Source: https://www.lifeanddisabilitylaw.com/erisa-watch-december-11-2014/
Timestamp: 2019-04-21 23:00:43+00:00

Document:
In Trustees of Laborers Union Local No. 1298 of Nassau & Suffolk Counties Ben. Funds v. A to E, Inc., No. 13-CV-4800 ADS ARL, 2014 WL 6926276 (E.D.N.Y. Dec. 9, 2014), a matter alleging violations of the LMRA and ERISA to recover monetary damages, plus injunctive and equitable relief, Plaintiff moved pursuant to Federal Rule of Civil Procedure 15(a) for leave to file an amended complaint to add two additional defendants who are not signatories to the CBA under an alter ego or single employer theory. The court found that the relevant allegations, taken as true, state a plausible claim that the proposed additional defendants are alter egos of the Defendant or that they and the Defendant constitute a single employer. In particular, the Plaintiff alleges that the Defendant and the additional defendants have common ownership, common principals, failed to follow corporate formalities, common officers, directors and management, share assets/financing, similar line of business and customers, common equipment and employees, and have centralized control of labor relations, and perform work within the trade and geographical jurisdiction of Plaintiffs’ Union. Additionally, Plaintiff alleges that Defendant aided the additional defendants in evading its contractual obligations to Plaintiff by performing work within the trade and geographical jurisdictions of the Union without conforming to the terms of the CBA. The court found that the proposed amended complaint would not be futile and granted Plaintiff’s motion to amend the complaint.
DECEDENT’S ESTATE LACKS STANDING TO BRING CLAIM FOR ACCIDENTAL DEATH AND DISMEMBERMENT BENEFITS. In Cole v. Guardian Life Ins. Co. of Am., No. 13-4104, __Fed. Appx.___2014 WL 6808358 (3d Cir. Dec. 4, 2014), Guardian denied Plaintiff’s claim for AD&D benefits for the death of her sister, where Plaintiff was not designated as a beneficiary but served as co-administrator of the decedent’s Estate. In a previous interpleader action between the parties concerning a basic life insurance benefit, the parties settled the claim whereby Plaintiff received one-third of the proceeds. In the dispute for AD&D benefits, the district court granted summary judgment for Guardian on the basis that Plaintiff lacked standing to bring the claim because she was not a beneficiary or participant in the plan. Plaintiff argued that the previous action finally determined that the Appellant/Plaintiff is a proper beneficiary under the ERISA Plan, and that this finding has collateral estoppel effect, precluding a determination that she or the Estate is not a beneficiary. Collateral estoppel bars a party to an earlier action from litigating an issue in a later action if: (1) the identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the previous determination was necessary to the decision; and (4) the party being precluded from relitigating the issue was fully represented in the prior action. The 3rdCircuit found that the issue of whether she or the Estate was a beneficiary of the Plan was not actually litigated and determined by a valid and final judgment since the action ended with a settlement agreement that controlled the division of the basic life insurance benefit. The court rejected Plaintiff’s other argument that either she or the Estate has standing as a beneficiary under the Plan, because there are no other named beneficiaries. This argument was based on Plaintiff’s contention that the enrollment form was fraudulent and therefore invalid. The court noted that Plaintiff cited no evidence in the record of fraud and that her argument relied on highly speculative and unsupported conjecture. Accordingly, the court affirmed the decision of the district court.
“Once a plan administrator is on notice that readily-available evidence exists that might confirm claimant’s theory of disability, it cannot shut its eyes to such evidence where there is little in the record to suggest the claim deficient.” In Harrison v. Wells Fargo Bank, N.A., No. 13-2379, __F.3d___, 2014 WL 6845461 (4th Cir. Dec. 5, 2014), the court held that the disability plan administrator, Liberty Life Assurance Company of Boston, did not satisfy ERISA’s full and fair review requirements and breached its fiduciary duty to Plaintiff-Participant in this matter where Plaintiff alleged that her short-term disability benefits had been improperly terminated while she was undergoing series of treatments for thyroid disease. The district court upheld Defendant’s decision, finding the plan administrator did not abuse its discretion in denying Plaintiff’s claim. However, the court found that because Defendant failed to consider readily available material evidence of which it was put on notice, the review process failed to conform to the directives of ERISA and the Plan’s own terms. The physician reviewing Plaintiff’s claim for Liberty Life did not contact one of Plaintiff’s treating doctors even though he had his contact information and was referred to him by Plaintiff’s primary care physician. The court found that Plaintiff’s medical records for her thyroid condition alone presented a close case. She was undergoing multiple surgical procedures for a large mass in her chest that was causing her pain and tracheal compression. In the midst of it all, Plaintiff suffered the unexpected loss of her husband who had been a source of support after the earlier deaths of her mother and children. Other evidence suggested that Plaintiff would not be able to return to work. On such a close record, Defendant’s “process was simply not the collaborative undertaking that ERISA envisions.” The court found that under the terms of the Plan here, Defendant should have instructed Plaintiff plainly and specifically that additional records from her doctor were needed to perfect her claim. Additionally, a plan administrator cannot decline to undertake the most nominal efforts to obtain readily available information that was made known to the Plan, that was plainly material to the claim, and that could well have provided the proof crucial to the participant’s success. The court explained that it now adopts this “narrow principle”-narrow because it does not undercut a claimant’s responsibility to provide medical information nor impose a duty on plan administrators to fish for medical information on the mere possibility that it may be helpful in some remote way. The court reversed and remanded to the district court with directions to return the case to Defendant for a full and fair review of Plaintiff’s disability claims.
INSURER DID NOT ABUSE ITS DISCRETION IN INTERPRETING UNDEFINED TERM OF “DATE OF LOSS” IN DEATH BENEFIT POLICY. In Ellis v. Reliance Standard Life Ins. Co., No. 14-50284, __Fed.Appx.___, 2014 WL 6879124 (5th Cir. Dec. 8, 2014), the Fifth Circuit Court of Appeals determined that Reliance Standard did not abuse its discretion in calculating the death benefit paid to Plaintiff following her husband’s death in 2011 using his 2009, as opposed to his 2010, income, where her husband stopped working in 2010 due to disability. The relevant policy provides that the death benefit will be paid in the amount of two times earnings, rounded to the next higher $1,000, subject to a maximum of $700,000. “Earnings” is defined as the amount of wages the employer paid to the insured as reported on his W-2 form for the year just before the “date of loss.” “Date of loss” is not defined in the general definition section of the policy and Plaintiff argued that the term is ambiguous and should be held to mean “date of death.” The court disagreed, finding that language in the waiver provision makes clear that the date when coverage under the waiver provision begins is the day that the insured became totally disabled irrespective of the use of the term elsewhere in the contract. The waiver provision provides that the amount of insurance continued will be the amount that was in force at the time that Total Disability began, and that this amount will not increase. As such, the date of loss must be the date of disability under this provision. If the date of loss could be defined as the date of death then it would be possible for the amount of insurance to increase if the insured earned more money in the year before death than in the year before disability, but this increase is prohibited by the terms of the waiver provision. It is uncontroverted that the decedent was not “Actively at Work,” as defined in the policy, after November 19, 2010 when he became disabled and began receiving disability benefits. Thus, RSL reasonably concluded that the date of loss was November 19, 2010 and it had to look to W-2 income from the previous year, 2009, to calculate the death benefit. The court found that the district court did not err in granting Reliance Standard’s motion for summary judgment.
Denial of long-term disability benefits supported by substantial evidence despite contrary Social Security DIsability Insurance award. In Liebel v. Aetna Life Ins. Co., No. 14-6046, __Fed.Appx.___, 2014 WL 6791181 (10th Cir. Dec. 3, 2014), the 10th Circuit Court of Appeals affirmed the district court’s judgment for Aetna Life Insurance Company in a claim involving a denial of long-term disability benefits. Plaintiff suffered from a history of painful back and related problems associated with scoliosis and exacerbated by injuries, which have been addressed through a series of surgeries ultimately leading to a fusion from the sacrum through the thoracic spine. Aetna paid Plaintiff disability benefits for twenty-four months under the disability plan provision tying the determination of disability solely to the job she had performed. Aetna encouraged Plaintiff to apply for SSDI benefits, which would reduce the amount of long-term disability benefits that it would have to pay her. In so doing, Aetna provided the services of a specialized Social Security claims administration company to represent her. Subsequently, the Social Security Administration (SSA) determined that she was disabled, meaning that it found her unable to perform not just her past job but all other occupations available in the national economy. After twenty four months, the disability plan applies a stricter definition of disability similar to Social Security’s standard. In connection with its review of Plaintiff’s claim under the stricter definition of disability, Aetna requested Plaintiff’s medical records, retained physicians to review them and engage in peer-to-peer consultation with her medical providers, sent her for an independent medical examination and a functional capacity evaluation, and had a home assessment conducted by a registered nurse. Aetna concluded that, with a gradual work-hardening program recommended by her doctor, Plaintiff could perform sedentary work that met the criteria for gainful activity in a reasonable occupation. Aetna provided Plaintiff with a lump sum of three months’ additional benefits to cover the program and terminated her long-term disability status. On appeal, Plaintiff contended that Aetna improperly ignored the contrary SSA determination of disability and conducted a skewed and incomplete assessment of her claim. She also contended the district court reviewed Aetna’s decision under an unduly deferential standard. The court found that under “a substantial-evidence standard,” the independent examination, the functional capacity evaluation, and the successive reviews of two doctors, all support Aetna’s determination, which was also largely consistent with later communications from Plaintiff’s physician. The court noted that the determination was contrary to some earlier opinions but it reflects a reasonable judgment supported by substantial evidence.
Carpenters Pension Trust Fund for N. California v. Lindquist Family LLC, No. 13-CV-01063-SC, 2014 WL 6879931 (N.D. Cal. Dec. 5, 2014) involved a declaratory judgment action which sought a declaration from the court that Defendants had engaged in a transaction with a primary purpose of evading liability under the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”). The court granted Plaintiffs’ motion for summary judgment and moved for fees. Section 4301(e) provides for the discretionary award of attorneys’ fees to the prevailing party and the Ninth Circuit has a set of factors (Hummell) relevant to the grant of attorneys’ fees authorized under ERISA, which apply to attorneys’ fees sought under the MPPAA as well. In considering those factors, the court found that neither the fact that Plaintiffs’ judgment in the underlying action is not against Defendants nor the fact that Plaintiffs sought only equitable relief in this action is a reason that Plaintiffs are not entitled to attorneys’ fees. With respect to the factors, the court found that: 1) Defendants engaged in a transaction with a primary purpose of evading liability under the MPPAA; 2) Defendants can satisfy the fee award; 3) an award of fees in this case would likely provide some degree of deterrence against similar efforts to shield assets from MPPAA judgments; 4) the less that the Carpenters Fund has to pay its lawyers, the more it will be able to pay its participants; and 5) the merits of Plaintiffs’ position was “very strong,” and the merits of Defendants’ was “weak.” With respect to the reasonableness of the fees sought, Plaintiffs sought reimbursement for five attorneys’ and two paralegals’ work on this case, totaling 200 hours and $70,065.00. Plaintiffs also sought $1,003.04 in costs. The hourly rates ranged from $275/hour to $600/hour. However, the court used hourly rates that Plaintiffs’ attorneys previously declared were consistent with the prevailing market rates for litigation involving union-sponsored benefit funds: $275 for attorneys with 10 or more years of experience, $225 for attorneys with less than 10 years of experience, and $115 for paralegals for litigation matters. Applying the reduced rates to all of the time Plaintiffs’ sought, the court awarded $46,495 in attorneys’ fees and reimbursement for the reasonable costs of litigation.
In Lynn R. v. ValueOptions, No. 2:12-CV-1201 TS, 2014 WL 6832903 (D. Utah Dec. 3, 2014), the court denied Plaintiff’s motion for reconsideration of the court’s decision to deny Plaintiff an award of attorneys’ fees despite finding that Defendants’ denial of residential mental-health care was arbitrary and capricious. The court did award Plaintiff $76,801.22, plus prejudgment interest at 10% per annum and post-judgment interest at the statutory rate, for the cost of the treatment. The court supplemented the administrative record with Plaintiff’s documentation of costs incurred throughout the treatment period because: 1) Plaintiff submitted documentation demonstrating that her dependent received continuous treatment from July 2010 to June 2011; 2) the disputed charges were incurred after Plaintiff’s administrative appeals had been denied, so Plaintiff could not have submitted them to ValueOptions at the time the claim was denied; 3) the additional documentation reflects unique charges incurred for treatment that is not cumulative or repetitive of evidence elsewhere in the record; and 4) the documentation reflects unique costs incurred, it is not simply better evidence than what is already contained in the administrative record.
In Jabara v. Aetna Life Ins. Co., No. 3:13·CV·02041, 2014 WL 6769971 (M.D. Pa. Dec. 1, 2014), the court determined that the deferential abuse of discretion standard of review would apply to the court’s review of Aetna’s denial of Plaintiff’s long-term disability claim. The Plan provides that Aetna is “a fiduciary with complete authority to review all denied claims for benefits under this Policy.” It also states, “In exercising such fiduciary responsibility, [Aetna] shall have discretionary authority to determine whether and to what extent eligible employees and beneficiaries are entitled to benefits and to construe any disputed or doubtful terms under this Policy, the Certificate or any other document incorporated herein.” Following the 3rd Circuit’s decision in Fieisher v. Standard Ins. Co., 679 F.3d 116, 121 (3d Cir.2012), the court held that this policy language granted discretionary authority with respect to the determination of eligibility for benefits under an employee benefit plan. The court rejected Plaintiff’s assertion that a conflict exists between the Group Insurance Policy and the Booklet-Certificate because the former purports to grant discretionary authority while the latter is silent. The court found that the fact that the Booklet-Certificate does not repeat the grant of discretionary authority contained in the Group Insurance Policy does not create a conflict.
Reiling v. Sun Life Assur. Co. of Canada, No. 6:13-CV-01349-JAR, 2014 WL 6895951(D. Kan. Dec. 5, 2014) involved a claim for accidental death benefits where the decedent died in a car crash while driving with a suspended license-a class B misdemeanor under Kansas law. In this case, the court found that there is no indication that Defendant has taken steps to reduce potential bias. Thus, in light of Defendant’s financial interest in denying benefits in this case, the court found that the conflict of interest is entitled to some weight. The court found that the term “criminal act” is ambiguous but because both interpretations are reasonable, the court upheld Defendant’s interpretation that violation of K.S.A. § 8-262(a)(1) is a criminal act. However, the decedent’s driving while suspended did not cause her death here. Under LaAsmar, Kellogg, and Fought, the policy’s definition of “accidental death” does not support Defendant’s use of “but-for causation” to deny benefits in this case. Accordingly, the court found that Sun Life abused its discretion in denying benefits based on the policy exclusion applicable to “committing or attempting to commit an assault, felony or other criminal act.” The court awarded accidental-death, seat belt, and air bag benefits totaling $101,250, and prejudgment interest using the current Kansas rate of 10%.
In Jacquez on behalf of Jacquez v. Health & Welfare Dep’t of Constr. & Gen. Laborers’ Dist. Council of Chicago & Vicinity, No. 13-CV-9221, 2014 WL 6888459 (N.D. Ill. Dec. 4, 2014), the dispute centered on the denial of physical and occupational therapy for a plan participant diagnosed with cerebral palsy and spastic quadriplegia. The Claim Committee determined that this therapy was excluded under the Plan’s exclusion for Maintenance or Developmental Care. In so doing, the Committee did not consider additional information submitted as part of a second voluntary appeal, wherein Plaintiffs submitted information supporting that the therapy was also for pain management. The court found that the Committee abused their discretion in the second appeal and remanded for a fresh administrative decision.
In Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, No. AP 08-01789(SMB), 2014 WL 6879248 (Bankr. S.D.N.Y. Dec. 5, 2014), the court determined that the “Inter-Account Method” does not violate ERISA as it pertains to inter-account transfers involving Bernard L. Madoff Investment Securities LLC IRA accounts based on ERISA’s rule that benefits under pension plans “may not be assigned or alienated.” 29 U.S.C. § 1056(d)(1). The court found that ERISA does not generally apply to IRA accounts, including those that were rolled-over from ERISA-regulated plans. Further, ERISA contains an express provision subordinating ERISA to other federal statutes and ERISA’s anti-alienation provision trumps the Securities Investor Protection Act’s (“SIPA”) net equity calculation or distribution procedures. The SIPA net equity calculation as approved in the Second Circuit’s Net Equity Decision trumps any affect ERISA might have on the net equity calculation.
In Alampi v. Cent. States Se., No. 14-CV-11910, 2014 WL 6861449 (E.D. Mich. Dec. 3, 2014), the court granted Defendant’s motion for judgment on the administrative record in dispute concerning whether Plaintiff was an “employee” (rather than an independent contractor) of a company that would entitle him to receive Vesting Service or Contributory Service Credit. Defendant determined that Plaintiff did not demonstrate that the company was required to make Employer Contributions on his behalf and that Plaintiff was not eligible to receive Vesting Service or Non-Contributory Service based on his affiliation with the company because he did not demonstrate that such affiliation constituted a period of employment (instead of self-employment). On this record, the court found that it could not conclude that the Trustees’ failed to apply the proper common-law standard when determining whether Plaintiff was an “employee” under the terms of the Plan. Further, the court found that the Trustees’ decision that Plaintiff was an independent contractor for the company cannot be deemed arbitrary or capricious simply because there may have been sufficient evidence in the record to support the opposite conclusion. Lastly, the court rejected Plaintiff’s argument that he is entitled to benefits because he “reasonably relied” on the Fund’s repeated statements that he had earned 14.3 years of service credit and therefore qualified for a Vested Pension. When the Fund told Plaintiff that he had earned 14.3 years of service credit and qualified for a pension, it also told him that this assessment was based on current information and that his eligibility for a pension could change if the Fund found additional or conflicting information. The court found that Plaintiff is not entitled to relief under a reliance or equitable estoppel-like theory because he has not demonstrated that his case fits within the test for equitable estoppel in the ERISA context as set forth in Sixth Circuit decisions such as Marks v. Newcourt Credit Grp., Inc., 342 F.3d 444, 456 (6th Cir.2003) and Sprague v. Gen. Motors Corp., 133 F.3d 388, 403 (6th Cir.1998) (en banc).
In Medeiros v. Wells Fargo & Co. Long Term Disability Plan, No. CV-14-01129-PHX-JZB, 2014 WL 6769190 (D. Ariz. Dec. 1, 2014) Plaintiff asserted three causes of action: (1) recovery of plan benefits pursuant to 29 U.S.C. § 1132(a)(1)(B) against Liberty Life and the Plan; (2) failure to disclose and maintain plan documents pursuant to 29 U.S.C. § 1132(c) against Wells Fargo; and (3) breach of fiduciary duty pursuant to 29 U.S.C. § 1132(a)(3) against Liberty and Wells Fargo. Liberty Life filed a motion to dismiss the third claim in light of the Supreme Court’s holding in Varity Corp. v. Howe, 516 U.S. 489, 512, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), arguing that Plaintiff’s § 1132(a)(3) breach of fiduciary duty claim is precluded by her § 1132(a)(1)(B) claim for benefits. The court noted that the Supreme Court’s decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866, 179 L. Ed. 2d 843 (2011) control and that Plaintiff’s § 1132(a)(3) claims are subject to dismissal if in them she seeks relief that is duplicative of the relief she seeks in another cause of action. Plaintiff alleged that that Liberty Life and Wells Fargo breached their fiduciary duties in the following ways: 1) Liberty acted with malice and in bad faith against Plaintiff; 2) Liberty arbitrarily and capriciously denied Plaintiff’s benefits; 3) Wells Fargo acted imprudently by failing to oversee Liberty’s claims administration; 4) Defendants and Liberty had a duty to engage in meaningful dialogue with Plaintiff, which they failed to do; 5) Liberty was unjustly enriched as a result of its breach of fiduciary duty violations, because it wrongfully withheld benefits for its own profit; 6) Liberty did not adequately set aside reserves for Plaintiff’s LTD claim; and 7) Liberty incentivized its employees to make claims determinations based on Liberty’s “reserve report” and in the interest of its net income reports regarding company profitability. Based on this alleged unlawful conduct, Plaintiff seeks to “enjoin any act or practice by Wells Fargo and/or Liberty, which violates ERISA or the Plan, and/or she is entitled to see other appropriate equitable relief that is traditionally available in equity.” She further requests “mandamus relief, requiring Wells Fargo to establish a proper Plan pursuant to ERISA and other applicable law” and to have Liberty return any benefits resulting from its breaches. The court found that with regard to Liberty, to the extent that Plaintiff requests relief in the form of payment of past and future benefits, that claim is duplicative of Plaintiff’s benefit claim; however, Plaintiff seeks other forms of equitable relief against Liberty for other conduct, including equitable relief based on alleged procedural violations by Liberty in administrating Plaintiff’s claim. The court found that with regard to Wells Fargo, to the extent Plaintiff’s breach of fiduciary duty claim against Wells Fargo is based on its failure to maintain and disclose Plan documents to Plaintiff, those claims are duplicative of the claims in Count II of the Complaint; however, Plaintiff also asserts that Wells Fargo breached its fiduciary duty by failing to oversee Liberty in its claims administration, and she seeks equitable relief to remedy such conduct. The court found that Plaintiff sufficiently pled distinct claims for relief under § 1132(a)(3) against both Liberty Life and Wells Fargo.
In Unum Life Ins. Co. of Am. v. Pittman, No. CIV. WDQ-14-1442, 2014 WL 6835676 (D. Md. Dec. 2, 2014), the magistrate judge recommended that the district court grant in part and deny in part Unum’s motion for default judgment against a long-term disability participant who Unum overpaid benefits as a result of a Social Security Disability Insurance award. The court found that Sereboff, rather than Knudson, controls in this case: Unum seeks to recover specific funds (Defendant’s LTD payments) and identifies the specific portion to which it is entitled (the amount of LTD benefits it overpaid while Defendant was receiving Social Security disability benefits and LTD benefits at the same time). Although Unum did not identify a specific financial account that Defendant’s Social Security disability benefits were deposited into, or prove that they are still in his possession, the court found that Unum is not required to do so. The court noted that the 4th Circuit has not addressedSereboff‘s application in the overpayment context. Because ERISA permits fiduciaries only to bring actions for equitable relief, the court recommended that Unum’s Motion for Default Judgment as to Count I (breach of contract) be denied, but the Motion as to Count II (unjust enrichment) be granted.
In Trustees of Plumbers Local Union No. 1 Welfare Fund v. Bass Plumbing & Heating Corp., No. 13-CV-06797 ERK VMS, 2014 WL 6886107 (E.D.N.Y. Dec. 8, 2014), the court granted the Fund’s motion for summary judgment seeking unpaid fringe contributions from Defendants. The court found that Defendants were bound by the terms of two CBAs and they did not provide adequate notice to the Union about either their termination from the Association or their desire to abrogate the Agreements. The court explained that even if a letter from a multiemployer association to a union could be considered a proper form of notice of an employer’s withdrawal from the bargaining unit, the Association’s one-sentence notification that Defendants’ membership had been terminated falls short of the standard for “unequivocal” notice of withdrawal from the Agreements.

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