Source: https://www.lifeanddisabilitylaw.com/your-erisa-watch-third-circuit-finds-supplemental-ltd-policy-is-an-erisa-plan-and-physicians-occupation-includes-specialty-of-interventional-radiology/
Timestamp: 2019-04-18 10:50:13+00:00

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This week’s notable decision is McCann v. Unum Provident, No. 16-2014, __F.3d__, (3rd Cir. Oct. 5, 2018), where the Third Circuit addressed two principal issues: whether a group insurance plan is governed by ERISA and whether the physician-claimant was incorrectly denied long-term disability benefits.
(4) The employer or employee organization receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions or dues checkoffs.
McCann contends that the supplemental long-term disability insurance he purchased through the Residents’ Supplemental Disability Insurance Plan (“RSDP”) falls under ERISA’s safe harbor’s criteria and is not an ERISA plan. It is McCann’s burden to show that all four of the safe harbor criteria are satisfied. It is undisputed that the second and fourth criteria are met because the RSDP was completely voluntary and the employer, Henry Ford Hospital, received no compensation in connection with the program.
Residents were not provided with a menu of options or free to select any insurer.
The Hospital encouraged enrollment in the RSDP and expressed some judgment about the plan when it explained that Provident is the industry’s leader in individual disability coverage for physicians and was chosen to provide supplemental disability insurance to Ford physicians.
The Hospital determined eligibility for the RSDP.
The Hospital agreed to provide disability insurance as part of its standard benefits package.
After finding that the RSDP is governed by ERISA, the court turned to the merits of McCann’s claim for total disability.
On the final question of McCann’s ability to perform his “substantial and material duties,” the court found a dispute of material fact for which it remanded to the district court to consider.
The court also remanded to the district court to consider McCann’s claim for Residual Disability. The court found that McCann’s failure to exhaust this claim can be excused on the principle of futility. The denial letters stated that McCann was not totally or residually disabled, which would have given McCann the reasonable impression that Provident was considering both types of disability claims or that raising a Residual Disability claim would be futile.
Plaintiff is represented by friends of ERISA Watch, Tybe A. Brett of Feinstein Doyle Payne & Kravec, and Michael E. Quiat of Uscher, Quiat, Uscher & Russo.
White v. Chase, No. CV 15-40013-TSH, 2018 WL 4829179 (D. Mass. Oct. 4, 2018) (Judge Timothy S. Hillman). The court previously granted summary judgment to Defendant upon finding that the record evidence established that notice of the Plan freeze was timely mailed to Plan participants. The court denied Defendant’s request for an award of attorneys’ fees of $252,561. In addition to not meeting the five-factor test, Defendant did not provide any substantive detail regarding the hours spent.
Davis, et al v. Washington University in St. Louis & Washington University in St. Louis Board of Trustees, No. 4:17-CV-1641 RLW, 2018 WL 4684244 (E.D. Mo. Sept. 28, 2018) (Judge Ronnie L. White). The court granted Defendants’ motion to dismiss for failure to state a claim that they breached their duties to act prudently and loyally with respect to Plaintiffs’ 403(b) plan. The court held that Plaintiffs fail to allege a breach of fiduciary duties based upon Plan participants’ payment of purportedly excessive fees and recordkeeping fees and that the diverse selection of funds available to Plan participants negates any claim that Defendants breached their duties of prudence simply because cheaper funds were available. Even if these funds underperformed, Plaintiffs have failed to state a cause of action under ERISA for their purported lack of performance. Lastly, the court held that ERISA specifically exempts participant loans from the prohibited-transaction rules.
Daly v. Metro. Life Ins. Co., No. CV 17-95-LPS, 2018 WL 4700224 (D. Del. Sept. 30, 2018) (Judge Stark). The court determined that sufficient evidence supports the conclusion that Plaintiff could work part-time, thus, MetLife’s conclusion that Plaintiff was no longer unable to perform “any job” according to the Plan’s definition of totally disabled is not arbitrary and capricious.
O’Leary v. Aetna Life Ins. Co., No. 17-15162, __F.App’x__, 2018 WL 4697141 (11th Cir. Oct. 1, 2018) (Before JORDAN, JILL PRYOR and HULL). It was not arbitrary and capricious for Aetna to terminate Plaintiff’s long term disability benefits given surveillance showing Plaintiff was able to drive, tote a garbage can to his garage, and dance at a nightclub. This, in addition to physician’s assessments in the record opining that the medical records showed that Plaintiff was no longer functionally impaired.
McKennan v. Meadowvale Dairy Employee Benefit Plan, No. 18-CV-4010-LTS, 2018 WL 4701793 (N.D. Iowa Oct. 1, 2018) (Judge Mark A. Roberts). Plaintiff alleges standing to bring this lawsuit as an assignee of its deceased former patient. The court denied Defendants’ motion to compel discovery responses to requests for information regarding collateral source payments, which is relevant to show whether Plaintiff has standing to pursue this case. Though the discovery sought is narrow enough to be proper for this ERISA action, Defendants requests were served untimely, in this case, ten days before Plaintiff’s opening brief was due.
Rojas v. Cigna Health & Life Ins. Co., No. 14-CV-6368 (KMK), 2018 WL 4759775 (S.D.N.Y. Sept. 29, 2018) (Judge Kenneth M. Karas). Defendants brought counterclaims against the plaintiff providers alleging fraud, unjust enrichment, money had and received, and breach of contract. The court granted Plaintiffs’ motion for summary judgment on the fraud, unjust enrichment, and money had and received claims. The court rejected Defendants’ argument that all of the claims are preempted by ERISA. The court found no express preemption: “While the Court is mindful that the definition of ‘medically necessary’ is relevant in deciding the legitimacy of [Defendants’] claims, the essence of the claim is fraud, and mere involvement of the definitions of the terms does not implicate [ERISA] so as to warrant preemption.” The court also found that the counterclaims survive second prong of Davila (no other independent legal duty) and are not completely preempted.
Minerley v. Aetna, Inc., et al., No. CV 13-1377 (NLH/KMW), 2018 WL 4693963 (D.N.J. Sept. 29, 2018) (Judge Noel L. Hillman). “This case concerns the interpretation of an insurance policy and whether the insurer may require the insured to reimburse medical costs paid by the insurer when the insured receives an award from a third-party tortfeasor.” The court determined that insurance policies may serve as both ERISA plan documents and as plan assets. The insurance policy requires that a participant exhaust administrative remedies. The court granted Defendants’ motion for summary judgment on the basis that Plaintiff did not exhaust administrative remedies. Instead, Plaintiff reimbursed Aetna and then brought suit immediately thereafter. Plaintiff failed to show that filing an administrative appeal would have been futile.
Roibas v. EBPA, LLC, No. 1:17-CV-020-NT, 2018 WL 4690354 (D. Me. Sept. 28, 2018) (Judge Nancy Torresen). Plaintiff was a gestational carrier and submitted claims for all of her pregnancy-related medical expenses to Defendant for payment. The health plan excludes “expenses for surrogacy” though it covers charges for maternity care. Because Plaintiff was a surrogate mother, the Plan denied her claims. Surrogacy is not defined in the plan but Defendant took the position that based on the plain meaning of surrogacy, the exclusion can only be read to include the expenses of the surrogate mother’s pregnancy and childbirth. The court determined that the “expenses for surrogacy” exclusion in the context of the Plan is ambiguous, both sides’ interpretations are plausible, and the administrator’s construction of the Plan is reasonable. The court granted Defendant’s motion for judgment on the administrative record. The court denied Defendant’s request for attorneys’ fees.
Smith, et al. v. OSF Healthcare System, et al., No. 16-CV-467-SMY-RJD, 2018 WL 4680671 (S.D. Ill. Sept. 28, 2018) (Judge Staci M. Yandle). In determining whether the plan is a church plan, the court explained that the term “employee of a church” includes employees of nonprofit organizations controlled by or associated with a church. The court determined that OSF is a nonprofit organization associated with a church and the Plan Committees are principal-purpose organizations associated with a church. For these reasons, the Plans properly qualify for the church plan exemption and the court granted summary judgment to Defendants.
University Spine Center v. Cigna Health and Life Insurance Company, No. 2:17-CV-13620, 2018 WL 4771905 (D.N.J. Oct. 2, 2018) (Judge Claire C. Cecchi). The court dismissed the provider’s complaint without prejudice for failing to state the basis for the alleged underpayment for services performed. The amended complaint must specifically identify why Plaintiff believes it is due further compensation for its services provided to its patient under the patient’s health plan or policy.
Corman v. The Nationwide Life Insurance Company, No. CV 17-3912, 2018 WL 4680266 (E.D. Pa. Sept. 28, 2018) (Judge Wendy Beetlestone). The court determined that ERISA’s fraudulent concealment exception does not apply to this case because Nationwide did not take “affirmative steps” to hide a breach. Though Plaintiffs claim that Nationwide refused to provide information when they asked for it, Nationwide was not a fiduciary with respect to the decision to furnish information about the account to Plaintiffs.
Owens v. St. Anthony Medical Center, Inc., et al., No. 14-CV-4068, 2018 WL 4682337 (N.D. Ill. Sept. 29, 2018) (Judge Sharon Johnson Coleman). Defendants asserted that the statute of limitations on the alleged breaches of fiduciary duty began to run when Plaintiffs received the 2005 SDP, which disclosed that the Plan was an employer-contribution funded church plan. The court found that Plaintiffs plausibly argue that the statute of limitations began to run when the plan was terminated in 2012 because it was at that time that Plaintiffs were deprived of their guaranteed benefits. The allegations in the complaint do not clearly establish when Plaintiff had actual knowledge of the alleged breaches. The court concluded that Defendants’ arguments for dismissal of the ERISA claims based on a statute of limitations, statute of repose or laches are unavailing.
Connecticut Gen. Life Ins. Co. & Cigna Health & Life Ins. Co. v. Sw. Surgery Ctr., LLC, d/b/a Ctr. for Minimally Invasive Surgery, No. 14 CV 08777, 2018 WL 4777563 (N.D. Ill. Oct. 3, 2018) (Judge John Robert Blakey). On the issue of whether Cigna may recoup payments it made for ERISA-governed plans where it seeks recovery under state-law claims, not ERISA Section 502(a), the Court determined that Cigna may pursue recoupment relating to those ERISA-based plans under its state-law tort claims. The court granted summary judgment to CMIS on Count II of Cigna’s complaint only to the extent it seeks equitable recoupment under Section 502(a)(3) for payments Cigna made under ERISA-governed plans.

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