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Your ERISA Watch – January 13, 2021

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

Class Actions

Second Circuit

Vollmer v. Xerox Corp., 20-CV-6979 (CJS), 2021 WL 50907 (W.D.N.Y. Jan. 6, 2021) (Judge Charles J. Sipagusa). In this class action, Plaintiffs alleged that Xerox violated the employee benefit plan by requiring all participants in the 1986 Enhanced Early Retirement Program to begin paying 50% of their medical and dental premiums. Plaintiffs sought a preliminary injunction and were denied. The court found that, where Plaintiffs’ harm could be alleviated by monetary damages and they faced no involuntary termination of coverage, a preliminary injunction was not needed as there was no irreparable harm.

Ninth Circuit

Antonio Hurtado v. Rainbow Disposal Co., No. 817CV01605JLSDFM, 2021 WL 79350 (C.D. Cal. Jan. 4, 2021) (Judge Josephine L. Staton). In this class action asserting “fourteen causes of action against pre-sale ESOP fiduciaries, post-sale ESOP fiduciaries, and Republic for their respective roles in alleged violations of [ERISA] in connection with the October 1, 2014 sale of ESOP assets to Republic,” the court granted preliminary approval of the class action settlement. “The Settlement Agreement provides for a payment of $7.9 million (with $7.5 million to be paid by the Republic Defendants and $400,000 to be paid by GreatBanc), inclusive of payments to the Class, Class Counsel’s attorneys’ fees and litigation expenses, and incentive awards to the Class Representatives.” Class Counsel is R. Joseph Barton of Block & Leviton LLP and Joseph A. Creitz of Creitz & Serebin LLP.

Disability Benefit Claims

Third Circuit

Addington v. Senior Vice President Human Resources Consol Energy, Inc., __F.App’x__, 2020 WL 7774952 (3rd Cir. Dec. 30, 2020) (Before Circuit Judges Chagares, Scirica, and Roth). Plaintiff appealed the district court’s determination to uphold Defendant’s denial of Plaintiff’s claim for Long Term Disability benefits. The Court of Appeals upheld the lower court’s determination based on its findings that: 1) Defendant’s decision was not against the weight of the medical evidence, 2) Plaintiff failed to prove that Defendant failed to consider relevant evidence, 3) Plaintiff misrepresents the meaning of Liberty paying benefits just one month earlier as “reversing course,” where Plaintiff had full knowledge that Liberty was still completing its investigation, and 4) Plaintiff’s argument that Liberty identified jobs which provided insufficient wages was not supported by the language of the Plan.

ERISA Preemption

Eleventh Circuit

Sarasota County Public Hospital Board v. Blue Cross And Blue Shield Of Florida, Inc., et al.,  No. 8:18-CV-2873-T-23SPF, 2021 WL 37605 (M.D. Fla. Jan. 5, 2021) (Magistrate Judge Sean P. Flynn). Defendants administer health insurance and some of the defendants’ insureds are enrolled in health benefit plans regulated by ERISA. Plaintiff entered a “Preferred Patient Care Hospital Agreement” (PPC Agreement) with one defendant, Florida Blue, and a “Hospital Services Agreement” (HO Agreement) with the other defendant, Health Options. These “Provider Agreements,” which the parties frequently renew and amend, establish both the terms under which Plaintiff provides “hospital services” to Defendants’ members and the terms under which Defendants pay for those services. Plaintiff alleges, among other things, that Defendants breached the Provider Agreements by using improper methods of payment. ERISA fails to preempt Plaintiff’s state law claims (as pleaded in the second amended complaint). Plaintiff disavows any entitlement to benefits due under a federally governed plan and, instead, Plaintiff challenges (1) Defendants’ underpayments under an agreed fee schedule, (2) the method by which Defendants underpaid, and (3) Defendants’ performance of other contractual obligations unrelated to payment claims. These challenges require consultation of the Provider Agreements, not an ERISA benefit plan. Assuming the truth of Plaintiff’s factual allegations and any direct and necessary inferences from the allegations, Plaintiff’s claims seek no benefit due under an ERISA plan.

Exhaustion of Administrative Remedies

Fifth Circuit

Lejeune v. Prudential Ins. Co. of Am., No. 19-01270, 2021 WL 41659 (W.D. La. Jan. 12, 2021) (Magistrate Judge Carol B. Whitehurst). Plaintiff filed suit after Prudential denied her claim and subsequent appeal for ERISA-governed life insurance benefits. On cross-motions for summary judgment, Prudential argued that Plaintiff failed to exhaust administrative remedies in a timely fashion. Plaintiff argued that this failure was the result of Prudential’s refusal to provide her with a copy of the administrative record; in turn, Prudential failed to provide a full and fair review as required by ERISA. Finding for Plaintiff and remanding back to the administrator, the court held that Plaintiff could not have obtained a full and fair review without access to the full record.

Medical Benefit Claims

Second Circuit

Neurological Surgery v. Aetna Health Inc., et al., No. 219CV4817DRHARL, 2021 WL 26097 (E.D.N.Y. Jan. 4, 2021) (Judge Denis R. Hurley). Plaintiff seeks payment of 200 medical claims for services rendered to Aetna plan members, alleging Aetna either underpaid or denied payment. Defendants filed a motion to dismiss alleging ERISA preemption, anti-assignment provisions, expired limitation periods, lack of standing, and meritless state law claims. The court found Aetna did not waive the anti-assignment provisions, Plaintiff did not have standing on the ERISA action, and remanded 110 claims to state court. Regarding the remaining 72 ERISA claims, the court found ERISA preempts the state law claims because they relate to an employee benefit plan. The court found Plaintiff failed to plead exhaustion of administrative remedies and leave to amend is unlikely to be productive.

Pension Benefit Claims

Ninth Circuit

U.S. v. Ashley Maddox, John Hancock Ret. Plan Svs., LLC, No. 1:20-MC-00089-SAB, 2021 WL 37580 (E.D. Cal. Jan. 5, 2021) (Magistrate Judge Stanley A. Boone). Defendant Maddox pled guilty to aiding and abetting the sexual exploitation of a minor and was ordered to pay statutory and special assessments totaling $5,100.00. The government attempted to garnish her retirement account through her former employer, the Educational Employee Credit Union. The court found ERISA’s anti-alienation provision does not preclude the U.S. government from collecting from a defendant’s retirement account.

Tenth Circuit

Kurtz v. The Vail Corp., No. 1:20-CV-00500-RBJ, 2021 WL 50878 (D. Colo. Jan. 6, 2021) (Judge R. Brooke Jackson). Plaintiff, an employee of the Vail Corporation, brought a putative class action against Vail alleging a single claim for breach of the fiduciary duties of loyalty and prudence under ERISA. Plaintiff contended that Vail’s retirement plan charged participants excessive fees, paid unreasonably high fees for investments, and failed to offer lower cost passively managed funds to participants. Vail filed a motion to dismiss, arguing that Plaintiff lacked standing to bring claims regarding funds in the plan in which she did not invest, and that she failed to state a claim for relief in general. The court rejected Vail’s standing argument, ruling that “a plaintiff’s standing to sue a plan’s fiduciaries, and that same plaintiff’s ability to seek relief that goes beyond his own injuries, are separate issues.” Plaintiff’s “non-investment in certain funds is a class certification question, not a standing one.” However, this ruling was “ultimately irrelevant” because the court found that Plaintiff failed to state a claim for relief. The performance of the investment,” and therefore looks at process and not outcomes. The court found that Plaintiff’s “deceptively long” complaint did not “allege anything imprudent about defendant’s process,” did “not address at all Vail’s process for selecting or retaining fund options, monitoring expenses, or managing the overall Plan,” and did not “provide any factual allegations regarding whether defendant employed the appropriate methods to investigate and determine the merits of any investments.” As a result, even though the case was “a close call,” the court granted Vail’s motion to dismiss.

Eleventh Circuit

Prolow v. Aetna Life Ins. Co., Case No. 20-cv-80545, 2021 WL 24712 (S.D. Fla. Jan. 4, 2021) (Judge Kenneth A. Marra). In a putative class action challenging Aetna’s use of its Clinical Policy Bulletin (an internal clinical guideline) to deny ERISA claims systematically and categorically for proton beam radiation therapy (PBRTR) for cancer treatment, Aetna brought forward a motion to dismiss Plaintiffs’ 502(a)(1)(B) and (a)(3) claims seeking unpaid benefits and claiming unjust enrichment for the wrongfully denied claims. The court first held that Plaintiff may bring both claims simultaneously at the pleading stage as long as the “complaint seeks monetary relief for unpaid benefits under § 1132(a)(1)(B), [and] any additional equitable monetary relief sought under § 1132(a)(3), must show different damages than the damage of unpaid benefits.” The court ordered that Plaintiff would need to amend the Complaint holding that Plaintiff failed to allege an independent fiduciary “that does not rest on the assertion of unpaid benefits.” Finally, the court asked that Plaintiff, in her amended pleading, straightforwardly articulate which allegations and claims are directed at each of the defendants (insurer and plan) so that defendants are not “impermissibly lumped together.” Plaintiff’s claims under (a)(3) are ordered amended in line with the court’s Order and the (a)(1)(B) claim was not dismissed.

Pleading Issues & Procedure

Third Circuit

Medwell, LLC v. CIGNA Corp., et al., No. 20-CV-10627-KM-ESK, 2020 WL 7694008 (D.N.J. Dec. 28, 2020) (Magistrate Judge Edward Kiel). Defendants filed a Motion to Seal two declarations filed by Plaintiff in the course of litigation. Defendant alleged that the documents contained highly confidential and propriety business information as well as private details between Defendant and its clients. In response, Plaintiff argued that Defendants have routinely filed similar documents during litigation throughout the country. In siding with Defendant, the court applied the relevant balancing test and concluded that Defendant’s need for privacy outweighed the public’s need to have access to these documents.

Wright, et. al. v. Elton Corporation, et. al., No. CV 17-286-JFB, 2020 WL 7870875 (D. Del. Dec. 31, 2020) (Judge Joseph Bataillon). Plaintiff Williams seeks leave to file a third amended complaint which would sever her claims as an employee-plaintiff from the other employer-plaintiffs and allege a putative class action. The court denied the motion. The court found it could properly realign the interests of the employee-plaintiff and employer-plaintiffs during the bench trial through the pretrial order. It also determined there was no need to proceed as a class-action because the class of participants was small, ascertainable, and any relief would apply to all putative plaintiffs.

Sixth Circuit

Crabbe v. Procter & Gamble Co., No. 1:19-CV-893, 2021 WL 38272 (S.D. Ohio Jan. 4, 2021) (Judge Timothy S. Black). Plaintiff, an employee of Procter & Gamble in the United Kingdom, was offered a position by P&G in the United States, which he accepted in 2007. He alleged that P&G informed him that his retirement benefits would not be affected by this transition, and his subsequent retirement statements reflected this. However, when Plaintiff retired, he did not receive the benefits he anticipated. He submitted a claim to P&G, which stated that under the controlling 2016 version of the plan, it had correctly calculated his benefits. Plaintiff filed suit, bringing a single claim for equitable relief under ERISA in which he alleged that he had relied on the 1992 version of the plan and that P&G had never disclosed the 2016 version of the plan to him. P&G moved to dismiss, but the court denied the motion. The court noted that Plaintiff was not making a traditional claim for denial of benefits, because he had acknowledged that he could not recover under the 2016 plan. Instead, Plaintiff’s claim was equitable in nature, and sought estoppel, reformation, and surcharge remedies which were distinct from a claim for benefits. As a result, the court rejected Defendants’ argument that Plaintiff was impermissibly repackaging his equitable relief claim as a claim for benefits. Citing to the Supreme Court’s decision in CIGNA Corp. v. Amara, the court further held that Plaintiff’s allegations that P&G had failed to disclose modifications to the retirement plan were sufficient to state a claim for equitable relief under ERISA.

Snider ex rel. Seventy-Seven Energy Inc. Retirement & Savings Plan v. Admin. Comm., et al., No. CIV-20-977-D, 2020 WL 7630700 (W.D. Okla., Dec. 22, 2020) (Judge Timothy DeGuisti). Plaintiff was a member of a class action against Defendant. In response to discovery of a similar complaint filed against the same Defendant three years earlier, Plaintiff filed a Motion to Consolidate the complaints. Defendants opposed the motion on the grounds that the claims in each suit differ and that consolidation would result in undue delay and prejudice to the Plaintiffs in the previously-filed case. Plaintiff responded by offering extensive accommodations which would purportedly limit said prejudice. The court found itself “not persuaded by Plaintiff’s arguments. . .[because] the cases are at very different points in the litigation process.” Specifically, Plaintiff’s case was filed just three months prior and was thus still in the pleading stage, and he sought to both bring claims that were dismissed from the prior suit as well as claims never asserted in the prior suit. As such, “[t]he Court finds untenable Plaintiff’s contention that no prejudice can be shown . . . [and finds] unconvincing Plaintiff’s no-harm, no-foul approach to litigating a complex, putative class action.”

Statute of Limitations

Ninth Circuit

Kamala Rose-Holliday, M.D. v. Sun Life Assurance Company of Canada, No. C20-1249 TSZ, 2021 WL 75255 (W.D. Wash. Jan. 8, 2021) (Judge Thomas S. Zilly). In this case, Sun Life filed a motion to dismiss on the grounds that Plaintiff’s claim for relief was barred by the contractual limitation in the policy. In 2012, Plaintiff was found to be partially disabled by Sun Life but disputed the way her benefits were calculated. Sun Life reviewed its calculation and advised Plaintiff that if she disagreed, then she needed to file an appeal. Plaintiff did not do so. In September 2019, Plaintiff became totally disabled and in October 2019 her attorney contacted Sun Life advising that Plaintiff’s benefits were miscalculated. Sun Life reviewed its calculations and determined that its calculations were correct. Plaintiff submitted an appeal which was denied by Sun Life and this lawsuit followed. The court granted Sun Life’s motion explaining that Plaintiff’s claim for relief began to run from the date of her disability.  Plaintiff filed her lawsuit over 6 years too late.

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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