In Fortier v. Hartford Life & Accident Insurance Co., No. 18-1752 (1st Cir. 2019), a disability insurer, Hartford Life & Accident Insurance Company (“Hartford”), gave notice to Theresa Fortier that the long-term disability (“LTD”) benefits it had provided her under the Dartmouth Hitchcock Clinic Company Long Term Disability Plan (the “Plan”) would expire because she had not shown she was eligible for a continuation of those benefits. The notice informed her she must file any appeal within 180 days of receipt of the notice. She did not do so, filing her appeal about two months after this deadline.

In this ERISA suit, Fortier first argued that her appeal was timely under the Plan. She then argued that even if untimely, that untimeliness should be excused under either of two doctrines: the ERISA substantial compliance doctrine or a state law notice prejudice rule. The district court rejected these arguments and granted a motion for judgment on the administrative record for Hartford and the Plan. Upon review of the case, the First Circuit Court of Appeals (the “Court”) likewise rejected all these arguments and affirmed the district court’s decision.

In so affirming the district court’s decision, the Court held that:

In Zino v. Whirlpool Corp., Nos. 17-3851/17-3860 (6th Cir. 2019) (Unpublished Opinion), in a class action by Hoover Company retirees, the district court ruled that numerous collective-bargaining agreements (the “CBAs”) vest plaintiffs with unalterable lifetime healthcare benefits. Upon reviewing the case, the Sixth Circuit Court of Appeals (the “Court”) found that the CBAs’ general durational clauses (which say when the agreements end) control when healthcare benefits end, and therefore reversed the district court’s ruling.

In this case, the plaintiffs had built vacuum cleaners for the Hoover Company at its plant in Canton, Ohio, and retired between 1980 and 2007. Over the years, a succession of CBAs governed employment terms and aspects of retirement, including healthcare benefits. As to those benefits, the agreements contained one of three promises:

▪ The Company “assumes responsibility for paying premiums . . . for future retiree’s [sic] medical insurance in accordance with the terms and conditions of the [Welfare Benefit] Plan”;

Employee Benefits-IRS Offers Guidance On Correcting Errors In Plan Loans

The Internal Revenue Service (the “IRS”) provides on-line guidance on how to correct errors in plan loans. The guidance is entitled “Fixing Common Plan Mistakes-Plan Loan Failures and Deemed Distributions”. Here is what the IRS says.

The Issue

In The Depot, Inc. v. Caring for Mountanans, Inc., No. 17-35597 (9th Cir. 2019),  a panel for the Ninth Circuit Court of Appeals (the “Panel”) affirmed in part and reversed in part the district court’s dismissal of an action brought under ERISA and Montana state law against health insurance companies, and remanded the case for further proceedings.

In this case, the health insurance companies marketed health insurance plans, branded “Chamber Choices,” to members of the Montana Chamber of Commerce. Three small employers, Chamber members that provided their employees with healthcare coverage under Chamber Choices plans, alleged misrepresentations in the marketing of the plans. Affirming the district court’s dismissal of the ERISA claims, the Panel held that plaintiffs failed to state a claim for breach of fiduciary duty under ERISA (under 29 U.S.C. § 1132(a)(2)) in defendants’ alleged charging of excessive premiums. The Panel held that, in secretly charging excessive premiums, defendants did not act as fiduciaries of the plans because they did not exercise discretion over plan management or control over plan assets. Plaintiffs also failed to state a claim for equitable relief under ERISA (under § 1132(a)(3)) for prohibited transactions in imposing unreasonable charges for kickbacks and unrequested benefits because plaintiffs’ requested relief of restitution or disgorgement was not equitable in nature.

The Panel reversed the dismissal of plaintiffs’ state-law claims, based on defendants’ alleged misrepresentations that the premiums charged reflected the actual medical premium amount. The Panel held that ERISA did not expressly preempt the state-law claims because the claims did not have a reference to or an impermissible connection with an ERISA plan, and therefore did not “relate to” an ERISA plan. The state-law claims also were not conflict-preempted by ERISA. The Panel nonetheless agreed with the district court that plaintiffs’ allegations did not state with particularity the circumstances of the alleged fraud, as required by Federal Rule of Civil Procedure 9(b). The Panel therefore reversed the dismissal with prejudice of the state-law claims so that plaintiffs could amend their complaint to state the fraud allegations with greater particularity. The Panel noted, however, that the district court was also free on remand to decline to exercise supplemental jurisdiction over the state law claims.

Advantages Of Grandfather Status.

Your group health plan may still be treated as a “grandfathered plan” for purposes of the Affordable Care Act (the “ACA”). And you should try to keep it that way. Why? A grandfathered group health plan is NOT subject to some of the more cumbersome requirements of the ACA. The requirements which do not apply to a grandfathered plan include:

–the more stringent internal review and an external review of denied claims for benefits;

In Trustees of the Suburban Teamsters of Northern Illinois Pension Fund v. E Co., No. 18-2273 (7th Cir. 2019), under the terms of a collective bargaining agreement, T&W Edmier Corporation (“T&W”) regularly contributed on behalf of its employees to the Suburban Teamsters of Northern Illinois Pension Fund (the “Pension Fund”). But in 2014, T&W ceased operations and cut off its pension contributions, prompting the Pension Fund to assess withdrawal liability of $640,900. The Pension Fund sought to collect payment by mailing a notice of the withdrawal liability to T&W and several affiliated entities, only to see their collection efforts ignored. The Trustees of the Pension Fund eventually sued to collect payment, and that action culminated in the district court ordering T&W, along with several other individuals and entities under common control, to pay the withdrawal liability. Now seeking to vacate the district court’s judgment, T&W and the other defendants argue that their due process rights were violated when the Pension Fund initiated collection of the withdrawal liability by mailing notice to some but not all of them.

Upon reviewing the case, the Seventh Circuit Court of Appeals (the “Court”) affirmed the district court’s judgment. The Court found that certain defendants forfeited all defenses to liability, including the defense that they were not members of a controlled group, by failing to arbitrate after receiving the Fund’s notice of withdrawal liability. The Court further found that other defendants had likewise forfeited all defenses, as they were not  unsuspecting defendants;  rather the Court found that none of these defendants had a credible claim of surprise (at being a member of a controlled group) that would allow it to sidestep ERISA’s arbitration requirement. Each defendant was a trade or business under common control with another party who received the notice. As such, each defendant was liable for the withdrawal liability under ERISA’s controlled group provision, and therefore became jointly and severally liable for payment.


In IRS Notice 2019-09 (the “Notice”), the Internal Revenue Service (“IRS”) has provided guidance on the excise tax imposed on a tax-exempt entity under Code section 4960 that pays excess remuneration (or an excess parachute payment) to an employee. Here are the highlights of the Notice.

The General Rule of Code Section 4960. Under Code section 4960, an applicable tax-exempt organization (an “ATEO”) that pays excess remuneration or makes an excess parachute payment to a covered employee during a taxable year is subject to an excise tax on this excess.  The rate of this excise tax is equal to the rate of tax under Code section 11. For taxable years beginning after December 31, 2017, this rate of tax is 21 percent.

What is An ATEO?  As provided in Code section 4960(c)(1), an ATEO is any organization which, for its taxable year:

The case of Rittinger v. Healthy Alliance Life Insurance Company, No. 17-20646 (5th Cir. 2019), involves a bariatric surgery gone wrong and the ensuing clash over insurance coverage.

In this case, Karen Rittinger was the beneficiary of an ERISA-covered plan. Healthy Alliance Life Insurance Company offered the plan and Anthem Blue Cross Blue Shield (“Anthem”) administered it. In October 2014, Rittinger underwent bariatric surgery. Complications arose requiring follow-up surgery and intensive care. Anthem denied preauthorization (and thus plan benefits) for both the bariatric surgery and the follow-up surgery, writing, “We cannot approve coverage for weight loss surgery (bariatric surgery) or hospital care after this surgery. Bariatric or weight loss surgery is an exclusion in your health plan contract.” The contract, though, had an exception to this exclusion for “excessive nausea/vomiting.” Arguably, the exception applied to Rittinger. Nevertheless, Anthem denied her claim for benefits in both a first and second-level appeal, on the basis of the plan’s exclusion of bariatric surgery. Having exhausted the plan’s internal remedies, Rittinger filed suit in district court. The district court overturned Anthem’s decision, on the grounds that Anthem did not interpret the plan correctly and did not give enough weight to Rittinger’s vomiting problem. Anthem appealed. Rittinger filed a cross-appeal to determine the exact dollar amount of the damages she is owed.

Upon reviewing the case, the Fifth Circuit Court of Appeal (the “Court”) noted that Anthem’s decision is entitled to a highly deferential standard of review.  The Court concluded that, given this level of review, the Court could not say that Anthem, the plan administrator, abused its discretion in either the first or second internal appeal. Therefore, the Court overturned the district court’s decision. Because the Court agrees with Anthem, it also held that Rittinger’s cross-appeal is moot.


So, you and your family are receiving COBRA continuation health care coverage, and you or a family member becomes disabled.  How does the disability affect the COBRA coverage?

A. Normal Period of COBRA Coverage.

COBRA provides a temporary extension of the group health care coverage that you and your family are receiving because of your job, but would otherwise be lost due to certain life events.

In Torres v. Bella Vista Hospital, Inc., No. 16-2316 (1st Cir. 2019), Olga Torres and Pedro Bonilla are former employees of Bella Vista Hospital (“Bella Vista”), a Mayaguez, Puerto Rico-based hospital operated by the General Conference of Seventh Day Adventist Church. In 1982, the hospital created a pension program, advising its employees that the plan was subject to ERISA.

Certain types of plans are exempt from ERISA’s requirements, including plans which meet the statutory definition of “church plan,” 29 U.S.C. § 1003(b)(2). In 2000, the Internal Revenue Service, which is empowered to issue rulings to parties as to the status of their plans, advised Bella Vista that its pension plan met the definition of “church plan” and so was exempt from ERISA. In 2003, Bella Vista terminated the plan. Torres and Bonilla had become disabled some years earlier, and certain benefits they were receiving from the hospital ended. In November 2006, Torres and Bonilla sued in federal district court in Puerto Rico to recover lost benefits. Although the plaintiffs claimed federal subject matter jurisdiction under ERISA, the district court found that the church plan exception applied so ERISA did not govern the hospital’s pension regime. The court granted summary judgment in favor of the defendants, dismissing the case on May 21, 2009, for lack of subject matter jurisdiction—there being no federal claim in the case outside of the purported ERISA count. Torres and Bonilla did not appeal that decision and took no further action in court for five years. On November 24, 2014, Torres and Bonilla filed a motion in the district court to set aside the 2009 judgment, invoking the court’s authority to vacate a judgment procured by “fraud on the court” based material false statements by lawyers and others made during the proceedings.

After, reviewing the case, the First Circuit Court of Appeals (the “Court”), dismissed the motion and upheld the decision of the district court.  The Court said that claims of false statements by lawyers or parties are a serious matter and might meet some definitions of “fraud,” but the phrase “fraud on the court” has a special, well-understood and limited office. Inaccurate assertions in lawsuits are commonplace and to allow all such claims to be presented as “fraud on the court,” with no time limit, would undermine the finality of judgments and the need for all litigation to come to an end. Thus “fraud on the court” is limited to fraud that seriously affects the integrity of the normal process of adjudication, defiles the court itself, and prevents the judicial machinery from performing its usual function—for example, in bribery of a judge or jury tampering. severity is present in the plaintiffs’ allegations.