In DeBene v. BayCare Health System, Inc., No. 16-12679 (11 Cir. 2017) (Unpublished Opinion), Paul DeBene (“DeBene”) appeals the district court’s grant of summary judgment to his former employer, BayCare Health System, Inc. (“BayCare”), on-among other things-his claim asserting the failure to provide a benefits-election notice under COBRA.  On appeal, DeBene argues that his claim should survive summary judgment because the record contains genuine issues of material fact.  Upon reviewing the record and the parties’ briefs, the Eleventh Circuit Court of Appeals (the “Court”) affirmed the district court’s grant of summary judgment to BayCare.

As to the COBRA claim, the Court noted that BayCare maintains that a COBRA election notice was timely sent to DeBene on July 23, 2014, even if he did not receive it.  Evidence produced at summary judgment reflected that DeBene was coded into BayCare’s database as COBRA eligible on July 3, 2014, that this information was transferred to Benefit Concepts (who was hired to send out BayCare’s COBRA notices), and that a COBRA election notice dated July 23, 2014, was generated and printed for DeBene.  Further, BayCare also provided evidence showing that other recipients of notices mailed on the same day as DeBene were able to successfully elect coverage and that no other former employee reflected on a report of letters sent on that date had reported not receiving his or her notice.

The Court further noted that it had not yet directly addressed what an employer must do to satisfy its notification obligations under COBRA.  The Court concluded that it agreed with the district court that BayCare provided sufficient undisputed evidence to show that it mailed DeBene a COBRA letter.  BayCare produced evidence of its and Benefit Concepts’s routine procedures regarding the preparation and mailing of COBRA election notices and how they were followed with respect to Debene’s COBRA notification.  BayCare also provided a copy of DeBene’s July 23, 2014, COBRA letter, which included his premium amount and enrollment form, and a report from Benefit Concepts showing that the letter was sent on that date.  In addition, Baycare also provided evidence showing that other recipients of notices mailed on the same day as DeBene were able to successfully elect coverage and that no other former employee reflected on the report of letters sent on that date had reported not receiving his or her notice. As such, the Court concluded that BayCare has met its obligations under COBRA to provide the benefits-election notice.

In Corey v. Sedgwick Claims Management Services, Inc., No. 16-3817 (6th Cir. 2017), Plaintiff Bruce Corey worked as a machine operator in Eaton Corporation’s Northern Ohio factory.  Corey has long suffered from cluster headaches— extremely painful attacks that strike several times per day for weeks on end.  In 2014, Corey applied for short-term disability benefits under Eaton’s disability plan after a bout of headaches forced him to miss work.

After granting a period of disability, the third party administering Eaton’s disability plan discontinued benefits because Corey failed to provide objective findings of disability.  Under the plan, “[o]bjective findings include . . . [m]edications and/or treatment plan.” Corey’s physicians treated his headaches by prescribing prednisone, injecting Imitrex (a headache medication), administering oxygen therapy, and performing an occipital nerve block.

In analyzing the case, the Sixth Circuit Court of Appeals (the “Court”) said that it must decide whether Corey’s medication and treatment plan satisfy the plan’s objective findings requirement. The Court held that it does, and therefore reversed the district court’s contrary decision.

In Pruter v. Local 210’s Pension Trust Fund, No. 16-733-cv (2nd Cir. 2017), the Plaintiffs, former employees of World Airways, Inc., appeal from the February 8, 2016 memorandum and order of the United States District Court for the Southern District of New York (Torres, J.) dismissing their complaint seeking damages under state law for fraud, breach of contract and violation of an employee benefit plan.

Upon analyzing the case, the Second Circuit Court of Appeals (the “Court”) said that we agree with the district court that plaintiffs’ state law claims arise under the RLA and are thus preempted.  As those claims bear a close resemblance to claims brought pursuant to ERISA, however, we find it appropriate to borrow and apply ERISA’s three-year statute of limitations rather than the six-month limitations period the district court borrowed from Section 10(b) of the National Labor Relations Act (“NLRA”).  The Court therefore vacated the district court’s dismissal (on limitations grounds) of the RLA claims brought against Local 210 and remand for further consideration of that claim consistent with this opinion. The Court affirmed the district court’s opinion in all other respects.

In DOL Advisory Opinion 2017-02AC (May 16, 2017) (the “Opinion”), the United States Department of Labor (the “DOL”) provides advice to a cooperative on whether its plan is an employee welfare benefit plan or a multiple employer welfare arrangement (that is, a “MEWA”) for purposes of ERISA.  Here is a summary what the Opinion says:

The Opinion is in response to a request on behalf of the First District Association for an advisory opinion regarding applicability of Title I of the ERISA to the Dairy Consortium Health Plan (the “Plan”).  Specifically, it is asked whether the Plan would constitute an “employee welfare benefit plan” within the meaning of section 3(1) of ERISA that is maintained by a “group or association of employers” within the meaning of section 3(5) of ERISA (which defines “employer”).  It is also asked whether the Plan would constitute a MEWA within the meaning of section 3(40) of ERISA.

The First District Association (the “FDA”) has been operating as an independent dairy cooperative organized under Minnesota Chapter 308A since 1921.  A group of dairy farm employers in Minnesota and Wisconsin who are FDA members propose to establish the Dairy Consortium (the “Consortium”) for the purpose of establishing the Plan to provide group health benefits to their employees.  The Consortium intends to establish a trust as described in section 501(c)(9) of the Code as a funding vehicle for the Plan.

In The Pioneer Centres Holding Company Employee Stock Ownership Plan and Trust v. Alerus Financial, N.A., No. 15-1227 (10th Cir. 2017), the Pioneer Centres Holding Company Employee Stock Ownership Plan and Trust (the “Plan” or “ESOP”) and its trustees sued Alerus Financial, N.A. (“Alerus”)  for breach of fiduciary duty in connection with the failure of a proposed employee stock purchase.  The district court granted summary judgment to Alerus after determining the evidence of causation did not rise above speculation.  The Plan appeals, claiming the district court erred in placing the burden to prove causation on the Plan rather than shifting the burden to Alerus to disprove causation once the Plan made out its prima facie case.  In the alternative, the Plan contends that even if the district court correctly assigned the burden of proof, the Plan established, or at the very least raised a genuine issue of material fact regarding, causation.

Upon reviewing the case, the Tenth Circuit Court of Appeals (the “Court”) affirmed the district court’s judgement. In doing so, the Court indicated that it found no error of law or abuse of discretion by the district court that would warrant reversal .

In Advocate Health Care Network v. Stapleton, Nos. 16-74, 16-86, 16-258 (Supreme Court June 5, 2017), the following matter arose. ERISA generally obligates private employers offering pension plans to adhere to an array of rules designed to ensure plan solvency and protect plan participants.  Church plans, however, are exempt from those regulations. See 29 U. S. C. §1003(b)(2).  From the beginning, ERISA has defined a “church plan” as “a plan established and maintained . . . for its employees . . . by a church.” §1002(33)(A).  Congress then amended the statute to expand that definition, adding the provision whose effect is at issue here: “A plan established and maintained for its employees . . . by a church . . . includes a plan maintained by an organization . . . the principal purpose . . . of which is the administration or funding of [such] plan . . . for the employees of a church . . . , if such organization is controlled by or associated with a church.” §1002(33)(C)(i). For convenience, the organizations described in that provision are referred to by the Supreme Court as “principal-purpose organizations.”

Petitioners, who identify themselves as three church-affiliated nonprofits that run hospitals and other healthcare facilities (collectively, “hospitals”), offer their employees defined-benefit pension plans. Those plans were established by the hospitals themselves, and are managed by internal employee-benefits committees. Respondents, current and former hospital employees, filed class actions alleging that the hospitals’ pension plans do not fall within ERISA’s church plan exemption because they were not established by a church.  The District Courts, agreeing with the employees, held that a plan must be established by a church to qualify as a church plan. The Courts of Appeals affirmed.

Upon analyzing the case, the Supreme Court ruled that a plan, which is maintained by a principal-purpose organization, qualifies as a “church plan,” regardless of who established it.  Accordingly, the Supreme Court reversed the judgments of the Courts of Appeals.

Yesterday (June 7) I receive an announcement from the DOL, that the DOL is withdrawing it’s informal guidance on joint employment and independent contractors. This withdrawal could impact coverage of individuals under an employee benefit plan. Here is what what the announcement says:

U.S. Secretary of Labor Alexander Acosta today announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors.  Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law. The department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.

In Barton v. Constellium Rolled Products-Ravenswood, LLC, No. 16-1103 (4th Cir. 2017), a class of retirees and their union filed this action after their former employer unilaterally altered its retiree health benefits program.  After reviewing the case, the Fourth Circuit Court of Appeals (the “Court”) ruled that, because the governing collective bargaining agreement (the “CBA”) does not provide for vested retiree health benefits, the Court must affirm the district court’s grant of summary judgment to the employer.

In analyzing the case, the Court noted that the Supreme Court has recently held courts must interpret collective-bargaining agreements, including those establishing ERISA plans, according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy, and where the words of a contract in writing are clear and unambiguous, its meaning is to be ascertained in accordance with its plainly expressed intent. Thus, said the Court, we must interpret the CBA’s provision governing the retiree health, namely its Article 15, using ordinary contract principles. And in doing so, we must recognize that these principles foreclose holding that the retiree health benefits have vested unless unambiguous evidence indicates that the parties intended that outcome.

Article 15 of the CBA states that the retiree health benefits “shall remain in effect for the term of this . . . Labor Agreement.” Article 15 also provides that the parameters of the retiree health benefits programs “shall be set forth in [the] booklet[] entitled . . . Retired Employees’ Group Insurance Program.” That booklet, which serves as the SPD for these benefits, similarly states that these benefits would last “for the term of the Labor Agreement.” It is undisputed that the term of the 2010 CBA, the most recent one relevant, ended in 2012. As such, the plain language of the CBA and SPD clearly indicates that the retiree health benefits did not vest. First, Article 15 contains explicit durational language stating that the retiree health benefits continue “for the term of” the governing CBA. Furthermore, the SPD echoes this language, reiterating the benefits continue “for the term of the” CBA. The retirees cannot overcome the clear language of Article 15 of the CBA and the SPD. Given this language, the retirees cannot demonstrate that their health benefits had vested.

In Rhea v. Alan Ritchey, Inc. Welfare Benefit Plan, No. 16-41032 (5th Cir. 2017), Donna Rhea was the beneficiary of an employee benefit plan organized under ERISA (the “Plan”).  Rhea suffered injuries from medical malpractice.  The Plan covered some of her medical expenses.  After she settled the malpractice claim for more than the medical expenses paid by the Plan, the Plan sought reimbursement from Rhea.

The Plan used a single document as both its summary plan description (the “SPD”) and its written instrument.  That document had a reimbursement provision.  Rhea refused to reimburse the Plan, claiming that it did not have an enforceable written instrument. She sought a declaratory judgment on this matter in district court, and appeals the district court’s adverse summary judgment against her.

In reviewing the case, the Fifth Circuit Court of Appeals (the “Court”) noted that, when the Plan paid Rhea’s medical expenses, its SPD was functioning as both an SPD and a written instrument.  It said that this is nothing peculiar.   Plan sponsors commonly use a single document to satisfy both requirements, and courts have blessed the practice.  When a plan’s sponsor does not maintain a separate written instrument, as here, the Court must look to the SPD to define the plan’s terms. Under these terms, Rhea had a pre-existing obligation to reimburse the Plan for payments it made for her medical expenses in the event she received a third-party recovery. When Rhea settled her malpractice claim, an equitable lien by agreement was created. The Plan is entitled to reimbursement.

In Kennedy v. The Lilly Extended Disability Plan, No. 16-2314 (7th Cir. 2017), the following occurred.

Cathleen Kennedy (“Kennedy”) was hired by Eli Lilly and Company (“Lilly”) in 1982 and rose rapidly, eventually becoming an executive director in the company’s human resources division, with a monthly salary of $25,011.  But at the beginning of 2008, she was forced to quit work because of disabling symptoms of fibromyalgia.  As a participant in the Lilly Extended Disability Plan (the “Plan”), a self-funded employee benefit plan, she requested benefits upon ceasing to work, and effective May 1, 2009, was approved for monthly benefits of $18,972.44.  Three and a half years later, however, her benefits were terminated by the Plan’s plan administrator, on the grounds that fibromyalgia is not disabling within the meaning of the Plan, precipitating this suit by her against the Plan.

The Plan states that an employee has a “disability” if unable to engage, for remuneration or profit, in any occupation commensurate with the employee’s education, training, and experience.  The district court judge granted summary judgment in favor of Kennedy, granting her past benefits of $537,843.81 and reinstating benefit payments retroactively to December 2012.  The Plan appeals.