Source: https://www.lifeanddisabilitylaw.com/erisa-watch-october-9-2014/
Timestamp: 2019-04-18 10:53:01+00:00

Document:
In Tetreault v. Reliance Standard Life Ins. Co., 13-2353, __F.3d___, 2014 WL 4976198 (1st Cir. Oct. 6, 2014), the 1st Circuit Court of Appeals considered the question of whether ERISA permits a benefit plan to incorporate the 180-day appeals deadline into the “written instrument” through the summary plan description. The court decided that a benefit plan may expressly incorporate its internal appeals deadline into the written instrument through a summary plan description and that, when a benefit plan does so, a beneficiary’s failure to meet that deadline may bar her attempt to challenge an adverse benefit decision in court. The court clarified that its holding is a narrow one: it did not decide that claims procedures must be included in a benefit plan’s written instrument, nor did it address issues not presented in this case but that, in theory, might arise from the express incorporation of a summary plan description. The court rejected the plaintiff’s argument that the Plan should be estopped from enforcing the appeals deadline because it did not produce the summary plan description when her counsel requested the document prior to submitting her appeal. The court determined that even if such an argument for estoppel were cognizable under ERISA, an issue it previously declined to reach, estoppel would not free Tetreault from having to satisfy the 180-day appeals deadline since any reliance by Tetreault on the written instrument for the older version of the benefit plan was unreasonable. Reliance Standard twice informed Tetreault’s counsel that a 180-day internal appeals deadline applied to her case.
Addition of “Reservation of Rights Clause” Confers Standing on Claim for Clarification of Right to Future Benefits and § 1132(a)(1)(B) Claim is Not Time-Barred. In Bell v. Xerox Corp., 13-CV-6586L, 2014 WL 4955372 (W.D.N.Y. Oct. 2, 2014), fifteen plaintiffs brought suit against Xerox Corporation (“Xerox”), three alleged employee welfare benefit plans, and the administrators of those plans. The gist of plaintiffs’ claims is that they chose to participate in an early retirement program offered by Xerox in the 1980s, based in part on a promise that by doing so they would receive certain medical and dental benefits, at an unchanging level for the rest of their lives. Plaintiffs also allege that in 2008, defendants added a reservation-of-rights clause (“RORC”) to the materials provided to plaintiffs, indicating for the first time that Xerox could modify or even terminate plaintiffs’ medical and dental benefits. The plaintiffs’ actual benefits have not changed but they brought this action seeking to establish that defendants may not reduce their level of benefits, but must instead provide them with unchanging, unalterable, lifetime benefits. Defendants moved to dismiss the complaint on several grounds, which the court granted in part and denied in part. The defendants contended that plaintiffs lack standing to sue, because they have not been denied benefits, nor have their benefits been reduced. They further contended that plaintiffs’ claims under § 1132(a)(1)(B) is time-barred, that the ERP is not an ERISA-covered plan, and that defendants never promised plaintiffs unchanging, lifetime benefits. The court concluded that plaintiffs’ allegation that the added language in plaintiffs’ annual enrollment materials containing a RORC is sufficient to confer standing on the plaintiffs, as to their claim for clarification of their right to future benefits. By its very nature, a claim for clarification of future benefits presumes that the plaintiff is not currently being denied benefits to which he claims he is entitled. Thus, the fact that plaintiffs’ benefits have not yet been reduced does not mean that they lack standing to assert this claim. With respect to the defendants’ claim that the action is time-barred, the court determined that by its terms, the one-year contractual limitations period applies only to claims “for the alleged wrongful denial of Plan benefits or for intentional interference with any Plan rights to which any person is or may become entitled under ERISA….” and that plaintiffs’ first cause of action, which is brought under § 1132(a)(1)(B), does not allege they have been denied benefits, nor does it allege interference with their ERISA rights. Thus, the contractual limitations period, on its face, does not apply to plaintiffs’ first cause of action. Plaintiffs’ second cause of action alleges that “[d]efendants have refused to honor their obligation to pay for 100% of all eligible covered medical expenses once a plaintiff’s family has reached the 6% out-of-pocket maximum when one or both members of the family are eligible for Medicare.” The court determined that the second cause of action does not clearly seek benefits as such, but rather equitable relief, i.e., enforcement of the terms of the plan, as interpreted by plaintiffs. Any ambiguity in that regard must be construed against the defendants. Additionally, because defendants failed to include notice of the limitations period in the initial denial letter, the one-year statute of limitations should be disregarded. Applying New York’s six-year limitations period for contract actions, the court found that the action was timely because it did not accrue, at the earliest, until 2008, when defendants purported to add a RORC to the Old Plan. The court also determined that the plaintiffs have stated a viable claim for promissory estoppel, which is available on ERISA claims only in “extraordinary circumstances.” With respect to the claim for statutory damages under § 1132(c), the court dismissed this claim because it saw no indication of bad faith on the defendants’ part or any prejudice to plaintiffs stemming from any delay in defendants’ provision of particular documents.
Reliance Standard Did Not Abuse Discretion for Denying LTD Benefits to Claimant Who Lost Commercial License Due to Diagnosis of Diabetes Mellitus. In Hampton v. Reliance Standard Life Ins. Co., 13-2782, 2014 WL 4977397 (8th Cir. Oct. 7, 2014), the 8thCircuit Court of Appeals reversed the district court’s decision in favor of the plaintiff-LTD claimant who had ceased work as an over-the-road truck driver after being diagnosed with insulin-dependent diabetes mellitus. The Regulations of the United States Department of Transportation provide that any person with insulin-dependent diabetes mellitus is not qualified to operate a commercial motor vehicle. As a result, Arkansas disqualified the plaintiff’s commercial driver’s license. In support of his claims disability claims, the plaintiff submitted to Reliance Standard a statement from his doctor stating that he could not work because he was “unable to obtain a DOT health card with this new diagnosis.” The treating doctor later elaborated that he “d[id] not feel that Mr. Hampton will be able to obtain gainful employment noting his insulin dependent diabetes mellitus, which precludes him from operating any sort of heavy machinery or motorized vehicles based on the Department of Transportation regulations.” Reliance Standard denied the plaintiff’s claim for long-term disability benefits. To qualify as “Totally Disabled,” an insured must be unable to perform the material duties of his regular occupation due to injury or sickness and that if the insured “requires a license for such occupation, the loss of such license for any reason does not in and of itself constitute ‘Total Disability.'” Reliance Standard determined that there was no evidence that any symptoms of diabetes mellitus prevented him from performing his occupation under the terms of the Plan. After Reliance Standard upheld the denial of LTD benefits on appeal, the plaintiff brought suit. The district court reasoned that although Reliance Standard had discretion to interpret the Plan, less deference than usual was appropriate, because Reliance Standard was also responsible for paying benefits under the Plan. The court then concluded that Reliance Standard abused its discretion by adopting an unreasonable interpretation of the Plan. The court determined that the plaintiff was totally disabled under the terms of the Plan, because he lost his license as a result of his insulin-dependent diabetes mellitus. The district court cited to the Department of Transportation’s medical advisory criteria for evaluation under 49 C.F.R. § 391.41, noting that the federal government forbids insulin-dependent diabetics from operating commercial motor vehicles because the stresses of long-haul driving exacerbate the symptoms of diabetes. The 8thCircuit concluded that Reliance Standard’s interpretation of the Plan is reasonable. The loss-of-license provision states that the loss of a license for any reason is insufficient in and of itself to entitle a claimant to benefits. Reliance Standard’s interpretation does not foreclose a claimant who loses his license based on injury or sickness from receiving benefits; it merely requires that the claimant show that the injury or sickness itself-independent of the loss of license-renders him unable to perform his occupation. Although Reliance Standard’s conflict of interest in serving both as claims-review fiduciary and payer of benefits is a factor to be considered in the analysis, the court determined that Reliance Standard advanced the better reading of the disputed plan provision, and this is not the sort of case in which the fiduciary’s conflict likely was determinative. With respect to the other evidence supporting the plaintiff’s disability, the court determined that the plaintiff’s doctor did not identify physical limitations on the plaintiff’s ability to do work as a direct result of his diabetes. Reliance Standard also asked another doctor to review the plaintiff’s claim file, and that doctor found no evidence that diabetes mellitus impaired his ability to perform his occupation. The court rejected the plaintiff’s argument that the Department of Transportation’s medical advisory criteria effectively applies an irrebuttable presumption that a person afflicted with insulin-dependent diabetes is at risk of passing out, becoming disoriented, or going into a diabetic coma or shock while working as an over-the-road truck driver. It was permissible for Reliance Standard to require some evidence specific to the plaintiff, as opposed to the generalizations upon which the government sometimes must rely in its regulatory capacity to avoid significant administrative burdens. The court reversed the judgment of the district court and its award of attorneys’ fees and costs. Circuit Judge Smith wrote a dissenting opinion, concluding that Reliance Standard abused its discretion in denying LTD benefits because it failed to consider relevant federal regulations specifically referenced by the plaintiff’s doctor.
ERISA Does Not Govern Government Employees’ Claim for Loss of Retirement Benefits In Connection with Termination of Employment. In Dickerson v. D.C., CV 09-2213 (PLF), __F.Supp.3d___, 2014 WL 4851854 (D.D.C. Sept. 30, 2014), twenty-two plaintiffs who are former principals and assistant principals of public schools in the District of Columbia challenged their non-reappointment to these positions in 2008 and 2009, alleging that after they lost their positions, Chancellor Rhee defamed them by making statements to the press that attributed the poor state of the District’s schools to their allegedly ineffective performance as administrators. In their Third Amended Complaint, the plaintiffs assert a number of claims under both federal and District of Columbia law, including violations of ERISA. The plaintiffs contended that the District caused them to lose valuable retirement benefits. The District argued that ERISA does not apply with respect to government employees. 29 U.S.C. § 1003(b)(1) provides that, “the provisions of this subchapter shall not apply to any employee benefit plan if [ ] such plan is a governmental plan.” ERISA defines “governmental plan” to include “a plan established or maintained for its employees … by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.” 29 U.S.C. § 1002(32). And “[t]he term ‘State’ includes … the District of Columbia.” 29 U.S.C. § 1002(10). The plaintiffs did not file a response to the District’s position. The court found that the District’s position is correct: ERISA unequivocally exempts governmental benefit plans-like those of District of Columbia employees-from the scope of its coverage. Accordingly, the court dismissed the ERISA claim.
Stump v. Wachovia Grp. Long Term Disability Plan, 7:13CV00462, 2014 WL 4923223 (W.D. Va. Sept. 30, 2014) (granting Liberty Life’s motion for summary judgment in matter involving denial of long-term disability benefits under the “any occupation” definition of disability for a claimant with chronic pain, degenerative disc disease, arthritis, fibromyalgia and depression).
RM v. Sun Life Assur. Co. of Canada, 12-15375, 2014 WL 4869659 (E.D. Mich. Sept. 30, 2014) (on de novo review of Sun Life’s denial of long-term disability benefits, finding that the claimant is disabled from various forms of mental illness, where Defendant’s file reviewers’ did not interview or spend time with the claimant to understand her symptoms and had little bases to reject the three affidavits submitted by the claimant’s treating physicians that the claimant is totally disabled and unable to function at “any” work setting of her own occupation).
Young v. Am. Gen. Life Ins. Co., 1:13-CV-02055-SKO, 2014 WL 4960240 (E.D. Cal. Oct. 2, 2014) (finding single cause of action for “Claim Against Insurance Policies And Annuity Contracts” for proceeds of life and annuity policies provided through employer-sponsored benefit plan to be preempted by ERISA and dismissed without prejudice).
Advanced Ambulatory Surgical Ctr., Inc. v. Cigna Healthcare of Illinois, 13 C 7227, 2014 WL 4914299 (N.D. Ill. Sept. 30, 2014) (in suit by surgical center seeking payment for services rendered by participants in plans insured by Cigna, dismissing the center’s unjust enrichment claim and its Ill. Ins. Code § 155 claim as preempted by ERISA § 502(a), but finding that center’s promissory estoppel and fraud claims are not expressly preempted by ERISA § 514(a)).
Malishka v. Metro. Life Ins. Co., CIV.A. 13-0516, 2014 WL 4851509 (E.D. Pa. Sept. 30, 2014) (granting MetLife’s motion for summary judgment in denial of life insurance claim and finding that MetLife did not abuse its discretion in determining that the decedent did not work enough hours per quarter to be eligible for coverage).
Lanpher v. Metro. Life Ins. Co., CIV. 12-2561 JRT/JSM, 2014 WL 4829084 (D. Minn. Sept. 29, 2014) (concluding that it was an abuse of discretion and an unreasonable interpretation of the policy documents for MetLife to find that although the long-term disability claimant had fulfilled all of the enrollment requirements, he was not entitled to benefits because of a determination that he was not “covered” at the time of his disability because premiums had not been paid, where the plan language did not expressly make coverage contingent upon the employee’s payment of premiums; granting plaintiff’s § 1132(a)(1)(B) and concluding that he would alternatively be entitled to equitable relief on account of MetLife’s breach of its fiduciary duty).
Johnson v. Duke Energy Ret. Cash Balance Plan, 1:13CV156, 2014 WL 4851887 (M.D.N.C. Sept. 29, 2014) (finding in favor of Plan in action challenging pension plan administrator’s discretionary decision to round cash balance benefit at five decimal places, rather than seventeen decimal places, because the decision was reasonable).
Greenville Hosp. Sys. v. Employee Welfare Benefits Plan for Employees of Hazelhusrt Mgmt. Co., Underwritten by Aetna Life Ins. Co., CA 6:14-1919-TMC, 2014 WL 4976588 (D.S.C. Oct. 3, 2014) (in derivative action brought on behalf of insured for payment of medical services rendered, finding that the dispute is subject to arbitration even though a determination of benefits under the terms of Plan may fall within ERISA).
Jones v. Metro. Life Ins. Co., C-08-03971-RMW, 2014 WL 4966294 (N.D. Cal. Oct. 3, 2014) (denying plaintiff’s motion for leave to amend complaint to add MetLife as a party to § 1132(a)(1)(B) claim, because even though Cyr v. Reliance Standard Life Insurance Co., 642 F.3d 1202 (9th Cir.2011) (en banc) held that third party administrators like MetLife are often proper parties, in this case, MetLife no longer has authority to resolve or pay benefit claims because MetLife has been replaced by LINA as the claims administrator and MetLife is not a proper defendant to plaintiff’s § 1132(c)(1) claim).
Blue Cross Blue Shield of Minnesota v. Wells Fargo Bank, N.A., CIV. 11-2529 DWF/JJG, 2014 WL 4954655 (D. Minn. Oct. 2, 2014) (in matter where jury heard non-ERISA claims and court sat as the finder of fact for the ERISA fiduciary duty claims and testimony was relevant to the determination of liability by both the jury and the court, finding that the court was bound by the preclusive effect of a jury verdict on issue of breach of fiduciary duty where: (1) the same law firm represented all plaintiffs; (2) there was practical privity between the ERISA and non-ERISA Plaintiffs; and (3) the issues related to breach of fiduciary duty were identical, as repeatedly acknowledged by the parties).
Leber v. Citigroup 401(k) Plan Inv. Comm., 07-CV-9329 SHS, 2014 WL 4851816 (S.D.N.Y. Sept. 30, 2014) (denying Defendants’ motion for summary judgment seeking dismissal of Plaintiffs’ putative class action alleging Defendants breached their ERISA § 404 fiduciary duty of prudence for including in Citigroup’s 401(k) retirement plan mutual funds offered and managed by subsidiaries of Citigroup which had higher investment advisory fees than those of competing funds with equal performance, where Defendants contended that the action is untimely because plaintiffs possessed “actual knowledge” of the alleged breach more than three years before they filed suit, because Defendants presented no evidence that plaintiffs knew that the Affiliated Funds’ fees were higher than alternatives with comparable performance).
Medina v. Catholic Health Initiatives, No. 13-CV-01249-REB-KLM, 2014 WL 4852272 (D. Colo. Sept. 30, 2014) (finding that allegations in the complaint are sufficient plausibly to assert that the individual defendants, as members of their respective committees, possessed the type of discretionary authority sufficient to make them functional fiduciaries within the meaning of 29 U.S.C. § 1002(21)(A)(iii)).
Spine Surgery Associates & Discovery Imaging, PC v. INDECS Corp., CIV. 13-1390 KSH CLW, 2014 WL 4854508 (D.N.J. Sept. 30, 2014) (finding that, as a health care provider, Spine Surgery may bring suit for ERISA benefits upon valid assignment from a plan participant or beneficiary and the Assignment in question effectively transferred to Spine Surgery the right to pursue this action for benefits owed for its services).
Advanced Ambulatory Surgical Ctr., Inc. v. Cigna Healthcare of Illinois, 13 C 7227, 2014 WL 4914299 (N.D. Ill. Sept. 30, 2014) (commenting that Cigna’s motion to dismiss did not narrow the issues in the case nor prevent the advancement of a plainly spurious suit; instead “all that Cigna has accomplished is the further discombobulation of a set of state-law claims already fractured by the happenstance that some of the benefit plans at issue are governed by ERISA and some are not;” cautioning against filing a similar motion in the future).
Davidson v. Henkel Corp., 12-CV-14103, 2014 WL 4851759 (E.D. Mich. Sept. 29, 2014) (certifying class of nonqualified retirement plan participants allegedly affected by Defendants’ failure to follow the Internal Revenue Code’s (“IRC”) special timing rule for the withholding of Federal Income Contributions Act (“FICA”) taxes on vested deferred compensation).
Knapp v. Cardinale, C-12-05076-RMW, 2014 WL 4949522 (N.D. Cal. Oct. 2, 2014) (in matter by a profit sharing plan trustee and participant under ERISA § 502(a)(3) against a state judgment creditor, granting motion to refer the matter to Bankruptcy Court for determination as to whether the funds contained within the plan are part of the participant’s bankruptcy estate).
Bd. of Trustees v. Moore, 1:13-CV-477, 2014 WL 4909917 (S.D. Ohio Sept. 30, 2014) (in action seeking reimbursement of Plan healthcare expenditures from Defendants’ third-party personal injury settlement, finding in favor of the Plan and determining as ineffectual, Defendants attempt to exclude the Plan’s subrogation interest in the settlement with the state court defendants).
Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Lewis, 11 C 4845, 2014 WL 4923512 (N.D. Ill. Sept. 30, 2014) (finding in favor of Health and Welfare Fund in action seeking reimbursement of medical expenses from Defendants’ tort settlement from the plan participant and her attorney, determining that the Fund could maintain an “equitable lien by agreement” against the attorney since the equitable lien by agreement was created as soon as the settlement proceeds were received by the attorney, as the participant’s agent, and regardless of whether the attorney and plan participant already dissipated the settlement funds).
Mull v. Motion Picture Indus. Health Plan, LA CV 12-06693-VBF, 2014 WL 4854548 (C.D. Cal. Sept. 30, 2014) (finding that the reimbursement/recoupment provision which the Plan enforced is contained only in the Summary Plan Description (“SPD”) and not in any document which constitutes “the plan,” and thus is not legally enforceable).

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