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Your ERISA Watch – Eleventh Circuit Holds NFL Retirement Plan Abused its Discretion by Failing to Consider Evidence and Combined Effects of Plaintiff’s Impairments

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This week’s notable decision is Mickell v. Bert Bell/Pete Rozelle NFL Players Retirement Plan, No. 19-10651, __F.App’x__, 2020 WL 6074329 (11th Cir. Oct. 15, 2020), where the Eleventh Circuit reversed the district court’s determination that an ERISA plan did not abuse its discretion in denying disability benefits. Plaintiff Darren Mickell spent nine years in the NFL as a defensive end in which he sustained countless injuries, including multiple blows to the head. In September 2013, Mickell submitted a claim for permanent and total disability (“PTD”) benefits under the NFL Player Retirement Plan (the “Plan”). The Plan provides that initial decisions are made by an Initial Claims Committee (the “Committee”). Players may appeal the Committee’s decision to the Plan’s six-member board (the “Board”) which reviews the claim de novo. The Plan also provides that a player may be referred to one or more “neutral” physicians whose opinions will be a “substantial factor” in the Board’s decision. Finally, the Board is vested with “full and absolute discretion . . .”

Plaintiff submitted a PTD claim supported by reports from his treating doctors.  His psychologist/clinical neuropsychologist opined that he had mood symptoms and likely a cognitive disorder. His physical medicine and rehabilitation doctor opined that he did not have the functional capacity to work even 4 hours per day, uninterrupted. The Committee commissioned three examinations of Mickell by “neutral” doctors, which included an orthopedist, neurologist, and neuropsychologist, each of whom opined that Plaintiff was not permanently and totally disabled. The Committee issued its initial decision denying benefits.

Plaintiff appealed and submitted medical reports from a psychologist and counselor who opined that he was unable to work due to his cognitive and emotional impairments. On appeal, the Board directed Mickell to undergo four more evaluations by an orthopedist, neurologist, neuropsychologist, and psychologist. Again, each medical provider determined that Plaintiff had no deficits to impact his employability. The Board denied Plaintiff’s claim after appeal and this lawsuit followed.  The district court, applying the abuse of discretion standard of review, affirmed the Board’s decision and held that the Board did not err in its interpretation and application of the disability standard, nor in its failure to consider the cumulative effects of Plaintiff’s condition.

The court reversed the district court and remanded the case for further handling as it determined that the Board had abused its discretion. Although the court found that the Board did not err in interpreting and applying the Plan’s disability definition which only required that a player be able to work in any occupation earning up to $30,000 per year, it found that the Board did err in evaluating Plaintiff’s medical information.  The court reasoned that the Board claimed it had reviewed Plaintiff’s entire file, however, the minutes of the Board’s meeting did not include all medical records submitted, nor did the decision letter discuss evidence submitted by Plaintiff.  As a result, the court concluded that the Board had “wholly failed to consider record evidence that contradicted the opinions of the Plan Neutral Physicians.” The court further determined that the Board unreasonably assessed Plaintiff’s conditions because it failed to consider the cumulative effect of his physical, cognitive, and psychological symptoms on his functionality. It must be noted that the Plan documents do not place the burden of proof on Plaintiff but require the Board to determine whether Plaintiff had become disabled.

Congratulations to Plaintiff’s attorneys and Friends of ERISA Watch, Alicia Paulino-Grisham and Melinda Liss Chmielarz of the Disability Insurance Law Group in Fort Lauderdale, FL.

Anna Maria Martin is a Partner at Kantor & Kantor, LLP and an experienced attorney who has handled significant cases through all phases of litigation, including numerous trials, arbitrations and appeals throughout the United States. For more than 25 years, Ms. Martin represented and defended insurance companies and Lloyd’s syndicates against the claims of its insureds. Today, Ms. Martin utilizes her experience and expertise in representing individuals whose benefits have been wrongfully denied.

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

Attorneys’ Fees

Ninth Circuit

Smith v. Aetna Life Insurance Company, et al., No. 18-CV-1463 JLS (WVG), 2020 WL 6055147 (S.D. Cal. Oct. 14, 2020) (Judge Janis L. Sammartino). On June 26, 2018, Plaintiff filed a complaint alleging that Aetna improperly terminated her disability benefits. On January 7, 2019, the Parties appeared for an early neutral evaluation and case management conference before a Magistrate Judge. “At that time, the underlying claims had been resolved and all that remained was a dispute regarding attorney’s fees.” Thereafter the court rejected Aetna’s effort to obtain a copy of Plaintiff’s fee agreement and Plaintiff filed a motion for attorneys’ fees requesting $225,630 for 452.6 hours of work. Applying the “catalyst theory of success,” the court determined fees could be awarded as Plaintiff obtained the very relief she sought in her complaint. With rates and time both vigorously opposed by Aetna, the court determined reasonable rates to be $700, $400, and $375 per hour depending on the attorney. It also considered Aetna’s argument that the hours were unreasonable for a case that “resolved in the formative stage of litigation,” “just three months after Aetna filed its answer.” The court was “admittedly skeptical of the number of hours expended in a case in which only matters related to attorneys’ fees were ever briefed in court, and in which the only court appearance was for an Early Neutral Evaluation Conference focused on the fee issues.” After a full evaluation of the time submitted, that skepticism translated into “minor adjustments to the hours expended” with the hours expended to be deemed “largely” reasonable. The court deemed 401.3 hours reasonable and, based on the above rates, calculated $198,402.50 in attorneys’ fees. It then reduced this figure by ten percent to account for the relative simplicity of the underlying proceedings. Thus, the loadstar became $178,562.25. The court also awarded $4,307.57 in costs for items such as the filing fee, travel, postage, service/messenger fees, copying, phone, fax, and electronic research.

Class Actions

Second Circuit

De Fuente v. Preferred Home Care of N.Y. LLC, No. 18-CV-06749 (AMD) (PK), 2020 WL 5994957 (E.D.N.Y. Oct. 9, 2020) (J. Ann M. Donnelly). Plaintiffs brought this class action against their employer and related Defendants, alleging that they misappropriated medical benefit plan assets in violation of the New York Home Care Worker Wage Parity Act and ERISA. The court had stayed the action while the Supreme Court decided Thole v. U.S. Bank N.A., which held that defined benefit retirement plan participants lacked standing to bring a breach of fiduciary duty claim against the plan administrator. Following the Supreme Court’s decision, Defendants renewed their motion to dismiss. The court granted their motion, finding Thole dispositive. Plaintiffs claimed that Defendants were engaged in a “captive insurance scheme” whereby the insurer of the plan refunded investment profits and excess premiums to Defendants instead of keeping those excess funds in the plan. However, Plaintiffs did not allege that they had been denied any benefits, did not allege that Defendants’ actions imperiled the financial stability of the plan, and indeed admitted that the plan was overfunded. The court further stated that if Plaintiffs had won, they would not have been entitled to any additional benefits, like the plaintiffs in Thole, and thus they had not been harmed and had no standing. Because the court rejected all the federal claims before it, it declined to exercise jurisdiction over Plaintiffs’ remaining state law claim and dismissed the case.

Disability Benefit Claims

Ninth Circuit

Johal v. United States Life Ins. Co. in the City of New York, No. CV-20-00204-PHX-JAT, 2020 WL 6074248 (D. Ariz. Oct. 15, 2020) (Judge James A. Teilborg). In conjunction with the lawsuit Plaintiff filed after her claim for long-term disability benefits was denied, Plaintiff moved to admit extrinsic medical information into the record. She tried to submit this information to the Defendant Insurance Company after it had already reviewed and denied her administrative appeal. Defendant rejected her request three times before Plaintiff filed suit. Plaintiff argued that Defendant committed several procedural violations which would merit supplementing the record, including providing insufficient notice regarding how to “perfect” the claim, as well as not providing a copy of the final medical report to the insured prior to issuing a final determination on appeal. The court did not find either of these irregularities sufficient to justify augmentation. However, it was persuaded by the seriousness and impact of Defendant’s affirmative misrepresentation to Plaintiff that her appeal would be approved if submitted immediately, finding that it was sufficient to justify augmentation of the record. The court rejected Plaintiff’s request to have this evidence admitted without a remand to the Defendant, finding Defendant should have an opportunity to issue a determination considering the newly admitted medical evidence.

Eleventh Circuit

Mickell v. Bert Bell/Pete Rozelle NFL Players Retirement Plan, No. 19-10651, __F.App’x__, 2020 WL 6074329 (11th Cir. Oct. 15, 2020) (Before Martin, Rosenbaum, and Tallman*, Circuit Judges). See Notable Decision summary above.

Discovery

Tenth Circuit

Phillips, et al., v. Boilermaker-Blacksmith National Pension Trust, et al., No. 19-2402-DDC-KGG, 2020 WL 6059733 (D. Kan. Oct. 14, 2020) (Magistrate Judge Kenneth G. Gale). Plaintiffs and the putative class members in this class action lawsuit are participants in the Boilermaker-Blacksmith National Pension Trust (“the Plan”). Defendant Plan is an employee benefit plan under ERISA. Plaintiffs seek an order compelling Defendants to produce the settlement agreement entered in the case of Boilermaker-Blacksmith Nat’l Pension Tr. v. Matrix N. Am. Constr., Inc., No. 19-CV-2370-JAR-TJJ, (D. Kan. July 9, 2019) (hereinafter “the Matrix lawsuit”). Plaintiffs contend that “[t]he Matrix lawsuit and terms of settlement are clearly relevant as they involved the same issues and interpretation of the same Plan provisions that are at issue in this case.” The court granted Plaintiffs’ motion, concluding that the settlement agreement was facially relevant and proportionate to the case, and that Defendants have conceded relevance of the document.

ERISA Preemption

Seventh Circuit

McCurry v Mars, Inc., et al., Case No. 19-cv-04067, 2020 WL 6075872 (N.D. Ill. Oct. 15, 2020) (Judge Sharon Johnson Coleman). The pro se plaintiff brought a variety of claims against several defendants, including Hartford Life and Accident Insurance Company, including state law claims, claims under Title VII of the Civil Rights Act of 1964, and under ERISA. Plaintiff worked for Kenco, one of the defendants, a vendor providing services at Mars. She filed for disability in 2015 and began receiving payments. Kenco lost the Mars contract and all Kenco employees were terminated. Plaintiff brought a suit in 2016 against Mars and Kenco for discrimination and filed a complaint with the Department of Labor, which was dismissed by the DOL. She brought a second suit in 2017 which was dismissed as malicious prosecution. The district court found against her in the first suit, she appealed and lost on appeal. In this third suit, the court dismissed the state law claims as preempted by ERISA. The court held that the disability issues were not precluded by res judicata as the disability insurance issues had not previously been litigated. Mars was dismissed as an improper defendant. The Section 1981 and Title VII claims against Hartford were dismissed, as Hartford did not employ Plaintiff. The ERISA cause of action against Hartford was dismissed without prejudice because the Northern District of Illinois lacked specific or general jurisdiction over Hartford, where Plaintiff lived in the Central District of Illinois and the alleged breach occurred there. Plaintiff also sued the physician who provided a file review for Hartford and the company who arranged the file review, alleging violations of ERISA, HIPAA and Title VII. Those claims were dismissed as well. The federal claims against Kenco were allowed to proceed. Mars, Kenco and Koehler sought sanctions for repeated baseless prosecution, but the sanctions were denied for failure to follow procedural requirements.

Medical Benefit Claims

Seventh Circuit

Piccioli v. Plumbers Welfare Fund Local 130, U.A., No. 19-CV-00586, 2020 WL 6063065 (N.D. Ill. Oct. 14, 2020) (Judge John J. Tharp, Jr.). Plaintiff sued his health plan for vicarious racial discrimination claiming the plan denied coverage for his treatment for spinal pain because his doctor was Indian. Defendant moved to dismiss the complaint. The court found Plaintiff’s state law theories are preempted by ERISA because he could have brought his claim that the plan discriminated against him in denying coverage under ERISA. The court found the state law theories do not involve legal duties independent of ERISA or the plan. The court found Plaintiff’s Section 1981 claim is not barred by failure to exhaust his ERISA administrative appeals because Section 1981 provides a distinct basis for liability apart from ERISA. The court found that the ERISA claim appeared to be time-barred because it was filed two years and two days after the conduct that gave rise to the claim. Although Plaintiff has standing for a Section 1981 claim, he did not show that race discrimination was the determining factor. The court found Plaintiff failed to state a plausible claim of intentional discrimination based on his doctor’s race. The court granted the motion to dismiss with prejudice.

Pension Benefit Claims

Ninth Circuit

Hackney v. Board of Trs. of Locals 302 & 612 of Int’l Union of Operating Engineers-Employers Constr. Indus. Ret. Fund, No. C20-0972-JCC, 2020 WL 6059791 (W.D. Wash. Oct. 14, 2020) (J. John C. Coughenour). Plaintiff brought this action against the trustees of an ERISA-governed retirement benefit plan, alleging that she was entitled to survivor benefits arising from her late husband’s participation in the plan. Defendants initially told Plaintiff that she was entitled to no benefit because her husband had selected a single life annuity. However, on appeal Defendants determined that the husband had misrepresented his marital status, and thus Plaintiff was entitled to a benefit. However, Defendants reduced this benefit by the amount it had mistakenly overpaid the husband under its previous calculations. Plaintiff filed a motion for summary judgment, arguing that Defendants breached their fiduciary duty because they knew or should have known that the husband was married when he made his benefit selection, and failed to obtain a spousal waiver from Plaintiff. The court denied Plaintiff’s motion. The court determined that the proper standard of review was abuse of discretion because the plan granted discretionary authority to Defendants. Under this standard of review, the court found that summary judgment was inappropriate because disputed issues of fact existed as to what Defendants knew. Specifically, Defendants provided evidence that (1) they had no proof that the husband was married, (2) the husband had previously provided unreliable information regarding his marital status, and (3) the husband did not respond to a request for documentation regarding his marriage.

Pleading Issues & Procedure

Third Circuit

Walgreens Specialty Pharmacy, LLC d/b/a AllianceRx Wallgreens Prime v. Atrium Admin. Servs., Inc., No. CV 19-12756 (CCC), 2020 WL 6042280 (D.N.J. Oct. 13, 2020) (Magistrate Judge James B. Clark III). Walgreens sought to recover amounts it alleged it was owed by Atrium, a self-funded employee health benefit and prescription plan, as reimbursement for dispensing a medication called Kanuma to a member of Atrium’s plan. Walgreens asserted three counts against Atrium for its alleged failure to pay benefits: (1) violation of ERISA, (2) promissory estoppel, and (3) unjust enrichment. Before the court, in addition to nonparty subpoena discovery motions, Walgreens moved for leave to amend its complaint to add a proposed claim for successor liability against Spring Hills. Atrium argued that amendment was futile because Spring Hills has not acquired assets of Atrium or its related entities or facilities. The court held that Atrium could not assert claims of futility in opposing this motion on behalf of a nonparty and held that amendment should be allowed with opposition to the new claim against Spring Hills better brought as a motion to dismiss.

Retaliation Claims

Eighth Circuit

Laabs v. Nor-Son, Inc., No. CV 20-1399 (PAM/ECW), 2020 WL 6058296 (D. Minn. Oct. 14, 2020) (Judge Paul A. Magnuson). Laabs claims that Nor-Son unlawfully interfered with his ERISA benefits by terminating him. ERISA prohibits an employer from discharging or discriminating against employee participants “for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.” 29 U.S.C. § 1140. Plaintiff must prove that Nor-Son possessed a “specific intent to interfere” with his ERISA benefits.” A specific intent to interfere means that Laabs’s entitlement to ERISA benefits had “a determinative influence” on Nor-Son’s decision. Nor-Son relied on its argument that Laabs was terminated pursuant to a bona fide reduction in force. The court, viewing the facts in the light most favorable to Laabs, found that Plaintiff sought information regarding his ERISA-guaranteed benefits, and was terminated shortly thereafter. Thus, Laabs has sufficiently pled an ERISA-violation claim to survive a Rule 12 motion.

Statute of Limitations

Ninth Circuit

Sargent, v. So. Cal. Edison 401(k) Savings Plan, et al., No. 20-CV-1296-MMA (RBB), 2020 WL 6060411 (S.D. Cal. Oct. 14, 2020) (Judge Michael Anello). Plaintiff filed this lawsuit to recover benefits outside the 180-day contractual limitation period in the pension plan document. Defendants brought a motion to dismiss and Plaintiff asked the court to apply equitable tolling due to COVID. Plaintiff alleged she was unable to find assistance to file her lawsuit due to the state’s business closures. The court was not convinced, stating that Plaintiff overstated the impact the pandemic had on her ability to file the action within the designated timeframe and dismissed her §1132(a)(1)(B) as untimely. The court applied ERISA’s statute of limitations, not the contractual period of limitations, to Plaintiff’s breach of fiduciary duty claims. Because the alleged breaches occurred in 2019, Plaintiff’s §1132(a)(3) claims survived the motion to dismiss.

Withdrawal Liability & Unpaid Contributions

Second Circuit

International Association of Sheet Metal, Air, Rail & Transportation Workers, Local Union No. 71, et al. v. Lovejoy Metals, Inc. et al., No. 1:19-CV-00299 EAW, __F.Supp.3d__, 2020 WL 6073771 (W.D.N.Y. Oct. 15, 2020) (Judge Elizabeth A. Wolford). “Plaintiffs’ motion for default judgment (Dkt. 13) is granted in part and denied in part. Plaintiffs have established liability as to Defendants in connection with their first four causes of action. However, due to inadequate evidentiary support and deficiencies in their briefing, the Court grants their request for damages, only in part, as follows: $4,818.25 in connection with their first cause of action; $64.59 in connection with their third cause of action; $327.75 in connection with their fourth cause of action; and $6,679.75 in attorneys’ fees and $626.65 in costs in connection with their second cause of action.”

Sixth Circuit

Hren v. Bernard Irby Inc., No. 3:19-CV-00770, 2020 WL 6083308 (M.D. Tenn. Oct. 14, 2020) (Judge Eli Richardson). In this lawsuit seeking unpaid contributions, the court granted Plaintiff’s Motion for Default Judgment.

Directors of The Ohio Conference v. Sharkey & Son Construction Co., Inc., No. 1:20 CV 649, 2020 WL 6047361 (N.D. Ohio Oct. 13, 2020) (Judge Donald C. Nugent). The court granted summary judgment “in favor of Plaintiffs and against Defendant in the amount of $247,316.17, which includes $146,596.04 in delinquent contributions, $14,659.60 in liquidated damages, $75,780.53 in accrued interest, $9,880.00 in audit fees, and $400,00 in court costs.”

D.C. Circuit

Carpenters Labor-Management Pension Fund, et al. v. Buffalo Veneer & Plywood Company, Inc., No. 1:20-CV-00670 (TNM), 2020 WL 5995124 (D.D.C. Oct. 8, 2020) (Judge Trevor N. McFadden). The court granted the Pension Fund’s motion for default judgment, finding that it proved each of these damages with reasonable certainty: $65,812.89 in delinquent contributions, $13,162.57 in liquidated damages, $30,258.05 in interest, and $3,769.75 in attorney’s fees. Additionally, “[t]he Court will direct Buffalo Veneer to file complete and timely monthly reports for all periods required under the parties’ agreements and to timely pay all contributions to the Pension Fund that may become due after the entry of judgment.”

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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