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Your ERISA Watch – Kantor & Kantor Victory Against Sun Life and Health Insurance Company in Lawsuit for Long-Term Disability Benefits

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Even though the holiday season is in full swing, the courts continue to issue rulings, bringing justice to the nice and coal to the naughty.

Kantor & Kantor was back on the nice list with this week’s notable decision. The firm received an Order Granting Motion for Judgment in Favor of Plaintiff in Holmgren v. Sun Life & Health Ins. Co., No. 17-CV-03028-YGR, 2018 WL 6336043 (N.D. Cal. Dec. 5, 2018). The case addressed a wide swath of issues, new and old, that appear in today’s ERISA long-term disability cases, including whether social media activity was evidence of work capacity, how pre-disability work performance reviews factor into a disability analysis, whether surveillance was evidence of work capacity, whether subjective complaints of pain substantiate disability even when there was no objectively verifiable cause for the pain, how to evaluate an insurer’s reliance on peer review opinions over examining physician’s opinions, and whether physical “sedentary capacity” is equivalent to the ability to work a sedentary occupation.

The facts: Holmgren was a Corporate Tax Director for Hitachi America, Ltd. For several years prior to leaving work, Holmgren experienced progressing pain in his low back/buttock, hip, and neck. He underwent extensive testing and treatment, including two surgeries, attempting to alleviate or stop the progression of the pain. Some of the treatment was successful, but the continued low back/buttock pain puzzled his treatment providers as it did not have a known cause. Holmgren continued working through the pain, receiving accommodations from Hitachi including the ability to work from home and modern ergonomic devices such as a sit/stand desk.

Even with the increasing pain, in his final performance review, Holmgren rated his work as “Meets Expectations.” Hitachi agreed with this, but admonished Holmgren. It directed Holmgren to take back work he had passed down to his subordinates, carry his fair share of the workload, and increase his overall contribution and visibility to the tax department. Hitachi specifically stated that Holmgren needed “to be available and alert during working hours.”

It was not until the days before a third surgery that Holmgren heeded his doctor’s advice and left work on disability. Unfortunately, the surgery did not alleviate Holmgren’s disabling pain. As the disability plan’s elimination period ended, Holmgren had to decide: attempt a return to work or accept he was not able to return to continuous work due to his pain, sleep deprivation, pain medication side-effects, and difficulty with concentration. With the support of his treatment providers, Holmgren made a claim for long term disability benefits insured by Sun Life.

Before issuing a decision on the claim, Sun Life performed a background investigation on Holmgren. The report showed Holmgren was “very active” on social media. Sun Life then surveilled Holmgren for five days. The surveillance video showed Holmgren driving, entering and exiting vehicles, walking, standing, sitting, and carrying a small bag.

Sun Life hired Professional Disability Associates (“PDA”), a peer review company, to provide a paper-only assessment of Holmgren’s claim. Dr. Stefan Muzin, a specialist in physical medicine and rehabilitation, determined Holmgren was able to work because there was “no objective explanation to explain [Holmgren’s] subjective complaints.” Relying upon this finding, Sun Life denied Holmgren’s long-term disability claim.

Holmgren appealed, and Sun Life hired PDA to provide additional paper-only medical reviews. One report was from Dr. Victor Lee, a pain management specialist. The other was from Dr. Alfred Mitchell, an orthopedic surgeon. Dr. Lee determined that Holmgren’s pain was disabling. Dr. Mitchell determined that Holmgren’s pain complaints were unreliable and there was no objective evidence supporting disability. Sun Life upheld the denial of benefits based on Dr. Mitchell’s findings, going to extensive lengths to discredit Dr. Lee’s findings.

Conclusions of Law: The court applied the de novo standard of review and determined the case under F.R.C.P. 52. It found Holmgren established that he was disabled under the plan’s terms, finding support for this in the fact that each of the doctors who examined Holmgren determined he was unable to do his sedentary job. Those opinions were based on functional testing, MRIs, results of surgeries, and their own physical examinations.

The bulk of the opinion addressed Sun Life’s four arguments (1) that the objective evidence did not support the severity of Holmgren’s pain complaints; (2) that Holmgren’s pain complaints were refuted by his “active footprint” on the internet and social media; (3) that Holmgren’s performance review self-evaluation established he was able to continue working despite his pain; and (4) Sun Life’s argument that the surveillance showed Holmgren performing “activities in a fluid and unrestricted manner without the use of any assistive devices,” and thus he was not in disabling pain.

The court rejected the first argument and noted that a disability insurer cannot condition coverage on proof by objective indicators where the condition is recognized yet no such proof is possible. It recognized that chronic pain, of which Holmgren complained, was inherently subjective. While Holmgren’s treatment providers based the disability determinations on Holmgren’s self-reported symptoms, there was no other way to do it, so long as the self-reporting was credible. After reviewing the evidence, the court found Holmgren’s subjective complaints of increased pain to be credible.

The court faulted Sun Life for relying upon the opinions of third-party consultants rather than the physicians who examined and treated Holmgren. After making clear that it was not applying the treating physicians’ rule previously in the Social Security regulations, it cited cases showing that courts generally give greater weight to doctors who had examined the claimant versus those who only review the file.

The court was not persuaded by the fact that Holmgren’s attending physician had completed a Sun Life form and checked “Sedentary Capacity.” First, elsewhere on the form the physician confirmed Holmgren was not capable of working due to pain. Second, “Sedentary Capacity” was the most restrictive option available on the form and there was no opportunity to select an option that Holmgren lacked sedentary capacity. Finally, it recognized that physical sedentary capacity could not be interpreted to mean sedentary work capacity.

Sun Life’s second argument, that social media posts proved Holmgren was physically and cognitively able to do his job, was rejected. The court recognized that “an individual’s personal musings,” even on topics as complex as economics, diplomacy, and politics, was not evidence of cognitive ability.

The court rejected Sun Life’s third argument that Holmgren’s performance review self-assessment of “Meets Expectations,” established that “any increase in pain [Holmgren] experienced…did not impact his job performance.” It observed that Sun Life provided no authority for the use of a self-assessment of job performance to rebut a claim of disability. Moreover, it was not reasonable to expect an employee to disclose personal health issues, or the impact thereof, when completing a job performance self-assessment. Finally, the employer’s portion of the performance assessment – which was negative – was consistent with an employee struggling to meet his employer’s expectations due to significant pain and difficulty concentrating.

Finally, the court did not agree with Sun Life’s characterization of the surveillance footage – a bear trap attached to the leg of any entity that over-reached in a discussion of video footage. However, even if it accepted Sun Life’s characterization as correct, this did not “establish” that Holmgren had the functional capacity to perform his job duties. The court put the surveillance in its place. It did not show Holmgren performing job duties for eight hours a day for five days. A most it established the ability to sit for 30 minutes, stand for 10 minutes, and walk. “This does not establish that he can perform the functions of his job as a tax director.”

Brent Dorian Brehm, Holmgren’s lead attorney, authored the notable decision write-up.

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

Attorneys’ Fees

Sixth Circuit

Tennessee Valley Operating Engineers Health Fund v. Dennis, No. 3:17-CV-1369, 2018 WL 6268190 (M.D. Tenn. Nov. 30, 2018) (Judge Aleta A. Trauger).  The court previously granted the health fund’s unopposed motion for summary judgment and ordered Defendant to repay $8,817.07 that the fund paid to Defendant’s healthcare providers on his behalf.  The claim the fund paid was for a work-related injury which is excluded under the plan.  The court granted the health fund’s motion for attorneys’ fees and costs and ordered Defendant to pay a total of $9,960 in fees and costs.

Breach of Fiduciary Duty

Fourth Circuit

Brincefield v. Studdard, et al., No. 3:17-CV-718-JAG, 2018 WL 6323071 (E.D. Va. Dec. 4, 2018) (Judge John A. Gibney, Jr.).  Plaintiff brought ERISA, as well as direct and state law derivative claims against defendants alleging that they created the ESOP for their own benefit and concealed fraudulent accounting that caused the stock prices to plummet.  Defendants moved to dismiss.  With respect to the ERISA claims, the court determined that the Section 406(a) claim for non-exempt prohibited transactions may proceed against some of the defendants for transactions not barred by the statute of limitations.  The Section 404(a) claim may also proceed against those defendants whose breach of fiduciary duty caused a loss to the ESOP.  Although the court is uncertain about whether this case requires equitable relief, the court stayed the Section 502(a)(3) count pending resolution of the other ERISA claims to determine the necessity of equitable relief.

Hobgood, et al. v. Local 305, National Postal Mail Handlers Union, et al., No. 3:18CV131-HEH, 2018 WL 6331689 (E.D. Va. Dec. 4, 2018) (Judge Henry E. Hudson).  This is a dispute over the validity of an amendment to the Welfare Benefit Trust Agreement which “enlarged the number of Trustees from three to five, eliminated the provision allowing the Trustees to select successors, and reduced the Trustees’ terms from six years to three years. It also enabled the Union to remove Trustees for any reason.”  The court found that the preponderance of authority supports the Union’s right, subject to the language of the Trust Agreement, to discharge trustees without cause.  “In the final analysis, this Court must conclude that the Union holds the ‘whip hand.’” The amendment is permissible under the terms of the Trust Agreement.

Acosta v. Chimes District of Columbia, Inc., et al., No. CV RDB-15-3315, 2018 WL 6319810 (D. Md. Dec. 3, 2018) (Judge Richard D. Bennett).  The court granted in part and denied in part the Secretary’s motion for partial summary judgment against Defendant Marilyn Ward.  The court held that Ward’s resignation was effective as of December 13, 2013 so her potential liability in this case is limited to the period from March 13, 2012 to December 13, 2013.  The court denied Ward’s request that the court grant judgment as a matter of law that disgorgement of fees is not a proper remedy and also denied the Secretary’s request that the court grant judgment as a matter of law that Ward must disgorge all fees that she received from the Plan for work as a trustee.

Sixth Circuit

Furwa v. Operating Engineers Local 324 Health Care Plan, No. 18-12392, 2018 WL 6305336 (E.D. Mich. Dec. 3, 2018) (Judge Laurie J. Michelson).  Post-termination of collective bargaining agreements, employers wanted to continue to make healthcare contributions on behalf of members in a labor union.  However, Local 324’s Health Care Plan agreed to accept some employers’ contributions but not others and Plaintiffs sought a preliminary injunction to force the Health Care Plan to accept and credit healthcare contributions from their employers.  The court determined that “the trustees likely do not violate Taft–Hartley if they accept and credit the contributions to the Health Care Plan. And for the same reasons, the trustees likely do not run afoul of ERISA’s requirements for employer contributions to Taft–Hartley funds. . . . So, in refusing to accept and credit the contributions, the trustees likely breached their fiduciary obligations to union members.”  The court found that the preliminary injunction factors balance out in favor of Plaintiff and the other union members. The court ordered the trust funds to accept and credit all employer contributions to the Health Care Plan on behalf of all employees pending the resolution of this case.

Ninth Circuit

Acosta v. Brain, No. 16-56529, __F.3d__, 2018 WL 6314617 (9th Cir. Dec. 4, 2018) (Before: MARY M. SCHROEDER and MILAN D. SMITH, JR., Circuit Judges, and GERSHWIN A. DRAIN,* District Judge).  Defendants-Appellants appeal from the district court’s entry of judgment against them and in favor of the Secretary under ERISA section 510 (unlawful retaliation) and section 404 (breach of fiduciary duty) based on retaliatory action they took against the Trust Funds former Audit and Collections Department Director, Cheryle Robbins, for participating in a DOL investigation.  The Ninth Circuit held that the district court did not err in concluding that the former trustee, Scott Brain violated ERISA section 510 by retaliating against Robbins.  Robbins engaged in protected activity when she provided the DOL information in connection with its investigation of Brain.  Robbins’ protected activity was the but-for cause of her being placed on leave.  But the district court did err in concluding that Brain breached his fiduciary duty in violation of section 404.  This is because Brain was not wearing his ERISA fiduciary hat when he took the actions against Robbins.  Placing Robbins on leave was a corporate or business operations action rather than a fiduciary function under ERISA.  ERISA section 404 speaks of fiduciary duties owed to participants and beneficiaries, not to employees.  The retaliatory action taken against Robins was personal.  Because there is no breach of section 404, the district court erred by basing the permanent injunction against Defendants on section 409.  In addition, section 502(a)(5) does not provide an alternative basis for the district court’s permanent injunction.

Trustees of The Construction Industry and Laborers Health and Welfare Trust; et al. v. Archie, No. 14-16034, __F.App’x__, 2018 WL 6309024 (9th Cir. Dec. 3, 2018) (Before: CANBY, TASHIMA, and FRIEDLAND, Circuit Judges).  In light of intervening authority in Bos v. Board of Trustees, 795 F.3d 1006 (9th Cir. 2015) and Glazing Health & Welfare Fund v. Lamek, 896 F.3d 908 (9th Cir. 2018), the court vacated and remanded the district court’s grant of summary judgment for Plaintiffs.  The decision was based on finding that unpaid employer contributions controlled by Defendants qualified as plan assets and they were liable as ERISA fiduciaries.  Bos declined to recognize an exception to the general rule that unpaid contributions by employers to employee benefit funds are not plan assets.

Tawater v. Health Care Service Corporation, No. CV 18-47-GF-BMM, 2018 WL 6310280 (D. Mont. Dec. 3, 2018) (Judge Brian Morris).  Plaintiff alleged that Defendant “has orchestrated a policy to unduly hamper the processing of claims in violation of its fiduciary obligations” pursuant to 29 U.S.C. § 1104; that BCBSMT has admitted that “it does not use the most favorable payment methodology in resolving the claims of participants;” and that BCBSMT “has administered the Plan in such a manner as to unduly obstruct the processing of valid claims.  The court determined that the relief sought by Plaintiff would benefit all members of the Plan and that she has sufficiently stated a claim for breach of fiduciary duty pursuant to § 502(a)(2) to survive a Rule 12(b)(6) motion.

Disability Benefit Claims

Eighth Circuit

Leirer v. Proctor & Gamble Disability Benefit Plan, No. 17-3426, __F.3d__, 2018 WL 6379287 (8th Cir. Dec. 6, 2018) (Before WOLLMAN, KELLY, and ERICKSON, Circuit Judges).  The court affirmed the district court’s grant of summary judgment to the Plan.  The district court did not err in applying abuse-of-discretion review.  Substantial evidence, including an IME and FCE, supported the Plan’s decision that Plaintiff was only partially disabled and entitled to only partial disability coverage which ends after 52 weeks.

Flanagan v. The Lincoln National Life Insurance Company, No. 17-CV-05060-MDH, 2018 WL 6419346 (W.D. Mo. Dec. 6, 2018) (Judge Douglas Harpool).  Lincoln National abused its discretion in denying Plaintiff’s appeal for “any occupation” long-term disability benefits.  “Here, Plaintiff’s treating physician and the FCE found Plaintiff’s work level at less than sedentary. Then Defendant’s own expert, Dr. Thomas, also opined that Plaintiff could not perform sedentary work.”  Lincoln relied on selective portions of the evidence, a past file review, and on a vocational assessment that did not consider all of the records and the FCE.  “The only examining and treating physician, and a physician selected by Defendant, to review Plaintiff’s records, found Plaintiff to be disabled and unable to perform work.”

Ninth Circuit

Holmgren v. Sun Life & Health Ins. Co., No. 17-CV-03028-YGR, 2018 WL 6336043 (N.D. Cal. Dec. 5, 2018) (Judge Yvonne Gonzalez Rogers).  See Notable Decision summary above.

Discovery

Fifth Circuit

Van Bael v. United HealthCare Servs., Inc., No. CV 18-6873, 2018 WL 6335776 (E.D. La. Dec. 5, 2018) (Judge Lance M. Africk).  The court denied Plaintiff’s motion for reconsideration of its denial to extend discovery deadlines and to permit her to depose Dr. Posas about a telephone call he had with a United Healthcare doctor, Dr. Eshelman, in which Dr. Eshelman allegedly refused to allow Dr. Posas to submit references to clinical trial studies related to one of Van Bael’s claims.  The court explained that the deposition testimony was unnecessary to establish the fact that United Healthcare refused to allow Posas to provide Eshelman with the clinical trial studies.  The court would not allow the deposition as “part of a fishing expedition.”  Also, Posas was available to be deposed before the discovery cut-off and Plaintiff did not explain why the other attorney on the case was not available to depose him then, especially with the deadlines for discovery and filing motion for summary judgment looming.

ERISA Preemption

Eighth Circuit

Thompson v. Reliant Care Management Company, LLC, et al., No. 4:18CV905 RLW, 2018 WL 6331806 (E.D. Mo. Dec. 4, 2018) (Judge Ronnie L. White).  The court granted Plaintiff’s motion for remand after finding that Defendant failed to show that its individual employment contract with Plaintiff providing for severance benefits is an ERISA plan.  The court found that ERISA does not preempt Plaintiff’s breach of contract claim.  The contract provides that “if terminated without cause, Defendant would provide written notice at least 60 days prior to the termination date; Plaintiff would be entitled to compensation accrued through the effective date of the termination; Plaintiff would be entitled to an amount equal to the compensation Plaintiff received in his last full year of employment prior to the effective date of termination and to be paid for a period of 24 months; and Plaintiff would be entitled to any other benefits accrued and owing.  The Agreement further provided that severance benefits were only paid on the condition that Plaintiff deliver a resignation from all employee benefit plans and allowed no accrual of benefits during the severance period.  Additionally, in the event Plaintiff obtained other employment within 24 months of termination, Defendant would offset the severance benefit payments by Plaintiff’s current employment compensation. The only reference to continued participation in medical, vision, dental, life insurance, and disability plans pertained to termination for cause, which Plaintiff disputes is applicable to his case. The aforementioned provisions demonstrate that the severance payments would be easily calculated by simple or mechanical determinations not an ongoing administrative scheme.” (internal citations omitted).

Life Insurance & AD&D Benefit Claims

Eleventh Circuit

Morris v. Southern Intermodal Xpress, No. 18-10785, __F.App’x__, 2018 WL 6326211 (11th Cir. Dec. 4, 2018) (Before WILSON, ROSENBAUM, and HULL, Circuit Judges).  The Court agreed with the district court’s decision finding that Union’s decision to deny life insurance benefits was correct.  Coverage ended under the policy if a dependent was no longer eligible.  Plaintiff’s ex-wife was not his lawful spouse as of the date of their divorce, so she ceased being an eligible dependent.  His ex-wife died two months after the date of divorce.  He’s not entitled to benefits on the assertion that he is a named beneficiary.

Medical Benefit Claims

First Circuit

Cotten v. Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., No. CV 16-12176-RGS, 2018 WL 6416813 (D. Mass. Dec. 6, 2018) (Judge Richard G. Stearns).  In this suit alleging that BCBS improperly denied claims for the costs of treating their children’s mental health issues in wilderness therapy programs, the court granted BCBS’s motion to dismiss the ERISA Section 502(a)(1)(B) and 502(a)(3) claims.  The plan clearly disclaims coverage for residential or other care that is custodial care.  With respect to the equitable relief claim, the court followed the First Circuit’s decision in LaRocca v. Borden, Inc., 276 F.3d 22, 28 (1st Cir. 2002) and found that Plaintiffs cannot pled the (a)(3) claim in the alternative since adequate relief is available under (a)(1)(B).  BCBS did not move to dismiss Plaintiff’s claim under the Mental Health Parity and Addiction Equity Act.

Tenth Circuit

Joel S. et al. v. Cigna et al., No. 1:16-CV-143-CW, 2018 WL 6329072 (D. Utah Dec. 4, 2018) (Judge Clark Waddoups).  Following a suicide attempt, Cigna covered acute inpatient psychiatric hospitalization for Plaintiffs’ minor child for only 8 days.  It denied the rest of her stay for that month as well as residential treatment at another facility for about six months.  It claimed that the treatment was not medically necessary.  An independent reviewer, MCMC, concluded that the treatment was not medically necessary so Cigna again denied coverage.  The court denied Plaintiffs’ motion for summary judgment, finding that the denial of coverage was proper within Cigna’s discretion.

Pension Benefit Claims

Second Circuit

Babino v. Gesualdi, No. 17-3444, __F.App’x__, 2018 WL 6304202 (2d Cir. Dec. 3, 2018) (PRESENT: DENNIS JACOBS, ROSEMARY S. POOLER, RICHARD C. WESLEY, Circuit Judges).  Due to misconduct by Plaintiff, including fabricating time that he worked, the Trustees decided to terminate Plaintiff’s coverage under the Welfare Fund and disregard all hours of covered work attributed to him unless he was able to prove to the Trustees’ satisfaction that he performed such covered work.  Plaintiff failed to submit such support during the appeals process but attempted to submit information after the appeal denial was made.  The Second Circuit concluded that the district court did not abuse its discretion by not considering evidence outside the administrative record, and that it properly found that Plaintiff needed to provide records of covered work.  The court affirmed the district court’s grant of summary judgment to Defendants.

Eighth Circuit

Dean v. Seafarers International Union, et al., No. 4:18-CV-312 CAS, 2018 WL 6326269 (E.D. Mo. Dec. 4, 2018) (Judge Charles A. Shaw).  In this suit by a pro se litigant, “the Court finds defendants are entitled to summary judgment as a matter of law. It is undisputed that plaintiff did not pursue his administrative remedies under either of the plans at issue in this case and, therefore, his claims for benefits are barred. But even on the merits, plaintiff’s claims fail. With respect to the Pension Plan, plaintiff is not entitled to any Pension Benefits because he does not meet the required time of service and, therefore, he does not qualify for benefits under the terms of the Pension Plan. As for the Money Purchase Plan, plaintiff received all the benefits to which he was entitled under the plan. Plaintiff was paid the accumulated Share in his Voluntary Contribution Account, and under the terms of the Money Purchase Plan, he is not entitled to additional benefits.”

Tenth Circuit

In re: Deborah Michelle Kiley, No. BR 15-27838, 2018 WL 6422676 (Bankr. D. Utah Dec. 4, 2018) (Judge Kevin R. Anderson). The court found that the Retirement Plan and the QDRO are ERISA qualified and that through the petition date, the Debtor was the principal, survivor beneficiary of her ex-husband’s Retirement Plan.  Thus, the Debtor held an interest in the Retirement Plan as a survivor beneficiary.  The Debtor’s interest in the plan as a survivor beneficiary is subject to ERISA’s anti-alienation provisions that exclude it from property of the estate under § 541(c)(2).

Pleading Issues & Procedure

Second Circuit

Durso et al. v. Store 173 Food Corp. et al., No. 16-CV-9456 (JGK), 2018 WL 6268218 (S.D.N.Y. Nov. 30, 2018) (Judge John G. Koeltl).  “In sum, this dispute over withdrawal liability required arbitration. Because the defendants were properly notified of and failed to seek arbitration, they cannot contest the propriety and amount of withdrawal liability assessed against Store 173. See Levy Bros., 846 F.2d at 887. The plaintiffs’ motion for summary judgment is accordingly granted and the defendants’ motion for summary judgment is denied. The plaintiffs are entitled to $72,702 of withdrawal liability from the defendants, who are jointly and severally liable as businesses under common control.”

Eighth Circuit

Construction Industry Laborers Pension Fund, et al. v. Fulsom Brothers, Inc., No. 4:18-CV-00580-NKL, 2018 WL 6331705 (W.D. Mo. Dec. 4, 2018) (Judge Nanette K. Laughrey).  In this suit to recover unpaid employee benefit plan contributions, the court denied Plaintiff’s request to strike Defendant’s jury demand.  The court noted that although the Eighth Circuit has not directly addressed a demand for a jury trial under ERISA section 502(g), the Third Circuit has explicitly found that its authorization of “such other legal or equitable relief” (29 U.S.C.A. § 1132(g)(2)(E)) confers a right to a jury trial.  Absent any authority from the Eighth Circuit or the U.S. Supreme Court, the court declines to strike the jury demand.

Provider Claims

Third Circuit

Enlightened Solutions, LLC v. United Behavioral Health, Unite Here Health, & Optum Inc., No. 118CV06672NLHAMD, 2018 WL 6381883 (D.N.J. Dec. 6, 2018) (Judge Noel L. Hillman).  The court concluded that “the anti-assignment provision in Defendants’ Plan is valid and enforceable. Because JV did not obtain written consent from the Plan to assign his claims to Plaintiff, Plaintiff does not hold a valid assignment through which to pursue its claims here. Similarly, Plaintiff does not hold a valid power of attorney and cannot prosecute JV’s claims on his behalf. Consequently, Defendants’ motion to dismiss Plaintiff’s complaint must be granted.”

Ninth Circuit

Salinas Valley Memorial Healthcare System v. Monterey Peninsula Horticulture, Inc., et al., No. 17-CV-07076-VKD, 2018 WL 6268878 (N.D. Cal. Nov. 29, 2018) (Magistrate Judge Virginia K. Demarchi).  On the provider’s Section 502(a)(1)(B) claim, the court concluded that the Hospital has pled facts that plausibly support its standing to sue based on an assignment of right from plan beneficiaries and participants.  The Hospital may assert ERISA disclosure arguments with respect to the issue of Plan interpretation and that the Plan’s one-year limitations period is not enforceable.  The Hospital’s “applicable law” theory with respect to the proper level of payment is not implausible as a matter of law.  The Hospital is not precluded from asserting arguments that certain Plan provisions were allegedly not properly disclosed under ERISA.  The Hospital has sufficiently pled that the Plan was based on an improper reference-based pricing model.

Remedies

Ninth Circuit

Tawater v. Health Care Service Corporation, No. CV 18-47-GF-BMM, 2018 WL 6310280 (D. Mont. Dec. 3, 2018) (Judge Brian Morris).  “No equitable remedy would be available to Tawater if she prevails on her § 502(a)(1)(B) claims. Moyle, 823 F.3d at 962. Moyle does not permit Tawater to recover under both statutes. Tawater seeks the same recovery under each claim—the award of benefits, plus costs, interests and attorney fees. Tawater’s § 502(a)(3) claim must be denied.”

Retaliation Claims

Ninth Circuit

Barker v. Insight Global, LLC, et al., No. 16-CV-07186-BLF, 2018 WL 6334992 (N.D. Cal. Dec. 5, 2018) (Judge Beth Labson Freeman).  The court found that Plaintiff’s Fourth Amended Complaint sufficiently alleges that his employment was terminated with “specific intent” to interfere with his ERISA rights in order to survive a motion to dismiss for failure to state a claim under ERISA Section 510.  As an example, the Fourth Amended Complaint pleads that the Insight Compensation Committee, working in concert with Insight Global, conducted a pre-ordained “review” of Plaintiff’s claim for benefits, and employed multiple false excuses to deprive him of his earned deferred compensation, including his alleged termination for “cause.” Other allegations included that his employment was abruptly terminated to deny his accrued benefits under the plan.  The court disagreed with Defendants that Plaintiff had to allege that his boss intended to drive him of his ERISA rights when he made the termination decision.

Statute of Limitations

Ninth Circuit

Tawater v. Health Care Service Corporation, No. CV 18-47-GF-BMM, 2018 WL 6310280 (D. Mont. Dec. 3, 2018) (Judge Brian Morris).  The Plan provides that claims must be submitted no later than 12 months from the date of service.  A cause of action accrues on “the expiration of the time within which proof of loss is required by the Plan” but the Plan does not define the term “proof of loss.”  Defendant argued that the three years runs from when Plaintiff’s 180-day appeal period expires.  The court determined it is ambiguous as to whether “proof of loss” refers to Plaintiff’s receipt of the air ambulance transport claim itself or the expiration date of the 180-day internal appeals process.  The court construed the ambiguous language against Defendant.  Plaintiff filed suit within three years following the one-year deadline to file her claim.  However, Defendant “may attempt to develop this statute of limitations defense through further discovery and the filing of a motion for summary judgment pursuant to Rule 56.”

Salinas Valley Memorial Healthcare System v. Monterey Peninsula Horticulture, Inc., et al., No. 17-CV-07076-VKD, 2018 WL 6268878 (N.D. Cal. Nov. 29, 2018) (Magistrate Judge Virginia K. Demarchi).  On the issue of the Plan’s one-year statute of limitations, the court found the Ninth Circcuit’s decision in Spinedex on point.  “Here, as in Spinedex, the Plan’s time bar provision is disclosed near the very end of the SPD (i.e., on page 66 of the 87-page document) and is not in close proximity to the Schedule of Benefits on pages 12-13 of the SPD or the Medical Benefits section found on pages 22-23 of that document. Insofar as defendants seek to dismiss the Hospital’s ERISA claim based on the one-year limitation provision, their motion to dismiss is denied.”

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