Articles Posted in ERISA

In Acosta v. Brain, Nos. 16-56529, 16-56532 (9th Cir. 2018), a panel of the Ninth Circuit Court of Appeals (the “Panel”) affirmed in part, reversed in part, and vacated in part the district court’s judgment in a civil enforcement action brought by the Secretary of the Department of Labor against Scott Brain, a former trustee of the Cement Masons Southern California Trust Funds (the “Trust Funds”), and Melissa Cook and Melissa W. Cook & Associates, PC (collectively, the Cook Defendants), former counsel to the Trust Funds, alleging violations of the ERISA.

The action alleged violations of two sections of ERISA — unlawful retaliation in violation of ERISA section 510, and breach of fiduciary duty in violation of ERISA section 404.

The Panel held that the district court did not err in concluding that Brain violated ERISA section 510 by retaliating against whistleblower Cheryle Robbins, the Director of the Trust Funds’ internal Audit and Collections Department.  The Panel held that Robbins’s participation in the Department of Labor (“DOL”) investigation of Brain was unmistakably protected activity under ERISA, and constituted an independently sufficient ground for the district court’s conclusion.  The Panel noted that there was a circuit split on the issue of whether “unsolicited internal complaints” constituted protected activity within the meaning of ERISA section 510, but concluded that the issue of Robbins’s letter-writing being protected activity was immaterial where Robbins’s cooperation with the DOL investigation provided an independent basis for the section 510 claim.

In Sulyma v. Intel Corporation Investment Policy Committee, No. 17-15864 (9th Cir. 2018), a panel of the Ninth Circuit Court of Appeals (the “Panel”) reversed the district court’s grant of summary judgment in favor of the defendants in an ERISA action on the ground that the limitations period had expired.

In this case, a former employee and participant in Intel’s retirement plans sued the company for allegedly investing retirement funds in violation of ERISA section 1104 (breach of fiduciary duty).  The district court concluded that the employee had the requisite “actual knowledge” to trigger ERISA’s three-year limitations period, 29 U.S.C. § 1113(2), so that the period of limitations for bringing the suit had expired.

The Panel held that a two-step process is followed in determining whether a claim is time- barred by section 1113(2).  First, the court isolates and defines the underlying violation on which the plaintiff’s claim is founded.  Second, the court inquires whether the plaintiff had “actual knowledge” of the alleged breach or violation.  The Panel held that actual knowledge does not mean that a plaintiff had knowledge that the underlying action violated ERISA, nor does it merely mean that a plaintiff had knowledge that the underlying action occurred.  Rather, the defendant must show that the plaintiff was actually aware of the nature of the alleged breach more than three years before the plaintiff’s action was filed. In an ERISA section 1104 case, the plaintiff must have been aware that the defendant had acted and that those acts were imprudent.  Disagreeing with the Sixth Circuit, the Panel held that the plaintiff must have actual knowledge, rather than constructive knowledge.

In W.A. Griffin, M.D. v. Teamcare, No. 18-2374 (7th Cir. 2018), W.A. Griffin, M.D., is the assignee of her patient’s health plan, TeamCare (the “Plan”).  The Board of Trustees of Central States, Southeast and Southwest Areas Health and Welfare Fund (collectively “Central States”) administers the Plan.  ERISA governs the Plan.  Dr. Griffin sued Central States for underpayment and for statutory penalties based on its failure to furnish plan documents upon request.  The district court dismissed her complaint.

Upon reviewing the case, the Seventh Circuit Court of Appeals (the “Court”) found that Dr. Griffin adequately alleged that she is eligible for additional payment for services and statutory damages.  Accordingly, the Court affirmed the district court’s judgment only as to Count 2 (Central States breached its fiduciary duty by not adhering to the Plan’s terms), vacated the district court’s judgment as to Count 1 (Central States did not pay Dr. Griffin the proper rate for her services under the Plan) and Count 3 (Central States failed to produce, within 30 days, the summary plan description she requested, and certain other information), and remanded Counts 1 and 3 back to the district court for further proceedings.

The case of McCann v. Unum Provident, No. 16-2014 (3rd Cir. 2018) involves two principal issues: first, whether a group insurance plan is governed by ERISA and, second, whether the physician—claimant was incorrectly denied his disability benefit payments.

In this case, plaintiff-appellant, Dr. Kevin McCann, is a radiologist certified in the specialty of interventional radiology.  The gravamen of this appeal concerns a supplemental long-term disability insurance policy Dr. McCann purchased from defendant, Provident Life and Accident Insurance Company.  After initially issuing payments under the policy, Provident terminated Dr. McCann’s disability benefits.  Central to its decision was a determination that Dr. McCann was primarily practicing as a diagnostic radiologist—rather than as an interventional radiologist—at the time he became disabled.  This suit followed.

In analyzing the case, the Third Circuit Court of Appeals (the “Court”) said that, as a preliminary matter, the parties dispute whether Dr. McCann’s claim arises under ERISA.  Thus, the Court first considers the outer bounds of an employer’s involvement in a group or group—type insurance plan before deciding whether the plan may be governed by ERISA.  The Department of Labor has promulgated a safe harbor regulation exempting certain plans from the definition of an “employee welfare benefit plan.”  But the Court concluded that Dr. McCann’s then—employer sufficiently endorsed the plan under which his policy was purchased to render the safe harbor inapplicable.  The plan is therefore governed by ERISA, which will supply the governing framework.

In Brotherston v. Putnam Investments, LLC, No. 17-1711 (1st Cir. 2018), plaintiffs John Brotherston and Joan Glancy are two former employees of Putnam Investments, LLC who participated in Putnam’s defined-contribution 401(k) retirement plan (the “Plan”).  They brought this lawsuit on behalf of a now-certified class of other participants in the Plan, and on behalf of the Plan itself pursuant to the civil enforcement provision of ERISA.  Section 502(a)(2) of ERISA.  They claim that Putnam (as well as other Plan fiduciaries) breached fiduciary duties owed to Plan participants by offering participants a range of mutual fund investments that included all of (and, for most of the class period, only) Putnam’s own mutual funds without regard to whether such funds were prudent investment options. They also claim that Putnam structured fees and rebates in a manner that was both unreasonable and treated Plan participants worse than other investors in those Putnam mutual funds.

In a series of rulings before and after plaintiffs presented their evidence at trial, the district court found that plaintiffs failed to prove that any lack of care in selecting the Plan’s investment options resulted in a loss to the Plan, and that the manner in which Putnam transacted with the Plan was neither unreasonable nor less advantageous than the manner in which Putnam dealt with other investors in its mutual funds.  Finding several errors of law in the district court’s rulings, the First Circuit Court of Appeals vacated the district court’s judgment in part and remanded the case back to the district court for further proceedings.

In Vest v. Resolute FP US Inc., No. 18-5046 (6th Cir. 2018), plaintiff Mead Vest contends defendant Resolute FP US Inc. breached its fiduciary-duty obligations set forth in ERISA when it failed to notify her late husband of his right to convert a group life insurance policy to an individual life insurance policy after he ceased employment and began drawing long-term disability benefits.  The district court ruled plaintiff did not adequately plead a breach-of-fiduciary-duty cause of action. The Sixth Circuit Court of Appeals (the “Court”) agreed with the district court and affirmed its decision.

In this case, Arthur Vest worked nearly forty years for Resolute.  During his employment, Resolute offered group life insurance benefits (“the Plan”) to its employees in the form of base and optional additional life insurance coverage; Resolute provided coverage equal to an employee’s annual salary and permitted employees to purchase optional additional coverage.  Arthur purchased an additional $300,000 of coverage.

Due to complications arising from diabetes, Arthur ceased working in September 2015, and began drawing short- and then long-term disability benefits.  Under the Plan, employees maintained base life insurance coverage when receiving long-term disability benefits, but lost the optional additional coverage.  However, employees had the right to port or convert the expiring additional group coverage to individual coverage within 31 days of ending active employment.  Accordingly, Resolute ended Arthur’s additional coverage on May 18, 2016.  Resolute did not, however, provide him with any information concerning his right to port or convert the coverage that ended, and Arthur never did port or convert.  He died in October 2016, and Resolute’s life insurance carrier paid Vest’s beneficiary, plaintiff here, only the base coverage amount.

In Manuel v. Turner Industrial Group, L.L.C., 2018 U.S. App. LEXIS 27810 (5th Cir. 2018), Michael N. Manuel (“Manuel”) is a former employee of Turner Industries Group LLC (“Turner”).  During his employment, Manuel participated in a group employee short term and long term disability plan (the “Plan”) sponsored by Turner and insured by Prudential Insurance Company of America (“Prudential”).

The Plan provides the following.  Benefits are payable when Prudential determines that a participant is unable to work.  The Plan also provides that participants must submit proof of disability satisfactory to Prudential.  The summary plan description (“SPD”) adds that Prudential has the sole discretion to interpret the Plan.  The Plan does not cover a disability which is due to a pre-existing condition.  As to short term disability (“STD”) benefits, Prudential has the right to recover any overpayments due to any error Prudential makes in processing a claim.

Manuel alleges he became unable to work and claimed STD benefits under the Plan.  His STD claim was approved and paid.  Once he exhausted these benefits, he applied for long term disability (“LTD”).  His LTD claim was denied at every level of internal adjudication because Prudential concluded that Manuel’s claim was subject to the pre-existing condition exclusion.  Related to the denial, but before any suit was filed, Prudential determined that it had paid STD benefits in error and demanded repayment.

In Hennen v. Metropolitan Life insurance Company, No. 17-3080 (7th Cir. 2018), plaintiff-appellant Susan Hennen worked as a sales specialist for NCR Corporation from 2010 to May 2012, when she sought treatment for a back injury.  As an employee, Hennen was covered by long-term disability insurance under a group policy provided by defendant-appellee Metropolitan Life Insurance Company (“MetLife”).  When physical therapy and surgery failed to resolve her injury, Hennen applied for long-term disability benefits under the insurance plan.

Acting as plan administrator, MetLife agreed that Hennen was disabled and paid benefits for two years.  The plan has a two-year limit, however, for neuromusculoskeletal disorders.  That limit is subject to several exceptions, one of which applies to cases of radiculopathy.  After paying for two years, MetLife terminated Hennen’s benefits, finding that the two-year limit applied.  Hennen believes that she is entitled to continued benefits because she has radiculopathy. She sued under ERISA, arguing that MetLife’s determination that she did not have radiculopathy was arbitrary and capricious.  The district court granted summary judgment for MetLife, and Hennen appeals.

The Circuit Court of Appeals for the Seventh Circuit (the “Court”) reversed the district court’s decision and remanded the case back to the district court. The Court said that MetLife acted arbitrarily when it discounted the opinions of four doctors who diagnosed Hennen with radiculopathy in favor of the opinion of one physician who ultimately disagreed, but only while recommending additional testing that MetLife declined to pursue.


In Re: Derogatis, Docket Nos. 16-977-cv, 16-3549-cv (2nd Cir. 2018) has tandem cases, in which plaintiff-appellant Emily DeRogatis appeals the judgment of the district court awarding summary judgment to defendants-appellees, the trustees of two union-affiliated employee benefit plans, on her claims for relief asserted under ERISA.  The benefit plans at issue are the Pension Plan, which governed benefits payable to Emily as a surviving spouse after the death of her husband, Frank, and the Welfare Plan, which governed the DeRogatises’ entitlement to health benefits during and after Frank’s lifetime.  The conflict arises primarily because of certain oral miscommunications by Plan personnel to the DeRogatises before Frank’s death in 2011.

Upon reviewing the case, as to the Pension Plan, the Second Circuit Court of Appeals (the “Court”) concluded that the Pension Plan trustees correctly denied DeRogatis’s request for an augmented survivor benefit following her husband’s death.  It therefore affirmed the district court’s decision denying DeRogatis’s claim under ERISA § 502(a)(1)(B) against the Pension Plan for benefits due.  As to DeRogatis’s claim under ERISA § 502(a)(3) for breach of fiduciary duty, the District Court reasoned that a plan administrator cannot be held liable for unintentional misrepresentations made about the plan’s operation by its non-fiduciary, “ministerial” agent and on this basis denied the claim.  The Court rejected that ruling.  Nonetheless, it affirmed the judgment denying DeRogatis relief under this section because the Pension Plan’s summary plan description (“SPD”) adequately described the eligibility requirements for the benefits in question and thereby satisfied the trustees’ fiduciary duty to provide complete and accurate information to plan participants and beneficiaries.  Therefore, the summary judgment entered by the district court for the Pension Plan defendants is affirmed.

As to the Welfare Fund, DeRogatis asserts an ERISA § 502(a)(3) claim for breach of fiduciary duty against the trustees of the Welfare Fund.  The district court granted summary judgment for defendants on this claim on the same “ministerial employee” ground as described above.  Again, the Court rejected that analysis.  It disagreed, too, with the district court’s conclusion that the Welfare Plan SPD explained clearly its participants’ options to receive post-retirement health benefits. Given the evidence that Welfare Fund agents misstated material aspects of those same benefits when communicating with the DeRogatises, the Court identifies an open question of material fact concerning whether the Welfare Plan trustees breached their fiduciary duty to provide plan participants with complete and accurate information about their benefits.  Therefore, the Court vacated the judgment entered in favor of the Welfare Plan defendants, and remanded that part of the case back to the district court.

In Doe v. Harvard Pilgrim Health Care, Inc., No. 17-2078 (1st Cir. 2018), Jane Doe’s insurer, Harvard Pilgrim Health Care (“HPHC”), deemed part of the time Doe spent at a mental health residential treatment facility not medically necessary under the health care benefits plan established by the employer of Doe’s parent. HPHC therefore denied coverage for that portion of the treatment.  After several unsuccessful administrative appeals, Doe sued HPHC in federal court under ERISA.

On de novo review, the district court agreed with HPHC’s determination that continued residential treatment was not medically necessary for Doe.  However, upon review by the First Circuit Court of Appeals (the “Court”), the Court concluded that the administrative record upon which the district court based its finding should have been supplemented.  As a result, the Court reversed in part, vacated in part, and remanded for further proceedings.