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ERISA Watch – June 14, 2016

Happy Tuesday! This week’s notable decision is Backman v. Unum Life Ins. Co. of Am., No. 14-CV-05433-YGR, 2016 WL 3180016 (N.D. Cal. June 8, 2016), a case involving de novo review of a long term disability benefit claim denial. Backman worked as an accounting manager before becoming disabled by symptoms related to degenerative disc disease. The court found that Backman established entitlement to disability at the time her benefits were terminated. The court also found that the foundation for Unum’s decision is undermined by a number of factors, including that:

  • Unum favored in-house consultants’ opinions over examining physicians’ opinions and courts generally give greater weight to doctors who have actually examined the claimant versus those who only review the file, especially when they are employed by the insurer as here;
  • Unum insisted on additional diagnostic evidence and examination to establish continuing disability when Plaintiff was following her doctor’s treatment plan and was already deemed “permanent and stationary;”
  • Unum overlooked records that conflicted with Unum’s conclusions;
  • Unum dismissed evidence of pain as merely subjective and unreliable but the Ninth Circuit has held that “the lack of objective physical findings” is insufficient to justify denial of disability benefits for conditions that lack objective physical evidence;
  • Unum terminated benefits despite a lack of evidence of a change in Plaintiff’s condition; and
  • Unum inappropriately discounted the Social Security Administration’s determination that Plaintiff is disabled.

Although Backman may have also prevailed under an arbitrary and capricious review standard, this case highlights the value of de novo review for plan participants.

On a separate note, ERISA Watch will be offline for the next few weeks while I am on vacation in Croatia. It was a hard decision to make — white sand beaches or summarize ERISA cases — but the beaches won the coin toss. Stay tuned for more starting July 12th. Doviđenja!

Your reliable source for summaries of recent ERISA decisions

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

Select Slip Copy & Not Reported Decisions

Attorneys’ Fees

Fifth Circuit

•· Affirming fee decision of the district court and finding waived and unreviewable arguments made by Bruister Family L.L.C. supporting its claim that it cannot have a fee award rendered against it. Thomas E. Perez, Secretary, Department of Labor, v. Bruister, No. 15-60765, __F.App’x__, 2016 WL 3194687 (5th Cir. June 8, 2016) (Before DAVIS, JONES, and GRAVES, Circuit Judges).

Ninth Circuit

•· In matter involving individual claim for long term disability benefits, granting in part Plaintiff’s motion for attorneys’ fees based on hourly rates ranging from $500-$550 for attorney time. “An ERISA plaintiff who enjoys a degree of success on the merits of his case should recover his attorneys’ fees, absent special circumstances and injustice.” Court lacks authority to consider request for fees incurred during most recent appeal to the Ninth Circuit per Circuit Rule 39-1.8. Barboza v. California Ass’n of Prof’l Firefighters, No. 2:08-CV-0519-KJM-EFB, 2016 WL 3125996 (E.D. Cal. June 3, 2016) (Judge Kimberly Mueller).

Breach of Fiduciary Duty

Sixth Circuit

•· Finding that Plaintiffs are entitled to summary judgment on their breach-of-fiduciary duty claim against Church’s where: (1) Church’s failed to provide Donna Van Loo an evidence of insurability (“EIF”) in 2008, the year she was entitled to fill one out in order to qualify for supplemental life insurance coverage past the guaranteed-issue threshold; (2) Church’s continued to make material misrepresentations to Van Loo, leading to a reasonable belief that coverage was effective; (3) Van Loo paid her premiums for the supplemental life insurance coverage; (4) the coverage never became effective because of Church’s failure to provide an EIF in 2008, when Van Loo’s health should have been evaluated. Loo v. Cajun Operating Co. d/b/a Church’s Chicken, No. 14-CV-10604, 2016 WL 3137822 (E.D. Mich. June 6, 2016) (Judge Laurie J. Michelson).

Disability Benefit Claims

Ninth Circuit

•· On de novo review of Unum’s denial of long term disability benefits to a claimant impaired by radiculopathy and spondylolisthesis, finding in favor of Plaintiff and concluding that: (1) Unum unreasonably favored in-house consultants’ opinions over examining physicians’ opinions; (2) Unum insisted on additional diagnostic evidence and examinations to establish continuing disability when it was not necessary; (3) Unum overlooked records that conflicted with its conclusions; (4) Unum dismissed evidence of pain as merely subjective and unreliable contrary to Ninth Circuit precedent; (5) Unum terminated benefits despite a lack of evidence of a change in condition; and (6) Unum inappropriately discounted SSA’s disability determination. Backman v. Unum Life Ins. Co. of Am., No. 14-CV-05433-YGR, 2016 WL 3180016 (N.D. Cal. June 8, 2016) (Judge Yvonne Gonzalez Rogers).


Second Circuit

•· Finding that the following facts satisfy the good cause standard for discovery outside of the administrative record: (1) after Plaintiff’s Social Security claim had been denied, which increased Prudential’s liability, Prudential reevaluated Plaintiff’s medical condition even though Prudential had previously concluded that Plaintiff had reached maximum medical improvement and could not do any sedentary work; (2) a non-examining medical consultant who only works for Prudential concluded that Plaintiff could do sedentary work without identifying any medical records to support that conclusion; and (3) Prudential terminated Plaintiff’s benefits without identifying any medical finding that demonstrated her functioning had improved. But, Plaintiff’s current discovery requests are overbroad and the parties are required to meet and confer to limit the scope of the requests.Shelton v. Prudential Ins. Co. of Am., No. 16-CV-1559 (VEC), 2016 WL 3198312 (S.D.N.Y. June 8, 2016) (Judge Valerie Caproni).

ERISA Preemption

Fourth Circuit

•· Granting summary judgment in favor of Defendant and finding that Plaintiff’s claims are preempted by ERISA, and that Plaintiff was reasonably denied a claim under a group policy that her employer terminated more than two years prior to the onset of her disability. Breit v. Am. Heritage Life Ins. Co., No. JKB-15-2483, 2016 WL 3162814 (D. Md. June 6, 2016) (Judge James K. Bredar).

Exhaustion of Administrative Remedies

Sixth Circuit

•· Granting Defendants’ motion to dismiss complaint against a 403(B) DC Plan, where: (1) Plaintiffs did not allege that they exhausted their administrative remedies, nor that exhausting their administrative remedies would be futile; (2) the anti-cutback claim also asks for damages in the amount of lost benefits from a Plan amendment; and (3) the fiduciary-duty count is a repackaging for individual benefits that Plaintiffs were required to administratively exhaust this claim and did not. Hitchcock, et. al., v. Cumberland University 403(B) DC Plan, et. al., No. 3:15-CV-01215, 2016 WL 3197767 (M.D. Tenn. June 9, 2016) (Judge Waverly D. Crenshaw, Jr.).

Pleading Issues & Procedure

Eleventh Circuit

•· Where Amended Complaint has alleged that MetLife denied payment of the life insurance benefit because the policy had lapsed due to lack of premium payments, and that International Paper had a duty to fund the policy through a plan, which it failed to do, or had a fiduciary duty pursuant to 29 U.S.C. § 1132 to pay the premiums, Plaintiff is permitted to plead claims in the alternative under Rule 8. Vinson v. Metropolitan Life Insurance Co., et al., No. 2:15CV885-WHA, 2016 WL 3156065 (M.D. Ala. June 3, 2016) (Judge W. Harold Albritton Sr.).

Provider Claims

Fifth Circuit

•· In matter brought by Cigna against a hospital to recover alleged overpayments made for out-of-network healthcare services, determining that Cigna’s claim(s) for reimbursement of overpayments made pursuant to ERISA and/or common law fail, as a matter of law, and granting hospital’s Rule 52 motion for judgment; concluding that Cigna’s defenses to hospital’s ERISA claims fail and hospital is entitled to recover damages under § 502(a)(1)(B) and penalties under § 502(c)(1)(B). Connecticut Gen. Life Ins. Co. v. Humble Surgical Hosp., LLC, No. 4:13-CV-3291, 2016 WL 3077405 (S.D. Tex. June 1, 2016) (Judge Kenneth M. Hoyt).

Severance Benefit Claims

Third Circuit

•· Finding that denial of severance benefits available to employees of Sunoco whose employment is terminated in connection with Sunoco’s idling of the main processing units at its Marcus Hook Refinery was not an abuse of discretion where Plaintiffs’ salary and benefits were largely unaffected by their becoming permanent employees of Philadelphia Energy Solutions LLC, Plaintiffs experienced no period of unemployment, and their responsibilities and place of work remained the same. Felker v. USW Local 10-901, No. CV 13-7101, 2016 WL 3198615 (E.D. Pa. June 9, 2016) (Judge J. Slomsky).

Statutory Penalties & Notice Violations

Fifth Circuit

•· Denying Outreach Defendants’ Motion to Dismiss Plaintiff’s claims under 29 U.S.C. §§ 1022(a) and 1024(b) because the Court can draw the reasonable inference that Plaintiff alleges Defendants failed to meet the thirty-day deadline. That Plaintiff did not specifically allege to whom her alleged requests were sent, that the requests were sent to the plan administrator, or that her requests were made in writing, are not fatal to her claim, to the extent she intends to state a claim under § 1024(b)(4). Also, the Fifth Circuit has suggested in dicta that where a plan names a plan administrator, an entity other than the named administrator may nonetheless be held liable as a de facto administrator where the plan delegates the administrator’s duties to that entity. Simmons v. Outreach Health Cmty. Care Servs. LP, No. EP-15-CV-286-KC, 2016 WL 3162147 (W.D. Tex. June 3, 2016) (Kathleen Cardone).

Withdrawal Liability & Unpaid Contributions

Fourth Circuit

•· Ordering Defendant to pay $2,035.38 in delinquent contributions; interest in the amount of $679.72; attorney’s fees and costs in the amount of $992.80; audit fees in the amount of $366.93; any additional fees and costs incurred by Plaintiff in connection with the enforcement of a judgment; interest on all amounts awarded; and, post-judgment interest until paid. Nat’l Elec. Benefit Fund v. Donald A. Pusey, Inc., No. GJH-15-2659, 2016 WL 3129112 (D. Md. June 1, 2016) (Judge George J. Hazel).

Sixth Circuit

•· In matter seeking judgment against Flynn for delinquent fringe benefit contributions, awarding $80,139.98, plus reasonable costs and attorneys’ fees.Trustees of the Painting Indus. Ins. Fund v. Edward R. Flynn Co., No. 1:15 CV 269, 2016 WL 3211963 (N.D. Ohio June 7, 2016) (Judge Donald C. Nugent).

* 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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