judges King, Graves, and Oldham). Plaintiff was terminated from his employment as an accountant. He subsequently submitted to his employer claims for benefits under an ERISA-governed severance plan and three equity incentive plans. The employer denied those claims, and Plaintiff brought this action. The district court granted summary judgment to the employer, and Plaintiff appealed. On appeal, the Fifth Circuit affirmed. Plaintiff argued that the employer’s failure to render a timely decision on his claims—its denial letters were ten days late—deprived it of deferential review, but the court ruled that this error was insufficient to warrant de novo review. The court further found that Plaintiff had been fired for just cause, as he had missed several important deadlines and failed to perform several key tasks, and thus the employer did not abuse its discretion in denying his claim for severance benefits. The court ruled that Plaintiff was not entitled to benefits under two of the equity incentive plans for the same reason. On the third equity incentive plan, the court found that Plaintiff was not employed on the date the benefits vested, and thus he was not entitled to benefits under that plan either.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Stephen Flanagan, as a Tr. of the Gen. Bldg. Laborers’ Local 66 Vacation Fund, et al. v. T.R. Whitney Inc. & Richard D. Whitney, No. 19-CV-0415(JS)(AKT), 2020 WL 6304941 (E.D.N.Y. Oct. 28, 2020) (Judge Joanna Seybert). The court granted Plaintiff’s motion for default judgment and “awarded $24,739.02 in damages, accounting for: (1) $15,807.32 in unpaid contributions; (2) $3,140.24 in interest on the unpaid contributions; (3) $3,161.46 in liquidated damages; (4) $1,750.00 in attorneys’ fees; and (5) $880.00 in costs and disbursements.”

Trustees Of The New York City District Council Of Carpenters Pension Fund, Welfare Fund, Annuity Fund, And Apprenticeship, Journeyman Retraining, Educational And Industry Fund, et al. v. Galt Installations, LLC, No. 20-CV-02582 (JGK), 2020 WL 6274774 (S.D.N.Y. Oct. 26, 2020) (Judge John G. Koeltl). The court granted the petition to confirm the arbitration award.

Buffalo Laborers Welfare Fund v. Leone Constr., Inc., No. 18-CV-00544-JJM, 2020 WL 6264451 (W.D.N.Y. Oct. 23, 2020) (Magistrate Judge Jeremiah J. McCarthy). In this dispute over unpaid contributions, the court granted plaintiffs’ motion for summary judgment “to the extent of awarding reasonable attorneys’ and paralegal fees in the amount of $43,995, plus the other uncontested relief listed at pp. 20-21 of plaintiffs’ Memorandum of Law [71], but is otherwise denied.”

Sixth Circuit

Iron Workers Dist. Council of S. Ohio & Vicinity Benefit Tr., et al. v. Millennium Steel, Inc., No. 3:18-CV-00351, 2020 WL 6268236 (S.D. Ohio Oct. 26, 2020) (Judge Walter H. Rice). The court granted Plaintiffs’ motion for default judgment against Defendant Millennium Steel, LLC, awarding a declaratory order “finding Millennium Steel to be in violation of the Trust Agreements for failing to submit to timely submit employer and employee fringe benefit contributions to the Trusts.” The court also entered a monetary judgment “in the amount of $228,391.98 in unpaid fringe benefit contributions, $62,424.73 in unpaid interest, and $45,678.44 in liquidated damages.” The court also awarded attorneys’ fees and costs.

Seventh Circuit

Central States, Southeast and Southwest Areas Pension Fund and Charles Whobrey, Tr., v. Vanguard Services, Inc., et al., No. 09 C 4721, 2020 WL 6381368 (N.D. Ill. Oct. 30, 2020) (Judge Thomas M. Durkin). At issue here is the Pension Fund’s attempt to enforce indemnification agreements between Vanguard and citation respondent Bridgestone Americas Tire Operations, LLC (“BATO”), successor in interest to Bridgestone/Firestone, Inc., pursuant to which the Pension Fund asserts that BATO is liable for the bulk of Vanguard’s withdrawal liability. A citation to discover assets was issued to BATO for that purpose. The court granted BATO’s motion to dismiss the Citation.

Ninth Circuit

Dist. Council 16 N. Cal. Health, et al. v. Lindini Co., et al., Case No. 17-cv-05985-PJH, 2020 WL 6318890 (N.D. Cal. Oct. 28, 2020) (Judge Phyllis J. Hamilton).  Defendants entered into bargaining and employers’ agreements that required them to pay monthly fringe benefit contributions to Plaintiffs, a group of trust funds. The agreements generally required Defendants to maintain time records to Plaintiffs’ auditors to determine whether Defendants made full and prompt payment of all sum required by the agreements. Plaintiffs’ auditors attempted to contact Defendants in January 2017, but Defendants failed to respond. Defendants also failed to respond to Plaintiffs’ counsel, which caused Plaintiffs to file the present lawsuit. Defendants’ counsel eventually consented to an audit which determined that defendants owed payments to Plaintiffs and, after repeated demands for payment, Plaintiffs filed their motion for default judgment in this case to collect the amounts owed plus liquidated damages, interest, costs, and fees. Among other issues the court took with Defendants’ motion to set aside default judgment the court found that Defendants had notice of this suit since its inception in late 2017 yet failed to appear until more than a year after the court entered default judgment. The court noted that Defendants had engaged in a pattern of conduct in which they purported to negotiate with Plaintiffs but ultimately failed to agree to any resolution or pay what was owed under the agreements. The court denied Defendants’ motion to set aside the default judgment previously against them.

Your ERISA Watch is made possible by the collaboration of the following Kantor & Kantor attorneys:  Brent Dorian Brehm, Sarah DemersElizabeth GreenAndrew Kantor, Anna Martin, Michelle RobertsTim Rozelle, Peter Sessions, Stacy Tucker, and Zoya Yarnykh.

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