ERISA-Fifth Circuit Reviews Claims Pertaining To Disability Benefit Plan

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.

Following the administrative denial of his claims, Manuel sued Turner and Prudential for a myriad of alleged violations of ERISA and state law.  Prudential counterclaimed, seeking repayment of the STD benefits it allegedly paid in error. The district court rejected all of Manuel’s claims upon motion to dismiss or for summary judgment.  It granted summary judgment to Prudential on its repayment counterclaim.  Manuel appeals some but not all of the district court’s rulings.

Upon reviewing the case, the Fifth Circuit Court of Appeals (the “Court”): (a) reversed and remanded the district court’s dismissal of Manuel’s claims for fiduciary breach and failure to provide documents as to Turner and his claim for plan benefits and discrimination as to Prudential; (b) reversed and remanded the district court’s grant of summary judgment to Prudential on its claim for reimbursement; (c) affirmed the dismissal of Manuel’s fiduciary breach and failure to provide document claims against Prudential; and (d) affirmed the application of the abuse of discretion standard to Manuel’s claims for plan benefits.  The Court also instructed the district court to consider anew any discovery requests related to Manuel’s surviving claims.  Further, the Court vacated the award of prejudgment interest to Prudential.

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