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ERISA Watch – February 26, 2015

Your reliable source for summaries of recent ERISA decisions

Below is Roberts Disability Law, P.C.’s summary of this past week’s notable ERISA decisions.

Top (hat) of the morning to you! Unfortunately, the defendant in Campbell v. Sussex Cnty. Fed. Credit Union, didn’t have the best morning after the 3rd Circuit reversed summary judgment in its favor in a matter involving the enforceability of a top-hat plan. . . . And speaking of dissatisfaction, Matrix Absence Management, Inc. should avoid sending a post-employment satisfaction survey to the unsuccessful plaintiff in Chavez v. Reliance Standard Life Ins. Co., who worked as a Senior Long Term Disability Claims Manager for Matrix (Reliance Standard’s sister company) until she became disabled. Reliance Standard terminated her long term disability benefits claim, after, in part, receiving an “anonymous” phone call from someone who claimed the plaintiff was not disabled. Taking a lesson from this case, we wonder if anonymous phone calls to plan administrators informing them that our clients are truly disabled will be effective. Probably not, but enjoy this week’s case summaries!

Third Circuit

Summary judgment reversed and remanded where triable issue of fact remains as to whether a top-hat plan is unenforceable for lack of consideration. In Campbell v. Sussex Cnty. Fed. Credit Union, No. 13-4141, __Fed.Appx.___, 2015 WL 690435 (3d Cir. Feb. 19, 2015), Plaintiff began working for Diamond State in 1983 and became a Manager/President in 1998. In 2005, she engaged a lawyer to draft a supplemental retirement-benefits plan on her behalf (the “Plan”), whose stated purpose was to reward Plaintiff for her loyal and continuous service to the Company. The Plan, which was approved by the board of directors, required Diamond State or its successor to provide lifetime health insurance benefits to Plaintiff and her husband at its sole cost and expense upon Plaintiff’s retirement from the Company. In the fall of 2007, Plaintiff resigned from Diamond State to accept a position at Sussex and Diamond State covered her health insurance benefits. In November 2008, Sussex and Diamond State entered into a merger agreement under which Sussex assumed all liabilities of Diamond State on March 31, 2009. Sussex later fired Plaintiff for alleged performance reasons and offered her COBRA coverage. Plaintiff and Sussex dispute whether or not Sussex was obligated to honor the Plan as the successor to Diamond State.

In granting Sussex’s motion for summary judgment, the district court ruled that the Plan is unenforceable for lack of consideration because Plaintiff was not required to work for any additional period of time after the Plan was adopted and her past performance as an employee of Diamond State could not have served as consideration to support the formation of a contract. The 3rd Circuit disagreed and found that a reasonable trier of fact could find that the consideration for the Plan took the form of Plaintiff’s continuous services and loyalty up until her actual date of retirement. Sussex made four arguments supporting affirmance of the district court’s decision, each of which the court rejected as follows:

Exhaustion of Administrative Remedies. Plaintiff was not required to exhaust any additional administrative remedies before bringing suit where Sussex never complied with the Plan because it failed to advise Plaintiff of, among other things, (1) the specific reason or reasons for its denial of the claim, (2) the specific reference to pertinent provisions of the Plan on which such denial is based, (3) appropriate information as to the steps to be taken to submit the claim for review, and (4) the time limits for requesting a review.

Statute of Limitations. The district court did not erroneously apply the doctrine of equitable tolling to conclude that Plaintiff’s ERISA claim was time-barred. Equitable tolling applies to situations like here where a plan administrator has failed to comply with regulatory notice requirements in denying a plan participant’s claim for benefits.

Successor Liability. Although Sussex asserts that it did not assume liability for the Plan when it merged with Diamond State, the court declined to determine Sussex’s equitable defense to successor liability in the first instance because Sussex never moved for summary judgment in the district court on this ground.

Compliance with Contractual Obligations. Sussex argued that it is not required to pay for Plaintiff’s health insurance because its current BCBS plan bars coverage for all but full-time employees. Construing the Plan as a whole, the court concluded that a plausible (if not more reasonable) interpretation of the Plan is that Diamond State was required to provide coverage at least equivalent to what Plaintiff enjoyed at the time of her Plan’s adoption. Because a factfinder must weigh this conflicting evidence at trial, we court declined to use this alternative ground to affirm the district court’s judgment.

For the above reasons, the court reversed the district court’s entry of summary judgment and remanded for further proceedings consistent with this opinion.

Fifth Circuit

Plan Administrator did not abuse its discretion in distributing Savings Plan benefits. In Hall v. Lockheed Martin Corp., No. 14-10471, __Fed.Appx.__, 2015 WL 676850 (5th Cir. Feb. 18, 2015), a matter involving the distribution of savings plan benefits, Plaintiff alleged that Lockheed Martin Corp. (“LMC”) was negligent and breached its fiduciary duty by recognizing a power of attorney in favor of her late husband’s daughter. The district court granted summary judgment in favor of LMC and found that Plaintiff’s state law claims were preempted by ERISA and that there was no genuine issue of fact that LMC, as Plan administrator, had abused its discretion in administering her late husband’s account in the Plan. The court found that Plaintiff presented nothing on appeal that would create a question of material fact that the Plan administrator’s actions were arbitrary and not supported by substantial evidence.

Fund has standing to bring declaratory judgment action and court has subject matter jurisdiction to adjudicate this claim. In Bd. of Trustees of the Plumbers & Pipefitters Nat. Pension Fund v. Fralick, No. 13-10711, __Fed.Appx.___, 2015 WL 680522 (5th Cir. Feb. 18, 2015), Defendant appealed the district court’s declaratory judgment in favor of the Board of Trustees of the Plumbers and Pipefitters National Pension Fund (the “Board”) and the dismissal of her counterclaim for benefits under ERISA. The Board initiated this declaratory judgment action seeking a declaration that Defendant was not entitled to a preretirement surviving spouse pension benefit and it sought an order that it only owed Defendant an additional payment of $36,722 based on the remaining payments due under her late husband’s retirement pension. Defendant argued that the district court lacked subject matter jurisdiction because the Board’s ERISA claim falls outside the remedies provided to it in § 1132(a) because only a beneficiary may make such a claim under § 1132(a)(1)(B). The court found that this argument does not bear on whether the court has subject matter jurisdiction over the Board’s claim and concluded that the district court correctly held that it had subject matter jurisdiction to adjudicate this declaratory judgment claim under its federal question power in 28 U.S.C. § 1331. Further, the Board has standing to bring the claim because the Board presents a long-standing actual controversy between the parties that is capable of judicial resolution. It is of no moment that the Board filed this action before Plaintiff counterclaimed for benefits. The court found that the district court’s conclusion that Defendant was judicially estopped from challenging the earlier decision in her husband’s case was not an abuse of discretion. The court further found that Defendant was disqualified from preretirement surviving spouse benefits because her husband did not die before his Effective Date of Benefits. Accordingly, the court affirmed in part, vacated in part, and remanded the case for entry of an amended judgment awarding Defendant the remaining payment of $36,722 due under her late husband’s retirement pension.

Ninth Circuit

Non-qualified top hat plan is exempted under ERISA from spousal consent requirements. In E & J Gallo Winery v. Rogers, No. 13-55327, __Fed.Appx.___, 2015 WL 738265 (9th Cir. Feb. 23, 2015), an interpleader action to determine the designated beneficiary under the Key Executive Profit Sharing Retirement Plan (the “ERP”) belonging to a now-deceased former Gallo employee, the 9th Circuit Court of Appeals affirmed the district court’s decision that Mark Rogers was the proper beneficiary of the ERP benefits. The Gallo Qualified Plan provides that benefits would be paid a) to the surviving spouse, or b) to the designated beneficiary, but only if there was no surviving spouse or if the surviving spouse had consented to the designated beneficiary, and would pass to the estate only if there were no surviving spouse or the surviving spouse had consented to the designated beneficiary. The district court correctly concluded that Robert unambiguously designated his former wife, Audrey Rogers, as his primary beneficiary under the ERP, and his brother, Mark, as his secondary beneficiary. First, nothing in the ERP governing documents provided that Robert’s marriage void his prior beneficiary designation. Second, the ERP is a non-qualified, top hat plan, exempted under ERISA from spousal consent requirements. Third, the primary beneficiary waived her right to the benefit.

Denial of benefits under health and pension plan affirmed. In LeBlanc v. Motion Picture Indus. Health Plan, No. 13-55291, __Fed.Appx.___, 2015 WL 736941 (9th Cir. Feb. 23, 2015), the court affirmed the district’s denial of Plaintiffs’ claim for benefits under the Defendants Motion Picture Industry Health Plan and Motion Picture Industry Pension Plan and the denial of Plaintiffs’ motion for attorney fees. The court found that Defendants gave specific and legitimate reasons for rejecting non-contemporaneous records and records other than payroll records to demonstrate the requisite employment and hours and Plaintiffs received a “full and fair” review as required by 29 U.S.C. § 1133(2). The district court did not abuse its discretion in denying Plaintiffs’ motion for attorneys’ fees.

Tenth Circuit

The “fraud or concealment” provision is an exception to the statute of repose and not a separate statute of limitations. In Fulghum v. Embarq Corp., No. 13-3230, __F.3d___, 2015 WL 759169 (10th Cir. Feb. 24, 2015), Plaintiffs brought this suit after Defendants altered or eliminated health and life insurance benefits for retirees, asserting that Defendants (1) violated ERISA by breaching their contractual obligation to provide vested health and life insurance benefits; (2) breached their fiduciary duty by, inter alia, misrepresenting the terms of multiple welfare benefit plans; and (3) violated the ADEA and applicable state laws by reducing or eliminating health and life insurance benefits. The district court granted Defendants’ summary judgment on the breach of fiduciary duty claims, the ADEA claims, the state-law age discrimination claims, and some of the contractual vesting claims. The 10th Circuit Court of Appeals concluded that Defendants did not contractually agree to provide Plaintiffs with lifetime health or life insurance benefits and thus affirmed in part the grant of summary judgment as to the contractual vesting claims. The court reversed the grant of summary judgment against those class members whose contractual vesting claims arise, in whole or in part, from summary plan descriptions other than those identified in Defendants’ motion. But, the court affirmed the grant of summary judgment in favor of Defendants on the ADEA claims. The court also reversed the district court’s dismissal of Plaintiffs’ breach of fiduciary duty claims brought pursuant to 29 U .S.C. § 1132(a)(3) and the dismissal of Plaintiffs’ remaining breach of fiduciary duty claims to the extent those claims are premised on a fraud theory.

With respect to the breach of fiduciary duty claim, in the Third Amended Complaint, seventeen named plaintiffs raised claims alleging Defendants breached their fiduciary duties by withholding benefits due them, misrepresenting and concealing material benefits information, and misleading them into believing their health and life insurance benefits could not be amended or terminated. The breach of fiduciary duty claims were purportedly brought pursuant to both 29 U.S.C. § 1132(a)(3) and 29 U.S.C. § 1104(a)(1). Defendants moved for summary judgment on the basis that the § 1104(a)(1) claims were untimely under § 1113. The district court granted the motion on the timeliness basis as to fifteen of the seventeen plaintiffs. In its discussion of the breach of fiduciary duty claims, the district court analyzed the Plaintiffs’ claims as brought pursuant to § 1132(a)(3) and then dismissed all of Plaintiffs’ breach of fiduciary duty claims as untimely. The court found that because the six-year statute of repose set out in 29 U.S.C. § 1113 is not applicable to Plaintiffs’ § 1132(a)(3) claims, the district court erred to the extent it dismissed the § 1132(a)(3) claims as untimely. As such, the court’s analysis of Plaintiffs’ breach of fiduciary duty claims is confined to the claims arising pursuant to 29 U.S.C. § 1104(a)(1).

The court concluded that the exception to the general six-year statute applies when a plaintiff alleges the defendant breached a fiduciary duty by making a false representation of a matter of fact, whether by words or conduct, by false or misleading allegations or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury or when the defendant conceals his breach of fiduciary duty by withholding information of which he knows and which he is duty bound to reveal. Thus, Plaintiffs’ claims are timely only if the alleged breach of fiduciary duty is based on a fraud theory. The court found that the district court erred when it dismissed Plaintiffs’ breach of fiduciary duty claims based on Rule 9(b) to the extent Plaintiffs’ breach of fiduciary duty claims are premised on a fraud theory. The court instructed on remand that Defendants, if they so choose, may present argument regarding the timeliness of Plaintiffs’ breach of fiduciary claims, including that Plaintiffs did not bring suit within “six years after the date of discovery” of the alleged breach.

D.C. Circuit

PBGC did not act arbitrarily or capriciously in declining to provide shutdown benefits or insure a participant’s individual account. In Deppenbrook v. Pension Benefit Guar. Corp, No. 13-5254, __F.3d___, 2015 WL 728062 (D.C. Cir. Feb. 20, 2015), the D.C. Circuit affirmed the district court’s decision that the PBGC properly interpreted ERISA and did not act arbitrarily or capriciously in declining to provide shutdown benefits to a participant in a terminated pension plan, and the PBGC properly interpreted ERISA and did not act arbitrarily or capriciously in failing to insure the participant’s individual account. The court held that the PBGC properly interpreted ERISA and its own regulations by insuring only benefits that were nonforfeitable on the plan termination date. Plaintiff was not entitled to shutdown benefits because he was not terminated until approximately six weeks after the plan terminated on June 14, 2002. The court rejected the argument that the plan termination date was the same as the date on which Plaintiff received the notice of plant closure pursuant to the WARN Act. The WARN Act’s 60-day notice requirement, 29 U.S.C. § 2102(a), was not a “required waiting period” under ERISA, and therefore did not cause shutdown benefits to vest on May 1. The court also found that the PBGC properly declined to administer the individual account portions of the pension plan. Plaintiff’s pension-plan benefit included “a defined benefit pension determined in accordance with Article 5” of the pension plan, as well as an “Individual Account Benefit based on the balance of the Individual Account of the Participant.” Each individual account was simply “an account maintained on behalf of a” plan participant and the PBGC is statutorily prohibited from insuring this account. Lastly, Plaintiff argued that the PBGC unlawfully amended his pension plan by requiring him to accept a distribution of his individual account. Assuming arguendo that the PBGC in fact amended the plan, the court found that Plaintiff cannot identify a statutory provision that bars the PBGC from doing so.

Unreported Decisions

Attorneys’ Fees

In Ohio & Vicinity Carpenters’ Fringe Ben. Funds, Inc. v. BCS Contractors, Inc., No. 5:12-CV-1565, 2015 WL 710955 (N.D. Ohio Feb. 18, 2015), the court previously granted Plaintiff’s motion on the issue of Defendant’s liability but denied, without prejudice, plaintiff’s motion on the issues of damages and attorneys’ fees. In this case, Plaintiff sought an hourly rate of $150.00 for counsel of record in this case but did not submit affidavits from outside attorneys specializing in ERISA matters regarding the prevailing market rates, affidavits detailing the experience of the billing attorneys, or opinions from the attorneys regarding the prevailing market rate in the community. Based on the court’s own experience in similar cases, however, it concluded that an hourly rate of $150.00 is reasonable in this case for the lodestar analysis. Also, the work performed and time expended for each activity set forth, and the costs incurred, were reasonable. Accordingly, the court granted Plaintiff’s motion for attorneys’ fees in the amount of $6,690.00, and costs in the amount of $380.28.

Disability Benefit Claims

In Chavez v. Reliance Standard Life Ins. Co., No. CV-13-02512-PHX-GMS, 2015 WL 727929 (D. Ariz. Feb. 19, 2015), Plaintiff worked as a Senior Long Term Disability Claims Manager for Defendant Matrix Absence Management, Inc. (“Matrix”), before becoming disabled and receiving short-term and long-term own occupation benefits. Plaintiff alleged disability due to rheumatoid arthritis, Sjogren’s disease, hypothyroidism, and migraine headaches. As part of its review for long-term any occupation benefits, Reliance Standard received an anonymous phone call stating that Plaintiff was not disabled. Reliance had Plaintiff undergo an in-person Independent Medical Examination with Dr. Debra Rowse, who opined that Plaintiff was not disabled. Similarly, Dr. Manoj Moholkar, a doctor Reliance hired to perform a medical record evaluation of Plaintiff’s claim, also opined that Plaintiff was not disabled. The court found that none of the procedural irregularities alleged by Plaintiff, including reliance on the anonymous phone call, arise to the level of an abuse of discretion.

In Gonda v. The Permanente Med. Grp., Inc., No. 11-CV-01363-SC, 2015 WL 678969 (N.D. Cal. Feb. 17, 2015), the court considered whether a settlement agreement bars Plaintiff’s claims against TPMG and the TPMG Plan. This dispute involved a denial of long term disability benefits that are insured and administered by Life Insurance Company of North America (“LINA”). The Settlement Agreement specifically releases TPMG and its agents from any claims which Plaintiff held (or had previously held), and it specifically mentions ERISA claims. The court found that,

• Although Defendants attempt to raise an untimely affirmative defense, the court permitted Defendants to amend their answer and the proper affirmative defenses are now adequately pled.

• LINA’s decision not to use the Settlement Agreement as a basis for denying benefits during Plaintiff’s administrative appeals does not preclude assertion of the Settlement Agreement as an affirmative defense in this action.

• LINA’s willingness to hear Plaintiff’s internal appeals cannot affect TPMG or the TPMG Plan’s contractual rights under the Settlement Agreement, particularly where LINA is not a party to this lawsuit and was not a party to the Settlement Agreement.

• Even if TPMG (rather than LINA) had agreed to allow administrative appeals of Plaintiff’s claims, that would not have constituted waiver of the release in the Settlement Agreement.

• LINA’s willingness to consider Plaintiff’s appeals and Defendants’ agreement to stay this case during those appeals did not constitute waiver of an affirmative defense.

• Defendants are not barred from raising the Settlement Agreement as a defense by equitable, promissory, and judicial estoppel, because by allowing Plaintiff to pursue his internal appeals, Defendants did not admit that he had a viable cause of action in court, nor did Defendants surrender their contractual right to be released from all ERISA causes of action that Plaintiff held against them.

• On its face, the Settlement Agreement constitutes a knowing and voluntary waiver of Plaintiff’s ERISA claims against Defendants.

• California law governs the Settlement Agreement, including the ERISA waiver. This Court is bound by the Ninth Circuit’s holding in Wang Labs., Inc. v. Kagan, 990 F.2d 1126 (9th Cir.1993) and must give force to the parties’ choice of law provision.

• After considering the extrinsic evidence that Plaintiff offered, there is no meaning to which the language of the Settlement Agreement is reasonably susceptible that permits Plaintiff’s claims.

• Separate consideration for waiver of the ERISA claims is not required where the writing is plain and explicit and given for the express purpose of effecting a complete release.

• Even though the TPMG Plan is not listed in the Settlement Agreement, the Plan is an entity created and administered by Plaintiff’s former employer and the agreement’s broad release clause clearly bars Plaintiff’s ERISA action against the TPMG Plan.

In Culhane v. Aetna Life Ins. Co., No. 14CV76 BEN KSC, 2015 WL 710722 (S.D. Cal. Feb. 17, 2015), on de novo review, the court found that Aetna incorrectly denied Plaintiff long term disability benefits on this basis that Plaintiff’s eligibility for coverage ended when he was terminated. Plaintiff was earning his full salary until his termination. Aetna determined that because his eligibility for coverage ended on the day he was terminated and he was earning his full salary up to that point he could not be covered by the Policy and earning 80% or less at the same time. However, if he was covered by the Policy beyond his last day, then he could meet the second prong of the Test of Disability. The Policy contains a section titled “When Coverage Ends,” with a subheading for “When Coverage Ends For Employees.” It states, in relevant part, that “[y]our coverage under the plan will end if … [y]our employment stops for any reason, including job elimination or being placed on severance. This will be the date you stop active work. However, if premium payments are made on your behalf, Aetna may deem your employment to continue, for purposes of remaining eligible for coverage under this Plan, as described below…” Further, “[i]t is your employer’s responsibility to let Aetna know when your employment ends. The limits above may be extended only if Aetna and your employer agree, in writing, to extend them.” Plaintiff argued that his coverage was extended by one week because he paid the premiums for an additional week of coverage beyond his termination. Aetna did not dispute that Plaintiff paid the premiums for an additional week of coverage and that the premium was never returned. Instead, Aetna argued the payment did not extend his coverage because Aetna and the employer did not enter into a written agreement to extend Plaintiff’s coverage. The court found that the policy language is open to numerous reasonable interpretations. Because both interpretations are reasonable, the language is ambiguous and must be construed against Aetna. Plaintiff may have remained eligible for coverage under the Plan beyond when his employment stopped because premium payments were made on his behalf. Although the court found the basis for Aetna’s denial was incorrect, Plaintiff is not necessarily entitled to disability benefits under the Policy since Aetna did not make a determination based on his medical condition. The court found that remand to the administrator is appropriate to evaluate the evidence concerning Plaintiff’s medical condition and to determine, based on that evidence, if Plaintiff was unable to perform his job duties due to illness or injury.

In Hess v. Metro. Life Ins. Co., No. 13-CV-10696, 2015 WL 669409 (E.D. Mich. Feb. 17, 2015), the court found that MetLife abused its discretion when it denied Plaintiff’s long term disability claim because there was no finding that Plaintiff’s job could accommodate her need to lie down due to orthostatic intolerance. Defendant’s consultant agreed that lying down would be an accommodation possibly required for Plaintiff to continue working. Defendant interpreted an assessment not as it actually read, that plaintiff might need to sit or lay down based on her orthostatic intolerance, but instead that either sitting or lying down would do equally well. Defendant was required to assess the impact of her potential need to lay down on her ability to do her job. Because it did not, its decision was arbitrary and capricious. The court ordered MetLife to pay to Plaintiff all unpaid long term disability benefits owed to her under the Plan at issue from the time benefits became payable to the present along with prejudgment interest on those unpaid benefits, and to pay ongoing benefits in accordance with that same plan.


In Bryant v. Colonial Sur. Co., No. 1:13-CV-00298-BLW, 2015 WL 672314 (D. Idaho Feb. 17, 2015), a non-ERISA matter, the court ordered Defendant Colonial Surety Company to produce evidence of other bad-faith claims made against it since January 2005 involving similar ERISA Fidelity Bonds.

Discretionary Clause Bans

In Hess v. Metro. Life Ins. Co., No. 13-CV-10696, 2015 WL 669409 (E.D. Mich. Feb. 17, 2015), the Summary Plan Description attached to the Certificate of Insurance contains a provision granting discretionary authority to the Plan Administrator and other Plan fiduciaries. Plaintiff argued that Mich. Admin. Code R. 500.2202, entitled “Insurance Policy Forms-Discretionary Clauses” and in effect as of July 1, 2007, prohibits the enforcement of discretionary clauses in any part of an ERISA plan. The rule states in relevant part that on or after July 1, 2007, “an insurer shall not issue, advertise, or deliver to any person in this state a policy, contract, rider, indorsement, certificate, or similar contract document that contains a discretionary clause.” Id. at (2)(b). The rule further states that on or after July 1, 2007, “a discretionary clause issued or delivered to any person in this state in a policy, contract, rider, indorsement, certificate, or similar contract document is void and of no effect.” Id. at (2)(c). The court explained that an ERISA Plan or SPD is not among the documents subject to approval by the Commissioner of Michigan’s Office of Financial and Insurance Services (“Commissioner”). Here, the Commissioner objected to a discretionary clause in the long term disability insurance policy form, # G.24303, which read, “MetLife in its discretion has authority to interpret the terms, conditions, and provisions of the entire contract. This includes the Group Policy, Certificate and any Amendments.” The court found that Plaintiff does not contend, nor is there any evidence showing, that # G.24303 was an ERISA SPD. The court further found that the Commissioner did not reach the discretionary clause in the SPD. Accordingly, the court applied the arbitrary and capricious standard to this case, based on the reservation of discretionary authority reserved to Defendant in the SPD.

ERISA Preemption

In Shafer v. Metro. Life Ins. Co., No. 14-CV-00656-RM-KMT, 2015 WL 729376 (D. Colo. Feb. 19, 2015), Plaintiff filed a motion for partial summary judgment regarding the proper standard of review contending that she is entitled to a de novo standard of review and a jury trial due to Section 10-3-1116(3) of the Colorado Revised Statutes, which states:

An insurance policy, insurance contract, or plan that is issued in this state shall provide that a person who claims health, life, or disability benefits, whose claim has been denied in whole or in part, and who has exhausted his or her administrative remedies shall be entitled to have his or her claim reviewed de novo in any court with jurisdiction and to a trial by jury.

The court concluded that while the part of Colo.Rev.Stat. § 10-3-1116(3) (2008) providing for a de novo standard of review, standing alone, would not be preempted, the part of Colo.Rev.Stat. § 10-3-1116(3) providing for a jury trial conflicts with ERISA’s remedial structure by altering the judiciary’s role. Thus, the court concluded that ERISA preempts, in its entirety, Colo.Rev.Stat. § 10-3-1116(3).

Life Insurance & AD&D Benefit Claims

In Bruce-Thomas v. Hartford Life & Acc. Ins. Co., No. 6:14-CV-1194-ORL-37, 2015 WL 736350 (M.D. Fla. Feb. 20, 2015), the court granted Hartford’s motion for summary judgment on Plaintiff’s claim for life insurance benefits, where the insured died due to an overdose of Oxycodone and Alprazolam and the policy provides death benefits if the insured dies from an “injury.” The policy excludes payment of death benefits where the death results from sickness or disease or medical or surgical treatment of a sickness or disease. The court found that medical treatment of a condition includes death caused by accidentally overdosing on a drug prescribed by a doctor for a medical condition. Here, it was uncontested that the insured died from an accidental overdose of medications prescribed by the insured’s doctor to treat his chronic pain, cervical radiculopathy, and anxiety. Further, the conditions for which the insured was prescribed medication-chronic pain, cervical radiculopathy, and anxiety – constitute a “sickness or disease.”

Pension Benefit Claims

In Finley v. N. CA. Carpenters Pension Fund Trustees, No. 2:13-CV-1132-GEB-EFB, 2015 WL 692242 (E.D. Cal. Feb. 18, 2015), the pro se Plaintiff alleged that defendants wrongfully denied him benefits and that he is “totally disabled” as that term is defined by the pension plan. Plaintiff worked as a carpenter and joined the carpenters union in San Francisco, Carpenters Local # 22, in 1978. Between 1979 and 1980, plaintiff worked as a union carpenter in Palm Springs, California, before taking a short break from carpentry to work as a locksmith. In 1982, plaintiff joined the carpenters union in San Bruno, California, and continued to work as a union carpenter without a break in service until his retirement. As a union member, he participated in a pension plan that was governed by the Pension Fund. The crux of Plaintiff’s complaint is that Defendants wrongfully removed the previously-granted Future Service Eligibility (“FSE”) credits for which he had previously been credited. The court found that Plaintiff’s amended complaint contains allegations sufficient to assert an ERISA claim that he was entitled to receive FSE credits under the plan due to his disability, but that such credits were wrongfully removed in violation of the plan. But, Plaintiff’s complaint fails to allege that several of the defendants engaged in any wrongful conduct and the complaint references several purported claims, including breach of contract, theft of pension credits, bad faith, fraud, collusion, and oppression, which are not supported by any factual allegations. The court recommended that the remaining Defendants who have appeared in this action be dismissed, and this matter proceed on Plaintiff’s ERISA claim brought pursuant to 29 U.S.C. § 1132(a)(1)(B) against the Carpenters Funds Administrative Office of Northern California and the Pension Fund.

Pleading Issues & Procedure

In Shawley v. Life Ins. Co. of N. Am., No. 14-CV-671-JDP, 2015 WL 728505 (W.D. Wis. Feb. 19, 2015), the court denied Plaintiff’s motion to strike major portions of LINA’s answer on the grounds that they contain identical “stock responses” to several allegations. Of the 156 paragraphs in Plaintiff’s amended complaint, LINA answered over 100 of them with the following response, changing only the paragraph number:

Answering paragraph 12 of the Complaint, defendant affirmatively alleges plaintiff’s claim for benefits will be determined solely and exclusively by reference to the administrative record pertaining to Plaintiff’s claim for disability benefits. The administrative record speaks for itself. Defendant denies all allegations set forth in paragraph 12 to the extent inconsistent with the express content of the administrative record as a whole, and further denies the remaining averments set forth in paragraph 12.

Plaintiff argued that Rule 8(b)(1)(B) requires that a responding party specifically admit or deny the allegations against it. LINA argued that Plaintiff’s 156-paragraph complaint is unnecessarily detailed and verbose, given the nature of his claim. The court found that Plaintiff’s complaint also violates Rule 8 because it does not contain a “short and plain statement of the claim showing that the pleader is entitled to relief,” nor are Plaintiff’s allegations simple, concise, and direct. The court found that Plaintiff cannot meet his burden to show that the challenged allegations are so unrelated to Plaintiff’s claim as to be devoid of merit, unworthy of consideration, and unduly prejudicial. The court found that forcing both parties to replead for both violating Rule 8 would simply delay this case and Rule 8 aims to achieve brevity, simplicity, and clarity in pleadings, not additional delays.

In Sacchi v. Luciani, No. CIV.A. 14-3130 FLW, 2015 WL 685853 (D.N.J. Feb. 18, 2015), Plaintiff brought suit against Defendants recover, inter alia, damages for Defendants’ failure to send timely notice for coverage under COBRA, in violation of Section 502(c) of ERISA. Plaintiff was never employed by, nor did he ever have health insurance through, Meridian; rather, Plaintiff’s claims are based upon his spouse’s health insurance coverage when his spouse was employed by Meridian. The court found that Plaintiff lacks standing under ERISA to pursue his claims because Plaintiff did not allege, nor could he allege, that he is a participant or beneficiary under the benefit plan. Plaintiff argued that ERISA confers standing in his circumstances because he was “eligible to join the Plan,” and but for Defendants’ wrongful conduct, he would have been designated as a beneficiary by his spouse. The court found that it is entirely speculative that the spouse would have ever elected COBRA coverage for Plaintiff given that he was provided the opportunity to do so, yet he did not so act. The court concluded that ERISA simply does not permit any person to sue because he/she could be an eligible beneficiary-without having been so designated by the plan participant in the first instance. Accordingly, the court granted Defendants’ motions to dismiss.


In Brooks v. Wapato Point Mgmt. Co. Health & Welfare Plan, No. 2:14-CV-00250-LRS, 2015 WL 711248 (E.D. Wash. Feb. 18, 2015), the court determined that Plaintiffs do not have a remedy under § 1132(a)(1)(b) because they cannot be considered beneficiaries of a life insurance plan that did not exist at the time of the insured’s death. The court also determined that Plaintiffs are not entitled to “equitable relief” under 29 U.S.C. § 1132(a)(3) in the form of a surcharge because there is no evidence that the employer defrauded the insured or engaged in other egregious conduct that might justify reinstatement of benefits through a § 1132(a)(3) equitable remedy. Further, the court found that it is unclear whether ERISA’s fiduciary duty of notice extends past the employee to the designated beneficiaries of a life insurance plan. However, the court declined to decide whether Wapato Point had a duty to the employee’s designated beneficiaries or whether it breached that duty since the alleged breach of duty cannot be enforced by the estate of the deceased employee (as had been found in a prior court proceeding), and there is no basis to conclude that the rights of the named beneficiaries exceed those of the deceased.

Retaliation Claims

In Rowlands v. United Parcel Serv., Inc., No. 1:13-CV-59 RLM, 2015 WL 728296 (N.D. Ind. Feb. 19, 2015), Plaintiff brought suit against her former employer, United Parcel Service, under Title VII, the ADA, the ADEA, and ERISA after her employment was terminated. She alleged that UPS discriminated and/or retaliated against her and denied her benefits to which she would have been entitled in the future based on her sex, age, and/or disability (an unspecified knee injury), and that similarly situated male employee were treated more favorably with respect to the enforcement of the company’s policies and procedures and disciplinary issues. UPS moved to dismiss the ADA and ERISA claims under Fed.R.Civ.P. 12(b) (6). The court dismissed the ERISA claim, finding that Plaintiff’s amended complaint does not contain factual allegations that would support a plausible claim under a retaliation or interference violation. Plaintiff does not allege that UPS terminated her employment based on a previous exercise of an ERISA right, nor provide any factual basis for believing that UPS’s stated reason for discharging her was actually a pretext to avoid paying the cost of benefits that Plaintiff might have been entitled to at some undisclosed point in the future. “At bottom, her allegations are simply that she would have gotten some benefits if she hadn’t been fired, so UPS must have fired her to keep her from getting those benefits.”

Severance Benefit Claims

In Andrews v. Realogy Corp. Severance Pay Plan for Officers, No. 13-CV-8210 RA, 2015 WL 736117 (S.D.N.Y. Feb. 20, 2015), Plaintiff claimed he was entitled to severance benefits under the Defendant Plan because his employment transfer to a business that purchased his employer constituted an “involuntary termination.” The Plan provides that an employee is eligible for severance pay if, in relevant part:

(a) you are involuntarily terminated for …

elimination or discontinuation of your job or position, if you are not offered a comparable position with an Employer, a third party or an outsourcing company. Comparability shall be determined in the sole and absolute discretion of the Plan Administrator, and such analysis may include without limitation the following as compared with your current position: (1) the location of the position offered; (2) the total compensation of the position offered including base pay, variable pay and other benefits; and (3) the primary duties and responsibilities of the position offered….

Plaintiff primarily argued that he was due severance payments because he was not offered a “comparable position.” Specifically, Plaintiff contended that the new employer offered lesser in the way of severance benefits and bonuses and that taking into consideration “total compensation” in its discretionary determination of comparability, the Plan Administrator should find that the employment offer was not comparable to his employment. In finding that Plaintiff was offered comparable employment, the Plan Administrator found that the new position was in the “same location” as the previous position; that Plaintiff had “the same duties and responsibilities he had prior to the sale”; that the “base pay was also the same”; and that “most of the benefits provided by the new company were comparable to the benefits Plaintiff had prior to the sale. The court found that the Plan Administrator considered all of the data available at the time of the offer, including comparable bonus eligibility through 2010 and comparable severance eligibility through mid-2011. The court further found that the Plan Administrator was under no obligation to assume that the terms of Plaintiff’s future employment over some indeterminate “longer period” would be worse than his employment at the old employer and therefore find the employment not to be comparable. Under the arbitrary and capricious standard of review, the court could not say that that decision was without reason, unsupported by substantial evidence or erroneous as a matter of law.

Withdrawal Liability & Unpaid Benefit Contributions

In Trustees of the Local 1245 Health Fund v. Key Handling Sys., Inc., No. CIV.A. 13-2749 JLL, 2015 WL 716217 (D.N.J. Feb. 19, 2015), a matter arising out of allegations that Defendants were delinquent in contributing to welfare and pension benefits due and owing to Plaintiff Trust Funds pursuant to the terms of the parties, underlying collective bargaining agreements, the court granted in part and denied in part Plaintiffs’ motion for summary judgment and granted Defendants’ respective motions for summary judgment. The Court found that Plaintiffs cannot impose liability on the Individual Defendants because Plaintiffs have failed to present clear and explicit evidence of the parties’ intention to bind them personally. The language of the contract does not define “individual principals,” and contains no reference whatsoever to a personal guarantee or a promise to pay. Second, because there is no evidence that Key Handling’s corporate form was a sham, no reasonable jury could find a basis for piercing the corporate veil.

In Local Union No. 40 of the Int’l Ass’n of Bridge v. Car-Wi Const., No. 12CV4854-LTS-MHD, 2015 WL 690811 (S.D.N.Y. Feb. 18, 2015), the court adopted the Magistrate Judge’s Report and & Recommendation that Plaintiff’s motion for a default judgment be granted, that a post-default inquest be conducted, and that Defendants submit to an audit of its financial books and records.

In Int’l Ass’n of Heat & Frost Insulators v. CAC of NY Inc., No. 13-CV-00039 SAS, 2015 WL 691192 (S.D.N.Y. Feb. 18, 2015), an action pursuant to ERISA sections 502 and 515, LMRA section 301, and for breach of contract, seeking payment of delinquent fringe benefit contributions and union dues check-offs owed by defendant CAC of N.Y. Inc. (“CAC”), the court granted Plaintiffs’ motion for summary judgment. The court found that there is no genuine dispute of material fact concerning the validity of the Agreement and that Defendant was obligated to pay fringe benefit contributions and to pay over union dues collected from employee wages. The court found that Defendant is liable to Plaintiffs in the amount of $189,556.26, which includes $114,726.98 in unpaid fringe benefit contributions and unremitted dues, $28,447.01 in interest, $28,447.01 in statutory damages, and $11,707.26 in attorney’s fees and costs.

In Bricklayers Ins. & Welfare Fund v. Lasala, No. 12-CV-2314 JG RLM, 2015 WL 687753 (E.D.N.Y. Feb. 18, 2015), Plaintiff Bricklayers Local 1, along with several employee-benefit funds, moved for summary judgment on claims that the principals of two subcontracting firms breached their fiduciary duty under ERISA and committed conversion under New York law by failing to remit employee union dues. Defendant/Cross-Claim Plaintiff Plaza Construction LLC (“Plaza”), a general contractor who had hired the subcontracting firms, moved for summary judgment against the firms’ principals on claims relating to Labor and Material Payment Bonds, certain loan guarantee agreements, and various assigned claims. The court granted in part and denied in part their motions for summary judgment. The LaSala Defendants conceded liability on Plaintiffs’ First, Second, and Fourth claims concerning the amounts that were deducted from employee paychecks but never remitted to the respective funds as well as contributions owned to the Bricklayers and Trowel Trades International Pension Fund. With respect to Plaintiff’s Third claim, the court found that unpaid contributions are not assets of the plan and that two of the defendants cannot be deemed fiduciaries under 29 U.S.C. § 1002(21)(A). With respect to one defendant who served as a trustee of the Funds, irrespective of whether the employer contributions are “plan assets,” he nonetheless can be deemed a fiduciary if he exercises any discretionary authority or discretionary control respecting management of the ERISA-covered plan. The court found that whether this individual defendant violated his fiduciary duty to the various funds as a trustee depends upon whether he was acting in a fiduciary capacity when he allegedly made misrepresentations to the employee-benefit funds and there exists several genuine issues of material fact regarding this matter.

* Please note that these are only case summaries of decisions as they are reported and do not constitute legal advice. These summaries are not updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The cases reported above were handled by other law firms but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Roberts Disability Law, P.C. may be able to advise you so please contact us. Case summaries authored by Michelle L. Roberts, Partner, Roberts Disability Law, P.C., 1050 Marina Village Pkwy., Ste. 105, Alameda, CA 94501; Tel: 510-230-2090.


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*Please note that this blog is a summary of a reported legal decision and does not constitute legal advice. This blog has not been updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The case above was handled by other law firms, but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Roberts Disability Law, P.C. may be able to advise you so please contact us.

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