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ERISA Watch – AD&D and Life Insurance Policy Benefits Not Payable for Loss of Eye Caused by Fungal Infection

In Ramirez v. United of Omaha Life Ins. Co., No. 16-11660, __F.3d__, 2017 WL 4455267 (5th Cir. Oct. 6, 2017), the Fifth Circuit affirmed the district court’s grant of summary judgment to United of Omaha Life Insurance Company (“United”) in this case involving United’s denial of accidental death and dismemberment (“AD&D”) and life insurance policy benefits to Ramirez, who lost one of his eyes after he contracted a fungal infection.  United determined that Ramirez’s infection was not an “Accident” within the meaning of the ERISA-governed AD&D policy.

The parties assume that Ramirez contracted coccidioidomycosis (valley fever) by inhaling fungal spores on his West Texas work trips.  Within one year, this infection ultimately led to the removal of his right eye.  Ramirez was covered by an Accidental Death and Dismemberment and Life Insurance Policy (the policy) issued by United.  The policy provides that the AD&D benefit “is paid if an employee is injured as a result of an Accident, and that Injury is independent of Sickness and all other causes.”  The policy only pays for losses resulting from an Accident, defined as “a sudden, unexpected, unforeseeable and unintended event, independent of Sickness and all other causes.”  Accident does not include “Sickness, disease, bodily or mental infirmity or medical or surgical treatment thereof, bacterial or viral infection, regardless of how contracted. Accident does include bacterial infection that is the natural and foreseeable result of an accidental external bodily Injury or accidental food poisoning.”

The dispute is whether Ramirez’s fungal infection was a “Sickness” and whether the loss of his eye was the result of an “Accident” as defined by the policy.  The Fifth Circuit concluded that under ordinary principles of contract interpretation, coccidioidomycosis falls squarely within the definition of “Sickness” and that the loss of an eye as a result of such a fungal infection is not an “Accident” within the meaning of the policy.  Coccidioidomycosis comes within the commonly understood meaning of a “disease, disorder or condition, which requires treatment by a Physician.”

The court rejected Ramirez’s contention that coccidioidomycosis is an “Accident” independent of “Sickness” and that it caused his loss of sight.  Specifically, the court rejected the following arguments:  (1) the policy removes only bacterial and viral infections from the definition of “Accident” and therefore that “Accident” must include other microbial sources of infection, including fungus; (2) a fungal infection is an “Accident” covered by the policy’s “carve-back” provision, which brings within coverage a “bacterial infection that is the natural and foreseeable result of an accidental external bodily injury” and “accidental food poisoning,” even though they would otherwise be excluded as “Sickness,” “disease,” or “bacterial or viral infection[s];” (3) the policy must cover a fungal infection because a fungal infection is analogous to food poisoning; and (4) the definition of “Sickness” must be limited to preexisting sicknesses.

The court declined to apply the contra proferentem rule because the policy terms are unambiguous.

So, another Fifth Circuit decision that comes out against the plan participant.  That was foreseeable…  Enjoy the rest of this week’s cases!

Below is Roberts Bartolic LLP’s summary of this past week’s notable ERISA decisions.

Attorneys’ Fees

Ninth Circuit

Hart v. Unum Life Insurance Company Of America, No. C 15-05392 WHA, 2017 WL 4418680 (N.D. Cal. Oct. 4, 2017) (Judge William Alsup).  Following a judgment in favor of Plaintiff on her claim for long-term disability benefits, the court determined that based on the Hummell factors Plaintiff is entitled to attorneys’ fees but it will issue a companion order to set forth the procedure to determine the appropriate amount of the fee award.

Buster v. Compensation Committee of The Board of Directors of Mechanics Bank, et al., No. C 16-01146 WHA, 2017 WL 4354903 (N.D. Cal. Oct. 2, 2017) (Judge William Alsup).  Following a judgement in favor of Plaintiff on his claim for SERP benefits, the court granted Plaintiff’s motion for attorneys’ fees.  The Hummell factors weigh in favor of granting fees.  The court will issue a companion order setting forth the procedure to determine the appropriate amount of the fee award.  The court also awarded prejudgment interest at the interest rate prescribed for postjudgment interest under 28 U.S.C. Section 1961.

Breach of Fiduciary Duty

Second Circuit

Jander v. Ret. Plans Comm. of IBM, No. 15CV3781, __F.Supp.3d__, 2017 WL 4355899 (S.D.N.Y. Sept. 29, 2017) (Judge William H. Pauley III).  Members of IBM’s 401(k) Plus Plan who invested in the IBM Stock Fund allege that Defendants violated their fiduciary duties when they failed to mitigate the foreseeable drop in IBM’s stock and protect Plan members from losing millions of dollars in retirement savings.  The court dismissed the Second Amended Complaint because the allegations in the Complaint fall short of the standard set forth in Dudenhoeffer and Amgen. “Beyond a rote explanation of how those alternative actions would have mitigated the harm, the Complaint is bereft of context-specific details to show that a prudent fiduciary would not have viewed the proposed alternatives as more likely to do more harm than good.”

Cunningham v. Cornell University, et al., No. 16-CV-6525 (PKC), 2017 WL 4358769 (S.D.N.Y. Sept. 29, 2017) (Judge P. Kevin Castel).  The court found that Plaintiffs’ claim that Defendants breached their fiduciary duties by failing to monitor any of the Plans’ options before October 1, 2014, and monitoring only “core” investment options after that date fails to plausibly allege a breach of fiduciary duty.  The court also found that Plaintiffs have failed to plausibly allege that the Plans engaged in an impermissible provision of services by compensating the Plans’ service providers in violation of section 406(a)(1)(C).

Fourth Circuit

Kelly v. Johns Hopkins Univ., No. CV GLR-16-2835, 2017 WL 4310229 (D. Md. Sept. 28, 2017) (Judge George L. Russell, III).  The court determined that Plaintiffs fail to state a breach of fiduciary duty claim to the extent that Plaintiffs allege that offering Plan participants too many investment options is imprudent and to the extent that Plaintiffs allege that including higher-cost share classes in the Plan, instead of available lower-cost share classes of the same funds, is imprudent.  But, the allegations that a university offering actively managed funds was imprudent and allegations that a prudent fiduciary would have chosen fewer recordkeepers and run a competitive bidding process for the recordkeeping services supports a breach of fiduciary duty claim. Plaintiffs cannot bring prohibited transactions claims as to the mutual funds included in the Plan or on the basis that revenue sharing from a mutual fund is a prohibited transaction under 29 U.S.C. § 1106(a)(1)(D).

Ninth Circuit

Gough v. Tennyson, No. 17-CV-2215-PJH, 2017 WL 4310761 (N.D. Cal. Sept. 28, 2017) (Judge Phyllis J. Hamilton).  In this proposed class action, the court denied dismissal of the First Amended Complaint alleging (1) a claim of breach of fiduciary duty under ERISA §§ 502(a)(2) and 502(a)(3) arising from Defendants’ valuation of Tennyson ESOP stock and the implementation of Defendants’ decision to terminate the Plan; (2) a prohibited transaction claim under ERISA § 406(a)-(b) arising from the 2015 transactions whereby Michael and Cathleen Tennyson regained ownership of Tennyson through Tennyson’s purchase of the ESOP participants’ stock for $100,000; and (3) a claim for statutory penalties under ERISA § 502(c)(1)(A) based on Defendants’ alleged failure to provide pension benefit statements for 2011-2014 until November 2015.  The court found that the causes of action raise factual issues that cannot be resolved in the absence of a fully developed record.

Tenth Circuit

Ramos, et al., v. Banner Health, et al., No. 15-CV-2556-WJM-MJW, 2017 WL 4337598 (D. Colo. Sept. 29, 2017) (Judge William J. Martinez).  The court denied Defendant Jeffrey Slocum & Associates, Inc.’s motion to dismiss Counts I (excessive administrative fees) and II (imprudent investment options) of the Amended Complaint.  Regarding Count I, the court found that Plaintiffs have plausibly pled factual matters which, taken as true, show that Slocum held at least co-fiduciary responsibility for some aspects of the selection and monitoring of the Plan’s trustee and/or recordkeeper, as well as for negotiation of at least some of the administrative fees.  Regarding Count II, the court found that Plaintiffs have sufficiently pled a claim for breach of duties of loyalty and prudence by plausibly alleging that Slocum had at least co-fiduciary responsibility for insufficient monitoring or selection of the Fund’s mutual fund offerings.

Class Actions

Ninth Circuit

Cryer v. Franklin Resources, Inc. & The Franklin Templeton 401(K) Retirement Plan Investment Committee, No. C 16-4265 CW, 2017 WL 4410103 (N.D. Cal. Oct. 4, 2017) (Judge Claudia Wilken).  The court denied Defendant’s motion for reconsideration of class certification.  The court held that the right to seek class certification is important for the fair resolution of Section 502(a)(2) claims and cannot be bargained away without the plan’s consent.

Disability Benefit Claims

First Circuit

Parnagian v. Metlife Disability Insurance Company, et al., No. 14-CV-14254-IT, 2017 WL 4366968 (D. Mass. Sept. 29, 2017) (Judge Indira Talwani).  The court determined that MetLife did not abuse its discretion in denying long term disability benefits to Plaintiff claiming total disability from idiopathic environmental intolerance (IEI).  There is a difference between the diagnosis of a disease that does not manifest in an objectively-verifiable manner and the justified requirement that a claimant’s limitations be objectively verifiable.

Third Circuit

Potts v. Hartford Life & Accident Ins. Co., No. CV 3:16-35, __F.Supp.3d__, 2017 WL 4339675 (W.D. Pa. Sept. 28, 2017).  The court granted summary judgment to Hartford.  The court determined that the following was not arbitrary and capricious:  Hartford’s failure to demonstrate improvement, Hartford’s failure to obtain a physical examination of Plaintiff before terminating her LTD benefits, Hartford’s use and application of the Employability Analysis Report, and the content of the initial denial letter and the appeal denial letter.

Sixth Circuit

Saylor v. Appalachian Regional Hospital, No. 6:16-CV-00081-GFVT, 2017 WL 4355556 (E.D. Ky. Sept. 29, 2017) (Judge Gregory F. Van Tatenhove).  The court concluded it was the intent and understanding of the parties that the determination of whether a member of the Plan was “Totally Disabled” was within the discretion of the Pension Committee. Since the sole issue raised by Plaintiff was whether the Plan provisions afforded the Pension Committee the discretion to consider the evidence and then make the Total Disability determination, the decision to deny benefits will be upheld.

Eighth Circuit

Leirer v. The Proctor & Gamble Disability Benefit Plan, et al., No. 4:15CV00122 AGF, 2017 WL 4339512 (E.D. Mo. Sept. 29, 2017) (Judge Audrey G. Fleissig).  In this dispute over long term disability benefits, the court granted Defendants’ motion for summary judgment.  Defendants’ decision to deny benefits is supported by substantial evidence including an IME’s assessment that Plaintiff could perform light duty or administrative tasks in the workplace; a FCE finding that Plaintiff was able to perform medium level work with certain limitations; and an independent medical review that found that there was no objective medical evidence to support that Plaintiff was unable to perform any work from July 10, 2013, onward.

Tenth Circuit

Green v. Life Insurance Company of North America, No. 16-CV-02366-RBJ, 2017 WL 4337675 (D. Colo. Sept. 29, 2017) (Judge R. Brooke Jackson).  The court determined that LINA had substantial evidence that Plaintiff’s posterior vitreous detachment caused, contributed to, or resulted in his disabling vision loss and LINA had substantial evidence that Plaintiff received treatment, including diagnostic measures, within three months of his most recent effective date under the Plan.  Thus, the court affirmed LINA’s denial of Plaintiff’s long term disability benefits due to a pre-existing condition.

Eleventh Circuit

Miller v. PNC Fin. Servs. Grp., Inc., No. 1:16-CV-25142-KMM, __F.Supp.3d__, 2017 WL 4404469 (S.D. Fla. Oct. 2, 2017) (Judge K. Michael Moore).  Liberty’s doctors’ reports were insufficient evidence of non-disability where they did not even evaluate Plaintiff’s evidence for her claim.  The Plan does not have an objective evidence requirement and Liberty failed to identify any specific objective evidence that would be required for a continuation of Plaintiff’s benefits.  This statement in the SPD (also the Plan document) does not confer discretionary authority:  “[i]f a decision made by the Plan is challenged in court, the court’s review … shall be limited to a determination of whether the decision was arbitrary and capricious.”  Delegation of authority through the Administrative Services Agreement, not referenced in the Plan document, cannot constitute a grant of discretion such that judicial review is for abuse of discretion.  Regardless, if the ASA were a plan document, it does not confer the type of discretion required for the court to apply abuse of discretion review.  Summary judgment granted to Plaintiff.

Discovery

Second Circuit

Metzgar v. U.A. Plumbers and Steamfitters Local No. 22 Pension Fund, et al., No. 13-CV-85V(F), 2017 WL 4401499 (W.D.N.Y. Oct. 4, 2017) (Magistrate Judge Leslie G. Foschio).  In this action alleging pension cut-backs in violation of ERISA, the court denied Plaintiffs’ motion for reconsideration of the court’s previous decision and order insofar as it granted Defendants’ motion to compel Plaintiffs to respond fully to Defendants’ Interrogatory No. 4 (requesting pre-employment information), and to show cause why sanctions should not be awarded to Defendants in accordance with Fed.R.Civ.P. 37(b)(2)(C) based on Plaintiffs’ refusal to fully respond to Interrogatory No. 4 and agree to schedule Plaintiffs’ depositions.

Sixth Circuit

Mclaren v. Trustee Of The Group Insurance Trust For Employers In The Manufacturing Industry, et al., No. 1:16-CV-1164, 2017 WL 4417704 (S.D. Ohio Oct. 4, 2017) (Magistrate Judge Karen L. Litkovitz).  In this case seeking AD&D benefits, the court determined that discovery is warranted on LINA’s alleged conflict of interest and granted Plaintiff’s motion to obtain discovery relating to LINA’s alleged conflict of interest.  “Specifically, plaintiff has offered evidence showing that LINA has made a determination denying benefits based on its interpretation of “foreseeable,” a term that is undefined in the policies. Moreover, plaintiff has offered evidence that LINA changed its position on the use of safety measures related to Eric McLaren’s death; used its own physicians to support the denial of benefits; and made a determination that was contrary to that of the county coroner who ruled that Mr. McLaren’s death was accidental. The undersigned finds that all of this evidence is sufficient to warrant conflict of interest discovery.”

Ninth Circuit

Lasheen v. The Loomis Company, et al., No. 2:01-CV-0227-KJM-EFB, 2017 WL 4410167 (E.D. Cal. Oct. 4, 2017) (Magistrate Judge Edmund F. Brennan).  “This court previously found that plaintiff’s ERISA claim arose out of the Egyptian defendants’ commercial activity, and therefore the Egyptian defendants were not entitled to jurisdictional immunity pursuant to 20 U.S.C. § 1605(a)(2). Accordingly, under § 1610(b)(2), plaintiff should be provided discovery information as to any property of the Embassy and Bureau that is located in the United States. The Embassy and Bureau are therefore ordered to provide further responses to plaintiff’s discovery requests regarding such assets.”

ERISA Preemption

Second Circuit

Cummings v. The City of New York, No. 13-CV-1303 (RA), 2017 WL 4386366 (S.D.N.Y. Sept. 29, 2017) (Judge Ronnie Abrams).  In this case brought by Trustees of a multiemployer plan against the City of New York and other defendants for failing to making approximately $15 million in contributions to the Fund, the court determined that the Trustees’ state law claims for breach of contract, quantum meruit, and unjust enrichment are preempted by ERISA and the LMRA and foreclosed by the New York City Charter and the City’s PPB Rules.

Exhaustion of Administrative Remedies

Second Circuit

Kirkendall v. Halliburton, Inc., et al., No. 07-CV-289-FPG, 2017 WL 4344531 (W.D.N.Y. Sept. 29, 2017) (Judge Frank P. Geraci, Jr.).  Some of the plaintiffs were not required to exhaust administrative remedies since they all knew of the process undertaken by plaintiff Kirkendall, knew of Halliburton’s position on denying participants the ability to “grow in” to early retirement benefits, and reasonably concluded that the only means of vindicating their claims was through a lawsuit.  In the Second Circuit, plaintiffs do not have to exhaust their administrative remedies where they make a clear and positive showing that pursuing available administrative remedies would be futile.

Life Insurance & AD&D Benefit Claims

Second Circuit

Metro. Life Ins. Co. v. Carey, No. 16CV3814DLISJB, 2017 WL 4351512 (E.D.N.Y. Sept. 29, 2017) (Judge Dora L. Irizarry).  The court granted MetLife’s motion for interpleader relief with respect to $11,500 in life insurance benefits.  The court denied MetLife’s request for injunctive relief seeking to permanently enjoin the Defendants from instituting any action against it, AT&T, and the Plan with respect to the plan benefits deposited with the court.

Third Circuit

Woerner v. Fram Group Operations, LLC, No. CV 12-6648 (SRC), 2017 WL 4404393 (D.N.J. Oct. 4, 2017) (Judge Stanley R. Chesler).  The court concluded that the four documents, and the allegations in the third-party complaint pertaining thereto, cannot justify a reasonable inference that CIGNA possessed authority or bore any obligation with respect to any informal plan potentially governing Plaintiff’s claims for life insurance benefits.  No trier of fact could reasonably infer that CIGNA bore a fiduciary, statutory, or contractual obligation to defendant FRAM Group Operations, LLC or Plaintiff with regard to any informal plan.  The court granted Cigna’s motion to dismiss the third-party complaint.

Fifth Circuit

Ramirez v. United of Omaha Life Ins. Co., No. 16-11660, __F.3d__, 2017 WL 4455267 (5th Cir. Oct. 6, 2017) (Before SMITH, OWEN, and HIGGINSON, Circuit Judges).  The court affirmed the district court’s grant of summary judgment in favor of United on its determination to deny accidental death and dismemberment benefits to Plaintiff, who contracted a fungal infection that resulted in the removal of one of his eyes, on the basis that Plaintiff’s infection was not an “Accident” within the meaning of the policy.

Medical Benefit Claims

Second Circuit

Elizabeth W. v. Empire Healthchoice Assurance, Inc., No. 16-3463-CV, __F.App’x__, 2017 WL 4387182 (2d Cir. Oct. 3, 2017) (Present: DEBRA ANN LIVINGSTON, GERARD E. LYNCH, DENNY CHIN, Circuit Judges).  The court affirmed the district court’s decision upholding the denial of partial hospitalization program for a patient with anorexia nervosa.  The court explained that four third-party doctors evaluated Plaintiff’s medical records and provided explanations that were consistent with application of Empire’s medical necessity criteria and each doctor denied coverage because her symptoms or diagnosis improved and partial hospitalization was no longer the most appropriate level of service.

Sixth Circuit

Bald Mountain Holdings, LLC v. Aetna Health Insurance Company, No. 16-13518, 2017 WL 4378966 (E.D. Mich. Oct. 3, 2017) (Judge John Corbett O’Meara).  The court affirmed Aetna’s determination that Plaintiff’s patient’s claim was not covered under the Costco Employee Benefits Program because the InterStim device (for urinary incontinence) was considered “experimental or investigative” and not medically necessary.  Aetna’s decision to deny Plaintiff’s second level appeal as untimely was not arbitrary and capricious since the appeal came after the 60-day appeal deadline.

Pension Benefit Claims

Second Circuit

Bulovic v. The Stop & Shop Supermarket Company, LLC, No. 16-3341, __F.App’x__, 2017 WL 4422507 (2d Cir. Oct. 5, 2017) (Present: GUIDO CALABRESI, DEBRA ANN LIVINGSTON, Circuit Judges, JED S. RAKOFF, District Judge).  The pro se plaintiff is estopped from relitigating her entitlement to pension benefits, and thus the present complaint was properly dismissed on the basis of issue preclusion.

Babino v. Gesualdi, et al., No. 15CV3575ADSAKT, 2017 WL 4443571 (E.D.N.Y. Oct. 4, 2017) (Judge Arthur D. Spatt).  In this case seeking recovery of pension, welfare, annuity, and vacation benefits, the court denied Plaintiff’s motions to amend his complaint pursuant to Rule 15 and for summary judgment pursuant to Rule 56.  The court granted Defendants’ motion for summary judgment, dismissing all of the Plaintiff’s claims.  The court noted that the rules of evidence do not apply in ERISA administrative proceedings so the hearsay in the administrative record is permissible.

Kirkendall v. Halliburton, Inc., et al., No. 07-CV-289-FPG, 2017 WL 4344531 (W.D.N.Y. Sept. 29, 2017) (Judge Frank P. Geraci, Jr.).  Under arbitrary and capricious review, where both Defendants and Plaintiffs offer rational, conflicting interpretations of the Defendant Dresser Industries, Inc., Consolidated Salaried Retirement Plan provisions, Defendants’ interpretation must control.  Following Defendant’s interpretation, participants in the Plan may “grow in” to early retirement rights by accruing Vesting Service, which participants can do by working for a Related Entity.  A “Related Entity” is each partnership or joint venture in which Dresser has, either directly or indirectly, a substantial ownership interest.  Once Halliburton sold Dresser’s interest in DR to Ingersoll in 1999, Dresser no longer had a substantial ownership interest, direct or indirect, in DR.  Thus, any DR employees who did not meet the requirements for early retirement benefits as of December 31, 1999 could not “grow in” to early retirement benefits even though their employment with DR continued under Ingersoll’s ownership.

Fifth Circuit

Mcdowell v. Mercedes-Benz USA, LLC Pension Plan, No. 3:16-CV-2096-L, 2017 WL 4351246 (N.D. Tex. Sept. 30, 2017) (Judge Sam A. Lindsay).  The court denied Defendant’s motion to dismiss since Plaintiff has stated a claim upon which relief may be granted under § 502(a)(1)(B).  Plaintiff has sufficiently pled facts that show she was an eligible participant in the Mercedes Plan who satisfied the minimum service requirements set forth under Article II of the Plan.  Additionally, Plaintiff has set forth facts from which a court could reasonably infer that Defendant would be liable for a claim under § 502(a)(3) on the basis of equitable estoppel.  “Plaintiff alleges that: (1) Defendant made material misrepresentations to her regarding interpretation of the terms of the Plan; (2) she reasonably relied upon Defendant’s representations to her detriment and; (3) extraordinary circumstances exist, because she was denied benefits under the plan and she does not have access to her 401(K) funds.”

Plan Status

Seventh Circuit

Sharp v. Navistar International Corporation, No. 15-CV-00413, 2017 WL 4340172 (N.D. Ill. Sept. 30, 2017) (Judge Andrea R. Wood).  Navistar’s failure to explicitly characterize the Executive Severance Agreement (“ESA”) as an ERISA plan does not determine whether it is an ERISA plan.  The court found that the ESA is an ERISA plan in light of the managerial discretion required of Navistar to pay the benefits under the plan.  Navistar would have to exercise a significant amount of discretion under the ESA because in order to determine the amount of severance due to Plaintiff, including whether he was terminated “for cause,” whether he suffered a “constructive termination,” and whether his termination followed a “change in control.”  Navistar would have to maintain an ongoing administrative scheme to make determinations regarding whether Plaintiff and others suffered a “material diminution” of authority and monitor compliance with restrictive covenants.

Eleventh Circuit

Thomas, Jr. v. First Southern Bank F/K/A The Patterson Bank, et al., No. 5:17-CV-23, 2017 WL 4398653 (S.D. Ga. Sept. 29, 2017) (Judge Lisa Godbey Wood).  An Agreement that provided an annual accrual of benefits peaking at fifteen years of employment with a salary continuation and annual benefit of $77,500 per year, paid in monthly installments over fifteen years, is an “employee benefit plan … established or maintained by an employer engaged in commerce” that is not a governmental plan, church plan, related to worker’s compensation, maintained outside the United States, or an unfunded “excess benefit plan.” 29 U.S.C. § 1003(a)-(b).

Pleading Issues & Procedure

Third Circuit

Bloomfield Surgical Center v. Cigna Health and Life Insurance Company, No. CV170149ESJAD, 2017 WL 4330357 (D.N.J. Sept. 29, 2017) (Judge Esther Salas).  The court held that 29 C.F.R. § 2560.503-1 does not give rise to a private right of action.  Thus, the court dismissed this count with prejudice.

Remedies

Ninth Circuit

Hart v. Unum Life Insurance Company Of America, No. C 15-05392 WHA, 2017 WL 4418680 (N.D. Cal. Oct. 4, 2017) (Judge William Alsup).  Following a grant of judgment in favor of Plaintiff on her long term disability claim, Plaintiff sought to prevent Unum from offsetting her Social Security retirement payments on the basis that Unum’s wrongful termination of her disability benefits forced her to apply for early social security retirement payments which reduced her payments by 25% for the rest of her life.  The court noted similar out-of-Circuit cases but found that there is no basis in the law of the Ninth Circuit that would permit application of unconscionability principles to deny effect to an ERISA plan provision.  Even from an equitable perspective, there is no justification to award double relief to compensate for the same underlying harm.  The court denied Plaintiff’s request to bar Unum from offsetting her benefits payments but awarded Hart additional prejudgment interest at the rate of 10% compounded annually based on her showing of harm.

Retaliation Claims

Third Circuit

Leffler, et al., v. Creative Health Services, Inc., et al., No. CV 16-1443, 2017 WL 4347610 (E.D. Pa. Sept. 29, 2017) (Magistrate Judge Henry S. Perkin).  Plaintiffs are independent contractors, not employees, so their ERISA Section 510 claim fails as a matter of law.  There are no ERISA violations where an employer’s plan excludes hourly employees, temporary employees and independent contractors.

Statute of Limitations

Second Circuit

Cunningham v. Cornell University, et al., No. 16-CV-6525 (PKC), 2017 WL 4358769 (S.D.N.Y. Sept. 29, 2017) (Judge P. Kevin Castel).  Defendants claim that Plaintiffs had notice of the alleged excessive fees as a result of disclosures they received over three years ago detailing the number of investment options and the amount of fees for each option.  The court found that at the pleading stage Defendants have failed to show that Plaintiffs had actual knowledge of all the material facts necessary to bring suit three years before the filing of this action.

Standard of Review

Sixth Circuit

Mclaren v. Trustee Of The Group Insurance Trust For Employers In The Manufacturing Industry, et al., No. 1:16-CV-1164, 2017 WL 4417704 (S.D. Ohio Oct. 4, 2017) (Magistrate Judge Karen L. Litkovitz).  In this case seeking AD&D benefits, Plaintiff argued that de novo review should apply because the policy in question provides that benefits will be paid upon “[w]ritten or authorized electronic proof of loss satisfactory to us … within 90 days of the loss, for which claim is made.”  The court noted that it is bound by Sixth Circuit precedent finding that this language is sufficient to confer discretionary authority.  Plaintiff also argued that Delaware law, and thus the law of the Third Circuit, should determine the standard of review in this matter because the choice of law provision indicates that it is to be governed by the laws of the State of Delaware.  The court determined that the law of the Sixth Circuit in relation to ERISA, a federal statute, must apply.  Therefore, the court recommends that abuse of discretion review apply.

Subrogation/Reimbursement Claims

Third Circuit

Continental Airlines, Inc. 401(K) Savings Plan v. Almodovar-Roman, et al., No. CV 16-5766, 2017 WL 4330354 (D.N.J. Sept. 29, 2017) (Judge Madeline Cox Arleo).  The court denied Continental’s motion for default judgment because it has not sufficiently pled a claim for equitable relief under ERISA.  “Here, Continental alleges (1) the $149,071.89 erroneously placed into Almodovar-Roman’s 401(k), which was later disbursed to her in the amount of $122,077.33, is specifically identifiable property; (2) the property belongs in ‘good conscience’ to the Plan because it was mistakenly rolled over from another Plan participant’s fund; and (3) the property is either entirely or partially in Almodovar-Roman’s possession.”  Continental has not shown that the property is clearly traceable to funds in Defendant Almodovar-Roman’s possession.  And, the state law claims for breach of contract and unjust enrichment are preempted by ERISA.

Venue

Seventh Circuit

Bailey v. OSF Healthcare Sys., No. 116CV01137SLDTSH, 2017 WL 4319113 (C.D. Ill. Sept. 28, 2017) (Judge Sara Darrow).  Following a protracted battle over venue, the court granted Plaintiffs’ motion to dismiss so that Plaintiffs can join the Smith plaintiffs in the Southern District.  The court determined that Defendants have been put to foreseeably unnecessary and redundant expense in defending themselves in the instant action, now that Plaintiffs have agreed to coordinate with their counterparts in the Southern District.

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