In Thole v. U.S. Bank, No. 16-1928 (8th Cir. 2017),  plaintiffs James Thole and Sherry Smith (together, the “plaintiffs”) brought a putative class action against U.S. Bank, N.A. (“U.S. Bank”) and others (collectively, the “defendants”), challenging the defendants’ management of a defined benefit pension plan of U.S. Bank (the “Plan”) from September 30, 2007, to December 31, 2010.

The plaintiffs alleged that the defendants violated Sections 404, 405, and 406 of ERISA by breaching their fiduciary obligations and causing the Plan to engage in prohibited transactions with a U.S. Bank subsidiary.  The plaintiffs’ complaint asserts that these alleged ERISA violations caused significant losses to the Plan’s assets in 2008 and resulted in the Plan being underfunded in 2008.  The plaintiffs sought to recover Plan losses, disgorgement of profits, injunctive relief, and other remedial relief pursuant to ERISA Sections 409 and 502(a)(2).  They also sought equitable relief pursuant to ERISA Section 502(a)(3).

In response, the defendants moved to dismiss the plaintiffs’ complaint, arguing that the plaintiffs lacked standing to bring the suit, the ERISA claims were time-barred or had been released, and the pleading otherwise failed to state a claim on which relief could be granted.  During the litigation, the factual backdrop of the case changed. In 2014, the Plan became overfunded; in other words, there was more money in the Plan than was needed to meet its obligations.  The defendants, alleging that the plaintiffs had not suffered any financial loss upon which to base a damages claim, moved to dismiss the remainder of the action for lack of standing. The district court agreed and dismissed the case as moot.  It concluded that, because the Plan is now overfunded, the plaintiffs lack a concrete interest in any monetary relief that the court might award to the Plan if the plaintiffs prevailed on the merits.  The Eighth Circuit Court of Appeals (the “Court”) affirmed the district court’s decision to dismiss the plaintiffs case as moot.  The Court also found that the case should be dismissed because, as argued by the defendants, the claims were time-barred and failed to state a claim for which relief could be granted.


The Guidance Provided.  In Technical Memorandum 201736022, the IRS provides guidance on how a cure period, as described in § 1.72(p)-1, Q&A-10(a), is applied for a participant who fails to make installment payments required under the terms of a plan loan.  This guidance consists of a description of two situations, one in which a later single large loan payment is applied to cure loan payments that are missed, and one in which a replacement loan from the plan is applied to cure to missed loan payments, with the cures in each situation occurring during the regulation’s period during which cures can be made.

Here is the guidance:

Assumptions. In presenting the two situations, the IRS makes the following assumptions:

In Notice 2017-61, the IRS announces an increase in PCOR Fees generally for years ending on or after October 1, 2017 and before October 1, 2018.  Here is what the Notice says.


The Notice provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of the fee (commonly called the “PCOR Fee”) imposed by §§ 4375 and 4376 of the Internal Revenue Code (the “Code”), for policy years and plan years that end on or after October 1, 2017, and before October 1, 2018.

The Proposed Delay Of The Effective Date Of The Final Rule.  The U.S. Department of Labor (the “DOL”) has proposed a delay for ninety (90) days – through April 1, 2018 – of the applicability of the Final Rule which amends the requirements in the ERISA claims procedure regulations that apply to claims for disability benefits.  The proposal is here.

The Final Rule was published in the Federal Register on December 19, 2016.  It is currently scheduled to apply to claims for disability benefits under ERISA-covered employee benefit plans that are filed on or after January 1, 2018.

Expanded Requirements.  The expanded requirements pertaining to disability claims include:

In Pollard v. The New York Methodist Hospital, Docket No. 15-3231 (2nd Cir. 2017), the plaintiff, Jacintha Pollard (“Pollard”), who was dismissed from employment by the defendant, The New York Methodist Hospital (“Hospital”), for taking unauthorized leave, appeals from the order of the district court granting summary judgment to the defendant dismissing plaintiff’s suit brought under the FMLA.  In this suit, Pollard had alleged that the Hospital terminated her illegally for taking medical leave to which she was entitled under the FMLA.  The Second Circuit Court of Appeals (the “Court”) held that the district court erred in concluding that plaintiff could not, as a matter of law, establish a “serious health condition,” so as to qualify for medical leave.  Accordingly, the Court vacated and remanded the district court’s decision.

In this case, Pollard had developed a growth on her left foot.  The growth became increasingly painful and, to a contested degree, limited her ability to perform her job for the Hospital.  Pollard’s podiatrist concluded that the growth was a benign soft tissue mass.  The podiatrist and Pollard agreed to remove the mass by surgery to alleviate the pain.  The podiatrist certified on an FMLA medical form that the growth was a serious health condition that required surgery.  On March 28, 2013, the podiatrist performed the surgery.  Because of Pollard’s failure to report to work that day, the Hospital terminated her employment by letter dated April 1, 2013.  This suit followed.

In reaching its decision to overturn the district court’s decision, the Court noted that the FMLA provides that an eligible employee is entitled to a total of 12 workweeks of leave during any 12-month period because of a serious health condition.  The FMLA defines “serious health condition” as including an illness, injury, impairment, or physical or mental condition that involves continuing treatment by a health care provider. 29 U.S.C. § 2611(11).

The case of Severson v. Heartland Woodcraft, Inc., No.15-3754 (7th Cir. 2017) involved the following situation.  From 2006 to 2013, Raymond Severson worked for Heartland Woodcraft, Inc., a fabricator of retail display fixtures.  The work was physically demanding.  In early June 2013, Severson took a 12-week medical leave under the Family Medical Leave Act (the “FMLA”) to deal with serious back pain.  On the last day of his leave, he underwent back surgery, which required that he remain off of work for another two or three months.

Severson asked Heartland to continue his medical leave, but by then he had exhausted his FMLA entitlement.  The company denied his request and terminated his employment, but invited him to reapply when he was medically cleared to work.  About three months later, Severson’s doctor lifted all restrictions and cleared him to resume work, but Severson did not reapply.  Instead he sued Heartland alleging that it had discriminated against him in violation of the Americans with Disabilities Act (the “ADA”), by failing to provide a reasonable accommodation—namely, a three-month leave of absence after his FMLA leave expired.  The district court awarded summary judgment to Heartland and Severson appealed.

The Seventh Circuit Court of Appeals (the “Court”) affirmed the district court’s decision.  It said that the ADA is an antidiscrimination statute, not a medical-leave entitlement.  The ADA forbids discrimination against a qualified individual on the basis of disability.  A “qualified individual” with a disability is a person who, “with or without reasonable accommodation, can perform the essential functions of the employment position.”  So defined, the term “reasonable accommodation” is expressly limited to those measures that will enable the employee to work.  An employee who needs long-term medical leave cannot work and thus is not a “qualified individual” under the ADA.  A multi-month leave of absence is beyond the scope of a reasonable accommodation under the ADA.

In Salyers v. Metropolitan Life Ins. Co., No. 15-56371 (9th Cir. 2017), a panel of the Ninth Circuit Court of Appeals (the “Panel”) reversed the district court’s judgment in favor of the defendant, insurer MetLife, following a bench trial in an ERISA action concerning life insurance.

In this case, the plaintiff bought a $250,000 life insurance policy on her husband, but, when he died, MetLife paid out only $30,000 because the plaintiff had not submitted evidence of insurability with her coverage election, as required under the ERISA-governed benefits plan offering the policy. The Panel held that MetLife waived the evidence of insurability requirement because it did not ask the plaintiff for a statement of health, even as it accepted her premiums for $250,000 in coverage. The Panel further held that, under the federal common law of agency, MetLife could not claim that it did not know the pertinent facts, because the knowledge and conduct of the policyholder-employer could be attributed to MetLife. The Panel remanded the case to the district court with instructions to enter judgment in favor of the plaintiff for the amount of the $250,000 policy that remained unpaid.

In King v. Blue Cross and Blue Shield of Illinois, No. 15-55880 (9th Cir. 2017), upon reviewing the decision of the district court, a panel for the Ninth Circuit Court of Appeals (the “Panel”) held as follows.

First, the Panel reversed the district court’s grant of summary judgment in favor of the defendants in the case-an ERISA action- regarding the denial of a welfare benefit plan participant’s claim for medical benefits on the basis of the plan’s lifetime benefit maximum.  The Panel held that ERISA, as amended by the Patient Protection and Affordable Care Act, does not ban lifetime benefit maximums for certain retiree-only plans (like the plan in question).

The Panel then held that the defendants violated ERISA’s statutory and regulatory disclosure requirements by providing a faulty summary of material modifications describing changes to the lifetime benefit maximum.  The Panel concluded that the summary did not reasonably apprise the average plan participant that the lifetime benefit maximum continued to apply to the retiree plan.

In Dowling v. Pension Plan for Salaried Employees of Union Pac. Corp. & Affiliates, No. 16-1977 (3rd Cir. 2017), former Union Pacific employee, John Dowling (“Dowling”), is covered by a 277-page retirement plan composed of introductory material, 19 articles of content, and various appendices—none of which explicitly address Dowling’s precise situation.  When Dowling retired, the plan administrator interpreted the plan to provide Dowling with a lower monthly payment than he expected.  Dowling challenged the administrator’s decision as contradicting the plan’s plain language, but the district court found the plan ambiguous and the administrator’s interpretation reasonable.

Dowling appealed under ERISA 502(a)(1)(B)( seeking a declaratory judgment stating his rights and liabilities).  The dispute now centers on three issues: the text of the plan, the court’s standard of review, and whether a conflict of interest alters the outcome. Upon reviewing the case, the Third Circuit Court of Appeals (the “Court”) determined that, because the plan’s terminology, silence, and structure render it ambiguous, the plan accords the plan administrator discretion to interpret ambiguous plan terms, and the mere existence of a conflict of interest is alone insufficient to raise skepticism of the plan administrator’s decision.  Accordingly, the Court decided that it will grant deference to the plan administrator’s decision as to benefit payments amounts, and the Court affirmed the district court’s judgement.


In Twin City Pipe Trades Service Association, Inc. v. Wenner Quality Services, Inc., No.16-1791 (8th Cir. 2017), Twin City Pipe Trades Service Association, Inc. (the “Association”) is attempting to recover unpaid fringe-benefit contributions allegedly due under a collective bargaining agreement (the “CBA”). The district court granted summary judgment for the Association on the ground that Wenner Quality Services, Inc. (“Wenner”)  was precluded by a previous lawsuit from disputing liability for the contributions as an alter ego of a signatory of the CBA. The court then awarded damages and injunctive relief to the Association.

Upon reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) said that it agreed with the district court that the Association was entitled to judgment on liability, since all of the elements required to apply issue preclusion are present here. No additional fairness considerations are raised that would preclude application of the doctrine in this circumstance.

However, the Court concluded that the district court erred in awarding certain damages to the Association, since those damages were not authorized by ERISA and that the award should be reduced accordingly. The Court also uphold the district court’s grant of injunctive relief. Accordingly, the Court affirmed the district court’s ruling in part and reversed the ruling in part.