In Fletcher v. Honeywell Int’l, Inc., No. 17-3277 (6th Cir. 2018), the plaintiffs, on behalf of themselves and other similarly situated retirees, retirees’ surviving spouses, and eligible dependents, filed suit against defendant Honeywell International, Inc. to enforce their rights to retirement healthcare benefits under a series of Collective Bargaining Agreements (“CBAs”).  The district court held that the CBAs were ambiguous and relied on extrinsic evidence for its conclusion that the parties intended retiree healthcare benefits to vest for life.  The defendant appeals.

Upon reviewing the case, the Sixth Circuit Court of Appeals (the “Court”) ruled that, in a suit under the LMRA and ERISA to enforce their retirement healthcare benefits rights under a series of CBA’s, the retirees were not entitled to lifetime healthcare benefits because the CBAs’ general durational clauses, which provided that the CBAs would remain in effect only until specified dates, were unambiguous and applied to the retirees’ healthcare benefits.  Further, ruled the Court, consideration of extrinsic evidence was not warranted because the CBAs’ general durational clauses applied to the retirees’ healthcare benefits since there was no clear, affirmative language to the contrary, and the CBAs unambiguously did not provide for vested lifetime retiree healthcare benefits, even though the CBAs explicitly provided for lifetime healthcare benefits to retirees’ surviving spouses and dependents.

Based on these rulings, the Court overturned the district court’s holding.

In Heavenly Hana LLC v. Hotel Union & Hotel Industry of Hawaii Pension Plan, No. 16-15481 (9th Cir. 2018), a panel for the Ninth Circuit Court of Appeals (the “Panel”) reversed the district court’s judgment, after a bench trial, in favor of the plaintiffs in an action under the Multiemployer Pension Plan Amendment Act.

The Panel held that the plaintiffs were required to assume the unpaid withdrawal liability of their predecessor to a multiemployer pension plan.  The Panel held that a constructive notice standard applied, and the plaintiffs were on constructive notice of potential withdrawal liability because a reasonable purchaser would have discovered their predecessor’s withdrawal liability.

In Dowdy v. Metropolitan Insurance Company, No. 16-15824 (9th Cir. 2018), a panel of the Ninth Circuit Court of Appeals (the “Panel”) reversed the district court’s judgment in favor of the defendant in an ERISA action challenging the denial of accidental dismemberment benefits under an employee welfare benefit plan subject to ERISA.

In this case, the plaintiff suffered a serious injury to his left leg as the result of an automobile accident, and his leg was eventually amputated below the knee. The defendant denied coverage because the plaintiff’s injury was complicated by his diabetes. The Panel held that the district court did not abuse its discretion in excluding evidence outside the administrative record, and any error on this issue was harmless because the external evidence did not support the plaintiff’s claim.

Under the ERISA plan, the plaintiff was entitled to coverage if his car accident was the “direct and sole cause” of the loss, and if amputation “was a direct result of the accidental injury, independent of other causes.” The Panel held that, even under the more demanding “substantial contribution” standard used when the applicable plan language is conspicuous, the plaintiff was entitled to recovery because the record did not support a finding that the preexisting condition of diabetes substantially contributed to his loss. The panel remanded the case to the district court for further proceedings.

In Gordon v. Cigna Corporation, No. 17-1188 (4th Cir. 2018), Steven Gordon worked for Oil Price Information Services, Inc. and paid premiums on life insurance policies, under a plan sponsored by the employer, that totaled $300,000 in coverage.  But when Steven Gordon died in January 2014, his insurer, The Life Insurance Company of North America (“LINA”), paid Steven’s wife and beneficiary, Kimberly Gordon, only $150,000. The reason, LINA claimed, was because Steven Gordon had only been approved for $150,000 in coverage—not for the full $300,000 in coverage he had been paying for. When Kimberly Gordon sued for the difference between the two amounts, the district court granted summary judgment in favor of the insurance company.

The district court found that the errors leading to Steven Gordon’s reduced coverage resulted from mistakes by his employer, which administered the life insurance plan, not the insurance company. Thus, the insurance company did not breach any fiduciary duty it may have had under ERISA, nor did it knowingly participate in a breach of trust by another fiduciary. The district court also found that discovery would not lead to any information that would change its conclusion, so the court granted summary judgment before either party conducted discovery. Kimberly Gordon, on behalf of Steven Gordon’s estate, now appeals the district court’s decision. Upon reviewing the case, the Fourth Circuit Court of Appeals affirmed the district court’s ruling.

(Following up on Blog post on May 22)

In Am. Orthopedic & Sports Med. v. Independence Blue Cross Blue Shield, 2018 U.S. App. LEXIS 12637 (3rd Circuit 2018), the Third Circuit Court of Appeals (the “Court”) held that an anti-assignment clause in an ERISA-governed health insurance plan was enforceable, since it was negotiated between the insurer and plan administrator.  As such, the district court properly held that a healthcare provider-to whom an assignment of a claim for benefits against the plan was purportedly made by the plan beneficiary/patient- lacked standing to bring suit against the plan for payment.  The Court felt that its ruling on the anti-assignment clause’s enforceability is in line with decisions from the First, Second, Fifth, Ninth, Tenth, Eleventh (cases cited therein).

In so ruling, the Court said that insurers did not waive their right to enforce the anti-assignment clause by accepting and processing a claim form, issuing a check to the plan beneficiary, and failing to raise the clause as an affirmative defense during the internal administrative appeals process.

In Eden Surgical Center v. Cognizant Technology Solutions Corp., No. 16-56422 (9th Cir.2018) (Unpublished), the plaintiff, Eden Surgical Center (“Eden”), was appealing the district court’s grant of summary judgment for the defendants on Eden’s claims under ERISA.

The Ninth Circuit Court of Appeals (the “Court”) analyzed the case as follows.  Eden-seeking payment for surgical services provided- concedes that its sole basis for standing to claim such payment is as an assignee.  It also concedes that the benefit plan, the potential payor here, contained a valid anti-assignment provision, which, if enforceable, would bar Eden’s suit. Eden argues, however, that the doctrines of equitable estoppel and waiver render the provision unenforceable.

As to the equitable estoppel argument, the Court said that reasonable reliance on a material misrepresentation is one of the requirements necessary to establish an equitable estoppel claim.   Eden contends that Aetna, the claims administrator, made two misrepresentations: First, a week or so before the surgery, Aetna incorrectly advised Eden regarding the applicable reimbursement rate; and second, roughly four months after the surgery, Aetna mistakenly told Eden that the benefit plan did not contain an anti-assignment provision.

In Field Assistance Bulletin No. 2018-01 (the “FAB”), the U.S. Department of Labor (the “DOL”) provides additional guidance on the exercise of shareholder rights, written statements of investment policy and economically targeted investments.  Here is what the FAB says:


The DOL’s longstanding position is that, under ERISA, the fiduciary act of managing plan assets that involve shares of corporate stock includes making decisions about voting proxies and exercising shareholder rights.  To assist plan fiduciaries in understanding their obligations under ERISA, the DOL issued Interpretive Bulletin (IB) 2016-01.  The DOL has a similarly longstanding position that ERISA fiduciaries may not sacrifice investment returns or assume greater investment risks as a means of promoting collateral social policy goals.  Interpretive Bulletin (IB) 2015-01 contains the DOL’s interpretation of ERISA sections 403 and 404 as applied to employee benefit plan investments in economically targeted investments (that is, investments selected for the economic benefits they create apart from their investment return to the employee benefit plan).

In IRS Tax Reform Tax Tip 2018-69, May 4, 2018, the IRS offers guidance on the tax credit available to employers for paid family and medical leave.  Here is what the Tax Tip says:

During National Small Business Week, the IRS focuses on educating employers about the employer credit for paid family and medical leave created by the Tax Cuts and Jobs Act passed last year. Employers may claim the credit based on wages paid to qualifying employees while they are on family and medical leave.

Here are some facts about this credit and how it benefits employers:

In Pizza Pro Equipment Leasing, Inc. v. Commissioner of Internal Revenue, No. 17-1297 (8th Cir. 2018) (Unpublished Opinion), Pizza Pro Equipment Leasing, Inc. (“Pizza Pro”) appeals a tax court decision upholding determinations by the Commissioner of Internal Revenue that it owes excise taxes and additions to tax related to its defined benefit pension plan.  After reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) affirmed the district court’s ruling.

In this case, in 1995, Pizza Pro established a defined benefit pension plan (the “Plan”).  This case involves a dispute about a limitation on the Plan’s annual benefit, see I.R.C. § 415(b)(2)(C), which in turn determines Pizza Pro’s deductible contributions to the Plan.  The Commissioner concluded that from 2002 to 2006 Pizza Pro incorrectly calculated the limitation on the annual benefit and therefore made nondeductible contributions to the Plan. See I.R.C. § 404(j)(1)(A).  Section 4972 of the Internal Revenue Code imposes “a tax equal to 10 percent of the nondeductible contributions.”  The Commissioner further imposed additions to tax for failure to file a return of excise taxes and to timely pay the excise tax owed. See I.R.C. § 6651(a)(1) & (a)(2).

Pizza Pro petitioned the tax court, challenging the excise tax and additions.  The tax court decided the case without trial based on the parties’ stipulated facts and expert reports, and it upheld the Commissioner’s determinations.  It also concluded that Pizza Pro did not make a valid election under I.R.C. § 4972(c)(7), which allows a taxpayer to disregard contributions to a defined benefit plan under certain conditions, thereby avoiding the excise tax on nondeductible contributions.  Pizza Pro timely appealed.

In Field Assistance Bulletin No. 2018-02 (the “FAB”), the U.S. Department of Labor (the “DOL”) announces a temporary enforcement policy on prohibited transaction rules that apply to investment advice fiduciaries, to help them handle the recent decision from the Fifth Circuit Court of Appeals vacating the DOL’s New Fiduciary Rule and related exemptive relief.  Here is what the FAB says:


This document announces a temporary enforcement policy related to the DOL’s rule defining who is a “fiduciary” under ERISA and the Internal Revenue Code (the “Code”), and the associated prohibited transaction exemptions, including the Best Interest Contract Exemption (the “BIC Exemption”), the Class Exemption for Principal Transactions In Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs (the “Principal Transactions Exemption”), and certain amended prohibited transaction exemptions (collectively, the “PTEs”).