ERISA-Ninth Circuit Holds That ERISA Does Not Ban Lifetime Benefit Maximums For Certain Retiree-Only Plans

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.

The Panel further held that genuine disputes of material fact precluded summary judgment on claims of breach of fiduciary duty in the failure to comply with ERISA’s disclosure requirements.  The Panel held that a defendant claims administrator was a fiduciary because it had authority to grant, deny, and review benefits claims, and there was a genuine dispute of material fact about whether this defendant misled the ERISA plan participant.

The Panel remanded the case to the district court.

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