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Your ERISA Watch – To Fee or Not to Fee: The Fifth and Ninth Circuits’ Tale of Two Fee Awards

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The first notable decision this week, Herrman v. LifeMap Assurance Co., Case No. 19-35182, __F.App’x__, 2020 WL 3468187 (9th Cir. Jun. 25, 2020), shakes out as a positive for plan participants on the issue of attorneys’ fees. Before the Ninth Circuit was Plaintiff Debra Herrman’s appeal from the district court’s denial of her motion for attorneys’ fees. As the decision notes, attorneys’ fees under ERISA are typically guided by the application of the so-called five Hummel factors. Simonia v. Glendale Nissan/Infiniti Disability Plan, 608 F.3d 1118, 1121 (9th Cir. 2010) (citing Hummell v. S. E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980)). The 2-1 decision also observes that the Ninth Circuit follows the rule that a prevailing ERISA beneficiary “should ordinarily recover an attorney’s fee unless special circumstances would render such an award unjust.” Smith v. CMTA-IAM Pension Tr., 746 F.2d 587, 589 (9th Cir. 1984) (internal quotation marks omitted). The decision makes clear that when an ERISA beneficiary obtains a full recovery of benefits owed or otherwise prevails entirely, the district court abuses its discretion if it denies fees by merely applying the Hummell factors, without identifying “special circumstances” that would render a fee award unjust.

The court concluded that the rule in Smith was reconcilable with the Supreme Court’s decision in Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010), which according to Judges Bybee and Chhabria, addressed a different question under section 1132(g)(1)—whether a party who is not a “prevailing party,” but who nonetheless achieves some degree of success on the merits, can obtain a fee award—and expressly declined to overturn circuit precedents discussing factors that guide the district court’s exercise of discretion. Judges Bybee and Chhabria concluded that Ninth Circuit precedent, Smith, is not “clearly irreconcilable” with Hardt. Based on this conclusion, the court held that Herrman was entitled to fees for her successful circuit appeal, which was separate from the question of whether special circumstances exist that would render a fee award for the district court phase of the litigation unjust. The court remanded this question back to the district court.

Judge VanDyke dissented concluding that Smith and Hardt are irreconcilable and that Hardt constitutes intervening higher precedent that would prevent the application of the “special circumstances” analysis outlined in Smith. As such, Judge VanDyke concluded that without the “distorting influence” of the Smith requirement, the district court’s application of the Hummel factors was correct. Judge VanDyke notably asserts in his dissent that the “Smith’s rule removes all discretion from judges in the Ninth Circuit whenever an ERISA beneficiary is a ‘prevailing party,’ requiring our courts to award fees absent special circumstances.” Judge VanDyke concluded that section 1132(g)(1) should not be treated like a prevailing party statute and dissented on that basis.

The second notable decision, in contrast, is a terrible decision for plan participants on the issue of attorneys’ fees. As reported last month in Your ERISA Watch – Fifth Circuit Revives Claims Against Humana for Denying Eating Disorder Treatment, Kantor & Kantor, LLP along with our co-counsel, Berg Plummer Johnson & Raval, successfully achieved a reversal of a district court’s grant of summary judgment in favor of Humana Health Plan, Inc. See Katherine P. v. Humana Health Plan, Inc., 959 F.3d 206, 2020 EB Cases 180743 (5th Cir. 2020). The court found that there was a genuine dispute as to whether Katherine P. satisfied one of the Mihalik Criteria that Humana’s reviewers used to evaluate whether partial hospitalization was medically necessary for her treatment. It vacated the district court’s decision and remanded the case for the district court to weigh the evidence and decide whether treatment at a less intense level of care has been unsuccessful in controlling Katherine P’s eating disorder.

Despite this clear success on the merits, which included a reversal of summary judgment, the Fifth Circuit decided yesterday that Katherine P. was not entitled to attorneys’ fees at this juncture. Katherine P. v. Humana Health Plan, Inc., No. 19-50276, __F.3d__, 2020 WL 3496857 (5th Cir. June 29, 2020). The court analogized its reversal of summary judgment to a victory on interlocutory appeal that a complaint should not have been dismissed for failure to state a claim. “Both decisions simply allow a plaintiff to proceed with her claim. Neither alters the parties’ legal relationship or requires that the defendant do something besides what it was already doing—litigating the case. So in neither case has the claimant achieved any success on the merits. Both are ‘purely procedural victories’ and cannot support a fee claim.” The court invited Katherine P. to ask for fees if she achieves some success on the merits on remand.

So, what’s the moral of the story here?  If you’re a plan participant, it pays to win in the Ninth Circuit.

Congratulations to long-time ERISA Watcher, Jim Keenley of Bolt Keenley Kim, LLP, for obtaining the Ninth Circuit victory in Herrman.

The above Herrman summary was prepared by Kantor & Kantor associate, 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.

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

Attorneys’ Fees

Fifth Circuit

Katherine P. v. Humana Health Plan, Inc., No. 19-50276, __F.3d__, 2020 WL 3496857 (5th Cir. June 29, 2020) (Before King, Costa, and Ho, Circuit Judges). See Notable Decision summary above.

Ninth Circuit

Herrman v. LifeMap Assurance Co., Case No. 19-35182, __F.App’x__, 2020 WL 3468187 (9th Cir. Jun. 25, 2020) (Before Circuit Judges Jay Bybee and Lawrence VanDyke, and Vince Chhabria, District Judge). See Notable Decision summary above.

Eleventh Circuit

McConnell v. Am. Gen. Life Ins. Co., No. CV 19-0174-WS-MU, 2020 WL 3452983 (S.D. Ala. June 24, 2020) (Judge William H. Steele). In the first ERISA attorneys’ fee decision from the S.D. Alabama in nine years, the court had to determine reasonable hourly rates without the benefit of many benchmarks. Before doing so, the court noted that Plaintiff had achieved some success on the merits despite not having a judgment because Defendant reinstated benefits following a motion on the standard of review. Evaluating the reasonable rate for the local market (Mobile), the court noted that all of 40 ERISA cases had been pursued by individual plaintiffs in the district in the past ten years. While Plaintiff’s attorneys (both from Florida) asked for rates of $425 and $275 per hour, the court determined $325 and $225 were reasonable. Turning to the issue of reasonable time, the court did not reduce time spent on discovery well in advance of the settlement conference and discovery cut-off, because “settlement and litigation are simultaneous tracks, not sequential ones.” It also determined it was not “redundant lawyering” to have two attorneys appear at the settlement conference. Time reductions were made for legal research and writing, clerical tasks, pre-litigation time, block billing, vague entries, and spending 40 hours on the reply brief in the motion for attorneys’ fees (24 hours were awarded). The court awarded reasonable attorneys’ fees totaling $96,802.50 and costs in the amount of $590.

Breach of Fiduciary Duty

Eighth Circuit

Wilson v. Kleinsasser & Kleinsasser, No. 4:20-CV-04009-KES, 2020 WL 3469696 (D.S.D. June 25, 2020) (Judge Karen E. Schreier). Plaintiff alleges that Defendants failed to remit her medical insurance premiums they withheld from her paychecks which caused a lapse of coverage and expenses which would have been, but were not, covered by the medical plan. Defendants Kleinsassers moved to dismiss Plaintiff’s claim under §1132(a)(3) for breach of fiduciary duty, arguing it was duplicative of Plaintiff’s claim for benefits under §1132(a)(1)(b). The court rejected Defendant’s argument that Mertens and its progeny stand for the proposition that monetary relief is forbidden under §1132(a)(3), and thus the claim is barred. Instead, the court pointed out that the Supreme Court’s ruling in Amara significantly altered Mertens, and clarified the fact that relief under §1132(a)(3) “takes the form of a money payment does not remove it from the category of traditionally equitable relief.” The court further noted that it is premature at the pleading stage to determine whether Plaintiff has an adequate remedy under §1132(a)(1)(b) or §1132(a)(3), as the motion to dismiss should fail on this basis as well.

Jack Bunker, et al. v. Cigna Hlth Mgmt, Inc., et al., Case No. 19-cv-04128-LLP, 2020 WL 3448224 (D.S.D. Jun. 24, 2020) (Judge Lawrence L. Piersol). Cheryl Bunker was employed by Arlington Care and Rehabilitation Center for 17 years. Skyline Healthcare, LLC purchased Arlington Care in 2017. Beginning in 2017, Skyline offered medical insurance to employees of Arlington Care through Skyline’s Healthcare Medical Plan, a self-insured health plan and was funded by both employee contributions and Skyline Healthcare. Skyline began failing to pay claims as early as September 2017 and stopped funding the plan to cover claims prior to December 2017. Cheryl Bunker’s husband, Jack Bunker, was insured under Skyline’s health Plan. Mr. Bunker was diagnosed in 2017 with cancer and underwent surgery on or about December 15, 2017. By letter dated December 1, 2017, Mr. Bunker received notice from Cigna that “we have authorized a request for medical necessity received on [November 30, 2017].” In reliance upon the approval letter from Cigna, and without notice that Skyline had stopped funding the Plan, Mr. Bunker underwent the approved surgery incurring $73,266.04, which remained unpaid by the Plan and Cigna. Before the court was Cigna’s motion to dismiss Plaintiffs’ claim for breach of fiduciary duty and motion to strike jury demand. The court (1) denied Cigna’s motion to dismiss the breach of fiduciary duty claim finding that Plaintiffs have alleged sufficient facts to support an inference that the preauthorization letter and lack of disclosure about the plan funding would “mislead a reasonable [participant] in the process of making an adequately informed decision” about the benefits to which he or she may be entitled and (2) granted Cigna’s motion to strike Plaintiffs’ jury demand because Plaintiffs are pursuing an entirely equitable claim and relief, those determinations will be made by the court in a court trial.

Second Circuit

Board Of Trustees Of The Sheet Metal Workers International Association Local Union No. 28 Trust Funds v. Kern, No. 18-CV-7295 (FB), 2020 WL 3451642 (E.D.N.Y. June 24, 2020) (Judge Frederic Block). “The issue in this case is whether the bankruptcy court correctly determined that a debt owed by Richard Kern to the Sheet Metal Workers International Association Local No. 28 Trust Funds (“Local 28”) was not the result of defalcation.” Kern did not use the company’s assets for his own personal use, and the record demonstrated that Kern was “trying to keep his struggling company afloat.” The court held that the bankruptcy court was correct and affirmed its judgment. As summarized by the court, “[t]he CBAs obligated Cool to make employer contributions to Local 28’s funds. ERISA made Kern personally liable for Cool’s failure to do so. The Bankruptcy Code, however, made that debt dischargeable unless it was the result of “defalcation.” The bankruptcy court did not err in holding that Local 28 failed to establish defalcation under the Supreme Court’s definition in [Bullock v. Bankchampaign, N.A., 569 U.S. 267 (2013)].”

Ninth Circuit

Bouvy v. Analog Devices, Inc., No. 19-CV-881 DMS (BLM), 2020 WL 3448385 (S.D. Cal. June 24, 2020) (Judge Dana M. Sabraw). Plaintiff, a participant in his employer’s ERISA-governed 401(k) retirement plan, filed a putative class action alleging that the employer and other associated defendants breached their fiduciary duties to the plan by failing to rein in costs and failing to remove and replace underperforming funds in the plan. Defendants filed a motion to dismiss on several grounds, which the court granted in part and denied in part. The court ruled that Plaintiff’s claims were not barred by the statute of limitations, finding that he did not have “actual knowledge” and was not “willfully blind” of the relevant facts under the Supreme Court’s recent decision in Intel Corp. Inv. Policy Comm. v. Sulyma. The court also rejected Defendants’ standing argument, holding that Plaintiff could remain a class representative even if he had not personally invested in some of the funds at issue in the action. The court further found that Plaintiff had sufficiently alleged that the administrator’s fees were too high, that the fees were not adequately disclosed to Plaintiff, and that Defendants failed to monitor management of the plan by others. However, the court also found that the fee payments to the administrator were not a “prohibited transaction” under ERISA, and that Plaintiff’s disloyalty claim did not allege anything more than he had already alleged in his breach of fiduciary duty claim. The court thus granted Defendants’ motion on those grounds, and gave Plaintiff leave to amend.

Cheap Easy Online Traffic School v. Peter L. Huntting & Co., Inc., No. 19-55055, __F.App’x__, 2020 WL 3429115 (9th Cir. June 23, 2020) (Before Circuit Judges Rawlinson and N.R. Smith, and District Judge Edward R. Korman (E.D.N.Y.)). Plaintiffs, two online traffic schools who sponsored ERISA-governed retirement plans, sued third party administrators that provided services to the plans, alleging that the administrators had breached their fiduciary duties under ERISA. The court affirmed the district court’s ruling granting the administrators’ summary judgment motion. The court ruled that the administrators were not fiduciaries under ERISA because they were merely performing their “usual professional functions,” and Plaintiffs always retained discretionary authority over the plans. The court also affirmed the district court’s decision to deny the administrators’ motion for attorney’s fees, finding that Plaintiffs were not engaged in bad faith or culpable conduct and that an award would serve no deterrent purpose.

Disability Benefit Claims

Ninth Circuit

Lester v. U.S. Roche Health, No. 19-CV-01490-EMC, 2020 WL 3432692 (N.D. Cal. June 23, 2020) (Judge Edward M. Chen). Plaintiff brought suit against a self-funded plan that was administered by Liberty Life Insurance Company of Boston. The court held Liberty’s decision was not arbitrary and capricious. It noted there was no conflict of interest and Liberty had not laid out a definition for “disabled” that was impossible to meet—as Plaintiff had argued. The court was unwilling to overturn the decision when Plaintiff’s own treatment providers had not offered support for a long-term disability (they had arguably opined a short-term accommodation was necessary before non-accommodated work was possible). Before issuing judgment, the court did find that the opinion of Dr. H. Daniel Blackwood, Ph.D., a paper reviewer hired by Liberty, warranted skepticism because he had reviewed approximately 1,000 claims for Liberty from September 1, 2017 to February 13, 2020. It also noted that “those on disability leave should not be discouraged or penalized for trying to find employment. But this evidence is not entirely irrelevant and tends to corroborate (though only slightly so) the medical evidence in the record supporting Liberty’s finding.” Plaintiff had claimed cognitive difficulties but applied for a chief-of-staff position for her former employer.


Second Circuit

Wisconsin Province of the Soc’y of Jesus v. Cassem, No. 3:19-MC-00130 (VLB), 2020 WL 3470454 (D. Conn. June 25, 2020) (Judge Vanessa L. Bryant). In this retirement plan beneficiary designation dispute involving allegations that a beneficiary designation is invalid due to lack of capacity and/or undue influence, the court granted Plaintiff’s motion to compel non-party Gregory L. Fricchione, M.D. to produce a document and deposition testimony withheld on the basis of medical peer review privilege. Dr. Fricchione practiced with the decedent in the Department of Psychiatry at Massachusetts General Hospital before the decedent’s retirement and initiated a peer review investigation into the decedent’s fitness to continue enjoying full clinical privileges after he observed incidents reflecting the decedent’s “poor judgment.” The court explained that federal law governs the existence of a privilege in a civil action in which federal law supplies the rules of decision. The First Circuit has not recognized medical peer review privilege under federal common law. When considering whether to recognize a state-law privilege under Federal Rules of Evidence 501, the court must determine whether the state privilege would apply and whether it is “intrinsically meritorious.” The court found that Massachusetts would likely recognize that medical peer review privilege applies to Dr. Fricchione’s initial incident report and shields him from testifying about the proceedings that considered whether the deceased plan participant was fit to practice medicine. However, the court determined that the medical peer review privilege has not been extended outside of medical malpractice claims or related actions. The court held that the state interest in maintaining peer review privilege does not outweigh the federal interest in a litigant’s access to discovery materials.

Tenth Circuit

Doe v. Intermountain Healthcare, Inc., No. 218CV00807RJSJCB, 2020 WL 3489646 (D. Utah June 26, 2020) (Judge Robert J. Shelby). In this dispute alleging ERISA and Parity Act claims for the denial of residential treatment, Defendant filed an objection to the Magistrate Judge’s decision permitting Plaintiff leave to serve Defendants with discovery related to its document penalty claim and concerning Defendant’s “undisclosed, non-quantitative treatment limitations imposed by the Plan.” The court overruled Defendant’s objections.  It found that: (1) the clearly erroneous standard applies to the Magistrate Judge’s factual findings; (2) the Magistrate Judge applied the correct discovery standard found in Rule 26(b); and (3) the discovery order is not clearly erroneous because it explains why discovery is necessary and relevant in this context: it relates to the interpretation of the plan.

ERISA Preemption

Sixth Circuit

West v. Northcrest Medical Center and Unum Insurance Company, No. 3:20-CV-00002, 2020 WL 3469731 (M.D. Tenn. June 25, 2020) (Judge Aleta A. Trauger). Plaintiff filed suit in this court naming NorthCrest Medical Center (“NCMC”) and UNUM Insurance Company (“UNUM”) as defendants and asserted claims based on the Family and Medical Leave Act (“FMLA”), specifically 29 U.S.C. § 2615(a)(2), as well as state law claims for contract reformation, breach of contract, and, alternatively, promissory estoppel. Plaintiff invoked the court’s federal-question and diversity jurisdiction. Her claim for benefits under the Policy was denied by UNUM on the basis that, when she took retirement, it had issued a new life insurance policy that had an exclusion for pre-existing conditions as of the time the policy was reissued. The court granted Defendants’ motion to dismiss in part, and denied in part. The court explained that it is clear—and Plaintiff apparently concedes—that the claim for “equitable contract reformation” asserted against both NCMC and UNUM (the only claim asserted in the Complaint against UNUM) is preempted, as it seeks to reinstate the actual Policy that was in effect at the time Plaintiff took early retirement. That Policy is indisputably an employee benefit governed by ERISA, and the claim to recover benefits under that Policy is preempted. The Motion to Dismiss will be granted insofar as it is directed to that claim. However, Plaintiff’s FMLA claim was not preempted and that Plaintiff adequately alleged an injury arising from interference with her FMLA rights. The court construing the allegations in the Complaint in the light most favorable to the Plaintiff, and particularly in light of her determination not to lose benefits under the Policy that she had continuously maintained for more than twelve years, the court found that the Complaint gives rise to a reasonable inference that Plaintiff would have returned to work when her FMLA leave expired, if that was what was required in order to preserve the benefit, and, therefore, that she was prejudiced by the denial of FMLA leave.

Ninth Circuit

Collen v. UnitedHealthCare Ins. Co., No. CV-19-05692-PHX-MTL, 2020 WL 3414698 (D. Ariz. June 22, 2020) (Judge Michael T. Liburdi). In this suit alleging that United wrongfully denied coverage for healthcare services, the court found Plaintiffs’ second claim for relief— misrepresentation and detrimental reliance—which is pleaded as a state-law cause of action, to be preempted by ERISA because it impermissibly duplicates, supplements, or supplants the ERISA civil enforcement remedy. The court dismissed Plaintiffs’ amended complaint and granted Plaintiffs leave to amend the complaint to assert a state-law claim for relief arising from an independent obligation undertaken by United that it did not provide.

Exhaustion of Administrative Remedies

Third Circuit

Holton v. Boeing Co., No. 2:20-CV-00062-KSM, 2020 WL 3447765 (E.D. Pa. June 23, 2020) (Judge Karen S. Marston). In this dispute over disability retirement benefits, Defendant moved to dismiss Plaintiff’s complaint based on Plaintiff’s failure to exhaust administrative remedies. Plaintiff did not plead that she exhausted administrative remedies or was excused from exhaustion.  She also argued that she needs the administrative record to appeal (though not recognizing that Plaintiff has the right to obtain the record prior to litigation). Finding no justification for Plaintiff’s failure to plead that she exhausted administrative remedies or was excused from doing so, the court granted Defendant’s motion with leave to amend.

Medical Benefit Claims

Tenth Circuit

C.L. on behalf of H.L. v. Newmont USA Ltd., No. 2:18-CV-00192, 2020 WL 3414807 (D. Utah June 22, 2020) (Judge Robert J. Shelby). The parties brought cross-motions for summary judgment regarding whether Plaintiff exhausted her administrative remedies prior to filing the lawsuit. Plaintiffs seek benefits for hospitalization for their newborn, H.L. The provider, IHC, submitted the claims and appeal for H.L.’s treatment within the prescribed timeframe. Defendants argue that IHC was not an authorized representative at the time it filed the appeal and thus it did not constitute a timely appeal. Plaintiff did not submit an authorization form to Anthem until after the appeal deadline. The court found that the appeal was not timely because IHC was not an authorized representative and therefore had no right under the Plan to appeal the adverse benefit determination. The court did not excuse Plaintiff’s failure to exhaust on futility grounds because there is no evidence that the claim would have been denied had she filed a timely appeal. The court dismissed Plaintiff’s argument that Anthem’s inadequate notice provisions form a basis for deemed exhaustion. The court did not find any deficiencies in the notice sent by Anthem and Plaintiff did try to appeal the denial so there was no prejudice. The court granted Defendant’s motion for summary judgment as to the benefits claim (Plaintiffs withdrew their breach of fiduciary duty claim). The court declined to award fees to Defendants because there was no evidence Plaintiffs’ claims were brought in bad faith and both parties’ positions possess merit.

James C., et al. v. Anthem Blue Cross and Blue Shield, et al., No. 2:19-CV-38, 2020 WL 3452633 (D. Utah June 24, 2020) (Judge Clark Waddoups). Defendants moved to dismiss Plaintiffs’ Parity Act claim. The court found Plaintiffs plausibly alleged a disparity between Defendants’ treatment limitations for residential treatment coverage as compared to limitations that Defendants applied to analogous medical/surgical treatment. The court accepted Plaintiffs’ as-applied challenge alleging that Defendants apply short-term criteria to deny long-term treatment at residential treatment centers more frequently, and disproportionately, than they did long-term treatment at skilled nursing facilities. The court found that if true, it is plausible that Defendants violated the Parity Act. The court also found plausible Plaintiffs’ allegation that the guidelines disproportionately require a patient in residential treatment to receive treatment with a physician and the same limitation is not applied to inpatient subacute care. The court found that the Parity Act claim is not subsumed within Plaintiffs’ request for payment of benefits. The court denied the motion to dismiss.

Pension Benefit Claims

Eleventh Circuit

Crowder v. Delta Air Lines, Inc., et al., No. 19-12342, __F.3d__, 2020 WL 3481497 (11th Cir. June 26, 2020) (Before Jordan, Tjoflat and Hull, Circuit Judges). The Eleventh Circuit affirmed the district court’s dismissal of Plaintiff’s claim for her deceased ex-husband’s retirement plan benefits. Here, Plaintiff was not the designated beneficiary under the Delta Family-Care Savings Plan but argued that the Plan’s provision automatically designating the spouse as the beneficiary compels the Plan to pay her benefits even though they divorced 18 months before his death. Agreeing with the district court, the Eleventh Circuit found that the Plan Administrator correctly interpreted the Plan and that, after her divorce, Plaintiff had no entitlement to her ex-husband’s benefits under the Plan’s terms because she was not a “Beneficiary” under the Plan at the time of her ex-husband’s death. To interpret the Plan as requiring the spouse to stay the Beneficiary even after divorce would require the addition of plan terms and creates other issues not addressed by the Plan’s terms. The court also found that the district court properly dismissed the breach of fiduciary duty claims because the decision was correct, none of the fiduciaries owed any ERISA-imposed duties to Plaintiff when they paid the benefits to the designated beneficiary (the sister), and Plaintiff was not a beneficiary to whom Defendants owed any ERISA-imposed duty during the events in question.

Pleading Issues & Procedure

Third Circuit

Principal Life Ins. Co. v. Brooks, No. 1:19-CV-00450, 2020 WL 3469080 (M.D. Pa. June 25, 2020) (Judge Jennifer P. Wilson). This is an interpleader action brought under Federal Rule of Civil Procedure 22 by Plaintiff Principal Life Insurance Company (“Principal”) to determine the proper beneficiary for a $32,000 life insurance policy (“the policy”) that was owned by John W. Alleman, Jr. (“Alleman”), who is now deceased. Defendants to the action are Alleman’s estate (“the estate”) and Betty Jane Brooks (“Brooks”). The estate has answered the complaint, but Brooks has not yet responded. The case is presently before the court on a motion for default judgment filed by Principal. The court granted the motion for default judgment in part and denied as moot in part. The court found that the interpleader action was properly brought because Principal seeks to resolve potentially conflicting claims by a possible slayer and the insured’s estate. The court granted Principal’s motion to the extent it seeks interpleader relief discharging Principal of all liability under the policy, and the funds are deposited in the court’s registry. Insofar as default judgment, that motion is denied as moot since liability has been discharged. The court granted Principal’s motion for attorney fees and costs.

Retaliation Claims

Fifth Circuit

Oncale v. CASA of Terrebonne, No. CV 19-14760, 2020 WL 3469838 (E.D. La. June 25, 2020) (Judge Lance Africk). Plaintiff Oncale was diagnosed with stage 3 breast cancer in June 2018. She began chemotherapy immediately, working as much as possible around the chemotherapy appointment so she did not miss an excessive amount of work. When she informed her employer, CASA, she needed time off to undergo and recover from mastectomy surgery in November 2018. She anticipated returning to work January 4, 2019. Her manager informed Oncale that her FMLA would run out December 27, 2018—only 7 days before her anticipated return to work. On December 26, 2018, Oncale was terminated from her employment. Oncale asserted seven causes of action in her complaint; one cause of action was for retaliatory discharge to interfere with an employee’s ERISA benefits. 29 U.S.C. § 1140. The court found that Oncale’s complaint contained sufficient factual allegations to infer her employer’s discriminatory intent. These facts included: outstanding reviews of Oncale’s job performance with criticism about being late on days she was approved to receive chemotherapy, CASA’s inquiring about the extent of her treatment plan, the President of National CASA referred to Oncale as a “liability”, and more. Defendant’s motion to dismiss was denied with respect to this cause of action.

Ninth Circuit

Raya v. Barka, No. 19-CV-2295-WQH-AHG, 2020 WL 3469374 (S.D. Cal. June 25, 2020) (Judge Hayes). Plaintiff alleged that he was fired to be prevented from exercising his rights to the company’s 401(k) plan documents. The court dismissed Plaintiff’s Section 510 claim because “Raya’s allegation that Defendants terminated Raya’s position in order to prevent him from exercising his ERISA rights is not supported by any facts connecting the request for plan documents and subsequent termination.”

Standard of Review

Ninth Circuit

Ryan E. v. Entertainment Industry Flex Plan, No. 19-55131, __F.App’x__, 2020 WL 3485153 (9th Cir. June 26, 2020) (Before: Murguia and Christen, Circuit Judges, and Hellerstein,** District Judge). This case involves the denial of medical benefits under the Entertainment Industry Flex Plan where the district court, under abuse of discretion review, ruled in favor of the Plan. The Ninth Circuit vacated and remanded the case to the district court for further development of the record. Specifically, “the district court is instructed to clarify the record with respect to (1) the nature of the relationship between Anthem and Anthem UM; (2) the roles of the various agents and employees of each company in making the coverage determination; and (3) the expectation of the parties, if any, when delegating administrative responsibilities to Anthem, as to whether Anthem would act on its own or through an agent or affiliate.” The court explained that: “If Anthem, the authorized delegee of fiduciary discretion, made the ultimate coverage decision, with possible help from Anthem UM, a deferential standard might be appropriate. If Anthem UM made the decision, the standard of review might be de novo. Anthem UM could be considered the agent of Anthem, and there is a question of whether the delegee of fiduciary responsibility can sub-delegate to another, even to an agent, without contractual authorization and still be entitled to deference. While we have previously held in other narrowly defined circumstances that common law agency principles may apply in the ERISA context, see, e.g., Salyers v. Metro. Life Ins. Co., 871 F.3d 934, 940-41 (9th Cir. 2017) (noting that the Supreme Court has “left open the opportunity for federal courts to apply agency law in the ERISA context as a matter of federal common law,” and using agency principles to attribute knowledge concerning plan administration from an agent-employer to a principal-insurer), we are not aware of any case in which we have considered the applicability or effect of agency principles on the standard of review applicable to delegations of discretionary decision-making authority by an ERISA fiduciary to an agent.”

Statutory Penalties

Ninth Circuit

Raya v. Barka, No. 19-CV-2295-WQH-AHG, 2020 WL 3469374 (S.D. Cal. June 25, 2020) (Judge Hayes). The court dismissed Plaintiff’s claim seeking statutory penalties due to filing the claim after the three-year statute of limitations. Plaintiff requested retirement plan documents from the company in 2009 and again in August of 2016. He filed the complaint in December 2019, more than three years after the company failed to comply within 30 days of his request.


Ninth Circuit

Sanchez v. Aetna Life Insurance Company, No. 220CV00038JAMCKD, 2020 WL 3430246 (E.D. Cal. June 23, 2020) (Judge John A. Mendez). In this case where Plaintiff seeks payment of disability benefits, the court granted Defendant’s motion to change venue. Plaintiff filed the case in the Eastern District of California. The policy contained a forum selection clause that read: “[a]ny legal action brought against the Plan must be filed in the United States District Court, Southern District of Ohio, Eastern Division.” Plaintiff argued the forum selection cause was not in the policy in effect when he became disabled. The court disagreed, instead applying the language of the policy in effect when Plaintiff received the final termination notice of his benefit claim because that was when the action accrued. Plaintiff also argued moving the case to Ohio was unfair because the standard of review would change. The court stated that the policy grants Aetna discretion, and therefore the denial of benefits would be reviewed under an abuse of discretion standard no matter what court it was litigated in. The court ruled on Defendant’s motion without the benefit of oral argument and there was no discussion in the opinion about the impact of California’s ban on discretionary language like the language in this policy.

Withdrawal Liability & Unpaid Contributions

Seventh Circuit

Midwest Operating Engineers Welfare Fund, et al. v. J & L Excavating, Inc., No. 19 C 3636, 2020 WL 3469170 (N.D. Ill. June 25, 2020) (Judge Ronald A. Guzman). In this action to collect allegedly delinquent fringe-benefit contributions, the court denied Plaintiffs’ summary judgment motion because Defendant cannot be found liable for contributions.  First, Plaintiffs waited too long to file suit to seek judicial enforcement of the awards of a Joint Grievance Committee. Second, the Prior Entity’s obligations under the MOA and Master Agreement cannot be imposed on Defendant under the successorship doctrine. There is no operative agreement to which defendant could be a successor.

Trustees of The Chicago Regional Council of Carpenters Pension Fund, et al. v. Gandt Builders, Inc., et al., No. 19-CV-5420, 2020 WL 3448164 (N.D. Ill. June 24, 2020) (Magistrate Judge Jeffrey Cummings). “[T]he Court grants plaintiffs’ motion for summary judgment in part and awards judgment to plaintiffs in the amount of $228,011.27. Plaintiffs’ motion for summary judgment with respect to their claim to recover liquidated damages based on untimely contributions that were paid in full prior to the filing of this lawsuit is denied without prejudice.”

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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