In Studer v. Katherine Shaw Bethea Hospital, No. 16-3728 (7th Cir. 2017), Katherine Shaw Bethea  Hospital  is a not-for-profit healthcare provider in Dixon, Illinois. Heather Studer worked at the hospital as an occupational therapist until she resigned. After she resigned, she filed a small-claims complaint in Illinois state court, alleging that the hospital violated certain provisions of the Illinois Wage Payment and Collection Act (“IWPCA”) by failing to pay her money that she had accrued under the hospital ‘s Paid Days Leave policy. The hospital removed the suit to federal court, claiming that Studer’s claim was completely preempted by ERISA.

Studer then filed a motion to remand her suit to state court, challenging the hospital’s preemption claim and asserting that the district court did not have jurisdiction over her state-law claim; the hospital  filed a motion for summary judgment. The district court denied Studer’s  motion to remand, holding that it had federal-question jurisdiction because ERISA completely preempted the state-law claim. The court then granted the hospital’s motion for summary judgment, holding that Studer had failed to name the welfare benefit plan as a defendant, which ERISA requires in most instances. In granting the motion, the court permitted  Studer to file an amended complaint naming the appropriate defendant and to issue summons.

But instead of filing an amended complaint, Studer filed a Rule 59(e) motion to alter or amend the judgment, again arguing that ERISA did not completely preempt her claim. The district court denied that motion, and this appeal followed. On appeal, Studer again contends that her IWPCA claim was not completely preempted by ERISA. The Seventh Circuit Court of Appeals agreed with the district court, that ERISA completely completely preempted the claim with its expansive preemptive power, and affirmed the district court’s ruling.

 

In Osberg v. Foot Locker, Inc., Docket No. 15-3602-cv (2nd Cir. 2017), the defendants, Foot Locker, Inc. and Foot Locker Retirement Plan (together, the “Defendants”), appeal from a judgment entered by the district court.

Following a two week bench trial, the district court held that the Defendants violated §§ 102 and 404(a) of ERISA by, among other things, failing to disclose “wear-away” caused by the Company’s introduction of a new employee pension plan – a phenomenon which effectively amounted to an undisclosed freeze in pension benefits.  Drawing on its equitable power under § 502(a)(3) of ERISA, the district court ordered reformation of the plan to conform to plan participants’ reasonably mistaken expectations, which the district court found to have resulted from the Defendant’s materially false, misleading, and incomplete disclosures. On appeal, the Defendants do not challenge the district court’s determination that they  violated ERISA.  Instead, they quarrel with the district court’s award of equitable relief under § 502(a)(3), advancing several arguments.  Upon analyzing the case, the Second Circuit Court of Appeals (the “Court”) rejected the Defendants’ challenges to the district court’s award of equitable relief and affirmed the district court’s judgment.

In so acting, the Court held that the district court did not err in: (i) rejecting the Defendants’ position that the plaintiff’s claims were time-barred (the §102 claims were filed on a timely basis after the plaintiffs learned about the “wear-away”, and the §404(a) claims were filed timely, having been filed within the 6 year period of ERISA section 413 for claims of fraud or concealment ); (ii) ordering class-wide relief on participants’ section 404(a) claims without requiring individualized proof of detrimental reliance (noting that neither the statutory text of § 404(a) nor the equitable remedy of reformation requires a showing of detrimental reliance); and (iii) concluding that mistake, a prerequisite to the equitable remedy of reformation, had been shown by clear and convincing evidence as to all class members, based on the Defendant’s arguments and the record as a whole. Finally, the Court found that the district court did not abuse its discretion or make a clear error of law by awarding equitable relief.

In Cooper v. Metropolitan Life Insurance Company, No. 16-3429 (8th Cir. 2017), Michelle Cooper  (“Cooper”) had brought this action pursuant to ERISA section 502(a)(1)(B), claiming that Metropolitan Life Insurance Company (“MetLife”) improperly denied her long term disability (“LTD”) benefits under a group insurance plan sponsored by her former employer, Anheuser-Busch Companies, LLC (“Anheuser-Busch”). The district court entered summary judgment in favor of MetLife, finding that there was no abuse of discretion. Cooper now appeals from that decision, arguing that the court erred in applying an abuse of discretion standard of review to MetLife’s decision, and that it improperly excluded two physician’s affidavits from the record. Alternatively, Cooper contends that MetLife abused its discretion in denying LTD benefits.

Upon reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) found no error by the district court. The Court said that Cooper presented no evidence of a  conflict of interest, or other indicia of biased decision making, by MetLife. Further, found the Court, the district court did not err by excluding the two affidavits from the record. Finally, the Court found that MetLife did not abuse its discretion by denying LTD benefits to Cooper where MetLife properly considered all medical records, APS reports, comments, and other information submitted by Cooper and her physicians.  Accordingly, the Court affirmed the district court’s summary judgment.

In Marcin v. Reliance Standard Life Insurance Company, No. 16-7125 (District of Columbia Court of Appeals 2017), the District of Columbia Court of Appeals (the “Court”) was faced with an appeal concerning Jill Marcin’s recovery of long-term disability benefits under an ERISA-governed plan.

In 2008, Ms. Marcin filed for disability benefits under the Mitre Long Term Disability Plan, Group Policy Number 111701 (the “Plan” or “Policy”), citing numerous ailments that affected her cognitive abilities and motor functioning. Reliance Standard Life Insurance Company (“Reliance”), the Plan administrator, denied Ms. Marcin’s request for benefits, explaining that she did not meet the definition of “Total Disability.” In particular, Reliance concluded that Ms. Marcin was capable of performing all material duties of her employment on a full-time basis. Following an unsuccessful administrative appeal, Ms. Marcin filed suit against Reliance and the Plan in District Court in 2010.  The District Court remanded the case to Reliance, requesting additional explanation as to how the record supported Reliance’s conclusion that Ms. Marcin was not disabled.

In early 2013, Reliance again denied Ms. Marcin’s claim for disability benefits. Ms. Marcin filed a second lawsuit in District Court, which serves as the basis for this appeal. Following an additional remand, the District Court entered judgment in favor of Ms. Marcin on October 14, 2015. Specifically, the District Court found that there was not substantial evidence in the record to support Reliance’s denial of disability benefits, though it cautioned that it was not making a finding that Ms. Marcin was Totally Disabled. In subsequent orders, the District Court determined that Ms. Marcin was entitled to disability benefits in the amount of $2,409.74 per month, along with post-judgment interest at the rate of 0.27 percent per annum from October 14, 2015, and attorney’s fees in the amount of $72,240.

In Solomon v. Bert Bell/Pete Rozelle NFL Player Retirement Plan, No. 16-1730 (4th Cir. 2017), the appeal raises the issue of whether the plan administrator for the defendants, the Bert Bell/Pete Rozelle NFL Player Retirement Plan and the NFL Player Supplemental Disability Plan (collectively, the “Plan”), abused its discretion in denying a certain type of disability benefits to the plaintiff, Jesse Solomon (“Solomon”).  After the plan administrator determined that Solomon ‘s disability-onset date rendered him ineligible for the benefits he sought, Solomon brought suit under § 502(a)(1)(B) of ERISA.

The district court concluded that Solomon was entitled to the benefits he claimed and ordered the Plan to provide them.  Because the Fourth Circuit Court of Appeals (the “Court”) found that the plan administrator failed to follow a reasoned process or explain the basis of its determination to deny the benefits—neither addressing nor even acknowledging new and uncontradicted evidence supporting Solomon’s  application, including that of the Plan’s own expert—the Court affirmed the district court’s decision.

In Orzechowski v. Boeing Co. Non-Union Long-Term Disability Plan, No. 14-55919 (9th Cir. 2017), a panel of the Ninth Circuit Court of Appeals (the “Panel”) reversed the district court’s judgment, after a bench trial, in favor of the defendants in an ERISA action challenging a decision by the plan administrator to terminate the plaintiff’s long-term disability benefits.

The district court reviewed the benefits decision to terminate the benefits for an abuse of discretion because the ERISA plan gave defendants discretionary authority. The Panel held that de novo review was required under California Insurance Code § 10110.6. That provision voided the discretionary clause contained in the plan, which would normally entitle a plan administrator’s benefit denial a deferential review. The Panel held that § 10110.6 is not preempted by ERISA because it falls within the savings clause set forth in 29 U.S.C. § 1144(b)(2)(A). Agreeing with the Seventh Circuit, the Panel concluded that § 10110.6 is directed toward entities engaged in insurance, and it substantially affects the risk-pooling arrangement between the insurer and the insured. The Panel held that § 10110.6 applied to the plaintiff’s claim because the relevant insurance policy renewed after the statute’s effective date.

As such, the Panel ruled that the district court should have voided the discretionary clause in the plan and reviewed Orzechowski’s claim de novo. On de novo review, the district court should give appropriate consideration to Orzechowski’s  fibromyalgia and chronic fatigue syndrome diagnoses, which were ignored by the plan administrator  in its denial of benefits based on file reviews. The plan administrator  demanded that Orzechowski produce objective evidence showing that her disability was caused by a non-psychological condition. But as the Ninth Circuit previously acknowledged, fibromyalgia and chronic fatigue syndrome are not established through objective tests or evidence.  Accordingly, the Panel remanded the case back to the district court for review in accordance with it’s opinion.

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.