ERISA Watch – “Independent” Doctor May be Deposed on De Novo Review

The Easter bunny brought more than just candy this year, it delivered a golden egg of a discovery decision in Harding v. Hartford Life & Accident Ins. Co., No. 16-CV-6700, 2017 WL 1316264 (N.D. Ill. Apr. 10, 2017).  In Harding, the plaintiff asserted a claim for long term disability benefits and claim for waiver of life insurance premium benefits under ERISA Section 502(a)(1)(B).  In is undisputed that de novo review applies.  Plaintiff moved to compel seeking two depositions, including one of Dr. Julia Ash, M.D., an independent medical consultant retained by Professional Disability Associates (hired by Hartford) to review Plaintiff’s medical records, and of Mary Roman, a claim manager who rendered the decision denying Plaintiff’s claim on appeal.

The court permitted Plaintiff to depose Dr. Ash since the physician’s potential biases and conflicts of interest bear on the credibility and reliability of her medical opinions.  The court found that this could directly affect the court’s decision on whether the plaintiff is or was actually disabled.  The court considered and rejected each of the following arguments made by Hartford in opposition to Harding’s request:  (1) some courts have, in their discretion, declined to allow medical consultant discovery; (2) the administrative record is comprehensive and should not upset the default that discovery is limited to the rare case; and (3) the deposition will allow Plaintiff to sandbag Hartford with new evidence and end run the requirement that Harding exhaust her administrative remedies.  However, the court will not permit Ms. Roman’s deposition since her qualifications, her purported biases, and her decision making process are “simply irrelevant under a de novo review.”  The court rejected Harding’s argument that the deposition was necessary to prove “culpability” in any subsequent motion for attorneys’ fees.  The court explained that her qualifications or whether she applied the correct standard would have only a “speculative connection to culpability.”

This was a light week for ERISA decisions so enjoy an easy read of case recaps below.

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

Breach of Fiduciary Duty

Second Circuit

In re: Richard Kern, Debtor. Bd. of Trustees of the Sheet Metal Workers Int’l Ass’n Local Union No. 28 Trust Funds v. Richard Kern, No. 13-71700-AST, 2017 WL 1323419 (Bankr. E.D.N.Y. Apr. 9, 2017) (Bankruptcy Judge Alan S. Trust).  “The Plaintiffs are the Board of Trustees of certain benefit funds established under the framework of ERISA. Defendant Richard Kern was the principal owner and control person of a closely held company which employed union members who were entitled to have contributions made on their behalf to the benefit funds and their union for at least three different purposes, which contributions were deducted from their employee paychecks. The Court has determined on summary judgment that certain but not all of the monies deducted from the employee paychecks give rise to non-dischargeable debts pursuant to § 523(a)(4) of the Bankruptcy Code; specifically, monies deducted for a vacation fund is non-dischargeable because those funds were subject to a statutory trust, Debtor acted as a fiduciary, and Debtor committed a defalcation when he did not remit such deducted monies to the benefit funds; however, monies deducted for union assessments and political action league funds are dischargeable because a statutory trust did not exist as to such monies.”

Moyle v. Liberty Mut. Ret. Benefit Plan, No. 10CV2179-GPC(MDD), 2017 WL 1331739 (S.D. Cal. Apr. 11, 2017) (Judge Gonzalo P. Curiel).  Following remand from the Ninth Circuit, Defendants’ moved for summary judgment on the equitable relief claim under Section 502(a)(3), which the court denied.  The court held that there are genuine issues of material fact as to who made the alleged misrepresentation or affirmatively omitted information and whether those persons or entities are “fiduciaries” as defined under 29 U.S.C. § 1002(21)(A).  Defendants argued that Gabriel v. Alaska Elect. Pension Fund, 773 F.3d 945 (9th Cir. 2014) precludes reformation where it would be inconsistent with the unambiguous terms of the plan documents, but the court declined to conduct a sua sponte analysis on this issue.  The court also denied Defendants’ supplemental motion for summary judgment on the issue of surcharge.

Disability Benefit Claims

Ninth Circuit

Murphy v. California Physicians Serv., No. 14-CV-2581-PJH, 2017 WL 1330636, at *22 (N.D. Cal. Apr. 11, 2017) (Judge Phyllis J. Hamilton).  On de novo review, the court determined that Plaintiff has established that she is disabled from performing the substantial and material acts necessary to pursue her usual occupation of VP of Human Resources at Blue Shield, and that she was in fact not performing the substantial and material acts of her usual occupation in 2013.

Discovery

Seventh Circuit

Harding v. Hartford Life & Accident Ins. Co., No. 16-CV-6700, 2017 WL 1316264 (N.D. Ill. Apr. 10, 2017) (Judge Robert M. Dow, Jr.).  In this lawsuit for long term disability benefits subject to de novo review, the court will permit Plaintiff to depose Dr. Julia Ash, M.D., an independent medical consultant retained by Professional Disability Associates (whom Defendant retained) to review Plaintiff’s medical records.  However, the court will not permit Mary Roman’s (claim manager) deposition since her qualifications, her purported biases, and her decision making process are simply irrelevant under a de novo review.

ERISA Preemption

Ninth Circuit

Stevenson v. Aetna Health of California, Inc., No. 3:17-CV-0107-CAB-KSC, 2017 WL 1336776 (S.D. Cal. Apr. 10, 2017) (Judge Cathy Ann Bencivengo).  Here, Plaintiff was a subscriber to Defendants’ health care plan and a victim of a preventable medical error at the hands of a Sharp affiliated physician.  As a result, he developed Complex Regional Pain Syndrome (“CRPS”).  Defendants’ health care plan refused to approve a DRG stimulator so Plaintiff seeks damages for pain, medical expenses, earning losses, along with punitive damages.  The court found that Plaintiff’s suit against Sharp Rees Stealy Medical Group and Aetna for “unreasonable denial of benefits” in violation of Civil Code § 3428 is completely preempted by ERISA and fails to state a claim upon which relief can be granted.  Dismissed.

Exhaustion of Administrative Remedies

Second Circuit

Mcculloch v. Board Of Trustees Of The SEIU Affiliates Officers And Employees Pension Plan, et al., No. 16-1374, __F.App’x__, 2017 WL 1314880 (2d Cir. Apr. 10, 2017) (PRESENT: JON O. NEWMAN, DENNIS JACOBS, Circuit Judges, LEWIS A. KAPLAN,* District Judge).  Because Plaintiff’s claim for pension benefits is not statutory, and the district court would need to construe specific terms of the pension plan, Plaintiff was required to exhaust internal administrative remedies.  Judge of district court is affirmed.

Pleading Issues & Procedure

Third Circuit

Mclaughlin; J.J.M., v. Board Of Trustees of The National Elevator Industry Health Benefit Plan, No. 16-4108, __F.App’x__, 2017 WL 1325687 (3d Cir. Apr. 11, 2017) (Before: CHAGARES, SCIRICA, and FISHER, Circuit Judges).  In this matter where Plaintiffs filed a lawsuit alleging that the Plan breached its fiduciary duty by offsetting benefits otherwise payable to McLaughlin and his family members, but where the act complained of was previously alleged in a counterclaim in a prior lawsuit, the court found that the elements of res judicata are present.  The court rejected the argument that the “continuing course of conduct” exception bars application of res judicata.

Eleventh Circuit

Griffin v. Focus Brands Inc., No. 16-13485, __F.App’x__, 2017 WL 1359833 (11th Cir. Apr. 13, 2017) (Before MARCUS, JILL PRYOR and FAY, Circuit Judges).  A final judgment is on the merits in this narrow circumstance where the district court labeled its dismissal as without prejudice based on its determination that the plaintiff lacked standing, but the Eleventh Circuit clarified on appeal that the relevant issue was not jurisdictional.  The court affirmed the district court’s decision to dismiss the claims based on res judicata.

Retaliation Claims

Seventh Circuit

Blackburn v. Genuine Parts Co., No. 16 C 06911, 2017 WL 1316265 (N.D. Ill. Apr. 10, 2017) (Judge Virginia M. Kendall).  The court denied Defendant’s motion to dismiss Plaintiff’s ERISA interference claim.  The court found that “by alleging that Blackburn had insufficient notice of the availability of his rights, differential treatment compared to other employees, and that GPC deviated from normal business practices, Blackburn sufficiently alleged that GPC intended to interfere with his ERISA benefits.”

Statute of Limitations

Ninth Circuit

Moyle v. Liberty Mut. Ret. Benefit Plan, No. 10CV2179-GPC(MDD), 2017 WL 1331739 (S.D. Cal. Apr. 11, 2017) (Judge Gonzalo P. Curiel).  On remand from the Ninth Circuit, Defendants argued that the claim for breach of fiduciary duty is barred by the statute of repose and the statute of limitations under 29 U.S.C. § 1113.  The court held that a statute of repose is not subject to equitable tolling and Plaintiffs have provided sufficient proof that the “fraud or concealment” tolling exception applies to this case.  The court found that Plaintiffs Arwood and Rollason’s claims are barred by the six year limitations period for fraud or concealment but that there are genuine issues of material fact as to whether Plaintiff Sanders’ claims are barred by the six year limitations period under the fraud or concealment exception.  The court further found that in Plaintiff Moyle’s case equitable tolling should apply while he exhausted his administrative remedies from January 26, 2008 until October 23, 2009.  This tolling makes his complaint timely under the six year statute of limitations for fraud or concealment.