ERISA Watch – June 26, 2014

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

ERISA Statute of Limitations

In Watkins v. JP Morgan Chase U.S. Benefits Executive, 13-2621, 2014 WL 2808141 (6th Cir. June 20, 2014), the 6^th Circuit Court of Appeals affirmed the district court’s holding that the applicable statute of limitations barred the plaintiff’s ERISA claim. Watkins filed this suit in 2010, alleging that she had not received a lump sum retirement payment which she elected to collect in May of 1998. The parties agreed to stay the case to permit Watkins to pursue administrative remedies under Chase’s ERISA plan. While the ERISA statute itself does not set forth the statute of limitations, the 6^th Circuit has ruled that federal courts should apply the state statute of limitations period which is most closely analogous to the federal claim, which in the instant dispute would be a breach of contract claim with a six-year statute of limitations period. An ERISA cause of action does not generally accrue until a claim of benefits has been made and formally denied. In an ERISA denial of benefits claim, the 6^th Circuit has developed the discovery rule into the “clear repudiation” doctrine which holds that a formal denial of benefits is not required where there has been a clear repudiation of the benefits by the fiduciary. Here, Watkins asserts that her claim did not accrue until she exhausted her administrative remedies in 2012. However, the court found that she did not make informal inquiries of her former employer to determine the status of the check until 2006, over eight years after she requested to take her retirement benefits in a lump sum and that due diligence would have required Watkins to discover that her employer had failed to pay her for the benefits she sought at some point in 1998. As such, the court found her claim was filed well more than six years after her cause of action accrued and is time barred.

ERISA Class Actions

Stephens v. Pension Ben. Guar. Corp., 13-5129, 2014 WL 2853720 (D.C. Cir. June 24, 2014) involved a putative class action brought on behalf of a group of U.S. Airways pilots who retired over a decade ago and received a delayed payment of retirement benefits. The district court refused to certify a class, holding that Stephens’s claim is not typical of the claims of the rest of the putative class because only Stephens exhausted internal plan remedies before filing suit under ERISA. The D.C. Circuit Court of Appeals held that the class members were not required to exhaust internal remedies before bringing their claims in court because they seek enforcement of ERISA’s substantive guarantees rather than contractual rights. The court reversed the district court’s judgment and remanded for reconsideration of Stephens’s motion to certify a class.

ERISA Document Penalties Not Available. In Marcin v. Reliance Standard Life Ins. Co., CV 13-1308 (ABJ), 2014 WL 2791238 (D.D.C. June 20, 2014), the plan participant was impaired from work from renal cancer, portal vein thrombosis, and ovarian disease. She filed a claim for long term disability benefits, which Reliance denied. She subsequently filed suit, seeking review of the denial of her benefits and also seeking statutory penalties under ERISA Section 1132(c) against Reliance for not producing “disability durational guidelines” and “claims guidelines” that Reliance allegedly relied upon when it denied plaintiff’s claim. The defendants filed a motion to dismiss the statutory penalties claim, which the court granted, finding that these penalties are not available for the non-disclosure of the guidelines involved, and that, even if they were, the penalties are not available against Reliance because it is not the plan administrator or
plan sponsor under ERISA. The court also rejected plaintiff’s argument that Reliance is the “de factor” plan administrator, relying on D.C. Circuit law that a plan administrator be expressly identified by the terms of the instrument under which the plan is operated, not by implication.

Long Term Disability Claim Dismissed. In Friedland v. Unum Grp., CV 13-1417-SLR, 2014 WL 2796879 (D. Del. June 19, 2014), the plaintiff became disabled after falling down a flight of steps. Unum paid her long term disability benefits for two years before terminating her claim after she informed Unum that she was attempting to teach on a part-time basis. When Unum did not reinstate her benefits, the plaintiff brought suit more than one year following Unum’s final denial of her long term disability claim. The plaintiff brought a benefit claim under ERISA and also fraud and RICO claims against Unum and Unum Life. The defendants moved to dismiss each of the claims and the court granted Unum’s motion, finding that: (1) plaintiff’s ERISA claim is time-barred by the 1-year limitations statute for claims filed in Delaware; (2) plaintiff’s fraud claim is preempted by ERISA; and (3) plaintiff’s complaint fails to state a cause of action against defendants Unum and Unum Life under RICO.

Denial of Long Term Disability Benefits Affirmed. In Blair v. Metro. Life Ins. Co., 13-13463, 2014 WL 2809138 (11th Cir. June 23, 2014), the plaintiff originally filed her ERISA claim against MetLife under ERISA in state court, alleging that her long term disability benefits were wrongfully terminated. The plaintiff was disabled from work by recurrent major depression. MetLife removed the case to federal court, where the district court ultimately granted MetLife’s motion for judgment as a matter of law. The plaintiff appealed, arguing that (1) 11^th Circuit law entitles her to a remand so that MetLife can issue a decision in her second administrative appeal; (2) the district court and MetLife failed to properly consider her favorable Social Security Administration (SSA) award; (3) MetLife denied a full and fair review by failing to inform her of materials needed to perfect her appeal; (4) MetLife improperly required objective evidence when it terminated her LTD benefits because the Plan did not require objective evidence; (5) the district court should have considered the evidence that was submitted during her second appeal; (6) she should have been allowed discovery because a conflict of interest existed; and (7) it was error for the district court to analyze her ERISA claim under the six-step ERISA analysis explained in Blankenship v. Metro. Life Ins. Co., 644 F.3d 1350, 1355 (11th Cir. 2011) (per curiam). The court affirmed the district court’s decision and upheld the denial of LTD benefits.

In Nelson v. Aetna Life Ins. Co., 13-5073, 2014 WL 2748424 (10th Cir. June 18, 2014), the 10^th Circuit Court of Appeals affirmed a district court’s decision affirming Aetna’s denial of long term disability benefits, which the plaintiff did not appeal to Aetna prior to filing her lawsuit. The plaintiff alleged disability related to lupus, fibromyalgia, chronic fatigue, and pain. After the parties filed their opening and response briefs in the district court, the plaintiff received notice of a fully favorable Social Security Disability Insurance (“SSDI”) decision from the Social Security Administration (SSA). The SSA found she had been disabled since one day after she stopped working. The plaintiff filed her reply brief, which asked the district court to supplement the administrative record with the SSA’s decision or, in the alternative, to remand the matter back to Aetna so it could consider the SSA’s decision. The defendants filed a motion to strike the reply brief and to deny the request to supplement the record, which the district court granted. The 10^th Circuit Court of Appeals found that the district court did not err because it is clearly established that in reviewing a plan administrator’s decision under the arbitrary and capricious standard that the federal courts are limited to the administrative record. The court also found that there were no procedural irregularities here that might permit record supplementation under case decisions outside of the 10^th Circuit. Finally, the court found that Aetna based its decision on the opinions of five independent specialists and was not arbitrary and capricious.

Mental Illness Limitation in ERISA Plan. In Nelson v. Standard Ins. Co., 13CV188-WQH-MDD, 2014 WL 2715202 (S.D. Cal. June 16, 2014), the plaintiff filed a motion to amend the court’s previous decision in this case to allow the plaintiff to request the 9^th Circuit Court of Appeals to hear an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). The plaintiff sought permission to seek an interlocutory appeal as to the following issue: “Does California Insurance Code Section 10144 limit and regulate Standard Insurance Company and employers from utilizing a disability insurance policy to employees, as a part of a benefits package, that limits coverage to 24 months for those employees with mental impairments-due to the mental condition?” The court had previously dismissed each of plaintiff’s class action claims and her individual claim based on Section 10144, but permitted one of her individual claims to move forward. The plaintiff contended that allowing her to appeal the court’s order dismissing all class and individual claims based on Section 10144 at this stage of litigation will materially advance the ultimate termination of the litigation by allowing the 9th Circuit to address this important question of law prior to discovery and months of litigation. Additionally, the ability to request the Ninth Circuit to hear this appeal provides the potential class members with an avenue of appeal without requiring them to wait until the conclusion of plaintiff’s individual ERISA claim. After considering the relevant factors, the court found that the plaintiff failed to meet her burden of persuading the court that exceptional circumstances justify a departure from the basic policy of postponing appellate review until after the entry of a final judgment. In particular, the plaintiff failed to adequately show that there is a “controlling question of law” within the meaning of § 1292(b), and that an immediate appeal may materially advance the ultimate termination of the litigation. Accordingly, the court denied the plaintiff’s motion to amend the order.

* 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 Parkway, Ste. 105 Alameda, CA 94501; Tel: 510-230-2090.