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Your ERISA Watch – Finding No ERISA Preemption, Third Circuit Revives Out-of-Network Provider Claims Against Aetna

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This was an exciting week in ERISAland!  We highlight three notable decisions in the areas of ERISA preemption and out-of-network provider claims, proton beam radiation therapy and standing, and pension benefit claims.

This week’s first notable decision, ­­­­­­­­­­­­­­Plastic Surgery Ctr., P.A. v. Aetna Life Ins. Co., No. 18-3381, __F.3d__, 2020 WL 4033125 (3d Cir. July 17, 2020), tackles what remedy an out-of-network medical care provider has when an insurer pulls a bait-and-switch by agreeing to pay reasonable rates for services that are not covered in the ERISA benefit plan and only to later refuse to pay the provider’s invoices. When are unjust enrichment, breach of contract, and promissory estoppel claims brought by an out-of-network provider against an insurer preempted by ERISA?

The two plan participants in this case had employer-sponsored health care coverage administered and insured through Aetna. The plan strictly limited their ability to use out-of-network medical care providers, such as the Plastic Surgery Center (“Surgery Center”). Both insureds contacted the Surgery Center for medical care. The Surgery Center contacted Aetna prior to both operations, and in both cases, Aetna, with the knowledge that the Surgery Center was out-of-network, agreed to pay a “reasonable amount” at “the highest in-network rate”.  When the Surgery Center billed Aetna for the services provided, Aetna had a change of heart and paid less than what it had promised to pay. When the Surgery Center brought this lawsuit against Aetna for breach of contract, equitable estoppel, and unjust enrichment, Aetna moved to dismiss the claims as completely preempted by ERISA. The Surgery Center argued its claims were based on a separate contract it negotiated with Aetna, not based on the ERISA plan.

The district court found all three causes of action were completely preempted and dismissed the Surgery Center’s complaint. The Surgery Center appealed, and the Third Circuit affirmed in part and denied in part the lower court’s decision.

ERISA governs the relationship between the plan, its participants and beneficiaries, and its insurer. ERISA has a broad reach and “supersedes any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” 29 USC 1144(a). ERISA’s broad preemption powers leave out-of-network providers, like the Surgery Center, in a pickle: they cannot sue for benefits under an ERISA plan because they are not governed by ERISA, but most other causes of action are preempted. The providers must find other ways to ensure payment for their services. Here, the Surgery Center made an agreement outside the plan with Aetna for payment of the services. In litigation because the side agreement linked the Surgery Center’s reimbursement to in-network rates, Aetna moved to dismiss based on all the claims being preempted.

The test for whether a state law “relates to” an employee benefit plan and is therefore preempted by ERISA is whether it contains either (1) a “reference to” or (2) a “connection with” that plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 (1983). The Third Circuit found that the Surgery Center’s claims of breach of contract and equitable estoppel were not preempted because the claims did not meet either of these definitions.

The Third Circuit determined that the Surgery Center’s causes of action for breach of contract and equitable estoppel did not “reference” an ERISA plan because the side agreement does not require interpretation or analysis of the plan terms. The Surgery Center is not seeking benefits due under the terms of the ERISA plan but rather to enforce an obligation outside the plan. Aetna argued use of the term “in-network rate” in the side agreement is a reference to the plan, but the court said using a plan term does not automatically trigger preemption. The court was equally unimpressed with Aetna’s insistence that the Surgery Center’s request for pre-approval from Aetna for the claims triggers preemption because pre-approval requires interpretation of plan terms. The court surmised the Surgery Center was negotiating a side agreement with Aetna outside the terms of the plan, not seeking to apply the terms of the plan.

The Surgery Center’s claims for breach of contract and equitable estoppel were also found not to have a “connection” to any ERISA plan. ERISA governs the relationships among the employer, the plan, plan fiduciaries, plan participants, and beneficiaries. “Health care providers such as the Center orbit the periphery of this bargain, but their rights and remedies are not delineated in ERISA’s substantive or remedial provisions.” ERISA’s purpose is to protect participants, and “extending express preemption to out-of-network providers” will only harm participants and benefit the insurer.

The Third Circuit did uphold the district court’s decision that the Surgery Center’s unjust enrichment cause of action was completely preempted. Unjust enrichment requires that one party received a benefit that would be unjust to retain. The “benefit” Aetna received was discharge of the duty it owes its insureds. This requires the existence of an ERISA benefit plan, and therefore impermissibly implicates the terms of the plan. Unjust enrichment will remain dismissed from the Surgery Center’s complaint, but the breach of contract and equitable estoppel claims were revived, and the case was remanded to the district court for further proceedings.

This week’s first notable decision was prepared by Kantor & Kantor, LLP Attorney, Sarah Demers. Sarah has devoted her law practice to fighting for people who have been wrongfully denied employee benefits. She represents individuals in disputes over health insurance coverage, life insurance, disability income benefits, and retirement benefits.

This week’s second notable decision is Heckman v. United Healthcare Ins. Co., Case No: 20-cv-39-T-60AEP, 2020 WL 4041081 (M.D. Fla. Jul. 17, 2020). Vivian Heckman was a beneficiary under a fully insured Nike plan who submitted a claim for benefits for proton beam radiation therapy to treat a life-threatening lung cancer. United denied the claim for treatment based on policy exclusions for experimental and investigational treatments. United’s failure to authorize treatment delayed Mrs. Heckman’s treatment and required Plaintiffs to pay for the treatment themselves, in the total amount of $76,000 to date. Mrs. Heckman is financially dependent on Mr. Heckman, and it was therefore Mr. Heckman who ultimately provided the payments for Mrs. Heckman’s treatments.

United moved under Rule 12(b)(6) to dismiss the amended complaint as to Mr. Heckman, arguing that he lacked “statutory standing” under ERISA § 1132(a)(1)(B). The Court held that Mr. Heckman has statutory standing under ERISA and that United failed to explain how the terms of the Nike Plan precluded him from recouping payment of the denied benefits thereby Mr. Heckman has statutory standing under ERISA. The Court relied on robust case law cited by Plaintiffs that supports the existence of a cause of action for Mr. Heckman under these circumstances, whether he is deemed to have a direct right of action or alternatively a “derivative” right of action as a subrogee of Mrs. Heckman:

  • Richard K. v. United Behavioral Health, 2019 WL 3083019, at *15 (S.D.N.Y. June 28, 2019), report and recommendation adopted, 2019 WL 3080849 (S.D.N.Y. July 15, 2019);
  • Tony M. v. United Healthcare Ins. Co., No. 2:19- cv-00165, 2019 WL 5066806, at *3 (D. Utah Oct. 9, 2019;
  • Anne M. United Behavioral Health, No. 2:18-cv-808 TS, 2019 WL 1989644, at *3-4 (D. Utah May 6, 2019);
  • Potter Blue Shield of Cal. Life & Health Ins. Co., No. SACV 14-0837-DOC (ANx), 2014 WL 6910498, at *4-8 (C.D. Cal. Nov. 26, 2014);
  • Lisa O. Blue Cross of Idaho Health Serv. Inc., No. 1:12-CV-00285-EJL-LMB, 2014 WL 585710, at * 1-4 (D. Idaho Feb. 14, 2014);
  • Wills Regence BlueCross BlueShield of Utah, No. 2:07-CV-616BSJ, 2008 WL 4693581, at *7-10 (D. Utah Oct. 23, 2008);
  • Jandek v. AT&T Corp., No. 95 C 1439, 1995 WL 476608, at *3 (N.D. Ill. Aug. 10, 1995).

The above Heckman summary was prepared by Kantor & Kantor, LLP Attorney, Timothy J. Rozelle. Tim is thankful to focus his career on helping patients obtain health benefits for a range of health conditions and more recently has focused specifically on denials of life-saving cancer treatment. Check out his Proton Therapy Law Coalition on LinkedIn here. If you have been denied proton therapy by your insurance company, visit our page here for more information and to contact us.

This week’s third notable decision is McCutcheon v. Colgate-Palmolive Co., No. 16 CIV. 4170 (LGS), 2020 WL 3893303 (S.D.N.Y. July 10, 2020). This case involves a long ongoing battle for pension benefits under the Colgate-Palmolive Co. Employees’ Retirement Plan. After three years of litigation, the case settled in 2010. During the settlement, counsel for Plaintiffs discovered a Residual Annuity Amendment (RAA) and claims relating to the RAA were carved out for purposes of settling phase one of the case. Defendants now brought a motion for summary judgment on the issue of the RAA.

Two claims were brought by Plaintiff and a Class. Claim one consists of a claim for benefits for Plaintiff as an individual. Claim two is a claim for benefits for the remaining class members. The claim for benefits is based on four errors: 1) Defendants miscalculated the RAA causing an impermissible forfeiture of benefits; 2) Defendants used the wrong plan provision when calculating benefits; 3) the pre-retirement mortality discount violates ERISA; and 4) although the RAA was to be offset by the settlement in phase one of the litigation, the Plan was never amended and if it were to be amended retroactively it would cause an impermissible cut-back of benefits.

The court first decided the standard of review for count one, Plaintiff’s benefit claim, and found the de novo standard of review applies because Defendants failed to provide the documents requested, even if the committee did not rely on those documents to review her claim, and they did not set forth the specific reasons for the denial of her claim with reference to the plan provisions relied upon. With regard to claim two, the benefit claims brought by the remaining class members, the standard of review was arbitrary and capricious because the plan contained an adequate discretionary clause and the document and denial reasons did not apply to the class.

As to the first error, the court found Defendants’ miscalculation of the RAA benefits to be erroneous as a matter of law. The court explained the terms of the plan were plain and unambiguous and Plaintiffs had the better argument.

On the second error, the court found Defendants’ used the correct plan provision to calculate benefits and it would not permit extrinsic evidence as to past practices because the terms of the plan are unambiguous.

For the third error, the court ruled in favor of Plaintiffs finding the pre-retirement mortality discount does not apply to contributions made by employees and should not be used to determine the present value of an accrued benefit.

The court outright rejected the fourth error stating that although the plan was not amended to apply the offset to the RAA, the committee was complying with the court’s prior order and to reverse the offset now would discriminate against other class members.

This week’s third notable decision summary was prepared by Kantor & Kantor, LLP Attorney, Susan L. Meter. Susan enjoys finding creative solutions to challenging issues, using her 20 plus combined years of experience with retirement plans and as an ERISA attorney.

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

Breach of Fiduciary Duty

Sixth Circuit

Secretary of U.S. Dep. Of Labor, v. Kavalec, et al., No. 1:19-CV-00968, 2020 WL 3977347 (N.D. Ohio July 14, 2020) (Judge Pamela A. Barker). The Department of Labor (“DOL”) sued a set of Plan fiduciaries for breach of fiduciary duty—including self-dealing by setting their own compensation and paying themselves their own compensation. The fiduciaries sought to have the Plan pay the legal fees for their defense. The court rejected the fiduciaries’ request and granted a preliminary injunction prohibiting the Plan from paying the fees and thereby further depleting its fund. The court did so because (1) it was likely the DOL would prove its case since the fiduciaries did not deny the self-dealing—which is prohibited by Section 406(b); (2) having the Plan pay, or even advance, the legal fees would cause irreparable injury to the Plan because the fiduciaries were not able to repay the money; (3) the Plan participants would be harmed by this injury; and (4) ERISA’s public policy objective of protecting plan participants’ benefits and preventing misuse of plan funds was served by granting the preliminary injunction.

Gemini Ins. Co., Intervenor v. Thomas E. Potts, Jr., et al., Case No. 16-cv-612, 2020 WL 4000977 (S.D. Ohio, Jul. 15, 2020) (Mag. Judge Chelsey M. Vascura). Fiduciary Trust Services, Inc. (“FTS”) provided independent, third-party trustee services to employee stock ownership programs (“ESOPs”). Mr. Potts served as President and Chief Executive Officer of FTS and as a trustee and fiduciary for the Triple T Transport, Inc. ESOP. On January 28, 2011, Mr. Potts executed a Stock Purchase Agreement on behalf of the ESOP. Defendants relied on a flawed valuation opinion to purchase the stock, which resulted in the stock being significantly overvalued and caused a significant financial loss to the ESOP. On November 19, 2018, the Secretary of Labor and Defendants settled the Secretary’s ERISA claims against Defendants for $2,475,000. Gemini had issued two professional liability insurance policies to Defendants. Here, Defendants moved for partial summary judgment on the issue of Gemini’s duty to defend. Gemini moved for summary judgment on all claims between the parties, arguing that: (1) both of Defendants’ Gemini-issued insurance policies excluded ERISA claims and (2) Defendants failed to provide claims-made notice as required by the policies. The court found summary judgment in Gemini’s favor as pursuant to the professional liability insurance policies Gemini issued Defendants, Gemini was not obligated to defend or indemnify Defendants against the Secretary’s ERISA claims due to the ERISA exclusion contained in both policies.

Ninth Circuit

Board of Trustees of the Southern Nevada Joint Management and Culinary and Bartenders Training Fund v. Fava, et al., No. 2:18-CV-36 JCM (DJA), 2020 WL 4031767 (D. Nev. July 15, 2020) (Judge James C. Mahan). This action concerns purported breaches of fiduciary duty by a CEO and vice president of finance. CALV, the plaintiff, is a nonprofit employee benefit trust fund that provides training for entry-level and incumbent workers in the Las Vegas hospitality industry as its ERISA “benefit.” The alleged breaches happened when CALV got involved in a business deal to start and operate the Eclipse Theater. While the board of trustees approved the business deal, the court recognized that ERISA imposes joint and several liability on co-fiduciaries, and thus comparative fault is not a viable defense in ERISA actions. “Whether he is one-hundred percent at fault or only one-percent at fault,…he would have no right to contribution.” However, because CALV failed to produce evidence to definitively establish the precise scope of its training operations, the court denied summary judgment on the issue of whether the Eclipse agreement was inconsistent with the Plan’s goals by requiring services CALV did not provide. There were also issues of material fact regarding the prudence of the investigation into the Eclipse agreement, and whether the agreement violated a duty to diversify investments.

Class Actions

Second Circuit

Falberg v. Goldman Sachs Grp., Inc., No. 19 CIV. 9910 (ER), 2020 WL 3893285 (S.D.N.Y. July 9, 2020) (J. Edgardo Ramos). Plaintiff filed a class action against Goldman Sachs, its ERISA-governed 401(k) retirement plan, and other related entities, alleging that Defendants breached their fiduciary duties, engaged in prohibited transactions, and failed to monitor the plan’s fiduciaries. Defendants filed a motion to dismiss, arguing that the claims were untimely, Plaintiff failed to exhaust his appeals under the plan, and Plaintiff lacked standing. The court denied the motion in its entirety. The court found that the claims were timely because Defendants had not offered controlling authority holding that parties could contract around ERISA’s statute of limitations for breach of fiduciary duty. The court further found that the parties could not contract around ERISA’s exhaustion requirements, and in any event such requirements only applied to claims alleging the violation of plan terms, not to statutory claims such as those alleged by Plaintiff. The court also found that Plaintiff had standing to challenge Defendants in the administration of all five funds at issue, not just the three in which he had invested, because the misconduct alleged by Plaintiff affected all the funds at issue. As for the sufficiency of the pleading, the court ruled that Plaintiff had adequately alleged that Defendants offered underperforming funds with excessive fees, acted for their own benefit in charging higher fees than other similar funds, and did not credit employees with fee rebates from the funds in the plans.

Disability Benefit Claims

Second Circuit

Samborsky v. Rothstein, No. 1:20-CV-298-GHW, 2020 WL 3962055 (S.D.N.Y. July 13, 2020) (District Judge Gregory Woods). Plaintiff was paid disability benefits for several years before Defendant benefit plan realized that it should have never started paying him in the first place, as he was not eligible for benefits when he originally applied. Plaintiff filed suit, and Defendants filed for summary judgment in response. The court found for Defendant, finding that under the arbitrary and capricious standard, Defendant’s decision to stop paying benefits was reasonable, despite Plaintiff’s argument that the relevant policy provisions were ambiguous.

Fifth Circuit

Joseph v. Hartford Life & Accident Insurance Company, No. CV 19-17-JWD-RLB, 2020 WL 3979665 (M.D. La. July 13, 2020) (Judge John W. deGravelles). This matter is before the court on a Motion for Judgment on the Administrative Record filed by Defendant and a cross motion filed by Plaintiff. In support of its motion, Defendant argued that its decision was not arbitrary and capricious and that it considered all evidence submitted by Plaintiff as well as the evidence it generated, such as peer reviews and an employability analysis. Plaintiff argued that Defendant did not consider his affidavit evidence of pain, restrictions, and medication side effects and his treating physician opinions, as well as third-party observations. Plaintiff argued that this evidence was submitted to Defendant prior to filing of the suit and should have been considered, and that Defendant operated under a financial conflict of interest because it was both the insurer and the administrator. Hartford disputes that it had to consider the administrative record evidence provided to it after Hartford informed Plaintiff that he had exhausted his administrative evidence and rendered its final appeal decision. The court held that the AR consists of relevant information made available to the administrator prior to filing of a lawsuit, and that it will review the record as it existed initially and on appeal, and then if necessary, will consider whether Defendant abused its discretion when it refused to consider additional evidence. The court noted that the parties stipulated that the AR included records Plaintiff submitted after the denial of his appeal. Insofar as procedural irregularities, in this case, Hartford relied on the same conclusions on appeal as it did in denying the claim initially, but since the AR contains a colorable claim for the denial, the court remanded the case to Defendant to conduct a full and fair review, taking into account all information contained in the AR, due to its failure to substantially comply with procedural requirements of ERISA.

Eleventh Circuit

Heckman v. United Healthcare Ins. Co., Case No: 20-cv-39-T-60AEP, 2020 WL 4041081 (M.D. Fla. Jul. 17, 2020) (Judge Tom Barber). See Notable Decision summary above.

Richardson, Jr. v. Liberty Life Assurance Company of Boston, No. 19-11916, __F.App’x__, 2020 WL 3958502 (11th Cir. July 13, 2020) (Before Wilson and Jill Pryor, Circuit Judges, and Corrigan,* District Judge). In a one-paragraph per curiam opinion the court affirmed the Liberty Life’s reduction of Plaintiff’s long-term disability benefits for the reasons given by the district court. (The district court opinion is not on Westlaw).

ERISA Preemption

Third Circuit

­­­­­­­­­­­­­­Plastic Surgery Ctr., P.A. v. Aetna Life Ins. Co., No. 18-3381, __F.3d__, 2020 WL 4033125 (3d Cir. July 17, 2020) (Before: Krause, Matey, Circuit Judges, and Quiñones Alejandro* District Judge). See Notable Decision summary above.

Fourth Circuit

HCA Health Services of Virginia, Inc. d/b/a Henrico Doctors’ Hospital v. CoreSource, Inc., et al., No. 3:19-CV-406, 2020 WL 4036197 (E.D. Va. July 17, 2020) (Judge John A. Gibney, Jr.). Plaintiff Hospital sued the ERISA health insurer, administrator, and MultiPlan to recover reimbursement for healthcare services to a premature infant who died at the Hospital. Defendants filed a motion to dismiss claiming ERISA preempted the Hospital’s claims and that the Hospital failed to state a claim. The court held that ERISA does not provide a cause of action for health care providers who treat ERISA participants. Therefore, the court denied the motion to dismiss based on ERISA preemption. The court found that the Hospital adequately pled that the Client Services Agreement suggests that defendants intended to benefit network providers such as the Hospital. The court rejected defendants’ claim that the Hospital cannot simultaneously assert claims for express and implied breach of contract. The court held that the plaintiff may assert implied contract claim in the alternative when the parties dispute an express contract exists. The court found that the Hospital adequately pleads that it conferred a benefit on CoreSource. The court held that the Administrative Services Agreement (ASA) expressly provides that the parties did not intend to benefit third parties and therefore the Hospital cannot assert a claim as a third-party beneficiary to the ASA.

Life Insurance & AD&D Benefit Claims

Second Circuit

Delia v. UBS Fin. Servs., Inc., No. 19 CIV. 3109 (LGS), 2020 WL 4001999 (S.D.N.Y. July 15, 2020) (Judge Lorna G. Schofield). Plaintiff seeks damages under state law and ERISA due to an alleged wrongful refusal to provide her appropriate survivor benefits after Mr. Delia’s death by the Defendants. Defendants have filed a motion for summary judgment. The court held that neither Plaintiff’s husband nor the estate was a “participant” in the Plan. Mr. Delia did not affirmatively enroll in the Plan as was required, so he never became a participant and was not authorized to sue under ERISA at the time of his death. The court also held that neither Plaintiff nor the estate was a beneficiary due to Mr. Delia not being a participant. Therefore, the court granted summary judgment in favor of Defendants.

Eleventh Circuit

Thoms v. Advanced Technology Systems Company, Inc., et al., No. 120CV00235RAHJTA, 2020 WL 4016244 (M.D. Ala. July 16, 2020) (Judge Austin Huffaker). Plaintiff filed suit to challenge the denial of her claim for life insurance benefits under the terms of her deceased husband’s group-sponsored policy. Defendant moved to dismiss Plaintiff’s state-law claims based on ERISA preemption, and moved to dismiss her ERISA claim based on failure to exhaust administrative remedies. The court first held that Plaintiff’s state-law claims were preempted by ERISA, dismissing Plaintiff’s argument that those claims “do not arise from [the] ERISA plan,” because Plaintiff did not have an adequate remedy under ERISA (and was thus not preempted). It held that in light of the expansive interpretation applied to related to under ERISA, claims arising from communications during the claim process certainly do “arise from” the ERISA Plan. The court declined to dismissed Plaintiff’s ERISA claims, finding that if Plaintiff’s allegations in the complaint are true, specifically that she was prevented from obtaining a copy of the policy and the denial letter contained permissive rather than mandatory language explaining the appeal requirements, she could sustain a claim under 12(a)(1)(b) despite never filing a “formal” appeal.

Medical Benefit Claims

Eighth Circuit

York v. Wellmark, Inc., No. 19-1705, __F.3d__, 2020 WL 3955697 (8th Cir. July 13, 2020) (Circuit Judge James B. Loken). The case concerns the Patient Protection and Affordable Care Act (“ACA”) mandate that group health plans and health insurers provide coverage for preventative services, including comprehensive lactation support and counseling services. Wellmark refused to cover claims for services included by the ACA mandate. The court affirmed the district court’s dismissal of the complaint regarding claims alleging improper cost-sharing and also affirmed summary judgment for Wellmark. The court found the ACA mandate does not include information and disclosure requirements, such as Wellmark failing to provide a list of lactation counseling providers. The court found that the coverage under the ACA refers to the type or amount of benefits covered under the plan, not “the hassle associated with utilizing those services.” The court did not find persuasive the Department of Labor’s Frequently Asked Questions which state that “plans and insurers are required to provide a list of the lactation counseling providers within their network.” The court found that ERISA does provide for a private right of action for breach of plan administrator’s duty to provide sufficient written notice of their rights and obligations under the plan, but agreed with the district court that ERISA plans need not specify which providers offer certain services such as lactation counseling. In affirming the district court’s summary judgment in favor of Wellmark, the court found that the ACA does not require Wellmark to provide a network of lactation consultants, but rather whether Wellmark has “in its network a provider who can provide that item or service.” The court concluded that the plaintiffs could have asserted state or ERISA laws under their respective plans but did not in this lawsuit.

Pension Benefit Claims

Second Circuit

McCutcheon v. Colgate-Palmolive Co., No. 16 CIV. 4170 (LGS), 2020 WL 3893303 (S.D.N.Y. July 10, 2020) (Judge Lorna G. Schofield). See Notable Decision summary above.

Sixth Circuit

Brimmeier v. DeMaria Building Company, et al., No. 20-CV-10426, 2020 WL 3961355 (E.D. Mich. July 13, 2020) (Judge Bernard A. Friedman). In this dispute over deferred compensation benefits, the court denied Defendants’ motion to dismiss. The court rejected Defendants’ argument that Plaintiff is not eligible for benefits because he was not an employee when he turned sixty years old (having retired at age 59). This argument is not supported by the plain language of the Plan that states that benefits are to be paid, unless forfeited, upon an employee reaching the age of 60 and that an employee can continue to earn benefits if the employee continues to work beyond age 60. It implies the Plan considers someone an “employee” even if that person does not continue to work past age 60. On a motion to dismiss, the court cannot decide whether Plaintiff forfeited his right to benefits because it is not clear who terminated Plaintiff’s employment. Defendants allege that he resigned but Plaintiff counters that he was constructively terminated. Lastly, the court denied dismissal of the state law claims because it is not clear that ERISA applies to the deferred compensation plan in this case for the period before Defendants adopted the written plan in April 2016. In other words, the court cannot determine whether the Plan superseded the parties’ previous oral agreement concerning Plaintiff’s deferred compensation.

Pleading Issues & Procedure

Second Circuit

Canfield v. SS&C Tech. Holdings, et al., Case No. 18-cv-08913 (ALC), 2020 WL 3960929 (S.D.N.Y. Jul. 10, 2020) (Judge Andrew L. Carter Jr.). There are four related cases pending before Judge Carter and arbitration proceedings pending in the Western District of Missouri. In three of the actions before the Court—Ferguson, Canfield, and Mendon—the named Plaintiffs are current or former employees of DST Systems, Inc., now SS&C Technologies Holdings, Inc. On December 5, 2019, DST Defense counsel in the Mendon and Canfield actions notified the court that The Klamann Group (a law firm) also represented three, former members of the Plan’s Advisory Committee—Kenneth Hager, Thomas McDonnell, and Joan Horan—in arbitration proceedings against DST and Ruane in the Western District of Missouri. Defendants asserted that Plaintiffs in Mendon and Canfield sued the Advisory Committee of the DST Systems, Inc., 401(k) Profit Sharing Plan and its individual members, which include Hager, McDonnell, and Horan. In other words, Defendants argued that The Klamann Group was bringing suit against its own clients in Canfield and Mendon, which amounted to a concurrent conflict of interest warranting disqualification. Defendants’ motion to disqualify as to the Canfield and Mendon actions was granted.

Statute of Limitations

Fifth Circuit

Joseph v. Hartford Life & Accident Insurance Company, No. CV 19-17-JWD-RLB, 2020 WL 3979665 (M.D. La. July 13, 2020) (Judge John W. deGravelles). Defendant in this case argued that Plaintiff failed to comply with the policy’s contractual limitations period. Plaintiff argued that waiver applied because the appeal denial letter stated that he had until March 2021 to file a legal action. In this case, Hartford was aware of the Legal Actions provision/right, and by stating in the Appeal Letter to Plaintiff that “we hereby extend the time for your to file a civil action disputing this adverse benefit decision to no later than March 12, 2021,” Hartford voluntarily and intentionally relinquished that right. Therefore, the court found Plaintiff’s lawsuit is not time-barred under the contractual provision limiting the time to bring an action.

Statutory Penalties

Ninth Circuit

Jass v. CherryRoad Techs., Inc., No. 19-CV-00609-DKW-RT, 2020 WL 3965969 (D. Haw. July 13, 2020) (Judge Derrick K. Watson). Plaintiff asserted that Defendant violated COBRA by failing to provide him with notice upon his termination that he was eligible to elect continued health insurance coverage, which resulted in the cancellation of his insurance coverage and out-of-pocket expenses. The court explained that “[p]enalties under 29 U.S.C. § 1132(c)(1) can only be assessed against ‘plan administrators’ for failing to produce documents that they are required to produce as plan administrators.” The court found that Plaintiff did not allege that Defendant was the designated plan administrator or the plan sponsor, or any factual allegations that might give rise to such an inference. The court dismissed this claim with leave to amend.

Subrogation/Reimbursement Claims

Eleventh Circuit

Publix Super Markets, Inc. v. Figareau, No. 8:19-CV-545-T-27AEP, 2020 WL 3962256 (M.D. Fla. July 13, 2020) (Judge James D. Whittemore). In this dispute, Publix seeks reimbursement for health expenses it paid for Defendants’ minor child from Defendants who are in possession of a settlement fund related to a medical negligence action. The court granted Publix’s motion to exclude the testimony and opinions of Norberto S. Katz, Esq. Defendants wanted Katz’s opinion on the following questions: “Did the attorney Defendant have a legitimate, rational ethical duty based on the facts and circumstances of this case to assert in good faith that the Defendant should protect the minor and her parent’s interest in the allocation of the settlement in the underlying medical malpractice case? Did the attorney Defendant, based on the facts and circumstances of this case have a duty to assert in good faith that the Defendant’s ethical obligations are not governed by a Publix contract?” The court found that these assertions do not go to the merits of Publix’s claim, any valid affirmative defense, or any fact in issue. The court will not permit Katz’ opinions to be included as evidence in any motion or presented at trial.


Fifth Circuit

Group 1 Automotive, Inc. v. Aetna Life Ins. Co., No. 4:20-CV-1290, 2020 WL 4004604 (S.D. Tex. July 15, 2020) (Judge Nancy Atlas). Plaintiff, a nationwide automotive retail business, sponsored a self-funded ERISA-governed health benefit plan for its employees, and contracted with defendant Aetna in an administrative services agreement (ASA) to administer it. After terminating that contract in 2015, Plaintiff became concerned that Aetna had paid certain claims that should have been denied. It commenced an arbitration against Aetna in Connecticut, as required by the ASA. The arbitrator dismissed some claims as time-barred and held that the ERISA claims were not arbitrable. Plaintiff then sued Aetna under ERISA in the Southern District of Texas, where Plaintiff’s headquarters is located. Aetna filed a motion to transfer venue to Connecticut. The court denied Aetna’s motion. The court rejected Aetna’s argument that the ASA’s forum selection clause compelled transfer to Connecticut because that clause only referred to state law claims, not federal claims. The court also weighed the public and private interests involved in transferring the case and determined that Aetna had not met its “heavy burden” to demonstrate that those factors made transfer to Connecticut “clearly more convenient.” Specifically, the arbitration had concluded, so there was no reason to consolidate the two cases, and Aetna had not shown that Texas proceedings would significantly inconvenience it.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Trustees Of The New York City District Council Of Carpenters Pension Fund, Welfare Fund, Annuity Fund And Apprenticeship, Journeyman Retraining, Educational And Industry Fund v. JAS Construction Co., Inc., No. 20-CV-1001 (RA), 2020 WL 4016841 (S.D.N.Y. July 16, 2020) (Judge Ronnie Abrams). The court granted the petition to confirm the arbitration award and directed entry of “judgment in the amount of $4,755.10, plus prejudgment interest calculated at a rate of 7.5% per annum from March 25, 2019 through the date of judgment in this action and postjudgment interest. In addition, Petitioners’ request for attorneys’ fees and costs in the amount of $708 and $70, respectively, is granted.”

Trustees of New York City Dist. Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, Apprenticeship, Journeyman Retraining, Educ. & Indus. Fund v. Shorecon-NY, Inc., No. 17-CV-5210 (RA), 2020 WL 3962127 (S.D.N.Y. July 13, 2020) (Judge Ronnie Abrams). The court granted Plaintiffs’ motion for default judgment and request for $6,031.83 in liquidated damages, $3,400 in audit costs, $697.30 in costs incurred in litigating this action, as well as post-judgment interest. The court instructed Plaintiffs to submit a revised request for attorneys’ fees.

Broach v. Metropolitan Exposition Services, Inc., No. 20-CV-0165 (LJL), 2020 WL 3892509 (S.D.N.Y. July 10, 2020) (Judge Lewis J. Liman). The court granted Plaintiffs’ motion for default judgment in part and granted Plaintiff Independent Fiduciary the following: (i) Unpaid Contributions of $11,216.35 and $6,344.73 on behalf of the Pension Fund and the Annuity Fund, respectively; (ii) Attorneys’ fees of $20,256; and (iii) Costs of $828.33. Plaintiff must file a supplemental affidavit specifying the basis for the calculations of prejudgment interest and liquidated damages within twenty-one (21) days from the date of this Opinion and Order.”

Ninth Circuit

Boards Of Trustees Of The Northwest Ironworkers Health And Security Fund v. Western Rebar Consulting Inc., No. 2:18-CV-00486-BAT, 2020 WL 4000967 (W.D. Wash. July 15, 2020) (Judge Brian A. Tsuchida). The court concluded that The Trusts are entitled to dismissal of Western’s counterclaim for refund of overpayment. The Ninth Circuit has concluded that an employer has an implied right of action under section 403 to recover mistaken contributions, but the court found that Western’s allegations do not satisfy the requirements for asserting a claim for relief under 1103(c)(2)(A)(ii). However, the court granted “Western leave to amend its counterclaim, to include factual allegations showing that it made a mistake of fact or law when it submitted the improper contributions and further, showing that the equities favor restitution with respect to the amounts improperly paid and reported by Western.”

Bd. of Trustees of the Glazing Health & Welfare Fund, et al. v. Z-Glass, Inc., et al., No. 217CV01638JADNJK, 2020 WL 4004798 (D. Nev. July 15, 2020) (Judge Jennifer A. Dorsey). “I find that no genuine issue of fact remains as to whether Z-Glass is responsible for remaining contributions for the Smith Center project, whether ZSW is responsible for contributions for the three Northern California projects before the termination of its labor agreement, and whether Z-Glass is responsible for contributions for the three Northern California projects before and after the termination of ZSW’s labor agreement. So I grant in part and deny in part the motions for summary judgment filed by the plaintiffs, Z-Glass, and ZSW. However, Zhang and ZHI are not responsible for the outstanding ERISA contributions under any of the plaintiffs’ theories. So I grant their motions for summary judgment. Finally, I dismiss the plaintiffs’ claims against WGS because plaintiffs failed to effectuate timely service of process and do not oppose WGS’s motion to dismiss.”

D.C. Circuit

Service Employees International Union National Industry Pension Fund, et. al. v. Tan Facility Maintenance, Inc., No. CV 19-3758, 2020 WL 3893022 (D.D.C. July 10, 2020) (Judge Rudolph Contreras). The court granted Plaintiff’s motion for default judgment and awarded a total of $51,939.20.2 for unpaid contributions, interest, liquidated damages, and other costs and fees.

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


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