This week I want to take a moment to highlight two decisions from the Sixth Circuit Court of Appeals. Unfortunately, these opinions are not great for plan participants, except for a little nugget from Springer v. Cleveland Clinic Employee Health Plan Total Care, No. 17-4181, __F.3d__, 2018 WL 3849376 (6th Cir. Aug. 14, 2018).
In Springer, the plan administrator denied the plan participant’s claim for coverage for air ambulance transportation because he did not seek preauthorization. On the upside, the Sixth Circuit affirmed the district court’s determination that the plaintiff has the standing to bring his claim despite the failure to allege a financial loss. The court noted that “[e]very circuit court to consider this issue agrees that a plaintiff in Springer’s shoes does not need to suffer financial loss. The Fifth, Ninth, and Eleventh Circuits have each held that the denial of plan benefits is a concrete injury for Article III standing even when patients were not directly billed for their medical services.” Springer, 2018 WL 3849376 at *2, citing to North Cypress Med. Ctr., Operating Co., Ltd. v. Cigna Healthcare, 781 F.3d 182, 192–94 (5th Cir. 2015); Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d 1282, 1289–91 (9th Cir. 2014); HCA Health Servs. of Georgia, Inc. v. Employers Health Ins. Co., 240 F.3d 982, 991 (11th Cir. 2001), overruled on other grounds by Doyle v. Liberty Life Assur. Co. of Boston, 542 F.3d 1352 (11th Cir. 2008). On the merits, however, the court determined that the plain language of the plan required precertification so it affirmed the district court’s decision in favor of Defendant.
In an unpublished decision in IUE-CWA, et al. v. General Electric Co., No. 17-3885, __F.App’x__, 2018 WL 3949188 (6th Cir. Aug. 16, 2018), the court added to the body of caselaw decimating the right to lifetime healthcare benefits. The Sixth Circuit affirmed the district court’s holding that the collective bargaining agreement (“CBA”) did not vest lifetime retirement healthcare benefits. The court explained that the text of the CBA fails to establish vesting because the benefit plans contained a reservation-of-rights clause, the general duration provision sets forth the duration of GE’s obligation to provide benefits, and the plans explicitly vest other benefits beyond the CBA which indicates that GE and the unions knew how to vest benefits beyond the CBA but did not do so for the plans in this case. The court concluded that: “The most plausible explanation for the absence of explicit vesting language in these contracts is that they were negotiated when Yard-Man was still the law and so the parties did not think such language was necessary. Unfortunately for the retirees, that argument fails under our case law.”
With that, enjoy the rest of the case summaries!
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
H.N. v. Regence Blueshield, et al., No. C15-1374 RAJ, 2018 WL 3831294 (W.D. Wash. Aug. 13, 2018) (Judge Richard A. Jones). The court previously ordered Regence to pay prejudgment interest at the rate of 6.95% per annum. The parties could not agree as to the accrual date for prejudgment interest so Plaintiffs filed a motion to the court to make that determination. The court ruled in Plaintiffs’ favor, finding that interest accrues at the time that Regence denied the claims rather than the day that Plaintiffs exhausted administrative remedies. In this decision, the court determined that Plaintiffs are entitled to fees and costs associated with the Prejudgment Interest Motion. It awarded “$7,004.06 ($10,861.25 in requested fees less $1,522.50 in clerical tasks, and further reduced by 25%).”
Breach of Fiduciary Duty
Hausknecht v. John Hancock Life Insurance Company of New York, No. CV 17-3911, 2018 WL 3861830 (E.D. Pa. Aug. 14, 2018) (Judge Wendy Beetlestone). This lawsuit follows the DOL’s suit against John Koresko for converting the assets of welfare benefit plans and seeks to recover lost money. The court dismissed Plaintiffs’ Section 1132(a)(2) claim to the extent it seeks to hold Defendant liable as a fiduciary premised on the theory that Defendant exercised authority or control by changing the owner and beneficiary of the death benefit policy. Given the factual dispute about whether Defendant was a fiduciary for all purposes with respect to the policy, the court denied Plaintiffs’ motion for partial summary judgment on their Section 1132(a)(2) claim. The court declined to dismiss Plaintiffs’ Section 1132(a)(3) claim because Plaintiffs’ requested relief for “restitution of all losses stemming from the conversion of the cash value of the insurance policy” is available under Section 1132(a)(3) to the extent Plaintiff seeks restitution of the Policy value. “By contrast, Plaintiffs’ claims for restitution of profits Plaintiff could have earned on the converted funds and disgorgement of fees, commissions, or compensation or profits earned under Section 1132(a)(3) fail.”
Disability Benefit Claims
Reichard v. United of Omaha Life Insurance Company, No. CV 17-2885, 2018 WL 3831403 (E.D. Pa. Aug. 13, 2018) (Judge Edward G. Smith). The court determined that United of Omaha did not act arbitrarily or capriciously by denying “any occupation” benefits to Plaintiff (a former registered nurse) based upon her diagnoses of Crohn’s disease and related gastrointestinal and arthritic conditions. On the standard of review, the court considered information outside of the record. It rejected Plaintiff’s argument that United of Omaha failed to comply with ERISA by not using a claims manual when considering her claim. United considered Plaintiff’s side effects from medication but the main evidence of side effects was what she listed in her appeal letter and there was no medical opinion indicating that the side effects of medication rendered her disabled. On the SSDI award, the court declined to find that an agency relationship existed between the Advocator Group and United of Omaha to justify imputing the Advocator Group’s knowledge of her SSDI award to United of Omaha. Thus, it was not an abuse of discretion for United of Omaha to fail to consider the SSDI award. The court found that substantial evidence supports Dr. Steven Golombek’s IME and Dr. Thomas Reeder’s medical review. The court granted summary judgment to United of Omaha.
McMillan v. AT&T Umbrella Benefit Plan No. 1, No. 17-5111, __F.App’x__, 2018 WL 3854023 (10th Cir. Aug. 13, 2018) (Judge ). The court affirmed the district court’s decision that the Plan acted arbitrarily and capriciously by denying Plaintiff the full 26 weeks of short-term disability benefits. The court noted that none of the physician reviews discussed what work travel entails and how Plaintiff could meet those demands in light of serious medical impairments, particularly shortness of breath. The court also found that the Plan’s determination that Plaintiff could perform the cognitive requirements of his job is not supported by substantial evidence.
Redden v. Aetna Life Insurance Company, No. 12-CV-16-JED-PJC, 2018 WL 3954849 (N.D. Okla. Aug. 17, 2018) (Judge John E. Dowdell). The court gave the conflict of interest, in this case, greater weight because Aetna terminated disability benefits precisely when Plaintiff was transitioning from her employer’s self-funded short term disability plan to the long term disability Plan underwritten by Aetna. The court found it troubling that Aetna relied on peer review physicians who opined that Plaintiff never met the definition of disability when it had previously found her disabled through the elimination period. “Aetna relied on non-treating, non-examining physicians whose opinions contradicted— without explanation—the opinions of Redden’s treating physicians, the observations made by Redden’s employer, and Aetna’s own prior conclusions regarding Redden’s disability. The conflict of interest at play here further tips the balance in favor of Redden.” The court granted retroactive LTD benefits through the 24-month limitation period (Plaintiff did not submit a reply brief objecting to Aetna’s contention that the Mental Nervous Limitation applies here).
Sirey v. Metropolitan Life Insurance Company, No. CV 18-00197, 2018 WL 3928221 (E.D. La. Aug. 16, 2018) (Magistrate Judge Karen Wells Roby). The court granted in part and denied in part Defendant’s motion to strike discovery. The court permitted discovery as it pertains to MetLife’s investigation of Plaintiff’s long term disability claim and its use of consultant reviewers, Dr. Marcus Goldman and Dr. Mark Schroeder and medical director, Dr. Puja Korabathina. The court also permitted discovery of copies of letters approving mental illness claims within the last three years and reports from Drs. Goldman and Schroeder for the past three years. The court generally denied discovery which required MetLife to identify documents in the Administrative Record supporting its position.
Carty v. Metropolitan Life Insurance Company, et al., No. 3:15-CV-01186, 2018 WL 3861827 (M.D. Tenn. Aug. 14, 2018) (Judge Aleta A. Trauger). The court rejected MetLife’s argument that it has any kind of enforceable right or privilege with regard to its correspondence with an independent medical examiner it hired to review Plaintiff’s appeal following the Court’s Scheduling Order on remand. However, the court determined that deposing the doctor is not an appropriate remedy for MetLife’s violation of the Scheduling Order. Rather, the court stayed further proceedings so that Plaintiff has the opportunity to supplement the record in response to the IME’s addendum.
Black v. Hartford Life Insurance Company, No. 3:17-CV-01785-HZ, 2018 WL 3872113 (D. Or. Aug. 14, 2018) (Judge Marco A. Hernandez). In this long term disability case, the court permitted Plaintiff to obtain discovery since Hartford operates under a conflict of interest and has a history of biased claims administration. The court ordered Hartford to produce documents relating to the financial relationship between Hartford and the vendors/consultants it utilized in this case and performance evaluations and related documents of key employees who participated in the termination and organizational chart that includes their assignments. The court denied Plaintiff’s discovery requests concerning the completeness of the record since there is no evidence that any records are missing.
Enf’t Section of the Massachusetts Sec. Div. of the Office of the Sec’y of the Commonwealth v. Scottrade, Inc., No. 18-10508-NMG, 2018 WL 3946465 (D. Mass. Aug. 16, 2018) (Judge Nathaniel M. Gorton). The Enforcement Section of the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth alleges that Scottrade violated its internal policy by hosting incentivized sales contests, thus violating state law. Defendant removed the action on the basis that Plaintiff is merely attempting to enforce federal standards that were set forth in the now-vacated “Fiduciary Rule.” The court granted Plaintiff’s motion to remand “[b]ecause, the Enforcement Section is not the kind of party that can bring a claim pursuant to § 502(a), ERISA does not completely preempt either claim in the administrative complaint and neither claim ‘arises under’ ERISA. This Court lacks subject matter jurisdiction and the plaintiff’s motion to remand will be allowed.”
Glastein v. Horizon Blue Cross Blue Shield of America, et al., No. 17CV7983PGSTJB, 2018 WL 3849904 (D.N.J. Aug. 13, 2018) (Judge Peter G. Sheridan). This case arises from a dispute over reimbursement for medical services rendered by an out-of-network medical provider. The court granted Defendants’ motion to dismiss because Plaintiff’s four state common law claims, (1) breach of contract, (2) promissory estoppel, (3) account stated, and (4) fraudulent inducement lack plausibility and they are all preempted by ERISA since the claims are based on BCBS’s Precertification Authorization.
Soileau & Associates, LLC, et al v. Louisiana Health Service & Indemnity Company, No. CV 18-710, 2018 WL 3868911 (E.D. La. Aug. 15, 2018) (Judge Nannette Jolivette Brown). In this case challenging the denial of coverage for inpatient treatment, the court denied Plaintiff’s motion to remand to state court, finding that: (1) the policy is an employee welfare benefit plan under ERISA, Plaintiffs’ claim for benefits fall within the scope of ERISA Section 502(a)(1)(B) and federal-question jurisdiction exists; (2) Defendants did not waive the right to removal because the policy says that suit may be filed in a state or Federal court; (3) the plan satisfies all of the requirements of being an ERISA plan under the Fifth Circuit’s three-part test; and (4) Plaintiffs, who are owners of the company, are employees subject to ERISA.
Life Insurance & AD&D Benefit Claims
McCusker v. Unum Life Ins. Co. of Am., No. CV 17-1214, 2018 WL 3844828 (E.D. La. Aug. 13, 2018) (Judge Martin L. C. Feldman). In this case seeking to recover accidental death benefits arising from Plaintiff’s wife’s untimely death from prescription drug overdose, the court remanded the matter to Unum for further proceedings since Unum raised the medical treatment exclusion for the first time in this litigation and the record was not developed on this issue because Unum did not give Plaintiff fair notice of this issue during the claims and appeals process. The court also determined that it need not resort to the doctrine of contra proferentem if the plan administrator was granted discretion to interpret plan terms. In addition, applying this doctrine seems appropriate only if the Court is considering whether Unum’s decision was legally correct, which is an issue the parties did not brief.
Medical Benefit Claims
IUE-CWA, et al. v. General Electric Co., No. 17-3885, __F.App’x__, 2018 WL 3949188 (6th Cir. Aug. 16, 2018) (BEFORE: CLAY, STRANCH, and LARSEN, Circuit Judges). See Notable Decision summary above
Springer v. Cleveland Clinic Employee Health Plan Total Care, No. 17-4181, __F.3d__, 2018 WL 3849376 (6th Cir. Aug. 14, 2018) (Before: COLE, Chief Judge; CLAY and THAPAR, Circuit Judges). See Notable Decision summary above.
Pension Benefit Claims
Wegmann v. Young Adult Institute, Inc., et al., No. 15 CIV. 3815 (KPF), 2018 WL 3910820 (S.D.N.Y. Aug. 14, 2018) (Judge Katherine Polk Failla). The court declined to resolve the dispute as to the appropriate standard of review for denials of benefits in top hat plans because the Court found that the Board’s review of Plaintiff’s claim was deficient even under the more generous arbitrary and capricious standard. The court gave substantial weight to the conflict of interest since there was strong evidence of both categorical and case-specific conflicts of interest. On the merits, the court determined that the Board’s determination that Plaintiff was not a “Management Employee” prior to 2006 was reasonable but that the Board’s interpretation of “Eligible To” is not entitled to deference. The court found genuine disputes over the effect of the 2005 changes to the SERP benefit accruals and whether Plaintiff attained a vested right under the SERP. For this reason, the court denied summary judgment to both parties.
Whelehan v. Bank of America Pension Plan For Legacy Companies-Fleet-Traditional Benefit, et al., No. 17-CV-6581-FPG, 2018 WL 3861608 (W.D.N.Y. Aug. 14, 2018) (Judge Frank P. Geraci, Jr.). In this suit seeking pension benefits under the Bank of America pension plan, the court granted Defendants’ motion to dismiss. Plaintiff filed a lawsuit previously concerning the same benefits and that suit was dismissed with prejudice after the court determined there was no evidence she was vested under the plan. Following the dismissal of that lawsuit, Plaintiff applied for benefits with new evidence including affidavits from her former co-workers and publications of her status as a Security Trust employee. The court explained that it need not rely on res judicata to dismiss this suit. The court determined that these documents were available to Plaintiff when she pursued benefits at the administrative level, but she failed to submit them to BoA. Citing to a number of cases involving disability benefits, the court determined that an administrator does not have an obligation to consider new information after the appeals process has been exhausted. And, in this case, Plaintiff could have submitted those documents previously.
Pleading Issues & Procedure
Guest v. Air Liquide America Specialty Gasses, LLC, et al., No. 3:17-CV-1969-AC, 2018 WL 3849788 (D. Or. Aug. 13, 2018) (Judge Michael H. Simon). The court determined that Plaintiff’s ERISA interference claims are within the scope of the 2006 Alternative Dispute Resolution Agreement and granted Defendants’ motion to compel arbitration.
University Spine Center v. Aetna, Inc., No. CV 2:18-02823, 2018 WL 3873240 (D.N.J. Aug. 15, 2018) (Judge William J. Martini). The court found that the anti-assignment clause is valid and enforceable and that Plaintiff lacks standing to bring its claims against Defendant. The court previously considered and rejected Plaintiff’s argument that the clause was unenforceable because it did not contain the words “void” or “invalid.” “Unsurprisingly, Plaintiff offers no further explanation as to why its tortured argument should prevail in the instant case despite this Court’s previous rejection of it. Simply put, it was a loser then and it is a loser now.”