Articles Posted in ERISA

In Micha v. Sun Life Assurance of Canada, Inc., No. 16-55053 (9th Cir. 2017), a panel for the Ninth Circuit Court of Appeals (the “Panel”) reversed the district court’s denial of appellate attorney’s fees under 29 U.S.C. § 1132(g)(1) and remanded to the district court for calculation of a reasonable award of fees and costs in an ERISA case.

The Panel held that in analyzing a party’s request for appellate attorney’s fees under the Hummell test (enumerated by the Ninth Circuit in Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (1980)), a court must consider the entire course of the litigation, rather than focusing exclusively on the prior appeal.  Weighing the five Hummell factors in light of all of a defendant’s conduct, from its wrongful denial of the plaintiff’s claim for ERISA benefits to its filing of a petition for a writ of certiorari, the Panel held that the moving party was entitled to attorney’s fees for the prior appeal, in which the Panel had affirmed an award of litigation attorney’s fees.

The Panel declined to consider the issue, not raised before the district court, whether fees-on-fees should be automatically awarded, without application of the Hummell test.

In Owings v. United of Omaha Life Insurance Company, No. 16-3128 (10th Cir. 2017), plaintiff Greggory Owings (“Owings”) sustained a disabling injury on the job and was afforded long-term disability benefits by defendant United of Omaha Life Insurance Company (“United”), under the terms of a group insurance policy issued by United to Owings’ employer.  Owings disagreed with, and attempted without success to administratively challenge, the amount of his disability benefits.  He then filed suit against United in Kansas state court, but United removed the action to federal district court, asserting that the federal courts had original jurisdiction over the action because the policy was governed by ERISA.  The district court ultimately granted summary judgment in favor of United on the amount of the disability benefits.  Owings then appealed.

Upon reviewing the case, the Tenth Circuit Court of Appeals (the “Court”) concluded that United was arbitrary and capricious in determining the date that Owings became disabled (since United did not correctly interpret the plan language, in particular the definition of “Disability”) and, in turn, in calculating the amount of his disability benefits. Consequently, the Court reversed the district court’s grant of summary judgment in favor of United, and remand the case back to the district court, with directions to enter summary judgment in favor of Owings.

In Secretary, U.S. Department of Labor v. Preston, No. 17-10833 (11th Cir. 2017), the Eleventh Circuit Court of Appeals (the “Court”) faced the issue of whether a defendant may expressly waive the six-year statute of limitations contained in ERISA Section 413(1), or whether instead, the protection provided by Section 413(1), being so essential and fundamental, that is inherently indefeasible and unwaivable.

Section 413 of ERISA provides that:

No action may be commenced under this subchapter with respect to a fiduciary’s breach of any responsibility, duty, or obligation under this part, or with respect to a violation of this part, after the earlier of—

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 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 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.

In Brown v. Rawlings Financial Services, LLC, Docket No. 16-3748 (2nd Circuit 2017), a participant in a healthcare benefit plan covered by ERISA requested documents pertaining to her plan but did not receive them promptly. She sought statutory damages pursuant to ERISA Section 502(c)(1), which imposes personal liability on ERISA plan administrators that fail to provide plan documents to participants within thirty days of a request. On motion, the United States District Court for the District of Connecticut dismissed the suit as untimely, applying Connecticut’s one-year statute of limitations for actions to recover civil forfeitures, and the plaintiff failing to file her claim within the one-year period.

Since ERISA does not specify a statute of limitations for Section 502(c)(1) claims, courts apply the state statute of limitations that is the nearest analogue. On appeal, Brown argued that the proper statute of limitations is either Connecticut’s six-year statute of limitations for breach of contract, or the three-year statute of limitations for violations of the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Connecticut Unfair Insurance Practices Act (“CUIPA”).

Upon reviewing the case, the Second Circuit Court of Appeals (the “Court”) said that it agreed with the district court that Connecticut’s civil forfeiture statute of limitations (with its one year filing period) provides the appropriate limitations period, and because the plaintiff filed her complaint more than one year after her claim accrued, the Court affirmed the district court’s dismissal.