“This would come as something of a surprise to the nation’s law students, that the threshold requirement for practicing law is based on the ability to walk a dog.” – Judge Joan B. Gottschall
In this week’s notable decision, Druhot v. Reliance Standard Life Insurance Company, No. 16-CV-2053, 2017 WL 4310653 (N.D. Ill. Sept. 28, 2017), the court, on de novo review, determined that Druhot, a former attorney, was entitled to long term disability benefits despite her alleged ability to walk a small dog around the block. Druhot claimed disability as a result of common variable immunodeficiency, osteoarthritis, possible rheumatoid arthritis, severe fibromyalgia, severe diverticulosis, and a number of other conditions. Reliance Standard and its doctors relied heavily on Druhot’s ability to walk her dog but the court noted that lawyers are not dog walkers, at least for disability plan purposes. Instead, the court found that the evidence and supporting medical records demonstrate that her conditions make her unable to effectively meet with clients, conduct research, and draft legal documents in any reasonable practice setting. The court also found Plaintiff’s Social Security Disability Insurance award weighed in favor of a finding of disability. As a remedy, the court awarded Plaintiff benefits, attorneys’ fees, and pre-judgment interest.
Another noteworthy mention is Flaaen v. Principal Life Insurance Company, No. C15-5899 BHS, 2017 WL 4286358 (W.D. Wash. Sept. 27, 2017), a case addressing the vocational considerations that often arise in long term disability claims. In Flaaen, the court determined that the reasonable interpretation of the term “gainful occupation” requires an evaluation of the insured’s actual employment prospects and wages based on his current experience and qualifications. The court rejected Principal’s argument that the term “could reasonably be expected to earn” should be interpreted to mean that a median wage could be earned at any time in the future. Instead, the court adopted Flaaen’s proposed reasonable interpretation that the term “could reasonably be expected to earn” means “what is reasonably likely now, as of the date of denial of his benefits.”
Below is Roberts Disability Law, P.C.’s summary of this past week’s notable ERISA decisions.
Breach of Fiduciary Duty
Fleming v. Fidelity Management Trust Company, No. 16-CV-10918-ADB, 2017 WL 4225624 (D. Mass. Sept. 22, 2017) (Judge Allison D. Burroughs). The court held that Plaintiffs have failed to plausibly allege that Defendants were exercising a fiduciary function under 29 U.S.C. § 1002(21)(A) when they decided which securities to make available through BrokerageLink. This is because Delta retained ultimate authority to include or reject the BrokerageLink product from the list of investment options made available to Plan participants. Additionally, Financial Engines Advisors, LLC, as a plan service provider, was not acting in a fiduciary capacity when it negotiated with plan sponsors its own compensation and the final agreement with the plan does not give it the ability to determine or control the actual amount of its compensation. Plaintiffs’ prohibited transaction claim also fails because the fees Defendants collect from the mutual funds or from the service provider are not assets of the plan within the meaning of ERISA. There is also no allegation of knowledge of wrongdoing by a relevant fiduciary.
Demopoulos v. Whelan, No. 17-CV-5823 (JMF), 2017 WL 4233081 (S.D.N.Y. Sept. 25, 2017) (Judge Jesse M. Furman). The court granted in part and denied in part Plaintiffs’ motion for a preliminary injunction. Defendants are “enjoined from holding themselves out as Union Trustees of the Funds or exercising control over the Funds’ assets pending resolution of this action. Any Union Trustees appointed to replace Defendants shall not make any extraordinary expenditures or engage in any extraordinary transactions on behalf of the Funds, or make any further amendments to the Trust Agreements, without Defendants’ consent or the prior approval of the Court during the pendency of this suit.”
Ash v. Heat and Frost Insulators and Allied Workers Local No. 23 Pension Fund, No. 1:16-CV-539, 2017 WL 4284346 (M.D. Pa. Sept. 27, 2017) (Judge Christopher C. Conner). Plaintiff alleges that the Fund targeted Plaintiff by amending the Benefits Plan after he applied for benefits but before calculation of his benefits was finalized, and that the Fund, through PATH Administrators (the TPA), misrepresented that his disability benefits would not be reduced. The court granted the Fund’s motion for summary judgment since the Fund was entitled to recalculate Plaintiff’s benefits after the June amendment and before his eligibility period began (July 1, 2015) regardless of whether his application was received earlier.
Daugherty et al. v. The University of Chicago, No. 17 C 3736, 2017 WL 4227942 (N.D. Ill. Sept. 22, 2017) (Judge Ruben Castillo). Participants in the University of Chicago Retirement Income Plan for Employees (“ERIP”) allege that Defendant breached its fiduciary duties. The court determined that Plaintiffs do not clearly allege Article III standing for their University of Chicago Contributory Retirement Plan (“CRP”) and TIAA loan program claims, so the court dismissed without prejudice, Counts I-III as they relate to CRP and Counts IV and V in their entirety. At this early stage in the litigation, the court concluded that Counts I-III sufficiently allege a breach of the fiduciary duty of prudence with respect to the ERIP. Plaintiffs do not plausibly allege that Defendant engaged in any self-dealing or failure to communicate material information so the breach of duty of loyalty claims are dismissed with prejudice. The court granted the motion to strike Plaintiff’s jury demand given the general rule in ERISA cases that provides no right to a jury trial.
Disability Benefit Claims
Tietjen v. Unum Life Insurance Company of America, No. 16-CV-7021 (JMF), 2017 WL 4286317 (S.D.N.Y. Sept. 26, 2017) (Judge Jesse M. Furman). On the parties’ motion to determine the standard of review, the court found that abuse of discretion review applies. Here, the SPD delegates “discretionary authority” to Unum Group, as well as to Unum. The SPD also clearly states on its face that it is part of the Plan. The court also determined that the issue as to whether Unum complied with its administrative processes and safeguards is a question that goes to the merits, not to the standard of review.
Verhagen v. Life Insurance Company of North America, No. 1:17-CV-00577, __F.Supp.3d__, 2017 WL 4280563 (M.D. Pa. Sept. 26, 2017) (Judge Yvette Kane). Where LINA stipulated that the standard of review is de novo, the court denied Plaintiff’s request to conduct pretrial discovery beyond the administrative record. LINA does not need to provide the factual basis for each of its affirmative defenses because the court is persuaded by LINA’s representation that the evidence supporting each of LINA’s affirmative defenses is contained within the administrative record previously furnished to Plaintiff. In addition, any discovery into the independent medical reviewers would be irrelevant given that the court is ultimately tasked with making an independent long term disability benefit determination in connection with its de novo review. The court also found that Plaintiff is not entitled to conduct discovery into LINA’s claim manuals or any other documents indicating its guidelines, standard, training, policies, and/or procedures for adjudicating ERISA disability claims.
Rochow v. Life Ins. Co. of N. Am., No. 04-73628, 2017 WL 4236594 (E.D. Mich. Sept. 25, 2017) (Judge Arthur J. Tarnow). The court denied Plaintiff’s motion for reconsideration of the court’s decision to deny 12% prejudgment interest on LINA’s wrongfully denied long term disability claim. The 12% rate set by MCL Section 500.2006 was explicitly set to be punitive, which is not consistent with ERISA’s remedial model of making a plaintiff whole.
Hoperich v. Aetna Life Insurance Company, No. 4:16-CV-02590, 2017 WL 4246700 (N.D. Ohio Sept. 25, 2017) (Judge Benita Y. Pearson). The court found that Aetna did not abuse its discretion in denying “any occupation” disability benefits to Plaintiff. Specifically, the court found that Aetna’s reliance on the IME is proper and its resultant decision is reasonably based on the unambiguous findings of the IME. Aetna did adequately consider the results of two FCEs provided by Plaintiff. It was also reasonable for Aetna to weigh Plaintiff’s drug use in its final decision.
Druhot v. Reliance Standard Life Insurance Company, No. 16-CV-2053, 2017 WL 4310653 (N.D. Ill. Sept. 28, 2017) (Judge Joan B. Gottschall). In this dispute over long term disability benefits, the court entered judgment in favor of Plaintiff, a former attorney disabled as a result of common variable immunodeficiency, osteoarthritis, possible rheumatoid arthritis, severe fibromyalgia, severe diverticulosis, and a number of other conditions. The court dismissed the importance of surveillance allegedly showing Plaintiff walking a small dog around the block. “This would come as something of a surprise to the nation’s law students, that the threshold requirement for practicing law is based on the ability to walk a dog.” The court also found Plaintiff’s SSDI award as persuasive evidence of disability. The court awarded benefits and attorneys’ fees.
Stover v. Delta Air Lines Optional Insurances Plan, et al., No. CV 16-4122 (RHK/SER), 2017 WL 4277144 (D. Minn. Sept. 25, 2017) (Judge Paul A. Magnuson). In this lawsuit brought by a former flight attendant seeking benefits for job-related injuries under the Delta-sponsored Group Accident Insurance and Private Pilots Accident Insurance, the court denied dismissal of her claim for benefits for being untimely since the Plan’s terms are ambiguous as to precisely when she suffered a loss. On the current record, the court also cannot say that it was unreasonable for Plaintiff to believe she had submitted a claim under both programs so the issue of exhaustion requires further record development. The court did dismiss the breach of fiduciary duty claim with prejudice for being untimely since she knew or should have known long before the end of the limitations period that Prudential was not acting on her appeal.
Flaaen v. Principal Life Insurance Company, No. C15-5899 BHS, 2017 WL 4286358 (W.D. Wash. Sept. 27, 2017) (Judge Benjamin H. Settle). On de novo review, the court determined that the great weight of the evidence supports Plaintiff’s position that he could not reasonably secure a salary equal to or greater than his monthly benefit in any occupation for which he is qualified or identified by Principal. The court also found that Principal consistently ignored Plaintiff’s evidence and failed to provide any persuasive evidence contesting or undermining the essential facts contained in Plaintiff’s declaration. “The reasonable interpretation of the term ‘gainful occupation’ requires an evaluation of the insured’s actual employment prospects and wages based on his current experience and qualifications.” The court declined to apply Geiger v. Aetna Life Ins. Co., 845 F.3d 357 (7th Cir. 2017) (“an occupation is gainful even if the claimant would not be able to earn median/mean wage upon starting”) to the facts of this case.
Sanchez-Levine v. Metropolitan Life Insurance Company, et al., No. CV 16-3179 DMG (SKX), 2017 WL 4286139 (C.D. Cal. Sept. 26, 2017) (Judge Dolly M. Gee). The court found in favor of MetLife and against Plaintiff on her long term disability claim based on PTSD, depression, and anxiety. On de novo review, the court concluded that Plaintiff failed to show by a preponderance of the evidence that she was totally disabled. The court also found that Dr. Peter Sugarman’s and Dr. Dennis Gordan’s reviews support the conclusion that Plaintiff was not disabled within the meaning of the Plan because those reports are thorough and well supported.
Brende v. Reliance Standard Life Insurance Company, No. 15-9711-JAR-TJJ, 2017 WL 4222982 (D. Kan. Sept. 22, 2017) (Judge Julie A. Robinson). Here, the record shows that Plaintiff suffers from an undiagnosed condition characterized by numbness, dizziness, weakness, and fatigue. The court found that it was well within Reliance’s discretion to require objective evidence that Plaintiff lacked the ability to engage in work as an attorney. But, Reliance’s decision to deny long term disability benefits was unreasonable because it failed to consider Plaintiff’s actual job duties in defining her regular occupation. The court remanded the claim to Reliance to provide a full and fair review. On the mental or nervous disorder limitation, the court construed the limitation as applying only if Plaintiff’s mental or nervous disorder was a “but-for” cause of her disability. But since there are outstanding issues related to the claimed physical disability, the court cannot determine whether Reliance’s application of the limitation was reasonable.
Parker v. Sun Life Assurance Company of Canada, No. 16-2554-JAR, 2017 WL 4222987 (D. Kan. Sept. 22, 2017) (Judge Julie A. Robinson). The court granted Sun Life’s motion for summary judgment. The court concluded that Sun Life may require objective evidence of the restrictions and limitations that prevent Plaintiff from performing his job duties in light of his diagnosis of chronic fatigue and fibromyalgia. “Given the divergence of Plaintiff’s treating physicians’ opinions with respect to fatigue and brain fog, the absence of clinical findings, and the reviewing physicians’ unified conclusion that he retained cognitive functions, the Court finds that Plaintiff has not met his burden of proving that he lacked the physical capacity or mental acuity to perform the material and substantial duties of his own occupation.”
John Doe v. Jasper, et al., No. 8:17-CV-700 T-24 AEP, 2017 WL 4286621 (M.D. Fla. Sept. 27, 2017) (Judge Susan C. Bucklew). Where Plaintiff brought suit against Defendants for the alleged unauthorized disclosure of Plaintiff’s positive HIV test results on three occasions (in connection with his long term disability benefit claim) in violation of Section 381.004, Florida Statutes, the court found that Plaintiff’s amended complaint alleges only state law claims that are not completely preempted by ERISA and the Court lacks subject matter jurisdiction over this case. The court also found that the Florida long-arm statute does not provide a basis for personal jurisdiction over Defendant Pamela Jasper, who resides in Texas and has no substantive connection to Florida.
Exhaustion of Administrative Remedies
Coontz v. Metropolitan Life Insurance Company, No. 1:17-CV-00015-GNS, 2017 WL 4227656 (W.D. Ky. Sept. 22, 2017) (Judge Greg N. Stivers). Where Plaintiff filed her lawsuit for denied AD&D benefits when MetLife did not make a decision within 120 days of its receipt of her appeal, the court held that Plaintiff did exhaust administrative remedies since MetLife’s extension letter to Plaintiff did not operate to toll its time to decide the appeal under the Plan or 29 C.F.R. § 2560.503-1(i)(4). The extension letter simply stated that additional time was needed to process her appeal because it was necessary for MetLife to obtain additional information, but it does not state that the need for additional information was caused by Plaintiff’s failure to provide the information, nor does the letter explicitly request any information from Plaintiff. Since MetLife is not excused from making a timely decision, the court denied MetLife’s request for remand.
Life Insurance & AD&D Benefit Claims
Ellis v. Usable Life, No. 7:16-CV-391-BO, 2017 WL 4293146 (E.D.N.C. Sept. 27, 2017) (Judge Terrence W. Boyle). Where the insured died after a bee sting and the death certificate lists the causes of death as anoxic encephalopathy, cardiac arrest, anaphylactic response, and bee sting(s), the court determined that Defendant did not abuse its discretion in denying AD&D benefits to Plaintiff based on the policy’s bodily infirmity exclusion.
Medical Benefit Claims
Pinkham v. Aetna Life Insurance Company & Toys “R” Us, Inc., No. 15-CV-6462 (KMK), 2017 WL 4286330 (S.D.N.Y. Sept. 26, 2017) (Judge Kenneth M. Karas). Aetna did not abuse its discretion in denying medical coverage for Plaintiff’s dental services on the basis that it did not correlate Plaintiff’s external cervical resorption with any systemic disorder and Aetna determined that it was a localized dental condition not covered by the Plan.
Di Biase v. SPX Corp., No. 15-2340, __F.3d__, 2017 WL 4287801 (4th Cir. Sept. 28, 2017) (Before GREGORY, Chief Judge, KING, and KEENAN, Circuit Judges). In this dispute brought by retirees and a labor union seeking a preliminary injunction preventing the employer from changing the group health insurance to health reimbursement accounts, allegedly in violation of LMRA, ERISA, and the parties’ settlement agreements, the court held that: (1) Plaintiffs-Appellants’ motion for preliminary injunction was not moot after the employer instituted the health reimbursement accounts; (2) the district court had subject matter jurisdiction to consider motion for preliminary injunction; (3) Appellants failed to demonstrate a likelihood of success on the merits of their claim; (4) Appellants failed to demonstrate that they were likely to suffer irreparable harm absent a preliminary injunction; and (5) the balance of equities and public interest did not weigh in favor of issuance of a preliminary injunction.
Pension Benefit Claims
Bremus v. Crofton Diving Corp., No. 2:16-CV-700, 2017 WL 4228008 (E.D. Va. Sept. 22, 2017) (Judge Arenda L. Wright Allen). The court determined that Crofton Diving, having properly filed an interpleader action to resolve the retirement-fund dispute, cannot now be subject to liability for failing to resolve the dispute in one claimant’s favor. As such, the court found that one of the claimant’s breach of fiduciary duty claims is incurably infirm and must be dismissed with prejudice.
Maher v. Pension Benefit Guar. Corp., No. 16-CV-1646 (KBJ), __F.Supp.3d__, 2017 WL 4286187 (D.D.C. Sept. 26, 2017) (Judge Ketanji Brown Jackson). “The PBGC denied Maher’s claim for benefits under a pension plan that was terminated in 1984 because it found, as a matter of fact, that Maher already received the benefits to which he was entitled under that plan. That factual finding was supported by substantial evidence in the administrative record, and therefore the PBGC’s decision cannot be set aside as arbitrary or capricious under the APA. See 5 U.S.C. § 706(2)(A).”
Hishmeh, M.D., PLLC, v. Aetna Health Inc., No. 16-CV-5736(JS)(ARL), 2017 WL 4271449 (E.D.N.Y. Sept. 25, 2017) (Judge Joanna Seybert). The court granted Aetna’s motion to dismiss since its health care plan prohibits any assignments of payment to “out-of-network” health care providers like Plaintiff. See McCulloch Orthopaedic Surgical Servs., PLLC v. Aetna Inc., 857 F.3d 141 (2d Cir. 2017).
Shah, MD v. Horizon Blue Cross Blue Shield of New Jersey, et al., No. 117CV00166NLHJS, 2017 WL 4284470 (D.N.J. Sept. 27, 2017) (Judge Noel L. Hillman). This case is one of many suits brought by a medical provider as a purported assignee of its patients’ claims against the defendant insurance company for services rendered. The court determined that Defendant’s standing argument is not ripe for decision on a motion to dismiss. The court noted a number of arguments exist challenging the plan’s anti-assignment clauses. Similarly, exhaustion of administrative remedies argument is not ripe for decision on a motion to dismiss. Plaintiff’s claim under 29 C.F.R. 2560.503-1 is dismissed for lacking a private right of action.
Omega Hospital, LLC v. United Healthcare Services, Inc., & United Healthcare of Louisiana, Inc., No. CV 16-00560-JJB-EWD, 2017 WL 4228756 (M.D. La. Sept. 22, 2017) (Judge James J. Brady). The Court denied Defendants’ Motion to Dismiss as it relates to standing since Omega, as an assignee of the contractual rights United owed its insureds, can bring a claim for violation of those rights based on United’s recoupment efforts. The court gave Omega 30 days leave to amend to allege with specificity the dates of service and claim numbers at issue. The state law claims brought on behalf of the ERISA-plan participants are preempted by ERISA.
Electrostim Med. Servs., Inc. v. Health Care Serv. Corp., a Mut. Legal Reserve Co., No. CV H-11-2745, 2017 WL 4225194 (S.D. Tex. Sept. 22, 2017) (Judge Lee H. Rosenthal). In this case alleging improper denial or underpayment of reimbursement claims the provider submitted to Blue Cross, the court granted the provider’s motion for leave to amend in part and denied in part. The court instructed Plaintiff to “file a fifth amended complaint with spreadsheets that limit the claims at issue to the 8,800 pretermination claims and 273 posttermination claims identified in the spreadsheets incorporated by reference into the second amended complaint.”
Sides v. Cisco Systems, Inc., et al., No. 15-CV-03893-HSG, 2017 WL 4236960 (N.D. Cal. Sept. 25, 2017) (Judge Haywood S. Gilliam, Jr.). The court determined that to the extent Plaintiff is seeking statutory penalties for Cisco’s failure to provide documents pursuant to the Claims Regulations in 29 C.F.R. § 2560.503-1, this claim fails. See Lee v. ING Groep, N.V., 829 F.3d 1158, 1162 (9th Cir. 2016). And, regardless, any requests from 2005 to 2011 would be time-barred under the three-year statute of limitations on claims for statutory penalties under ERISA Section 502(c).
Knight v. Gen. Telecom, Inc., No. 2:16-CV-218-VEH, __F.Supp.3d__, 2017 WL 4280260 (N.D. Ala. Sept. 27, 2017) (Judge Virginia Emerson Hopkins). The court granted summary judgment in favor of Plaintiff on the issue of whether a proper COBRA notice was provided to Plaintiff. There is no genuine issue of material fact that such notice was not provided to the Plaintiff. But, there is a genuine issue of material fact as to whether Plaintiff was terminated for gross misconduct. The small employer exception does not apply to Defendant. On the issue of prejudice and bad faith, the court denied summary judgment to both parties and reserved judgment until the trial.
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