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Your ERISA Watch – Eighth Circuit Jettisons Prior Circuit Precedent Holding that Procedural Irregularities Can Justify a De Novo Standard of Review

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This week the Eighth Circuit’s decision in McIntyre v. Reliance Standard Life Ins. Co., No. 19-2367, __F.3d__, 2020 WL 4951028 (8th Cir. Aug. 25, 2020), clarified that when circumstances demand “less deferential review,” this cannot mean de novo review. Why? After all, de novo review is less deferential than abuse of discretion review and multiple Eighth Circuit opinions appeared to sanction this seemingly logical finding.

After approving Plaintiff’s disability claim for two years, Reliance terminated Plaintiff’s long-term disability claim under the “any occupation” definition of disability. Plaintiff appealed and Reliance upheld its original determination. That finding that came almost seven months after the appeal was submitted—well outside the 90 days allowed. Plaintiff filed suit and the district court ruled in her favor under the de novo standard of review despite the Plan containing a grant of discretionary authority.

The district court decided that a de novo standard applied on the basis of Eighth Circuit caselaw providing that “less deferential review” applied despite a grant of such discretionary authority if (1) either the administrator faces a “palpable conflict of interest” or a “serious procedural irregularity” arose in the review process, and (2) either the conflict or the procedural irregularity “caused a serious breach of the plan administrator’s fiduciary duty” to the claimant. See Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998), abrogated in part by Metro. Life Ins. v. Glenn, 554 U.S. 105, 115-16 (2008). Specifically, the district court found a palpable conflict of interest present insofar as Reliance “both determines and pays claims” and ostensibly had a “history of biased claims administration.” The district court also found a serious procedural irregularity; namely, Reliance’s “long delay in deciding McIntyre’s appeal.” It then concluded that both of these caused Reliance to breach its fiduciary duty owed to McIntyre and therefore decided to “review McIntyre’s benefits claim de novo.”

The key precedent at issue was Woo, in which the Eighth Circuit recognized a court could apply “less deferential review” in certain circumstances. Because the district court found these circumstances present, it read Woo’s endorsement of “less deferential review” to mean de novo review. The three-judge panel in McIntyre held “this reading was error.”

It was undisputed that Glenn did not authorize de novo review based on a conflict of interest. But what about serious procedural irregularities, did they justify sliding the scale to de novo review post-Glenn? The Eighth Circuit had repeatedly avoided deciding the issue of whether a sliding scale was even appropriate post-Glenn and expressly did so again here. Instead it relied on an announcement that Woo never permitted de novo review in the first place.

In Woo, the court determined the facts warranted a less deferential standard of review, but it had to chose whether to adopt a sliding scale approach to the standard of review or to simply review the denial de novo. It adopted the sliding scale approach, which still required courts to apply an abuse of discretion analysis. “Notwithstanding the fact that the Woo sliding scale approach did not authorize departure from the abuse-of-discretion standard of review, Woo came to be read by [the Eighth Circuit] as providing a gateway to de novo review.” At least six published Eighth Circuit decisions read Woo in this way, with four others suggesting Woo permitted this outcome.

The McIntyre panel rejected those cases because, when faced with conflicting panel opinions, the law dictated the earliest opinion controlled. Thus, because “all of our precedents” mischaracterized the holding in Woo, it was Woo rather than the subsequent cases misstating (or misapplying) the holding in Woo that controlled. The review could not be de novo, but an abuse of discretion standard analysis that took into consideration the procedural irregularity.

In a footnote, the court emphasized that “at most—and only if the procedural-irregularities component of Woo survived Glenn, [] Woo would permit the district court to ‘require that the record contain substantial evidence bordering on a preponderance to uphold [Reliance’s] decision’ if the district court determines the procedural irregularities here are ‘egregious.”’

McIntyre had a second holding of interest: an administrator’s failure to decide an appeal within the applicable deadlines (usually 45 days plus 45 days) does not in and of itself trigger de novo review. Application of the de novo standard was only appropriate if the administrator wholly failed “to act on an appeal” and that failure “raises serious doubts about the result reached by the plan administrator” in its initial denial. The delay in deciding an appeal becomes a factor to be considered by the district court when reviewing the decision for an abuse of discretion.

This week’s notable decision was summarized by Brent Dorian Brehm, a partner at Kantor & Kantor, LLP. Brent has represented claimants like Ms. McIntyre—persons disabled by Charcot Marie Tooth Syndrome (“CMT”). This degenerative neurological condition affects a person’s peripheral nerves such as those in the hands and feet. Having seen the sometimes devastating effect of CMT, including problems walking, manual dexterity (i.e. writing or manipulating zippers), and loss of the sense of touch, he wishes Ms. McIntyre well as her case goes back to the district court for another evaluation.

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

Class Actions

Seventh Circuit

Christoffersen v. V. Marchese, No. 19-CV-1481, 2020 WL 4926663 (E.D. Wis. Aug. 21, 2020) (Judge Nancy Joseph). Christoffersen sued his former employer, alleging he and other employees were not given COBRA continuation notice when their employment was terminated. Marchese brought a partial summary judgment motion on the statute of limitations, arguing that Christoffersen had not limited his proposed class to a specific period of time. The court denied Marchese’s motion for summary judgment because both parties agreed Christoffersen’s individual claims were timely, and the issue of timeliness was not ripe for putative class members’ claims until after class certification.

Smith v. Greatbanc Trust Co., No. 20 C 2350, 2020 WL 4926560 (N.D. Ill. Aug. 21, 2020) (Judge Ronald A. Guzmán). Plaintiff brought this class action suit under ERISA against his employer and the trustee of its employee stock ownership plan (ESOP), among other defendants, alleging that Defendants conspired to cause the ESOP to overpay for the employer’s stock. Defendants moved to compel arbitration of Plaintiff’s claims, or, in the alternative, to dismiss the case because of a class action waiver in the plan’s arbitration provision. The court denied Defendants’ motion. Disagreeing with Ninth Circuit authority, which the court found inapplicable and not well-reasoned, the court ruled that the arbitration provision was unenforceable because Plaintiff was not given notice of the addition of the provision to the plan and thus had not agreed to it. The court further found that the arbitration provision’s class action waiver ran afoul of ERISA because ERISA specifically contemplates actions by beneficiaries for plan-wide relief. Thus, individual arbitration was an insufficient remedy and could not be required by the ESOP.

Disability Benefit Claims

Eighth Circuit

McIntyre v. Reliance Standard Life Ins. Co., No. 19-2367, __F.3d__, 2020 WL 4951028 (8th Cir. Aug. 25, 2020) (Before Gruender, Wollman, and Kobes, Circuit Judges). See Notable Decision summary above.

Eleventh Circuit

Izydorek v. Unum Grp., No. 8:20-CV-247-T-33CPT, 2020 WL 5016897 (M.D. Fla. Aug. 25, 2020) (Judge Virginia M. Hernandez). The court denied the pro se plaintiff’s motion to stay his long-term disability case. Plaintiff sought a stay because his former employer, and the plan administrator of the disability plan which Unum insures, contacted Plaintiff and Plaintiff wants to suspend the litigation while his employer does an investigation. Because the employer has no decision-making authority, and because the issue here is whether Plaintiff exhausted his administrative remedies, a stay is unnecessary and would prejudice Unum.

Discovery

 Fifth Circuit

Skogen v. RFJ Auto Grp., Inc. Employee Benefit Plan, No. 4:19-CV-585-SDJ-KPJ, 2020 WL 5039101 (E.D. Tex. Aug. 26, 2020) (Magistrate Judge Kimberly C. Priest Johnson). Plaintiffs disputed Defendant’s claim that certain emails and call logs were work-product, and thus, not discoverable. After reviewing the documents, and applying the ordinary discovery rules, including FRCP 26(b)(3), the court held the documents were not work-product and should be produced in an unredacted form. This was because the investigation of the underlying claim was referred to Defendant’s general counsel, not outside counsel, and the referral was made before the denial of the claim. Significantly, Defendant was unable to point to a definite shift from acting in its ordinary course of business to acting in anticipation of litigation. Considering courts have routinely recognized that the investigation and evaluation of claims is part of the regular, ordinary, and principal business of insurance companies, and an attorney can act as an investigator, not a legal advisor, when performing these functions, the work-product doctrine did not apply.

Ninth Circuit

McNelis v. Prudential Ins. Co. of Am., No. 2:19-CV-01590-RAJ, 2020 WL 5038745 (W.D. Wash. Aug. 26, 2020) (Judge Richard A. Jones). In this dispute over disability benefits where Plaintiff alleges claims under § 1132(a)(1)(B) and § 1132(a)(3), the court found that the claims are not duplicative and that Plaintiff is not limited by ERISA discovery rules with respect to the latter. Defendant did not show good cause for a protective order limiting discovery and denied its motion to “quash the subpoenas issued to Dr. Kevin Hays [a Prudential physician] and Michael Larmi [a Prudential Appeals Specialist] or to preclude Plaintiff from pursuing these and other relevant depositions.”

ERISA Preemption

Fifth Circuit

ACS Primary Care Phys Southwest, P.A. v. UnitedHealthcare Insurance Company, et al., Case No. 20-cv-1282, __F.Supp.3d__, 2020 WL 4932152 (S.D. Tex. Aug. 17, 2020) (Judge Andrew S. Hanen). ACS Primary Care Physicians Southwest PA and six other emergency medicine physician staffing groups (“providers”) brought suit in state court alleging that United cut reimbursement rates to unacceptable levels, well below what is usual and customary. Providers plead three causes of action: (1) violations of the Texas Insurance Code; (2) breach of contract implied in fact; and (3) quantum meruit. United removed this case to federal court pursuant to the court’s federal question jurisdiction arguing that Plaintiffs’ claims were completely preempted by ERISA. On the providers’ motion for remand to state court the court held that the providers’ claims for implied-in-fact contract and quantum meruit were not preempted by ERISA but held that the providers’ Texas statutory claims were preempted by ERISA. The court also exercised its supplemental jurisdiction over the remaining causes of action to deny the providers’ motion to remand to state court.

Sixth Circuit

Johnson v. Highmark Health, Inc., et al., No. CV 6:19-288-KKC, 2020 WL 5084024 (E.D. Ky. Aug. 26, 2020) (Judge Karen K. Caldwell). In this dispute alleging the underpayment of medical benefits under an employer-sponsored group health care plan, the court denied Plaintiff’s motion to remand because her claims are completely preempted by ERISA.

Seventh Circuit

Halperin, et al., v. Richards, et al., No. 19-C-1561, 2020 WL 5095308 (E.D. Wis. Aug. 28, 2020) (Judge William C. Griesbach). “In this case, Plaintiffs’ allegations relate to the Director and Officer Defendants’ management or administration of the ESOP and the alleged breaches of their ERISA-governed fiduciary duties and obligations. Plaintiffs allege that the Director and Officer Defendants “artificially and materially inflated” the value of the [Paperweight Development Corporation] stock by intentionally providing inaccurate information to the ESOP’s valuation firms, they knew that the stock was being over valued but did nothing to stop it, and they improperly forgave intercompany debt and borrowed money from Appvion to fund the ESOP’s repurchase obligations.” Plaintiffs commenced an adversary proceeding in bankruptcy court for the benefit of certain Appvion creditors. The court found that the state law claims are preempted under ERISA Section 514. Even though Plaintiffs lack standing to sue under ERISA and would have no avenue to redress their injuries, “Plaintiffs’ claims against Argent and Stout are premised on the existence of the ERISA plan and relate to the plan’s administration.” Plaintiffs challenge Argent’s conduct with respect to determining the fair market value of PDC’s common stock, which is governed by ERISA. Agent engaged Stout to prepare fair market value determinations, “an ERISA plan–required function that was crucial to the ESOP’s administration.” Because Plaintiffs’ claims “are predicated on conduct governed by ERISA, those claims are preempted and must be dismissed.”

Eighth Circuit

Nordling v. Northern States Power Company, A Minnesota Corporation, et al., No. CV 20-337 (JRT/LIB), 2020 WL 5017857 (D. Minn. Aug. 25, 2020) (Judge John R. Tunheim). Plaintiff commenced this breach-of-contract, declaratory judgment, and ERISA action in state court seeking recovery of benefits and enforcement of a Settlement Agreement from a prior state court action. Defendants removed to this Court and filed a Motion to Dismiss and for Summary Judgment, arguing the state law claims are preempted by ERISA and the ERISA claim should be denied as a matter of law. Plaintiff opposed Defendants’ motion and filed a Motion to Remand, arguing that the Court lacks subject matter jurisdiction. The court deemed that removal was proper because Plaintiff’s state court claims were preempted by ERISA because those counts simply sought to enforce his rights under ERISA. The court also granted Defendants’ motion for summary judgment in part because Plaintiff presented no evidence showing inconsistent application of the Plan terms. However, some of the committee’s reasons for denying the benefit seemed contrary or inapplicable to the clear terms in the Plan. For example, it was unclear what statute of limitations the committee was referring to that would have prevented Plaintiff from raising his claim, or why the committee relied on papers provided to pensioners in the 1990s when Plaintiff’s employment ended in 1987. Regardless, he Plan’s clear terms did not support that Plaintiff was entitled to the pension make-up benefit. However, Plaintiff was entitled to the pension make-up benefits on any funds remaining in his regular deferred benefit account, and the court ordered that Defendants to provide with an accounting and pay him make-up benefits on any funds remaining in the account. 

Exhaustion of Administrative Remedies

 Eighth Circuit

McKennan v. Meadowvale Dairy Employee Benefit Plan, No. 19-2163, __F.3d__, 2020 WL 5085954 (8th Cir. Aug. 28, 2020) (Before Colloton, Wollman, and Benton, Circuit Judges). The Meadowvale Dairy Employee Benefit Plan appeals from judgments of the district court ordering the Plan to pay benefits and attorney’s fees to Avera McKennan under ERISA. Plaintiff claims that the benefits at issue were due to a former employee of Meadowvale who received care at a hospital operated by Avera. The court concluded that although the beneficiary assigned any causes of action to Avera, he never had a cause of action against the Plan, so Avera may not proceed against the Plan under ERISA as an assignee of a beneficiary or otherwise. The purported beneficiary, Mr. Fuentes, used a false name to enroll in the Plan, and the Plan rescinded coverage upon discovery of the falsehood. Avera attempted to bring an internal appeal of Meadowvale’s decision to rescind Marquez’s (aka Fuentes) coverage. Meadowvale, in its capacity as plan administrator, denied the appeal because: 1) Avera had “no right to pursue this appeal because it is not an authorized representative of Mr. Marquez/Fuentes; 2) the assignment was invalid because it was signed by Marquez’s mother, and she did not have power to act for him; 3) Marquez had submitted a false name and social security number to Meadowvale, the company properly rescinded coverage retroactively based on Marquez’s fraud or misrepresentation of a material fact. Avera filed a second-level internal appeal, and Meadowvale denied it on the same grounds. The court ruled after Meadowvale rescinded Marquez’s coverage under the Plan, neither Marquez nor an authorized representative of Marquez exhausted internal remedies to challenge the decision. Marquez thus never enjoyed a cause of action against the Plan, and there was no cause of action for Avera to receive from him by assignment. Accordingly, Avera cannot sue to recover benefits.

Ninth Circuit

Pacific Recovery Solutions, et al., v. United Behavioral Health, et al., No. 4:20-CV-02249 YGR, 2020 WL 5074315 (N.D. Cal. Aug. 25, 2020) (Judge Yvonne Gonzalez Rogers). This is a putative class action against Defendants for claims arising out of United’s alleged failure to reimburse plaintiffs “a percentage” of the UCR for Intensive Outpatient Program services, which plaintiffs provided to patients with health insurance policies administered by United. The court found that Plaintiffs’ state-law claims, including “(1) violation of the UCL, Bus. & Prof. Code § 17200 et seq.; (2) intentional misrepresentation and fraudulent inducement; (3) negligent misrepresentation; (4) civil conspiracy; (5) breach of oral or implied contract; and (6) promissory estoppel” are preempted under Section 514(a) because they depend on the terms of an ERISA plan.

Eleventh Circuit

Izydorek v. Unum Group, No. 8:20-CV-247-T-33CPT, 2020 WL 5083831 (M.D. Fla. Aug. 26, 2020) (Judge Virginia M. Hernandez). The court dismissed the pro se plaintiff’s amended complaint because he failed to plead exhaustion of administrative remedies. Unum terminated his long-term disability benefits in February 2017. He does not allege that he appealed within 180 days (as required by the plan). He then alleges that in January 2020 he tried to initiate administrative remedies and Unum told him that February 3, 2020 was the deadline to file suit. Regarding an alleged underpayment, the court found that the claim for underpaid benefits from 2005 to 2009 is facially time-barred. The court also denied Plaintiff’s request for a jury trial and punitive or extra-contractual damages since they are not available under ERISA.

Medical Benefit Claims

Ninth Circuit

LD, et al. v. United Behavioral Health, et al., No. 4:20-CV-02254 YGR, 2020 WL 5074195 (N.D. Cal. Aug. 26, 2020) (Judge Yvonne Gonzalez Rogers). Plaintiff brought a putative class action against United and Viant for United’s alleged failure to reimburse non-party Summit at the usual customary and reasonable rate (UCR) for intensive outpatient program (IOP) services. Defendants filed two motions to dismiss. The court found that Plaintiffs do not identify the terms of their plans that require United to reimburse Summit for IOP services based on UCR and thus Plaintiff fail to raise a reasonable inference that United breach the terms of their plans. The court found Plaintiffs have not alleged facts to show that United can be sued under ERISA Section 1132(c)(1) and do not sufficiently allege that United failed to comply with ERISA disclosure requirements. For similar reasons, the court found that Plaintiffs failed to allege fiduciary breaches of the plan terms. The court found Plaintiffs’ ERISA claim for violations of Section 1133 fails because it is based on the theory that the EOBs were required, but failed, to state the words “adverse benefit determination,” as Plaintiffs have cited no authority to support that proposition. The court found that Plaintiffs’ catch-all claims under Section 1132(a)(3) are subject to dismissal because Plaintiffs do not raise the inference that the basis and nature of such remedies is equitable. Defendants claimed Plaintiffs lacked standing for RICO claims. The court found Plaintiffs did not satisfy the elements of a RICO claim: enterprise, conduct, pattern of racketeering activity. The court granted Plaintiffs leave to amend these claims.

Pension Benefit Claims

Second Circuit

McCutcheon v. Colgate-Palmolive Co., No. 16 CIV. 4170 (LGS), 2020 WL 4937394 (S.D.N.Y. Aug. 24, 2020) (Judge Lorna Schofield). In this ERISA class action, Plaintiffs allege their benefits were miscalculated under the Colgate-Palmolive Retirement Plan. Here in this opinion, Plaintiffs’ motion for summary judgment was granted for both class claims. In the first claim, Plaintiffs alleged Defendant used incorrect interest rates, causing an impermissible forfeiture of their pension benefits. The second claim alleged that Defendants incorrectly used a mortality discount when paying out annuities in violation of ERISA § 203(a)(2) and IRC § 417(e)’s actuarial equivalence rules. The court found there was no issue of material fact that Defendants’ actions violated the terms of the plan and ERISA and remanded the matter to the Retirement Plan to recalculate all class members’ benefits based on the court’s opinion.

Seventh Circuit

Bator v. Dist. Council 4, No. 19-2626, ___F.3d___, 2020 WL 5050362 (7th Cir. Aug. 27, 2020) (Before Bauer, Kanne, and Barrett, Circuit Judges). Plaintiffs were members of a union. The union sponsored a pension benefit plan. Plaintiffs discovered that the financial health of the Plan was deteriorating and sued under ERISA. The district court dismissed the case for failure to state a claim under ERISA. Here, the Appeals Court affirmed, finding 1) the Pension Plan did not interpret plan provisions in an arbitrary and capricious manner, 2) the trustees did not breach their fiduciary duties by failing to require different segments within one union to contribute at the same rate, and 3) the union acted as a “settlor,” rather than an ERISA “fiduciary,” when it allegedly inconsistently enforced its by-laws requiring all local union members to contribute to the plan at equal rates.

Pleading Issues & Procedure

Second Circuit

Weyant v. Phia Grp. LLC, No. 19-3117, __F.App’x__, 2020 WL 5048525 (2d Cir. Aug. 27, 2020) (Before Pooler, Hall, Chin, Circuit Judges). The parties appealed the lower court’s ruling partially granting Defendant’s motion to dismiss based on Plaintiff’s failure to exhaust her administrative remedies. Plaintiff argued that the lower court wrongfully concluded that Plaintiff failed to exhaust administrative remedies where no such remedies existed. The court agreed, finding the lower court incorrectly applied precedential authority. Defendants appealed despite succeeding at the lower court. Defendant alleges that the lower court came to the right conclusion, but for the wrong reason. The court rejected this argument, finding the Defendant has no standing to appeal on those grounds.

Provider Claims

Third Circuit

Ass’n of N.J. Chiropractors, Inc. v. Data Insight, Inc., Case No. 19-21973, 2020 WL 4932458 (D.N.J. Aug. 24, 2020) (Judge John Michael Vazquez). Plaintiff-Providers brought suit attempting to stop Defendants’ allegedly improper practice of underbilling for chiropractic services that the Providers provide to their patients. The Providers allege that the Cigna and Aetna Defendants hired Data Insight and Multiplan to reprice insurance reimbursements to doctors. The Providers contend that because of the Data Insight/Multiplan’s repricing, they have been underpaid by the Cigna and Aetna for provided medical services, in contravention of the applicable ERISA plan documents. On Defendants’ motion to dismiss, the court held that (1) the Association of New Jersey Chiropractors did not have associational standing and (2) that the Providers failed to state a claim because they failed to identify plan language supporting the theory that they were entitled to a specific percentage of their billed charges. Providers were granted leave to amend the Complaint.

Ninth Circuit

Samaan v. Aetna Life Ins. Co., No. 217CV01690DSFAGRX, 2020 WL 4934363 (C.D. Cal. Aug. 21, 2020) (Judge Dale S. Fischer). Plaintiff, a gynecological surgeon, sued Aetna for unpaid medical benefits. Under an abuse of discretion standard, the court found that Plaintiff did not meet his burden of showing that Aetna abused its discretion in determining the reasonable and customary fee. The court found that it was not an abuse of discretion to use FAIR Health data to determine the reasonable and customary fee. Defendants were not barred from using FAIR Health data merely because it was not explicitly mentioned in the Plan. The Plan does not explicitly list any source of data. The court found that “consistent with other courts to consider this issue,” Defendants were not required to disclose the methodology used to calculate the reasonable and customary fee. The court found Aetna did not abuse its discretion by applying a multiple procedure reduction to some of Plaintiff’s billed charges, or not paying the full amount for the alleged comprehensive office visits.

Retaliation Claims

Seventh Circuit

Taylor v. Board of Education of The City of Chicago, No. 18 C 7874, 2020 WL 5076718 (N.D. Ill. Aug. 27, 2020) (Judge Matthew F. Kennelly). Plaintiff alleges “that the Board violated section 510 of ERISA, 29 U.S.C. § 1140, by unlawfully terminating her before her retirement benefits had fully vested.” It is disputed whether the retirement benefits plan qualifies as a governmental plan exempt from ERISA, but even if it were subject to ERISA, “no reasonable factfinder could find that the Board’s termination of Taylor violated section 510 of ERISA.” Plaintiff only offered a hearsay affidavit stating that she believes she was terminated in order to interfere with her retirement benefits which would have been substantially greater if she had retired after accumulating 35 years of service.

Statute of Limitations

Ninth Circuit

Guenther v. Lockheed Martin Corp., No. 17-16984, __ F.3d __, 2020 WL 5001809 (9th Cir. Aug. 25, 2020) (Before Gould, Ikuta, and Nelson, Circuit Judges). Plaintiff brought this action under ERISA against his employer and its defined benefit pension plan, alleging that they breached their fiduciary duty to make accurate representations to him about whether his service time under the plan was bridged when he left his employer and was later rehired. The case had already been to the Ninth Circuit once, at which time the court ruled that Plaintiff could not pursue a claim for benefits, but remanded because he had alleged sufficient facts to bring a breach of fiduciary duty claim. On remand, the district court granted Defendants summary judgment, finding that Plaintiff’s claim for breach of fiduciary duty was barred by ERISA’s statute of limitations. The Ninth Circuit affirmed. First, the court found that Defendants had not waived the statute of limitations defense because they had raised it on remand in their answer, and were not required to raise it during administrative proceedings. As to the merits, the court applied the Supreme Court’s recent ruling in Intel Corp. Investment Policy Committee v. Sulyma, and found that the alleged breach occurred in July of 2006, that Plaintiff had “actual knowledge” of the breach in November of 2006, and that he filed his complaint in November of 2010. This was beyond the three-year statute of limitations prescribed by ERISA for breaches of fiduciary duty where the plaintiff has “actual knowledge” of the breach, and thus his claim was barred. The court further rejected Plaintiff’s attempt to invoke ERISA’s six-year limitation period based on alleged fraud and concealment, finding that the employer did not knowingly misrepresent facts to Plaintiff or engage in affirmative acts to hide information.

Subrogation/Reimbursement Claims

Fourth Circuit

Pella Corp. v. Schulz, No. 5:20-CV-455-BR, 2020 WL 5026850 (E.D.N.C. Aug. 24, 2020) (Judge W. Earl Britt). Plaintiff, fiduciary of a medical plan, sought a temporary restraining order (“TRO”) against Defendants, a medical plan participant for whom the plan paid more than $69k in medical expenses following a slip and fall (and his personal injury attorneys), to enjoin Defendant from disbursing this amount from his personal injury settlement. The court concluded that “plaintiff has made a clear showing that: it will likely suffer irreparable harm if a TRO is not entered, it is likely to succeed on the merits, the balance of hardships is in its favor, and that a TRO is in the public interest. Plaintiff’s motion for a temporary restraining order will be granted.” The court required Plaintiff to post a bond of $1,000 for the payment of any costs and damages that may be incurred by Defendants if it is later determined that they were wrongfully restrained.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Trustees of The Northeast Carpenters Health, Pension, Annuity, Apprenticeship & Labor-Management Cooperation Funds v. Tiki Industries, Inc., No. 20-CV-492 (DRH)(AKT), 2020 WL 4927430 (E.D.N.Y. Aug. 21, 2020) (Judge Denis R. Hurley). “The petition to confirm the arbitration award in the amount of $93,390.96 (consisting of the principal deficiency of $61,589.33, interest of $10,709.65, interest on past delinquencies of $1,723.86, liquidated damages of $12.317.87, audit fees of $5,350.25, attorneys’ fees of $900, and the arbitrator’s fee of $800) is granted. Petitioners are further awarded (1) interest on the amount of past delinquencies calculated at the rate of 0.75% per month, from the date of the arbitration award (December 2, 2019) to the date of judgment: (2) attorneys’ fees in the amount of $1020.00; (3) costs in the amount of $470.00; and (4) post judgment interest pursuant to 28 U.S.C. § 1961.”

Third Circuit

Sheet Metal Workers’ Health & Welfare Fund of Local No. 19, et al., v. Invision Sign LLC, No. CV 20-2291, 2020 WL 4924539 (E.D. Pa. Aug. 21, 2020) (Judge Gerald J. Pappert). “The Local 19 Funds have now met their burden to show they are entitled to a default judgment against Invision for a $3,932.40 principal delinquency, $1,035.99 in interest and $3,455.28 in liquidated damages or a total of $11,776.67.” The court also awarded $4,025 in attorneys’ fees based on hourly rates of $250 for an attorney 11 years of experience and $300 for a shareholder with 16 years of experience. Lastly, the court awarded post-judgment interest under 28 U.S.C. § 1961(a).

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

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