In Brown v. Bluecross Blueshield of Tenn., 2016 U.S. App. LEXIS 11738 (6th Cir. 2016), Healthcare provider Harrogate Family Practice, LLC, and its owner, Amanda Brown (collectively “Harrogate”), brought suit under Section 502 of the ERISA to enjoin Blue Cross Blue Shield of Tennessee (“Blue Cross”) from recouping payments for services Harrogate provided to Blue Cross members. The district court dismissed for lack of subject matter jurisdiction, finding that Harrogate lacked standing under ERISA.

In this case, Harrogate is a healthcare provider that participates in Blue Cross networks, regularly treating patients who are participants and beneficiaries under health-benefit plans administered by Blue Cross. Per industry practice, Harrogate’s patients signed an “Assignment of Benefits Form,” allowing Harrogate to bill Blue Cross directly for payment of services. The arrangement between Harrogate and Blue Cross is governed by a Provider Agreement, which allows Blue Cross to perform post-payment audits and recoup overpayments from Harrogate in the event a payment error is detected. Harrogate objected to certain attempted recoupments, those made for so-called “ALCAT tests” (which purport to identify certain food allergies), and brought this suit.

On appeal, Harrogate argues that it has direct standing to sue as an ERISA beneficiary or, in the alternative, that it acquired derivative standing via an assignment of benefits from Blue Cross members. The Sixth Circuit Court of Appeals (the “Court”) concluded, that while Harrogate does have derivative standing through an assignment of benefits, its claim regarding recoupments falls outside the scope of that assignment, since the assigning patients have no standing to bring this suit. Therefore, the Court affirmed the judgment of the district court.



The U.S. Department of Labor (the “DOL”) has issued a new FAQ (Part 32), to provide guidance on the Notice of Coverage Options required in accordance with COBRA and the Affordable Care Act (the “ACA”). Here is what the FAQ says:

Notice of Coverage Options – COBRA and Health Insurance Marketplace Coverage

The ACA Health Insurance Marketplaces (the “Marketplaces”) are designed to ensure that individuals and small businesses have access to affordable coverage through a competitive private health insurance market. The Marketplaces offer “one-stop shopping” to assist individuals in finding, comparing and enrolling in private health insurance options. In general, under the COBRA continuation coverage provisions, an individual who was covered by a group health plan on the day before a qualifying event (such as termination of the covered employee’s employment, divorce, or a dependent aging out of a plan, if the event causes a loss of coverage) may be able to elect COBRA continuation coverage upon experiencing the qualifying event. Individuals with such a right are called qualified beneficiaries. A group health plan must provide qualified beneficiaries with a COBRA election notice that, among other things, describes their rights to COBRA continuation coverage and how to make a COBRA coverage election.

In IRS Health Care Tax Tip 2016-57, June 22, 2016, self-insured employers, applicable large employers and health coverage providers are reminded that the June 30 deadline to electronically file information returns with the IRS is approaching. The Tax Tip and the helpful information therein is here.

In IRS Health Care Tax Tip 2016-56, June 15, 2016, the IRS advises as follows:

If you filed for an extension of time to file your 2015 federal tax return – and you benefit from advance payments of the premium tax credit being made to your coverage provider – it’s important you file your return sooner rather than later.

You must file your 2015 tax return and reconcile your advance payments to ensure you can continue having advance credit payments paid on your behalf in future years. Advance payments of the premium tax credit are reviewed in the fall by the Health Insurance Marketplace for the next calendar year as part of their annual re-enrollment and income verification process. If you do not file and reconcile, you will not be eligible for advance payments of the premium tax credit in 2017. Use Form 8962, Premium Tax Credit, to reconcile any advance credit payments made on your behalf and to maintain your eligibility for future premium assistance.

In Chicago Regional Council of Carpenters Pension Fund v. Schal Bovis, Inc., Nos. 14-3413 & 14-3336 (7th Cir. 2016) the case had been brought by four carpenter union fringe benefit funds (“the Funds”) under § 301 of the Labor Management Relations Act (“LMRA”) and § 502(a) of ERISA. The Funds allege that Schal Bovis, Inc., a general contractor that builds large and small buildings in the Chicago metropolitan area, failed to make fringe benefit payments for work performed by nonunion labor, as was required under collective bargaining agreements. The Funds started with 36 claims of unpaid fringe benefits, but proceeded to trial on only four claims.

The district court granted summary judgment to the Funds on all four claims on the issue of liability. From summary judgment, the parties proceeded to a bench trial on damages, and from there both parties appeal. Schal Bovis appeals the granting of summary judgment for two of the four claims, the calculation of damages for those two claims, and the amount of attorneys’ fees awarded. The Funds cross-appeal the calculation of damages for one of the claims and the admission of certain evidence for that calculation.

Upon reviewing the case, the Seventh Circuit Court of Appeals (the “Court”) reversed the district court’s grant of summary judgment on the two claims that Schal Bovis appeals, and remanded the case for further proceedings. In the first of these claims, the Court held that the non-union subcontractor should be considered a single employer with the union signatory who ultimately performed the work. Consequently, the Funds are prevented from claiming fringe benefits for the work performed in that claim because Schal Bovis subcontracted the work to a union signatory as required by the collective bargaining agreement. In the second of these claims, the Court held that the collective bargaining agreement prevented the carpenters’ union from claiming work which was the existing practice of other trade unions. Since Schal Bovis presented undisputed evidence that the work performed in the second claim was the existing practice of another trade union—the union to which Schal Bovis subcontracted the work—the Funds cannot claim fringe benefit contributions for the work.

The issue in Ceco Concrete Construction, LLC v. Centennial State Carpenters Pension Trust, Nos. 15-1021, 15-1190 (10th Cir. May 3, 2016), is whether a construction company that stopped contributing to its employees’ pension plan must pay withdrawal liability under the Multiemployer Pension Plan Amendment Act (“MPPAA”).

In this case, Ceco Concrete Construction, LLC (“Ceco”) was a party to a collective bargaining agreement (“CBA”) that required it to contribute to the Centennial State Carpenters Pension Trust (“Trust”), a multiemployer pension plan. After Ceco stopped contributing, the Trust assessed MPPAA withdrawal liability, which is a payment that withdrawing employers must make to pension plans. Ceco disputed the withdrawal liability and initiated arbitration. The arbitrator sided with Ceco, concluding withdrawal liability was improper. Ceco then sued in federal district court to affirm the arbitrator’s decision. The Trust and its Board of Trustees (jointly, “the Plan”) counterclaimed, asking the district court to vacate the arbitrator’s award. The district court granted summary judgment in Ceco’s favor, and the Plan appeals.

Upon reviewing the case, the Tenth Circuit Court of Appeals (the “Court”) overturned the district court’s summary judgement. The Court noted that, under  ERISA § 1301(b)(1), an “employer” means “trades or businesses” under “common control” (i.e., a common-control group), and that all businesses under common control are treated as a single employer for purposes of collecting withdrawal liability, and each is liable for the withdrawal liability of another. Further, for construction employers, ERISA § 1383(b)(2) provides that a withdrawal (which triggers withdrawal liability) occurs when: (1) an employer ceases to have an obligation to contribute under the plan, and (2) either (a) continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required or (b) resumes such work within 5 years after the date on which the obligation to contribute under the plan ceases, and does not renew the obligation at the time of the resumption.

In Hogan v. Jacobson, No. 15-5572 (6th Cir. 2016),  Violet Hogan (“Hogan”) had sued the Life Insurance Company of North America (“LINA”) for violating the ERISA, by denying her claim for benefits under a disability-insurance policy (offered under a plan subject to ERISA). After losing that case, Hogan appealed to the Sixth Circuit Court of Appeals (the “Court”), which later affirmed the grant of judgment against her. While that appeal was still pending at the Court, Hogan filed the present case in the Jefferson County Circuit Court against Jo Ellen Jacobson (“Jacobson”) and Kem Alan Lockhart (“Lockhart”), two nurses who worked for LINA and who had provided opinions regarding Hogan’s eligibility for disability benefits after reviewing her claim.

Hogan carefully pleaded her claims in the second suit to avoid reference to LINA or ERISA, alleging only that Jacobson and Lockhart committed negligence per se by giving medical advice without being licensed under Kentucky’s medical-licensure laws. The defendants removed the case to federal court on the basis of ERISA’s complete-preemptive rule, and the district court then denied Hogan’s attempts to remand the case to state court and later granted the defendants’ motion to dismiss.

Upon reviewing the second case, the Court said that, because Hogan’s artfully pleaded state-law claims are, at bottom, claims for the wrongful denial of benefits under an ERISA plan that arise solely from the relationship created by that ERISA plan, the Sixth Circuit Court of Appeals (the “Court”) affirms the denial of Hogan’s motion to remand. Further, finding that Hogan’s second claim for benefits is virtually identical to her first and suffers from the same infirmities, and that her new claim under a different portion of ERISA fails to state anything beyond conclusory allegations, the Court affirms the grant of the defendants’ motion to dismiss.

The case of Rich v. Shrader, No. 14-55484 (9th Cir. 2016), involves, among other things, an employer’s Stock Rights Plan (the “SRP”). The question arose as to whether the SRP is subject to ERISA.

The SRP operated in the following manner: The employer granted eligible employees the right to purchase employer stock at such times, in such amounts and to such employees as determined in the “sole discretion” of the employer’s Board of Directors. The receiving employee was required to exercise the stock rights within sixty days of the grant by, among other things, purchasing ten percent of the stock rights. On June 15 of each subsequent year, the employee would have the opportunity to purchase another ten percent of the initial grant of stock rights. In the event the employee failed to exercise the rights within sixty days of the initial grant or each June 15, all unexercised rights that the employee may have would be forfeited. Although SRP participants were expected to hold their shares until they leave the firm, they were not precluded from selling paid-up stock back to the employer at any time. Shares earned through the SRP increased in value ten percent annually. In the event an SRP participant ceased being an employee of the employer by virtue of retirement, disability, or death, the employer had the right to repurchase that employee’s shares within twenty-four months after the end of his or her employment.

The Ninth Circuit Court of Appeals (the “Court”) said that ERISA coverage extends to employee pension benefit plans. A plan qualifies as an employee pension benefit plan if by its express terms or as a result of surrounding circumstances such plan: (i) provides retirement income to employees, or (ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond (29 U.S.C. § 1002(2)(A)).The paramount consideration is whether the primary purpose of the plan is to provide deferred compensation or other retirement benefits.

The Pension Benefit Guarantee Corporation (the “PBGC”) has now issued proposed rules on mergers and transfers between multiemployer plans. These proposed rules would amend the PBGC’s existing regulation on these mergers and transfers, to implement section 121 of the Multiemployer Pension Reform Act of 2014 (the “MPRA”). The proposed rules would also reorganize and update the existing regulation.

According to the Executive Summary in the Preamble to the proposed rules, section 121 of MPRA amends the existing rules under section 4231 of ERISA by adding a new section 4231(e), which clarifies PBGC’s authority to facilitate the merger of two or more multiemployer plans, if certain statutory requirements are met. For purposes of section 4231(e), “facilitation” may include training, technical assistance, mediation, communication with stakeholders, and support with related requests to other government agencies. In addition, subject to the requirements of section 4231(e)(2), the PBGC may provide financial assistance (within the meaning of section 4261 of ERISA) to facilitate a merger it determines is necessary to enable one or more of the plans involved to avoid or postpone insolvency. The proposed rules would provide guidance on the process for requesting a facilitated merger under section 4231(e) of ERISA, including a request for financial assistance under section 4231(e)(2).
 In addition, subject to the requirements of section 4231(e)(2), the PBGC may provide financial assistance (within the meaning of section 4261 of ERISA) to facilitate a merger it determines is necessary to enable one or more of the plans involved to avoid or postpone insolvency. The proposed rules would provide guidance on the process for requesting a facilitated merger under section 4231(e) of ERISA, including a request for financial assistance under section 4231(e)(2).

In American Psychiartric Association v. Anthem Health Plans, No. 14-3993-cv. (2nd Cir. 2016), the plaintiffs are two individual psychiatrists, Susan Savulak, M.D., and Theodore Zanker, M.D. (“the psychiatrists”), and three professional associations of psychiatrists, the American Psychiatric Association, the Connecticut Psychiatric Society, Inc., and the Connecticut Council of Child and Adolescent Psychiatry (collectively, “the associations”). They brought suit in the United States District Court for the District of Connecticut against the defendants, which are four health-insurance companies: Anthem Health Plans, Inc., Anthem Insurance Companies, Inc., Wellpoint, Inc. and Wellpoint Companies, Inc. (collectively, “the health insurers”).

The psychiatrists and the associations allege that the health insurers’ reimbursement practices discriminate against patients with mental health and substance use disorders in violation of the Mental Health Parity and Addition Equity Act of 2008 (“MHPAEA”) and ERISA. The associations brought suit on behalf of their members and their members’ patients, while the psychiatrists brought suit on behalf of themselves and their patients. The district court dismissed the case after concluding that the psychiatrists lacked a cause of action under ERISA and the associations lacked constitutional standing to pursue their respective claims.

The Second Circuit Court of Appeals (the “Court”) affirmed the district court’s decision. The Court held that, since the psychiatrists are not among those expressly authorized to sue, they lack a cause of action (that is, standing to sue) under ERISA.  Further, the Court held that the association plaintiffs lack constitutional standing to pursue their respective MHPAEA and ERISA claims because their members lack standing.