ERISA Watch – Long Term Disability Insurer Erred by Considering an Environmental Lawyer’s Occupation to be a “Generic” Lawyer.

This week’s notable ERISA decision is a nice win reported at Jane Doe v. Standard Insurance Company, No. 16-2085, __F.3d__, 2017 WL 1101609 (1st Cir. Mar. 24, 2017).

Doe was an equity partner at a Maine law firm for more than 25 years before she became a non-equity partner in August 2011 and remained in that position for the next six months before she stopped working altogether.  At the end of 2011, Doe was diagnosed with Major Depressive Disorder, including suicidal ideation and diminished attention, concentration, and memory.  Her last day of logging work at the firm was January 27, 2012.

Doe worked as an environmental lawyer, but when considering her claim for long term disability benefits, Standard evaluated her vocation as a “generic” lawyer.  Because it did so, Standard determined that after November 2011, Doe was not working in her own legal specialty but she was performing the work of a lawyer on a reasonably continuous basis.  Standard denied Doe’s benefit claim and appeal.  The district court ruled in Standard’s favor.  However, the First Circuit Court of Appeals reversed, finding that Standard acted arbitrarily and capriciously in relying on the DOT description of a generic lawyer rather than a job description that accurately encompassed the material duties of Doe’s specialized area of practice.  Further, there was no evidence in the record supporting the assumption that an “environmental lawyer” and “lawyer” are equivalent terms that may be used interchangeably.  The court found that the appropriate remedy is an award of benefits rather than a remand to Standard.

If you are applying for disability benefits and work in an occupation with sub-specialties that vary in material duties from the generic occupation title, you’ll want to be sure to support your claim that the specialized position’s job requirements should be considered.  The attorneys of Roberts Disability Law, P.C. have years of experience representing claimants in long term disability claims and understand the vocational evidence needed to support these claims.

If you need help with your long term disability appeal, contact one of our experienced ERISA attorneys today.  Below are this week’s summaries of ERISA decisions reported across the country.

Attorneys’ Fees

Sixth Circuit

Myers v. Mutual of Omaha Life Insurance Company, No. 4:14CV2421, 2017 WL 1093873 (N.D. Ohio Mar. 23, 2017) (Judge Benita Y. Pearson).  Following a previous decision to remand Plaintiff’s long term disability claim to Mutual of Omaha, the court granted Plaintiff’s motion for attorney’s fees in part.  Three of the five factors weigh in favor of awarding fees, including that there is sufficient evidence of culpability in Defendant’s decision making to warrant fees and an award would deter future non-compliance.  Plaintiff has fourteen days to provide the court with materials showing that the requested rates are reasonable.

Breach of Fiduciary Duty

Second Circuit

United States Of America v. Bodouva, No. 16-3937, __F.3d__, 2017 WL 1076339 (2d Cir. Mar. 22, 2017) (Before: KATZMANN, Chief Judge, POOLER and LYNCH, Circuit Judges).  Defendant-appellant appealed from a judgment of conviction entered against her on one count of embezzling funds from an employee benefit plan, namely her company’s 401(k) plan, in violation of 18 U.S.C. § 664.  Defendant was ordered to forfeit $127,854.22.  The court held that, in the absence of specific statutory authorization, a district court lacks the discretion to reduce the amount of a mandatory criminal forfeiture order by the amount of restitution payments.  The district court did not err in concluding that it lacked the discretion to reduce the amount of Defendant’s forfeiture order.

United States of America v. Bodouva, No. 16-3937, __F.App’x__, 2017 WL 1103451 (2d Cir. Mar. 22, 2017) (Present: ROBERT A. KATZMANN, Chief Judge, ROSEMARY S. POOLER, GERARD E. LYNCH, Circuit Judges).  In this matter where Bodouva was convicted of one count of embezzling funds from her company’s 401(k) plan in violation of 18 U.S.C. § 664, the court found that the district court did not erroneously charge the jury or exclude evidence pertinent to her defense.  The court affirmed the district court.

Fourth Circuit

Pender v. Bank of Am. Corp., No. 3:05-CV-00238-GCM, 2017 WL 1044965 (W.D.N.C. Mar. 17, 2017) (Judge Graham C. Mullen).  The court set a bench trial on the issue of whether Bank of America profited from its transfer strategy after it restored the separate account feature and paid a $10 million fine to the IRS.  The court found that Defendants did not retain a profit as a result of the transfer, and as such, the court need not make findings regarding the other equitable defenses that Defendants have raised in this litigation.

Fifth Circuit

Chamber of Commerce of the United States of Am. v. Hugler, No. 3:16-CV-1476-M, 2017 WL 1062444 (N.D. Tex. Mar. 20, 2017) (Judge Barbara M.G. Lynn).  In this matter involving Plaintiffs’ challenge to three rules promulgated by the Department of Labor (“DOL”), the court denied Plaintiffs’ emergency motions for injunction pending appeal.  Plaintiffs did not meet their burden of satisfying the following four factors:  1) the likelihood that the moving party will ultimately prevail on the merits of the appeal; 2) the extent to which the moving party would be irreparably harmed by denial; 3) the potential harm to opposing parties if the injunction is issued; and 4) the public interest.

Keith v. Metro. Life Ins. Co., No. CV H-15-1030, 2017 WL 1026008 (S.D. Tex. Mar. 15, 2017) (Judge Sim Lake).  MetLife denied Plaintiff’s claim and appeal for life insurance benefits because her husband’s coverage ended following the last premium payment, and because her husband was not eligible for continuation of his insurance since he was 60 years old when he became disabled with monoplegia and amyotrophic lateral sclerosis (ALS), known as Lou Gehrig’s Disease.  Plaintiff was not aware that her husband’s coverage under the employer’s group plan ended nine months after he ceased actively working.  She sued MetLife for breach of fiduciary duty.  The court concluded that any duty MetLife had to provide notice that the group coverage was ending or of the option to convert would be nonfiduciary and ministerial.  However, there are genuine issues of material fact as to whether MetLife acted as a fiduciary and whether it breached a fiduciary duty to communicate in a manner calculated to avoid confusion and misunderstanding.  There is also a question of causation the court cannot resolve on summary judgment.  Both parties’ motions are denied.

D.C. Circuit

Abraha v. Colonial Parking, Inc., No. CV 16-680 (CKK), __F.Supp.3d__, 2017 WL 1052558 (D.D.C. Mar. 20, 2017) (Judge Colleen Kollar-Kotelly).  Plaintiffs have stated a plausible claim for relief that Defendants breached their fiduciary duties by, inter alia, charging Plaintiffs and other Plan participants excessive fees for FCE’s administrative services for the Forge Company Death, Dismissal, Wage/Unemployment Benefit “Reserve” Employee Account. The court cannot conclude from the face of the Complaint that Plaintiff’s claims are conclusively time-barred, where it alleges that Colonial and FCE sought to conceal the fee structure from Colonial’s employees so they would continue to opt for the more expensive health coverage.

Class Actions

Sixth Circuit

Wilson v. Anthem Health Plans of Kentucky, Inc., No. 3:14-CV-743-TBR, 2017 WL 1089193 (W.D. Ky. Mar. 21, 2017) (Judge Thomas B. Russell).  In this class action challenging Anthem’s restriction of coverage for Applied Behavioral Analysis, a treatment for Autism Spectrum Disorders, the court granted in part Plaintiff’s motion for approval of proposed plan for notice of class pendency.  The court will allow for the use of a website dedicated to this class action in addition to notice by direct mail.  Plaintiff’s proposed notice, along with Anthem’s revisions, constitutes the best notice practicable under the circumstances.

Ninth Circuit

Griffith v. Providence Health & Servs., No. C14-1720-JCC, 2017 WL 1064392 (W.D. Wash. Mar. 21, 2017) (Judge John C. Coughenour).  In this case alleging ERISA violations with respect to a cash balance retirement plan, the court issued an order finally approving the class settlement.  Class Counsel is awarded attorneys’ fees in the fair and reasonable amount of $6,425,877.27, as well as $54,122.73 in reimbursement of Class Counsel’s reasonable expenses incurred in prosecuting this action.  The court also awarded a $10,000.00 incentive fee for each of the Class Representatives.

Corcoran v. CVS Health, No. 15-CV-03504-YGR, 2017 WL 1065135 (N.D. Cal. Mar. 21, 2017) (Judge Yvonne Gonzalez Rogers).  This putative class action alleges that Defendants knowingly overcharged millions of insured patients by submitting falsely inflated drug prices to pharmacy benefit managers and third-party payor insurance providers, which resulted in higher copayment obligations for Plaintiffs.  The court denied the motion for class certification of eleven state classes, but not on the basis of ERISA preemption.  The court explained that Defendants have failed to identify a single instance or example of a health insurance plan that would entitle Defendants to an ERISA preemption defense as to Plaintiffs’ claims in this action.

Disability Benefit Claims

First Circuit

Jane Doe v. Standard Insurance Company, No. 16-2085, __F.3d__, 2017 WL 1101609 (1st Cir. Mar. 24, 2017) (Before Lynch, Circuit Judge, Souter,* Associate Justice, and Baldock,** Circuit Judge).  Plaintiff, an environmental lawyer, had an “Own Occupation” insurance, for which an additional premium is charged.  The court reversed the district court’s decision in favor of Standard and found that its decision not to use the material duties of an environmental lawyer, but rather those of a generic lawyer was arbitrary and capricious.  The court directed an award to Doe of retroactive benefits based on a disability onset date of no later than 2011.

Second Circuit

Schuman v. Aetna Life Ins. Co., No. 3:15-CV-1006 (SRU), 2017 WL 1053853 (D. Conn. Mar. 20, 2017).  The court concluded that the Group Policy, acting as a “wrap” containing the general terms for all coverage, contains an adequate grant of discretion to Aetna.  Aetna’s various violations of the ERISA regulations are sufficient to trigger de novo review.  The court found that to make a proper determination it would be required to consider significant evidence outside of the record and determined that the appropriate remedy is a remand to Aetna.

Sixth Circuit

Gilewski v. Provident Life and Accident Insurance Company, No. 16-2028, __F.App’x__, 2017 WL 1078549 (6th Cir. Mar. 22, 2017) (Before: MERRITT, COOK, and McKEAGUE, Circuit Judges).  The court affirmed the decision to deny long term disability benefits to Plaintiff, who suffered from major depression.  The court found that after reviewing the administrative record and giving no deference to Provident’s decision to terminate benefits, it found substantial evidence supports Provident’s decision.

Black v. Metro. Life Ins. Co., No. 1:15-CV-1147, 2017 WL 1055221 (W.D. Mich. Mar. 21, 2017).  In Markey–Shanks v. Metropolitan Life Insurance Co., 2013 WL 3818838 (W.D. Mich. July 23, 2013), the court concluded that Rule 550.2202(b) did not prohibit application of the discretionary clause contained in the ERISA plan document itself.  This Court declined to revisit Markey–Shanks or apply its reasoning because MetLife’s decision to deny Plaintiff’s long term disability benefits claim should be affirmed even under a de novo standard of review.  Because Plaintiff bore the burden of proving disability, MetLife did not have to arrange an independent medical examination or a functional capacity evaluation.

Rowe v. United of Omaha Life Ins., No. 3:15-CV-256-TAV-CCS, 2017 WL 1047332 (E.D. Tenn. Mar. 17, 2017).  The Magistrate Judge granted in part Plaintiff’s motion for judgment on the administrative record, to which United of Omaha objected.  The court agrees with the Magistrate Judge’s determination that Defendant’s failure to articulate whether and to what extent nurse practitioner opinions were credited, and to what extent the opined limitations impact the determination of whether Plaintiff is disabled under the plan, is indicative of Defendant’s decision failing to result from a “deliberate, principled reasoning process.”  Plaintiff’s alleged failure to apply for Social Security benefits is not relevant to whether Defendant’s denial decision was arbitrary and capricious.  On remand, Plaintiff may submit any argument to Defendant as to why she is disabled but cannot reopen and supplement the administrative record because Plaintiff had the opportunity to submit additional documentation with her administrative appeal.

Seventh Circuit

Stafford v. Anthem Life Ins. Co., No. 115CV02032TWPMPB, 2017 WL 1035930 (S.D. Ind. Mar. 17, 2017) (Judge Tanya Walton Partt).  On Plaintiff’s claim for long term disability benefits, the court found that Anthem’s conclusions that Plaintiff was not disabled form “any occupation” was not arbitrary and capricious.  There is rational support in the record for Anthem’s interpretations of the evidence and its vocational review was not deficient.

Eighth Circuit

Braden v. AT&T Umbrella Benefit Pan No. 3, No. CV 16-729(DSD/HB), 2017 WL 1047257 (D. Minn. Mar. 17, 2017) (Judge David S. Doty).  Although it was undisputed that Plaintiff had the diagnosis of degenerative disc disease, the court found that substantial evidence supports the Plan’s denial of Plaintiff’s claim for short-term disability benefits.  For example, the MRI only showed mild disc bulges and Plaintiff’s doctor concluded that the MRI did not show “a terrible problem and that there was “not really” any objective evidence supporting Plaintiff’s symptoms.  Another doctor reported that Plaintiff was “in no acute distress,” his gait was normal, and he had full motor strength in all muscle groups.

Ninth Circuit

Reddick v. Metro. Life Ins. Co., No. 3:15-CV-02326-L-WVG, 2017 WL 1094048 (S.D. Cal. Mar. 23, 2017) (Judge M. James Lorez).  In this lawsuit for long term disability benefits, Plaintiff seeks to augment the administrative record with three items:  (1) a letter from Dr. Harris providing an in-depth explanation of Plaintiff’s physical condition, an opinion on disability status, and an explanation of what he meant to communicate when he filled out a form; (2) an exhibit containing W2’s and earnings statements which Plaintiff claims are relevant to determining his disability pay; (3) a summary judgment order in which Judge Moskowitz vacated the ALJ’s opinion and remanded the case.  The court permitted the Dr. Harris letter and the Judge Moskowitz order, but not the earnings statements.

ERISA Preemption

San Joaquin General Hospital v. United Healthcare Insurance Co., No. 216CV01904KJMEFB, 2017 WL 1093835 (E.D. Cal. Mar. 23, 2017).  The court found that the Hospital’s quantum meruit claim is not preempted by ERISA.  As in Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009), the claims in this case arise out of a telephone conversation between the parties whereby they allegedly formed an implied or oral contract.  The omission of an essential term in a contract, such as price, does not vitiate contract formation if the parties otherwise manifested their mutual assent to the agreement and the terms of that agreement are sufficiently definite.

Exhaustion of Administrative Remedies

Third Circuit

U.S. Renal Care, Inc. v. Wellspan Health, No. 1:14-CV-2257, 2017 WL 1062374 (M.D. Pa. Mar. 21, 2017) (Judge Sylvia H. Rambo).  The court found that an appeal of the adverse benefits determinations would not have been futile.  Plaintiff never filed an appeal although Defendants supplied Plaintiff with the relevant portions of the Plan documents, including the appeal procedure, how non-participating providers were paid, and how UCR was calculated.  The court found that Plaintiff failed to exhaust its administrative remedies before filing its complaint, and awarded Defendants summary judgment as to Plaintiff’s claim for benefits under § 502(a) of ERISA.

Ninth Circuit

Russell v. CVS Caremark Corp., No. CV-16-00284-PHX-PGR, 2017 WL 1090677 (D. Ariz. Mar. 23, 2017) (Judge Paul G. Rosenblatt).  Plaintiff brought suit after her 401(k) funds were deposited in the wrong bank account and CVS’ agents allegedly failed or refused to provide her with the requested information for correcting the erroneous distribution.  Defendants moved to dismiss for failure to exhaust administrative remedies.  The court concluded that dismissal of this action for failure to exhaust is not appropriate at this pleading stage because CVS has not established that non-exhaustion is obvious from the face of the First Amended Complaint.

Life Insurance & AD&D Benefit Claims

Second Circuit

Gardner v. Verizon Commc’ns Inc., No. 16CV814RRMRML, 2017 WL 1047331 (E.D.N.Y. Mar. 17, 2017) (Judge Roslynn R. Mauskopf).  Plaintiff’s claims for extra-contractual compensatory damages and punitive damages for the denial and seven-month delay in payment of $5,000 in life insurance benefits is legal relief she cannot recover.  Plaintiff may amend the complaint to allege a claim for prejudgment interest.

Sixth Circuit

Grabowski v. QBE Americas, Inc., No. 15-12318, 2017 WL 1077667 (E.D. Mich. Mar. 22, 2017) (Judge Denise Page Hood).  The Principal determined that Terence Grabowski was not eligible for life insurance coverage because:  (1) he did not become Totally Disabled prior to attaining the age of 60, as required by the Policy; and (2) he did not convert his group life insurance policy to an individual policy after he was terminated.  Plaintiff argued that he never received notice of his right to convert the group policy and that this was not addressed in the denial of Grabowski’s appeal.  The court found that Principal’s decision was not arbitrary and capricious given the terms of the Plan.  The court dismissed Plaintiff’s Section 502(a)(3) claim because there is only one alleged injury, the denial of life insurance benefits.  The proper avenue to recover unpaid benefits is Section 502(a)(1)(B).

Ninth Circuit

Simons v. Cenveo Corporation, No. C15-1598-JCC, 2017 WL 1079917 (W.D. Wash. Mar. 22, 2017) (Judge John C. Coughenour).  Plaintiff was denied basic life insurance and accidental death and dismemberment insurance benefits because the insured was not working at least 35 hours per week for the employer.  Plaintiff argued that the policy did not exclude part-time workers so she should be given the benefits.  The Court agreed with Defendant and reasoned that the lack of inclusion of part-time employees from the enumerated positions excluded from coverage is inconsequential because the rest of the Plan makes it abundantly clear that employees must work 35 hours per week to be covered.  Plaintiff also argued for equitable estoppel since Defendant represented that it would provide the insured with life insurance coverage when it sent the Benefits Confirmation Form, but the court found even if Plaintiff could establish the traditional elements of estoppel, the claim cannot be maintained where it would result in payment of benefits inconsistent with the Plan.

Dunn v. Robinson, No. 3:16-CV-818-PK, 2017 WL 1042467 (D. Or. Mar. 17, 2017) (Magistrate Judge Paul Papak).  The insured died on December 25, 2016, but attempted the month before to change the beneficiary of his life insurance policy from his minor daughter to his domestic partner.  The court found that CUNA was not required under the Plan to treat the insured’s change of beneficiary request of November 5, 2015 as taking effect immediately, and it was a proper exercise of CUNA’s discretion as the Plan administrator to treat that change as taking effect January 1, 2016, together with the insured’s other benefits elections made in the course of CUNA’s open enrollment process.  Thus, the life insurance benefits are properly payable to the insured’s minor daughter rather than to the insured’s domestic partner at the time of his passing.

Medical Benefit Claims

First Circuit

Stephanie C., v. Blue Cross Blue Shield Of Massachusetts HMO Blue, Inc., No. 16-1997, __F.3d__, 2017 WL 1101608 (1st Cir. Mar. 24, 2017) (Before Barron, Circuit Judge, Souter, Associate Justice,* and Selya, Circuit Judge).  Plaintiff sought coverage for private school treatment center in Utah to treat her teenage son’s severe behavioral problems.  Applying the plain language of the Plan, the court held that the treatment in dispute was not medically necessary and not covered.  The court affirmed the district court’s judgment, wherein the district court concluded that BCBS was justified in denying coverage for M.G.’s expenses at the school because the Plan does not provide coverage for services rendered in an educational setting and the services in question were not medically necessary within the purview of the Plan.

Fourth Circuit

Barton v. Constellium Rolled Prod.-Ravenswood, LLC, No. 16-1103, __F.3d__, 2017 WL 1078540 (4th Cir. Mar. 22, 2017) (Judge Motz wrote the opinion, in which Judge Duncan and Judge Harris joined).  In this dispute over retiree health benefits, the court held that:  (1) the collective bargaining agreement (CBA) required the employer to continue to provide bargained-for retiree health benefits only for the term of the CBA, not the life of the participants; (2) retirees waived the argument based on dependent health coverage by failing to raise it before district court; but (3) even if argument was not waived, the CBA did not prevent the employer from reducing benefits.

Eleventh Circuit

Woodruff v. Blue Cross & Blue Shield of Alabama, No. 2:16-CV-00281-SGC, 2017 WL 1090591 (N.D. Ala. Mar. 23, 2017) (Magistrate Judge Staci G. Cornelius).  Plaintiff’s complaint seeks redress for Defendants’ denial and refusal to pay for proton therapy prescribed to treat Plaintiff’s recurring prostate cancer.  The court found that because the amended complaint asserts a claim for benefits under Section 1132(a)(1)(B), Plaintiff’s claims for equitable relief are due to be dismissed, notwithstanding Amara and McCravy.  And, the allegations in the complaint will not support a claim for equitable relief under Section 1132(a)(3).

Pension Benefit Claims

Third Circuit

Pilat v. Open Air Imaging, Inc., No. 16CV1256, 2017 WL 1080093 (W.D. Pa. Mar. 22, 2017) (Judge Arthur J. Schwab).  Plaintiff filed suit against Defendants for failing to properly withhold certain sums for her retirement account or to pay the agreed-upon employer match.  The court entered default judgment in favor of Plaintiff in the amount of $20,525.67.

D.C. Circuit

Dullea v. Pension Benefit Guarantee Corp., No. 16-CV-00147 (CRC), __F.Supp.3d__, 2017 WL 1052551 (D.D.C. Mar. 20, 2017) (Judge Christopher R. Cooper).  The court found that the PBGC’s policy underlying its decision to deny a participant’s request to change the form of benefits that his former spouse had been receiving under the plan to be arbitrary, capricious, and contrary to ERISA.  The PBGC’s decision not to qualify the 2012 domestic relations order is deficient under § 706 of the APA.  Thus, the court vacated the agency’s decision and remanded the case to the PBGC for further consideration of the order consistent with this ruling.

Provider Claims

Ninth Circuit

DB Healthcare, LLC, v. Blue Cross Blue Shield of Arizona, Inc., No. 14-16518, __F.3d__, 2017 WL 1075050 (9th Cir. Mar. 22, 2017) (Before: Marsha S. Berzon, and N. Randy Smith, Circuit Judges, and Dana L. Christensen, Chief District Judge).  A health care provider designated to receive direct payment from a health plan administrator for medical services is not authorized to bring suit in federal court under ERISA on the basis of either direct statutory authority or derivative authority through assignment.

Statutory Penalties

U.S. Renal Care, Inc. v. Wellspan Health, No. 1:14-CV-2257, 2017 WL 1062374 (M.D. Pa. Mar. 21, 2017) (Judge Sylvia H. Rambo).  Plaintiff, a medical provider, requested fee schedules and other documents necessary to calculate UCR for the PPHN-covered area. Although such information likely would have been relevant to pursue an administrative appeal, Plaintiff never appealed the adverse benefits determinations. The only documents which Defendants were required to furnish under ERISA was the summary plan description, which Defendants did provide to Plaintiff.  The court found that Defendants did not violate § 502(c)(1) of ERISA, and awarded summary judgment to Defendants on this claim.

Venue

Wright v. Elton Corp., No. CV RDB-16-329, 2017 WL 1035830 (D. Md. Mar. 17, 2017) (Judge Richard D. Bennett).  Plaintiffs filed this action against the current and former trustees of the M.C. DuPont Clark Employee Pension Trust, seeking a judicial declaration that the Pension Trust is subject to ERISA and injunctive relief to remedy Defendants’ alleged non-compliance with that statute over the last forty-three years.  Maryland is a permissible venue for this action since Defendant “may be found” in Maryland.  However, the court granted Defendant’s motion to transfer venue to Delaware since it is the center of gravity for nearly aspect of the case.  The Pension Trust was established by citizens of Delaware, in Delaware, and under Delaware law.  The Pension Trust always has been and continues to be administered by entities located in Delaware.  It appears likely that at least some of qualified employers and potentially-eligible employees under the Pension Trust reside in Delaware.