Recently in ERISA Category

May 26, 2015

ERISA-Seventh Circuit Dismisses Case Since Plaintiffs Failed To Exhaust Administrative Remedies

In Orr v. Assurant Employee Benefits, No. 14-2370 (7th Cir. 2015), the plaintiffs, Danielle and Hailey Orr, are the daughters of Daniel Orr, who died in a motorcycle accident on August 7, 2012. As Daniel Orr's beneficiaries, Danielle and Hailey filed claims seeking benefits payable under a Group Life Insurance Policy, which is governed by ERISA, and which Union Security Insurance Company ("USIC") issued to Daniel Orr's former employer, Modern 1 Group of Companies, LLC. USIC denied the claim, and the Orrs brought this suit. The district court granted summary judgment against the Orrs, on the grounds that they had failed to exhaust their administrative remedies prior to bringing the suit. The Orrs appeal.

Upon reviewing the case, the Seventh Circuit Court of Appeals (the "Court") agreed with the district court that the Orrs failed to exhaust their administrative remedies prior to filing suit. USIC's "Life Claims Denial Review Procedure" requires that a claimant seeking review of a claim denial complete two levels of internal review prior to filing a lawsuit. The Procedure unmistakably requires the claimant to submit a request for review in writing, which the Orrs failed to do. Also, the Orrs failed to show why the failure to exhaust administrative remedies should be excused. As such, the Court upheld the district court's summary judgment.

May 21, 2015

ERISA-Second Circuit Rules That Plan Administrator's Denial Of Benefits Claim Was Not Arbitrary Or Capricious

In Roganti v. Metropolitan Life Insurance Company, Nos. 13-4532-cv (L), 13-4684-cv (XAP) (2nd Cir. 2015), the plaintiff, Ronald Roganti ("Roganti"), was a successful executive with defendant Metropolitan Life Insurance Company ("MetLife") until 2005, when he resigned in the face of pay reductions that he claims were levied in retaliation for his opposition to unethical business practices. Roganti brought arbitration proceedings against MetLife before the Financial Industry Regulatory Authority ("FINRA"), seeking, among other things, wages that he would have been paid but for the retaliatory pay reductions, as well as compensation for the decreased value of his pension, which was tied to his wages. The FINRA panel awarded Roganti approximately $2.49 million in "compensatory damages," but its award did not clarify what that sum was compensation for. Roganti then filed a benefits claim with MetLife, arguing that the award represented back pay and that his pension benefits should be adjusted upward as if he had earned the money while he was still employed. MetLife denied the claim because the FINRA award did not say that it was, in fact, back pay. Roganti brought this lawsuit.

In analyzing the case, the Second Circuit Court of Appeals (the "Court") noted that ERISA creates a private right of action to enforce the terms of a benefit plan. ERISA section 502(a)(1)(B). The pension plans covering Roganti plans vest interpretive discretion in the plan administrator, which means that the plan administrator's benefits decision is conclusive unless it is arbitrary and capricious. MetLife is the plan administrator. After a summary bench trial on stipulated facts, the district court determined that MetLife's denial of Roganti's claim was arbitrary and capricious because it was clear from the arbitral record that the award did represent back pay. The Court said that it did not agree. Instead, the Court concluded that MetLife's denial of Roganti's claim was not arbitrary and capricious, and that MetLife is therefore entitled to judgment in its favor as to his benefits claim.

Why this conclusion? The Court found that MetLife's rationale for denying Roganti's claim--i.e., that it was impossible to determine whether, or the extent to which, the FINRA award represented back pay--was not, in fact, unreasonable, and therefore met the arbitrary and capricious standard.


May 20, 2015

ERISA-Fifth Circuit Rules That Administrator Is Not An ERISA Fiduciary

In Humana Health Plan, Incorporated v. Nguyen, No. 14-20358 (5th Cir. 2015), the defendant, Patrick Nguyen ("Nguyen"), was appealing from the district court's order granting summary judgment in favor of the plaintiff, Humana Health Plan, Inc. ("Humana").

In this case, Nguyen was a participant in the API Enterprises Employee Benefits Plan (the "Plan"), an ERISA-governed employee welfare plan established by API Enterprises, Inc. ("API"). API had entered into a Plan Management Agreement ("PMA") with Humana, through which Humana had agreed to serve as "Plan Manager" and to provide various administrative services to the Plan. Two of Humana's tasks for the Plan were subrogation and recovery services. One issue arising in the case: is Humana an ERISA fiduciary with respect to the Plan under section 3(21) of ERISA(if not, it can't sue Nguyen under ERISA section 502(a)(3))? The Fifth Circuit Court of Appeals (the "Court") determined that Humana is not an ERISA fiduciary. Why?

In analyzing the case, the Court focused on the specific role that Humana undertook regarding subrogation and recovery services for the Plan, and whether API provided a framework of policies and procedures to guide Humana, and supervised Humana as it executed its task. First, the relevant language of the PMA pertaining to these services merely defines the range of potential disputes covered by the contract; it says nothing about who has the right to finally decide whether to investigate or pursue a claim. This language does not show that Humana had discretion over the Plan or its assets. As such, the subrogation and recovery language in the PMA does not show that Humana is an ERISA fiduciary of the Plan. Second, even if the Court interpreted the PMA to give Humana broad power, there is no explanation as to why Humana is not a ministerial agent, and thus not a fiduciary, or why it how Humana exercised discretion as described in section 3(21)(A)(i) and (iii).

May 19, 2015

ERISA-Supreme Court Rules That Fiduciaries Have A Continuing Duty To Monitor Plan Investments For Purposes Of Determining Whether ERISA's Statute Of Limitations Has Expired

In Tibble v. Edison International, No. 13-550 (U.S. Supreme Court 2015), in 2007, the plaintiffs, beneficiaries of the Edison 401(k) Savings Plan (the "Plan"), sued Plan fiduciaries, defendants Edison International and others, to recover damages for alleged losses suffered by the Plan from alleged breaches of the defendants' fiduciary duties. The plaintiffs argued that the defendants violated their fiduciary duties with respect to three mutual funds added to the Plan in 1999 and three mutual funds added to the Plan in 2002. They argued that the defendants acted imprudently by offering these six higher priced retail-class mutual funds as Plan investments, when materially identical lower priced institutional-class mutual funds were available.

Because ERISA requires a breach of fiduciary duty complaint to be filed no more than six years after "the date of the last action which constitutes a part of the breach or violation" or "in the case of an omission the latest date on which the fiduciary could have cured the breach or violation," under section 413 of ERSA, the District Court held that the plaintiffs' complaint as to the 1999 funds was untimely because they were included in the Plan more than six years before the complaint was filed, and the circumstances had not changed enough within the 6- year statutory period to place the defendants under an obligation to review the mutual funds and to convert them to lower priced institutional-class funds. The Ninth Circuit affirmed, concluding that the plaintiffs had not established a change in circumstances that might trigger an obligation to conduct a full due diligence review of the 1999 funds within the 6-year statutory period.

Upon its review of the case, the U.S. Supreme Court held that the Ninth Circuit erred by applying section 413's statutory bar to a breach of fiduciary duty claim based on the initial selection of the investments without considering the contours of the alleged breach of fiduciary duty. ERISA's fiduciary duty is "derived from the common law of trusts, which provides that a trustee has a continuing duty--separate and apart from the duty to exercise prudence in selecting investments at the outset--to monitor, and remove imprudent, trust investments. So long as a plaintiff's claim alleging breach of the continuing duty of prudence occurred within six years of suit, the claim is timely.

As such, the Supreme Court remanded the case back to the Ninth Circuit to consider the plaintiffs' claims that the defendants breached their duties within the relevant 6-year statutory period under section 413, recognizing the importance of analogous trust law.

May 12, 2015

ERISA-Seventh Circuit Reverses Decision Pertaining To Benefit Calculation For Imprecision

In Reilly v. Continental Casualty Co., No. 14-2888 (7th Cir. 2015), Michael Reilly ("Reilly") had participated in a pension plan offered by Continental Casualty Co. ("Continental"). Continental administers its own defined-benefit plan, which provides that the pension depends on the highest average compensation in any 60-month period of employment. "Compensation" is a defined term: regular salary, incentive compensation, and deferred compensation deposited in §401(k) plans are in (as are some other items), while educational bonuses, referral bonuses, overseas allowances, and some other items are out.

In this case, when Reilly left Continental's employ in 1999, he received a statement of his qualifying compensation that implied a monthly benefit of about $5,400 starting in 2012, when he would turn 65 and become eligible. Come 2012, however, Continental sent Reilly a different calculation, showing lower compensation and entitlement to roughly $4,200 a month. When internal appeals did not avail him, Reilly filed this suit under §502(a)(1)(B) of ERISA. The district judge concluded that Continental's decision was arbitrary and capricious (which the parties agree is the governing standard), and the court ordered it to pay monthly benefits at the $5,400 level. Continental appeals, contending in this court that its calculation should have been sustained, and if not that the district court should have remanded for a new calculation rather than ordering payment at the rate projected in 1999.

In analyzing the case, the Seventh Circuit Court of Appeals (the "Court") said that the district court's decision cannot stand, because Reilly has not tried to show that $5,400 is the only possible outcome of a proper calculation process. All that has been established to date is that Continental's 2012 decision is unreliable. By working through the original compensation numbers, the parties may be able to agree what the right pension is under the Plan's terms. If agreement is elusive, the district court must remand this matter to Continental so that the administrator can make a fresh calculation, which then could be subjected to another round of judicial review. Accordingly, the Court reversed the district court's decision, and remanded the case for further proceedings consistent with its opinion.

May 7, 2015

ERISA-Tenth Circuit Discusses Statute Of Limitations For Bringing A Claim Of Breach Of Fiduciary Duty Under Section 413 of ERISA

In Fulghum v. Embarq Corporation, No. 13-3230 (10th Cir. 2015), the plaintiffs represent a class of retirees formerly employed by Sprint-Nextel Corporation ("Sprint"), Embarq Corporation ("Embarq"), or a predecessor and/or subsidiary company of either Embarq or Sprint (such companies being the defendants). The plaintiffs brought this suit after the defendants altered or eliminated health and life insurance benefits for retirees. Plaintiffs claimed, among other things, that the defendants had breached their fiduciary duty by misrepresenting the terms of multiple welfare benefit plans. One issue faced by the Tenth Circuit Court of Appeals (the "Court") was whether the statute of limitations for bringing this claim had expired. Here is what the Court said on this issue:

This Court has previously held that section 413 of ERISA governs the time for filing a breach of fiduciary duty claim arising from an alleged violation of the duties imposed on ERISA plan fiduciaries by section 404(a)(1) of ERISA. Section 413 sets out the following six-year limitations period:

No action may be commenced under this subchapter with respect to a fiduciary's breach of any responsibility, duty, or obligation under this part, or with respect to a violation of this part, after the earlier of--
(1) six years after (A) the date of the last action which constituted a part of the breach or violation, or (B) in the case of an omission the latest date on which the fiduciary could have cured the breach or violation. . . .

That is, a plaintiff has six years to file his or her suit for breach of fiduciary duty--the six-year period being measured from (1) the date of the last action constituting a part of the breach or (2) the latest date on which the breach could have been cured by the fiduciary.

Section 413 has a separate three-year statute of limitations which is not applicable here. But section 413 also says that in the case of fraud or concealment, a civil enforcement action may be commenced not later than six years after the date of discovery of the breach or violation. When does the "fraud or concealment" provision apply? The Circuit Courts are split. This Court believes that this provision is a legislatively created exception to the general six-year rule, rather than being a separate statute of limitations. This exception generally applies when either: (1) the alleged breach of fiduciary duty involves a claim that the defendant made a false representation of a matter of fact which deceives, and is intended to deceive, another person that this person acts upon it to his legal injury or (2) the defendant conceals the alleged breach of fiduciary duty.

There remains the question here of whether the breach of fiduciary duty claims raised by Plaintiffs fall under the fraud or concealment exception to the general six-year rule. There is no concealment here. And the Court remanded the case back to the district court to determine if the plaintiffs' claims are based on a theory of fraud.

May 6, 2015

ERISA-Ninth Circuit Rules That Assets Held In A Savings Account May Be Considered To Be Held In Trust For Purposes Of ERISA

In Barboza v. California Professional Association of Firefighters, Nos. 11-15472, 11-16024, 11-16081, and 11-16082 (9th Cir. 2015), the Ninth Circuit Court of Appeals (the "Court") was required to interpret, among others, the requirement in section 403(a) of ERISA that all assets of an employee benefit plan shall be held in trust by one or more trustees (sometimes called the "hold in trust" requirement).

At issue is a long-term disability plan (the "Plan"), which is an employee welfare benefit plan governed by ERISA, and which receives its funding exclusively from participants and pays all benefits solely from its assets. The Plan functions as follows. First, each participant makes a monthly contribution to the Plan. These contributions are deposited into a Wells Fargo Bank checking account. The benefits are paid in the form of a check drawn on the Wells Fargo account for the appropriate amount. Plan expenses, including administrative service fees, are paid from the assets in the Wells Fargo account. The question: are the Plan assets being held in trust?

In analyzing the case, the Court said that ERISA requires, under section 403(a), that generally all assets of an employee benefit plan must be held in trust by one or more trustees. 29 U.S.C. § 1103(a). Further, such trustee or trustees must be either named in the trust instrument or in the plan instrument or appointed by a person who is a named fiduciary. The Court said further that, to meet these requirements, a person (legal or natural) must hold legal title to the assets of an employee benefit plan with the intent to deal with these assets solely for the benefit of the members of that plan. Such a person is the "trustee," and the resulting relationship between the trustee and the participants in the plan with respect to a plan's assets is a "trust" for purposes of section 403(a). The Court noted that Barboza, and the Department of Labor (as amicus curiae), argue, in effect, that compliance with section 403(a) requires a party to record its responsibilities with respect to the assets of an employee benefit plan in a document that is entitled "trust instrument," uses the terms "trust" and "trustee," and expressly states that the party is holding the assets "in trust." Further, the Department appears to interpret its regulation at 29 C.F.R. § 2550.403a-1 as requiring parties to use express words of trust to comply with section 403(a).

However, the Court said that it rejects the argument, and concluded that the Plan assets held in the Wells Fargo account here satisfies the held in trust requirement. The Plan instrument (i.e., the official plan document which sets forth the Plan's terms) requires the California Association of Professional Firefighters ("CAPF"), the Plan's manager, to hold legal title to all property, monies and contract rights as well as all of the funds maintained in connection with the Plan. CAPF holds these assets for the Plan on behalf of the participants. The Plan instrument thus establishes a fiduciary relationship between CAPF, as the trustee, and the participants, as beneficiaries, with respect to the property contributed to the Plan (the trust res); this constitutes a trust according to its common law definition. Because the Plan instrument here is a written instrument that establishes a trust relationship, it is a written trust instrument for purposes of section 403(a).

May 5, 2015

ERISA-Ninth Circuit Finds No Breach Of ERISA Fiduciary Duty Stemming From Failure To File Form 990 (TEO's Tax Return)

In Barboza v. Cal. Ass'n. of Prof. Firefighters, No. 11-15472 (9th Cir. Apr. 7, 2015), plaintiff David Barboza, seeking disability benefits, challenged (among other matters) the district court's grant of summary judgment to the defendants on Barboza's claim that they breached their fiduciary duties by failing to file Internal Revenue Service (IRS) Form 990 (a tax-exempt organization's tax return) on the advice of their counsel and accountant.

The Ninth Circuit Court of Appeals upheld the summary judgment, stating that Barboza has not provided any evidence that, when the defendants failed to file Form 990, the defendants did not: (1) investigate the expert's qualifications-the experts being defendant's legal counsel and accountant, (2) provide the experts with complete and accurate information, and (3) make certain that reliance on the expert's advice is reasonably justified under the circumstances, in violation of ERISAs prudent man standard of care.

April 30, 2015

ERISA-First Circuit Rules That Administrator's Decision To Deny Benefits From A "Top Hat" Plan (Subject To ERISA) May Be Entitled To Deferential Review

In Niebauer v. Crane & Co., Inc., No. 14-2059 (1st Cir. 2015), a case arising under ERISA, plaintiff Robert Niebauer alleges, among other things, that the administrator of his former employer's executive severance plan denied him severance benefits, after erroneously determining that he had retired voluntarily from his position. The district court granted the defendants summary judgment on this allegation, and Niebauer appeals. In analyzing the case, the First Circuit Court of Appeals (the "Court") found that the plan administrator's decision to deny Niebauer's claim for benefits was both supported by substantial evidence and procedurally proper. Accordingly, the Court affirmed the district court's summary judgment on the benefits claim.

In this case, the executive severance plan (the "Plan"), which is a welfare benefit plan subject to ERISA, provided severance benefits to designated employees who have been involuntarily terminated. Employees who voluntarily leave the employer are entitled to benefits only if they do so for "good reason," which the Plan defines as certain changes to an employee's position, such as relocation, significant reduction in salary, or substantial changes to the employee's job responsibilities. The Plan reserves to the administrator -- here, the compensation committee of the employer's board of directors -- "full discretionary power and authority to construe, interpret and administer the Plan [and] to make Benefit Eligibility determinations." As an executive, Niebauer was covered by the Plan. After leaving employment, Niebauer filed a claim for severance benefits under the Plan, on the grounds of involuntary termination. The administrator found that his leaving was voluntary, and not for good reason, and therefore denied the benefits claim. This suit followed.

In affirming the district court's summary judgment on the benefits claim, the Court noted that where, as here, an ERISA plan-even a welfare benefit plan and specifically a "top hat" plan for executives as here - delegates to the plan administrator the discretion to construe the plan and determine eligibility for benefits under its provisions, a decision made under the plan will be upheld unless it was arbitrary, capricious, or an abuse of discretion. And here-since the administrator's decision to deny Niebauer benefits claim was supported by substantial evidence and procedurally proper- the Court held that the decision is not arbitrary, capricious or an abuse of discretion, and therefore must be upheld.

April 29, 2015

ERISA-Fifth Circuit Rules That A Hospital May Have Standing To Sue An Insurer Under ERISA For Unpaid Benefits

In North Cypress Medical Center Operating Company, Limited v. Cigna Healthcare, No. 12-20695 (5th Cir. 2015), the Fifth Circuit Court of Appeals (the "Court") faced the issue of whether a hospital, North Cypress, has standing to sue an insurer, CIGNA, under ERISA for benefits CIGNA has not paid under health plans which it insures. North Cypress is an out-of-network provider under the health plans at issue (the "Plans"). Bills to insured patients from North Cypress for hospital services have two parts: the part the patient pays and the insurer pays. North Cypress developed a practice, under which it would discount the amount due from the patient, but would not reduce the amount paid by the insurer. Upon learning about this practice, with respect to patients who participate in the Plans, CIGNA refused to pay the full amount of its part of the bills. North Cypress sued CIGNA under ERISA for the amounts it owes under the bills. The district court ruled that the hospital does not have standing to bring this ERISA claim, and the North Cypress appeals.

In analyzing the case, the Court said that healthcare providers, such as hospital, may not sue in their own right to collect benefits under an ERISA plan, but may bring ERISA suits standing in the shoes of their patients. In this case, the hospital had received express assignments of rights from at least some of its patients. Here, the insurer argues that there is no injury in fact to patients-a requisite for standing under the Constitution- because they were not billed for the amount allegedly due from the insurance plans. But the assignment, at the time made, is for all amounts due from the Plans. The patients have the right to have the benefits paid in full, and this right does not disappear because of the assignment, so that the insurer's failure to pay causes injury. As such, the Court concluded that North Cypress has standing-under both the Constitution's minimum requirements and ERISA's statutory rules-to bring its claims under ERISA.

April 27, 2015

ERISA-Ninth Circuit Holds That An SPD Cannot Grant A Plan Administrator Discretionary Authority, To Justify An Abuse Of Discretion Review, When The Plan Itself Does Not Grant Such Authority

In Prichard v. Metropolitan Life Insurance Company, No. 12-17355 (9th Cir. 2015), Matthew Prichard appeals from the district court's judgment affirming Metropolitan Life Insurance Company's ("MetLife") decision, as plan administrator, to deny him long-term disability benefits under the long- term disability plan of his employer, IBM (the "Plan"). The district court had reviewed MetLife's decision to deny the benefits for abuse of discretion. The Ninth Circuit Court of Appeals (the "Court") ruled that the district court should have reviewed MetLife's decision de novo, and not for an abuse of discretion. Therefore, the Court vacated the district court's judgment, and remanded the case back to the district court to review MetLife's denial of benefits de novo.

In analyzing the case, the Court said that the district court must review a plan administrator's denial of benefits de novo, unless the benefit plan gives the administrator fiduciary discretionary authority to determine eligibility for benefits. Here, it is undisputed that the only document in the record that confers discretionary authority upon MetLife is the Plan's summary plan description (the "SPD"). Prichard argues that after the Supreme Court's decision in Amara, a grant of discretion located only within an SPD (as opposed to a formal plan document) is insufficient to warrant discretionary review. However, MetLife argues that Prichard misapprehends the scope of the Plan. According to MetLife, the SPD is the Plan (i.e., it is the only formal Plan document), and therefore the SPD's terms warrant discretionary review.

In this case, noted the Court, the Plan has a separate document, in the form of an insurance certificate which contains the terms of the Plan, so the Plan and the SPD are not one and the same. The Plan document does not grant discretion to the plan administrator. The Court said that, although the SPD in this case does indicate that MetLife has discretionary authority, the Supreme Court has made clear in Amara that statements made in SPDs do not themselves constitute the terms of the plan. Because the official insurance certificate contains no discretion-granting terms, the Court held, consistent with Amara, that the SPD's grant of discretion constitutes an additional term of the Plan and therefore cannot be applied. Consequently, the Court concluded that the district court erred in applying the abuse of discretion standard of review.

April 22, 2015

ERISA-Sixth Circuit Rules That Defendants Breached Fiduciary Duty By Providing A Summary Plan Description Which Led Plaintiff To Believe He Is Entitled To A Benefit Increase

In Stiso v. International Steel Group, No. 13-3503 (6th Circuit 2015) (Unpublished Opinion), Plaintiff Michael Stiso, an employee of defendant International Steel Group and a beneficiary under its long-term disability insurance plan, brought this action, under sections 502(a)(1)(B) (claim for benefits) and 502(a)(3) (claim based on estoppel and breach of fiduciary duty), to enforce a 7% per year cost-of-living increase to his long-term disability benefits. He sought the increase in benefits based on language from the long-term disability plan and from the summary plan description. The language in both the disability plan and in the summary of the disability plan distributed to employees refers to a 7% increase in predisability earnings. The district court ruled against Stiso, and he appealed.

In analyzing the case, the Sixth Circuit Court of Appeals (the "Court") said that by providing plaintiff with a summary plan description that led plaintiff reasonably to understand that he would receive a 7% yearly increase in benefits and then denying his claim despite the explicit language in the summary plan description, both International Steel and defendant Metropolitan Life Insurance Company breached their fiduciary responsibilities to plaintiff. Therefore, the Court reversed the district court's judgment and remanded the case with instructions to grant an increase in benefits to Stiso. The Court said further that, on remand, Stiso may seek the appropriate equitable remedy, including make-whole relief in the form of money damages referred to by the Supreme Court in its Amara decision.

April 16, 2015

ERISA-First Circuit Upholds Termination Of Disability Benefits Due To A 24 Month Limitation In The Plan For Disabilities Relating To Mental Health Conditions

In Dutkewych v. Standard Insurance Company, No. 14-1450 (1st Cir. 2015), the First Circuit Court of Appeals (the "Court") faced the following matter. Plaintiff Mark Dutkewych is a participant in a disability plan (the "Plan"), insured and administered by Defendant Standard Insurance Company under ERISA. The Plan limits long-term disability ("LTD") benefits to 24 months for "a Disability caused or contributed to by . . .: (1) Mental Disorders; (2) Substance Abuse; or (3) Other Limited Conditions." Applying this Limited Conditions Provision, Standard terminated Dutkewych's benefits after 24 months, on June 1, 2011. After Dutkewych's administrative appeal failed, he brought this lawsuit against Standard for unpaid benefits. The district court entered summary judgment against Dutkewych's claims, and Dutkewych appealed.

In reviewing the case, the Court said that Dutkewych contests Standard's decision to limit his LTD benefits to 24 months, saying he has been diagnosed with chronic Lyme disease, "a physical illness that is not limited under the terms of the Plan." Despite the hot dispute between the parties on this issue, this case does not turn on the insurer's doubts about the validity of Dutkewych's diagnosis with chronic Lyme disease. Instead, this case turns on the insurer's application of a different provision of the Plan, the subset of the Limited Conditions Provision related to mental disorders ("Mental Disorder Limitation").Standard maintains that, even if Dutkewych was disabled as a result of chronic Lyme disease in June 2011, the Mental Disorder Limitation nonetheless applies because his mental disorders, regardless of their cause, contributed to his disability as of June 2011. The Court ruled that Standard's interpretation of the Mental Disorder Limitation is reasonable and its application to Dutkewych's case is supported by substantial evidence. Accordingly, the Court affirmed the entry of summary judgment to Standard.

April 15, 2015

ERISA-DOL Proposes New Rule Defining A Fiduciary For Certain Purposes of ERISA And Providing Guidance On A Fiduciary's Conflict of Interest.

The U.S. Department of Labor (the "DOL") has issued a new proposed rule providing a new definition of fiduciary for certain ERISA purposes and pertaining to an ERISA fiduciary's conflict of interest. Here is what the DOL about the proposed rule:

This proposal contains a proposed regulation defining who is a "fiduciary" of an employee benefit plan under ERISA as a result of giving investment advice to a plan or its participants or beneficiaries. The proposal also applies to the definition of a "fiduciary" of a plan (including an individual retirement account (IRA)) under section 4975 of the Internal Revenue Code of 1986 (the "Code"). If adopted, the proposal would treat persons who provide investment advice or recommendations to an employee benefit plan, plan fiduciary, plan participant or beneficiary, IRA, or IRA owner as fiduciaries under ERISA and the Code in a wider array of advice relationships than the existing ERISA and Code regulations, which would be replaced. The proposed rule, and related exemptions, would increase consumer protection for plan sponsors, fiduciaries, participants, beneficiaries and IRA owners.

This proposal also withdraws a prior proposed regulation published in 2010 (2010 Proposal) concerning this same subject matter. In connection with this proposal, elsewhere in the same issue of the Federal Register, the DOL is proposing new exemptions and amendments to existing exemptions from the prohibited transaction rules applicable to fiduciaries under ERISA and the Code that would allow certain broker-dealers, insurance agents and others that act as investment advice fiduciaries to continue to receive a variety of common forms of compensation that otherwise would be prohibited as conflicts of interest.

March 30, 2015

ERISA- Fifth Circuit Holds That An Out-Of-Network Hospital Has Standing To Sue A Health Plan Under ERISA For Unpaid Benefits, When Plan Participants Assigned To The Hospital Their Right To Benefits From The Plan

In North Cypress Medical Center Operating Company, Limited v. Cigna Healthcare, No. 12-20695 (5th Cir. 2015), the Fifth Circuit Court of Appeals (the "Court") ruled that an out-of-network hospital has standing-as a matter of both the constitutional minimum standing requirement and statutory standing needed under ERISA-to sue a health plan for payment of benefits, when plan participants had expressly assigned to the hospital their right to benefits from the plan.

In so ruling, the Court took into account the fact that hospital patients covered by a health plan generally assign their claims to the hospital in the admissions process well before their presentment to the plan's insurer or administrator. The Court then looks to the rights of the patient at the time of assignment. The fact that the patient assigned her rights elsewhere does not cause them to disappear. Further, as a fact to be taken into account, a patient suffers a concrete injury if money that she is allegedly owed contractually is not paid, regardless of whether she has directed the money be paid to a third party for her convenience. The patients contracted for coverage at out-of-network providers under their health plans. The patients allegedly incurred charges for medical care, and directed that the payments be made to the provider, but, here, the contracted-for payments have not been made. The patients have thus allegedly been deprived of what they contracted for, a concrete injury.