ERISA Watch – Firm Victory Against Liberty Life for “Moving the Target” in Disability Claim

This week’s notable decision is from a case handled by my partner, Michael, and our co-counsel, Adam Garner, Suson v. The PNC Financial Services Group, Inc. And Affiliates Long Term Disability Plan & The PNC Financial Services Group, Inc., No. 15-CV-10817, 2017 WL 3234809 (N.D. Ill. July 31, 2017).  The case involves a denial of long term disability benefits by a self-funded disability plan administered by Liberty Life Assurance Company of Boston.  The court agreed with Suson in part and held that Liberty Life abused its discretion by “moving the target” when it used an occupational analysis to deny Suson’s appeal without giving her the opportunity to respond and by failing to consider the effects of Suson’s carpel tunnel syndrome.  The court denied statutory penalties under 29 U.S.C. § 1132(c)(1) for Defendants’ failure to produce a plan-related trust agreement since Suson did not establish that she suffered any prejudice.  You can read Adam’s analysis of the decision on his blog, here.

Lastly, I want to plug the latest episode of the podcast, The Law Is My Ass, which featured special guest Ninth Circuit Judge Alex Kozinski.  Next week will be even juicier – including the future of privacy rights, the 4^th Amendment, and the 3rd Party Doctrine in the digital age, more on judicial opinion writing, his views on the death penalty, and dinner with the Ginsburgs and the Scalias.

Read more at http://lawmyass.libsyn.com/#JCCtBbWMH20XxO2P.99

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

Class Actions

Jones v. Singing River Health Servs. Found., No. 16-60550, __F.3d__, 2017 WL 3178624 (5th Cir. July 27, 2017) (Before HIGGINBOTHAM, JONES, and HAYNES, Circuit Judges).  This case concerns objections to the settlement class actions involving the defined benefits pension fund created by The Singing River Health System (SRHS), a community hospital owned by Jackson County, Mississippi, that only made one plan contribution between 2009-14, before it froze the plan.  The Court of Appeals vacated the district court’s order granting the motion for final approval in light of the “extraordinarily long-term, unsecured, and unpredictable proposed payout of the settlement amount.”  It remanded the case for further consideration of issues concerning the settlement’s consequences for Plan beneficiaries.

Life Insurance & AD&D Benefit Claims

Eighth Circuit

Donaldson v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, No. 16-2229, __F.3d__, 2017 WL 3122070 (8th Cir. July 24, 2017) (Before COLLOTON, GRUENDER, and KELLY, Circuit Judges).  The court affirmed the district court’s decision in favor of the plan administrator, who denied accidental death benefits to the insured’s wife.  The insured died on impact when, on his delivery route, his truck was struck by an oncoming vehicle that crossed the center divider.  Plaintiff sought benefits under Hazard H-12, entitled “24-Hour Accident Protection While On A Trip (Business Only),” but National Union denied the claim on the ground that coverage was excluded under a provision that excepts injuries sustained by any conveyance the insured has been hired to operate.  National Union took the position that because the insured was hired to operate the conveyance he was driving and was operating it at the time of the accident, the exception applies and there is no coverage.  Plaintiff argued that coverage is required because her husband died as a result of being struck by a conveyance that he had not been hired to operate and was not operating at the time of the accident.  Although the court found that the provision – “any such conveyance” – was ambiguous as to whether it applies to the conveyance operated by the insured or the conveyance he was struck by, National Union’s position was a reasonable interpretation of the Plan and not an abuse of discretion.

Pension Benefit Claims

Ninth Circuit

Davis v. Pension Tr. Fund for Operating Engineers, No. 15-17212, __F.App’x__, 2017 WL 3207151 (9th Cir. July 28, 2017) (Before: BEA and N.R. SMITH, Circuit Judges, and ROBRENO,* District Judge).  The court affirmed the grant of summary judgment for Defendants.  The Plan was ambiguous as to the size of the disability retirement pension to which Plaintiff was entitled and the Trustees properly looked to extrinsic evidence to clarify this ambiguity.  “The plan summary provided to plan participants, minutes of a Board of Trustees meeting, and communications from the Plan consultant to the Board support the Trustees’ interpretation that Davis should be entitled only to a pension based on the actuarial equivalent standard.”  Plaintiff did not establish two of the seven required elements to recover benefits on an equitable estoppel theory under ERISA, including misrepresentation of Plan terms and “extraordinary circumstances.”

Pleading Issues & Procedure

First Circuit

Groden v. N&D Transportation Co., Inc., No. 15-2553, __F.3d__, 2017 WL 3276792 (1st Cir. Aug. 2, 2017) (Before Torruella, Lipez, and Barron, Circuit Judges).  On the issue of whether the district court properly concluded that it lacked subject-matter jurisdiction over a pension fund’s lawsuit against an employer’s alleged alter egos under the principles articulated in Peacock v. Thomas, 516 U.S. 349 (1996), the Court of Appeals concluded that the district court erred in refusing to vacate its dismissal of the Fund’s alter ego claim against N&D, and rejecting the proposed amended complaint, on the ground that federal jurisdiction would be lacking even if the complaint contained the temporal allegation concerning N&D’s alter ego status.  The court remanded for reconsideration of the other post-judgment rulings resting on this legal error.

Subrogation/Reimbursement Claims

Ninth Circuit

Mull v. Motion Picture Indus. Health Plan, No. 15-56246, __F.3d__, 2017 WL 3259667 (9th Cir. Aug. 1, 2017) (Before: Susan P. Graber and Mary H. Murguia, Circuit Judges, and Susan R. Bolton,** District Judge).  The Court of Appeals vacated the district court’s ruling that, because the reimbursement/recoupment provisions that the Plan sought to enforce were found only in the SPD and not in any document that constituted “the plan,” the reimbursement/recoupment provisions were not legally enforceable under ERISA.  The court held that “the plan” is comprised of two documents:  the Trust Agreement and the SPD.  Although neither the Trust Agreement nor the SPD meets ERISA’s requirements for constituting a plan, by clear design reflected in provisions of both documents, the two documents together constitute a plan.