In Martone v. Robb, No. 17-50702 (5th Cir. 2018), Thomas Martone, a former Whole Foods employee, brought an action against certain Whole Foods executives who are named fiduciaries for the company’s 401(k) plan.  Martone alleges that these executives breached their fiduciary duties by allowing employees to continue to invest in Whole Foods stock while its value was artificially inflated due to a widespread overpricing scheme.  The district court dismissed the claims, finding that Martone failed to plausibly allege an alternative action that the fiduciaries could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.

Upon reviewing the case, the Fifth Circuit Court of Appeals agreed with the district court’s finding and therefore affirmed the district court’s decision.

In WHD Opinion Letter FMLA2018-2-A, the U.S. Department of Labor (the “DOL”) concluded that organ-donation surgery can qualify as a “serious health condition” under the Family and Medical Leave Act of 1993 (the “FMLA”).  Here is what the DOL said.

BACKGROUND.  The FMLA entitles eligible employees of covered employers to unpaid, job-protected leave for specified family and medical reasons.  Eligible employees may take up to 12 workweeks of leave in a 12-month period for, among other things, a serious health condition that renders the employee unable to perform the functions of his or her job. 29 U.S.C. § 2612(a)(1)(D); 29 C.F.R. § 825.112(a)(4).

The FMLA defines “serious health condition” as an “illness, injury, impairment, or physical or mental condition that involves” either “inpatient care in a hospital, hospice, or residential medical care facility” or “continuing treatment by a health care provider.” 29 U.S.C. § 2611(11).  Implementing regulations define “inpatient care” as “an overnight stay in a hospital, hospice, or residential medical care facility, including any period of incapacity… or any subsequent treatment in connection with such inpatient care.” 29 C.F.R. § 825.114.  The regulations also specify that “continuing treatment” includes “incapacity and treatment,” “chronic conditions,” “permanent or long-term conditions,” and “conditions requiring multiple treatments.” 29 C.F.R. § 825.115.  For all conditions, “incapacity” means “inability to work, attend school or perform other regular daily activities due to the serious health condition, treatment therefore, or recovery therefrom,” and “treatment” includes “examinations to determine if a serious health condition exists and evaluations of the condition.” 29 C.F.R. § 825.113(b), (c).  An employee is incapacitated if he or she is “unable to work at all or is unable to perform any one of the essential functions of the employee’s position,” including when the employee “must be absent from work to receive medical treatment.” 29 C.F.R. §§ 825.113(b), .123(a).

The Internal Revenue Service (the “IRS”) has issued a Private Letter Ruling in which an employer proposes to amend its 401(k) plan in a manner which will help its employees accumulate moneys to pay off student loans.

In PLR 201833012 (dated August 17, 2018), the Internal Revenue Service (the “IRS”) was faced with the following proposed amendment to a 401(k) plan (the “Plan”).

An employer proposed to amend the Plan to offer a student loan benefit program (the “Program”).  Under the Program, the employer would make an employer nonelective contribution on behalf of an employee, conditioned on that employee making student loan repayments (the “SLR Nonelective Contribution”).  The Program is voluntary.  An employee must elect to enroll, and once enrolled, may opt out of enrollment on a prospective basis.

In Marshall v. Anderson Excavating & Wrecking Co., No. 17-1887 (8th Cir. 2018), the International Union of Operating Engineers, Local 571 (the “Union”) and trustees of the Contractors, Laborers, Teamsters, and Engineers (“CLT&E”) Health and Welfare Plan (the “Welfare Plan”) and Pension Plan (the “Pension Plan”) (collectively, “plaintiffs”) sued Anderson Excavating and Wrecking Co. (“Anderson Excavating”) under ERISA.  They requested that the district court order Anderson Excavating to pay the contributions it allegedly owes to the Welfare Plan and Pension Plan, along with interest, liquidated damages, and attorneys’ fees and costs.  The district court found Anderson Excavating liable to the plaintiffs for delinquent contributions under ERISA and entered judgment against it and in favor of the plaintiffs in the amount of $11,956.96 in unpaid contributions; $8,817.96 in prejudgment interest; $8,817.96 in liquidated damages; $38,331 in attorneys’ fees; and $516.50 in nontaxable costs.

On appeal, Anderson Excavating argues that the district court erred in determining (1) damages for unpaid contributions, (2) prejudgment interest, (3) liquidated damages, and (4) attorneys’ fees.

Upon reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) concluded that the district court legally erred in applying the alter ego doctrine (deeming Andersen Excavating to be the employer that actually owed the contributions) to justify an award of unpaid contributions for an alleged employee’s work.  This error obtains because the plaintiffs never raised an alter ego theory in their complaint. Accordingly, the Court reversed the judgment of the district court and remanded the case for further proceedings consistent with its opinion.

In Griffin v. Hartford Life & Accident Insurance Company, No. 17-1251 (4th Cir. 2018), Scott Griffin commenced an action under ERISA against Hartford Life and Accident Insurance Company (“Hartford Life”) as the administrator of his employer’s welfare benefit plan (the “Plan”), seeking a continuation of the long-term disability benefits that Hartford Life had terminated based on its conclusion that Griffin was no longer “disabled,” as that term is used in the Plan.

The district court granted summary judgment to Hartford Life, and Griffin filed this appeal, contending that the district court erred: (1) in reviewing the administrator’s decision for abuse of discretion, rather than de novo, and (2) in concluding that Griffin failed to provide evidence sufficient to support a conclusion that Hartford Life’s decision to terminate the long-term disability benefits was unreasonable.

Upon reviewing the case, the Fourth Circuit Court of Appeals (the “Court”) affirmed the district court’s summary judgment.  As to the standard for reviewing the administrator’s decision, the Court noted that the applicable documents gave discretion to Hartford Life, so that an abuse of discretion review of its decision is warranted.  It rejected the contention that a person other than Hartford Life made the decision to terminate Griffin’s benefits, since the decision makers were acting as agents of Hartford Life.  As to the reasonableness of Hartford Life’s decision, the Court said that it agreed with the district court that Hartford Life’s decision was reasonable and therefore did not amount to an abuse of discretion.  The record readily shows that Griffin received a fair and thorough consideration of his claim and that Hartford Life’s conclusion was reasonably supported by the available evidence.

In Zaeske v. Liberty Life Assur. Co., No. 17-2496 (8th Cir. 2018), an appeal arose from Liberty Life Assurance Company’s denial of Damon Zaeske’s application for long-term disability benefits under his employer’s welfare benefit plan.  After Zaeske sued Liberty Life under ERISA, the district court ordered Liberty Life to pay Zaeske benefits and attorney’s fees.  Liberty Life appeals.

Upon reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) concluded that Liberty Life’s decision to deny the application was not an abuse of discretion.  Accordingly, the Court reversed the district court’s judgment.  In so ruling, the Court found that the opinions of two physicians were sufficiently reliable to provide a reasonable basis for Liberty Life’s denials of Zaeske’s claim.  While another interpretation of Zaeske’s medical records could support his eligibility for benefits, the assessments of those two physicians were not outside the range of reasonableness, and it was not an abuse of discretion for Liberty Life to rely on them. The court also vacated the award of attorney’s fees.


North Cypress Medical Center Operating Company v. Aetna Life Insurance Company, No. 16-20674 (5th Cir. 2018), involved the following situation.  Under Aetna’s insurance plans, patients are responsible for a portion of their bills.  Insurance companies cover the remainder.  But how much is Aetna obligated to pay for medical services provided to its members by an out-of-network hospital?

Houston medical services provider North Cypress Medical Center Operating Co., Ltd. and North Cypress Medical Center Operating Co. GP, LLC (collectively “NCMC”) alleged Aetna underpaid out-of-network providers like NCMC in violation of ERISA.  Aetna counterclaimed, alleging NCMC fraudulently and negligently misrepresented its billing practices by routinely waiving patient responsibilities yet billing Aetna for the total out-of-network cost.

The district court granted Aetna judgment as a matter of law on NCMC’s ERISA claims and granted NCMC judgment as a matter of law on Aetna’s fraud and negligent misrepresentation counterclaims.  Upon reviewing the case, the Fifth Circuit Court of Appeals affirmed the district court’s decision.

In Springer v. Cleveland Clinic Emple. Health Plan Total Care, No. 17-4181 (6th Cir. 2018), Jason Springer arranged air ambulance transportation for his son before his employee benefit plan (the “Plan”) could verify his membership and authorize the service.  Subsequently, the plan administrator denied Springer’s claim for coverage because he did not obtain the precertification required for nonemergency transportation.  The district court affirmed the denial and alternatively found that Springer did not suffer an injury to have Article III standing.

Upon reviewing the case, the Sixth Circuit Court of Appeals (the “Court”) said that Springer has standing to bring his claim.  The denial of plan benefits is a concrete injury for Article III standing.  However, the Court also said that it agrees with the district court that the plain language of the Plan required precertification.  Springer’s son’s transportation was not an emergency which could be used to sidestep the precertification process.  Accordingly, the Court affirmed the district courts’ decision.

In Meiners v. Wells Fargo & Company, No. 17-2397 (8th Cir. 2018), John Meiners (“Meiners”) appeals from the district court’s order dismissing his Complaint for failure to state a claim.  Meiners claimed that his former employer, Wells Fargo & Company (“Wells Fargo”), and an assortment of Wells Fargo executives and entities (collectively, the “Wells Fargo Defendants”), breached their fiduciary duty under ERISA.  He alleged two breaches: (1) retaining Wells Fargo’s proprietary investment funds as options for Wells Fargo employees’ 401(k) retirement plan (the “Plan”), and (2) defaulting to these proprietary investment funds for Plan participants who did not elect other options.

In this case, during the relevant time period, the Plan allegedly offered more than two dozen investment options, twelve of which were Wells Fargo Dow Jones Target Date Funds (“Wells Fargo TDFs”). These Wells Fargo funds were allegedly more expensive (due to higher fees) than comparable Vanguard and Fidelity funds and also underperformed the Vanguard funds.  Meiners’s claimed that the Wells Fargo Defendants breached their fiduciary duties under ERISA when they failed to remove their inordinately expensive and underperforming funds from the Plan’s options.  Meiners further alleged that the breach occurred because the Wells Fargo Defendants were maximizing their own profits, selecting their funds as a default out of improper financial motives to generate fees and “seed” (provide financial support for) the underperforming funds.  The district court granted the Wells Fargo Defendant’s motion to dismiss the claim, and Meiners appealed.

Upon reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) affirmed the district court’s dismissal.  In this case, the Court found that Meiners’s Complaint fails to state a plausible claim because it fails to allege any facts, accepted as true, to demonstrate that the Wells Fargo TDFs were an imprudent choice.  In particular, Meiners did not plead facts showing the Wells Fargo TDFs were underperforming funds.  His conclusory allegations of bad conduct do not save his Complaint from its deficient pleading regarding those funds.

In Munro v. University of Southern California, Docket No. 17-55550 (9th Cir. 2018), a panel for the Ninth Circuit Court of Appeals (the “Panel”) affirmed the district court’s denial of defendants’ motion to compel arbitration of collective claims for breach of fiduciary duty in the administration of two ERISA plans.

The plaintiffs, current and former employees of the University of Southern California, and participants in the two ERISA plans, were required to sign arbitration agreements as part of their employment contracts.  The Panel concluded that the dispute fell outside the scope of the arbitration agreements because the parties consented only to arbitrate claims brought on their own behalf, and the employees’ claims were brought on behalf of the ERISA plans.