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ERISA Watch – May 17, 2016

Good morning ERISA Watchers! There were many notable decisions this past week. Of note is the Second Circuit decision in Am. Psychiatric Ass’n v. Anthem Health Plans, Inc., No. 14-3993-CV, __F.3d__, 2016 WL 2772853 (2d Cir. May 13, 2016). In this case, psychiatrists and professional associations allege that health insurers’ reimbursement practices discriminate against patients with mental health and substance use disorders in violation of the Mental Health Parity and Addition Equity Act of 2008 and ERISA. The associations brought suit on behalf of their members and their members’ patients, while the psychiatrists brought suit on behalf of themselves and their patients. The Second Circuit affirmed the district court’s dismissal of the case after concluding that the psychiatrists lacked a cause of action under the statute and the associations lacked constitutional standing to pursue their respective claims.

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

Ninth Circuit

•· In matter where Defendant unsuccessfully removed case to federal court arguing ERISA preemption, granting in part Plaintiff’s request for attorney’s fees and awarding $8,556.90 in attorney’s fees. Bergen v. Tualatin Hills Swim Club, Inc., No. 3:16-CV-00052-HZ, 2016 WL 2736105 (D. Or. May 11, 2016) (Judge Marco A. Hernandez).

Breach of Fiduciary Duty

Third Circuit

•· Granting in part and denying in part Plaintiff’s First Amended Complaint for failure to state a claim in matter seeking disgorgement of $250,000 in fees against Defendant Christie Pabarue Morten & Young (“Christie Pabarue”), a law firm, that represented the Single Employer Welfare Benefit Plan Trust in 2011, where Plaintiff alleged that Pabarue knew the payment for its services improperly transferred ERISA plan assets. Harvey Kalan, M.D., et al. v. Farmers & Merchants Trust Company of Chambersburg, et al., No. CV 15-1435, 2016 WL 2766490 (E.D. Pa. May 13, 2016) (Judge Wendy Beetlestone).

Seventh Circuit

•· Granting the summary judgment motion of Intervenor Defendant Acuity, A Mutual Insurance Company, and declaring that Acuity has no duty to defend or indemnify its insureds, Defendants Bayland Buildings, Inc., Steven Ambrosius and Abraham Farley, on the claims asserted against them by Plaintiff and former Bayland employee Michael Cashman. Cashman v. Bayland Buildings, Inc., Steve Ambrosius, Abraham Farley, Defendants, Acuity, A Mutual Insurance Company, Intervenor Defendant., No. 15-C-808, 2016 WL 2766643 (E.D. Wis. May 12, 2016) (Judge William C. Griesbach).

Disability Benefit Claims

Second Circuit

•· In LTD matter where Plaintiff, a former truck driver who suffers from chronic, unexplained, and unpredictable syncope, or sudden loss of consciousness, the court granted summary judgment in favor of Defendants because Plaintiff did not establish that the independent, third-party claims administrator had a conflict of interest or that the denial of his claim was arbitrary and capricious. “Thus, under ERISA’s highly deferential standard of review, the Court cannot revisit the final claim determination.” Jones v. PepsiCo, Inc., No. 15-CV-01426 (SN), __F.Supp.3d__, 2016 WL 2642676 (S.D.N.Y. May 6, 2016) (Magistrate Judge Sarah Netburn).

Ninth Circuit

•· Plaintiff cannot assert a § 502(a)(3) claim to enjoin Defendant from ever again serving as fiduciary to the Plan. The appropriate avenue for recovering unpaid LTD benefits and prejudgment interest under an ERISA plan is § 502(a)(1)(B), not § 502(a)(3). Plaintiff cannot seek attorneys’ fees and costs under § 502(a)(3), where it is available under § 502(g)(1). The court denied Defendant’s motion to dismiss Plaintiff’s requests for disgorgement, surcharge, and other make-whole relief on the basis that such relief is duplicative of his § 502(a)(1)(B) claim. At motion to dismiss stage, the court cannot find that disgorgement of profits constitutes the type of extracontractual damages foreclosed as a matter of law by Russell and Sokol. Englert v. The Prudential Insurance Company of America, No. 15-CV-04814-HSG, 2016 WL 2770526 (N.D. Cal. May 13, 2016) (Judge Haywood S. Gilliam, Jr.).

•· Sedgwick abused its discretion by denying Plaintiff long term disability benefits without fully considering her restrictions and failing to develop the factual record necessary to make the finding that Plaintiff could work as a Customer Specialist. Sedgwick did not consider whether Plaintiff could work as a Customer Specialist without a conventional computer mouse and did not investigate whether both voice activated software and a foot mouse could actually be used to test for or work the Customer Specialist position. Thornton v. Sedgwick CMS, No. CV 14-7942 DSF (SHX), 2016 WL 2731657 (C.D. Cal. May 10, 2016) (Judge Dale S. Fischer).

•· “In summary, Drs. Swotinsky, Allison, and Duvall evaluated Mr. Pearson’s health with more complete information than his previous doctors had. Furthermore, Mr. Pearson’s activity level undermines his reports of debilitating pain. The court accordingly concludes that Mr. Pearson has not demonstrated that he was incapable of performing the material duties of his job, and that he is therefore not disabled under the terms of the LTD policy.” Pearson v. Aetna Life Ins. Co., No. C15-0245JLR, 2016 WL 2745299 (W.D. Wash. May 10, 2016) (Judge James L. Robart).

Life Insurance & AD&D Benefit Claims

Fourth Circuit

•· Granting summary judgment in favor of Defendant Unum on supplemental life group life insurance policy denial based on suicide exclusion within the policy, where the decedent, a former Navy SEAL, took his own life, and Unum reasonably determined that he was sane at the time he did so. Jennifer Mullen Collins v. Unum Life Insurance Company of America, No. 2:15CVL88, __F.Supp.3d__, 2016 WL 2658157 (E.D. Va. May 6, 2016).

Sixth Circuit

•· Denying Defendant’s Motion for Summary Judgement and giving notice to Mary McGhee that the Court is considering summary judgment in favor of the Jones Defendants on the grounds of (1) undue influence and (2) her otherwise improper procurement of Bernadine McGhee’s signature on the beneficiary designation form; giving McGhee thirty days to show why the court should not rule the 2013 beneficiary designation form to be invalid and enforce the December 27, 2006 beneficiary designation form naming the Jones Defendants as the co-primary beneficiaries in equal shares. Metro. Life Ins. Co. v. McGhee, No. 15-2467-STA-DKV, 2016 WL 2742429 (W.D. Tenn. May 10, 2016) (Judge S. Thomas Anderson).

Medical Benefit Claims

Second Circuit

•· In matter where psychiatrists and professional associations allege that health insurers’ reimbursement practices discriminate against patients with mental health and substance use disorders in violation of the Mental Health Parity and Addition Equity Act of 2008 (“MHPAEA”), and ERISA, and where the associations brought suit on behalf of their members and their members’ patients, while the psychiatrists brought suit on behalf of themselves and their patients, affirming the district court’s dismissal of the case after concluding that the psychiatrists lacked a cause of action under the statute and the associations lacked constitutional standing to pursue their respective claims. Am. Psychiatric Ass’n v. Anthem Health Plans, Inc., No. 14-3993-CV, __F.3d__, 2016 WL 2772853 (2d Cir. May 13, 2016) (Before: WALKER and RAGGI, Circuit Judges).

Seventh Circuit

•· “Although plaintiff is empowered to sue under § 1132(a)(1)(B) as the assignee of a plan beneficiary, the plan beneficiary who assigned her claim to plaintiff never submitted a claim for benefits under the plan, did not exhaust her administrative remedies and is not entitled under the plan to the benefits plaintiff is seeking. By obtaining an assignment of its patient’s claims under the plan, plaintiff is entitled to raise a claim under § 1132(a)(1)(B), but it is not relieved of any of the prerequisites or limitations on claims generally applicable to the plan’s beneficiaries.” University Of Wisconsin Hospitals And Clinics Authority v. Bank Of America Group Benefits Program, Defendant., No. 15-Cv-280-Bbc, 2016 Wl 2732201 (W.D. Wis. May 10, 2016), Judgment Entered Sub Nom. University Of Wisconsin Hospitals And Clinics Authorithy, Plaintiff, V. Bank Of America Group Benefits Program , Defendant., No. 15-CV-280-BBC, 2016 WL 2732823 (W.D. Wis. May 10, 2016) (Judge Barbara B. Crabb).

Eighth Circuit

•· In matter alleging that Plaintiff’s son, a beneficiary under an ERISA-governed health insurance policy, was wrongfully denied coverage for gender reassignment services and surgery, finding that the ACA claim fails because HealthPartners is an improper party to this action and the alleged injury is not traceable to it or redressable by it and Plaintiff lacks statutory standing. Brittany R. Tovar, Plaintiff, v. Essentia Health, Innovis Health, LLC, d/b/a Essentia Health W., & HealthPartners, Inc., Defendants., No. CV 16-100 (RHK/LIB), 2016 WL 2745816 (D. Minn. May 11, 2016) (Judge Richard H. Kyle).

Pension Benefit Claims

Seventh Circuit

•· The Mandatory Victims Restitution Act of 199 supersedes ERISA’s anti-alienation provision. United States v. Sayyed, No. 11 CR 625-1, 2016 WL 2622307 (N.D. Ill. May 9, 2016) (Judge Gary Scott Feinerman).

Plan Status

Fourth Circuit

•· Superior’s holiday pay policy is not an ERISA plan where it provides for payment of ordinary wages on five of the six most commonly observed holidays (omitting only New Year’s Day), as though an employee had worked a shift even if he got the day off; where there is no evidence that the policy is funded by a separately administered fund, nor is there any reason to believe that the policy was contingent upon anything beyond the occurrence of a specified holiday during an employee’s tenure. Joshua Hatfield v. Superior Coal Services, L.L.C., No. CV 15-14997, 2016 WL 2643029 (S.D.W. Va. May 6, 2016) (Judge John T. Copenhaver, Jr.).

Pleading Issues & Procedure

Fourth Circuit

•· In breach of fiduciary duty action brought by the Secretary of the DOL, granting the Secretary’s two procedural motions: (1) the Secretary’s Motion to Strike AmeriGuard’s Demand for a Jury Trial filed pursuant to Rule 12(f) of the Federal Rules of Civil Procedure; and (2) AmeriGuard’s Motion to Strike Silva’s Answer on Behalf of Other Defendants, also filed pursuant to Rule 12(f). Perez v. Silva, No. JKB-15-3484, 2016 WL 2625261 (D. Md. May 9, 2016) (Judge James K. Bredar).

Fifth Circuit

•· In pro se action seeking disgorgement of retirement funds, denying Plaintiff’s motion to disqualify defense counsel and granting Defendant’s motion to dismiss for lack of subject matter jurisdiction where Plaintiff failed to demonstrate his standing as a beneficiary under ERISA. Feingerts v. Sandra Mills Feingerts, No. 15CV2895NGGJCW, 2016 WL 2744812 (E.D. La. May 10, 2016) (Judge Nicholas G. Garaufis).

Eleventh Circuit

•· In pro se action asserting claims of medical malpractice and violations of various federal statutes including ERISA and HIPAA against numerous defendants, affirming district court’s dismissal of the action because Plaintiffs violated a previously entered permanent injunction requiring leave of court before filing a new civil action. Duwell v. Atlanta Med. Ctr., No. 15-14510, __F.App’x__, 2016 WL 2640575 (11th Cir. May 10, 2016) (Before HULL, WILSON and ROSENBAUM, Circuit Judges).

Retaliation Claims

Second Circuit

•· Denying motion for reconsideration of court’s decision to dismiss Plaintiff’s Amended Complaint and to deny leave to amend his claim for wrongful termination brought under ERISA Section 510, but reserving decision on Plaintiff’s request for leave to amend his claim for unpaid benefits under ERISA Section 502(a)(1)(B). Abe v. New York Univ., No. 14-CV-9323 (RJS), 2016 WL 2757761 (S.D.N.Y. May 11, 2016) (Judge Richard J. Sullivan).

Subrogation/Reimbursement Claims

Seventh Circuit

•· Entering Temporary Restraining Order enjoining and prohibiting Defendants, their agents, servants, employees, attorneys, and all persons acting in concert and participation with them, be enjoined as follows: (1) Defendants are restrained from spending, transferring, or dissipating all or any portion of the proceeds of a $500,000.00 settlement between Defendants and Roger Cone, Defendant in Case No. 08-L-168 in the Circuit Court of Madison Count, Illinois, in connection with a personal injury claim brought by Defendants against Roger Cone; and (2) Defendants are restrained from transferring, dissipating, or in any way disposing of any identifiable or traceable assets that Defendants may have acquired with any of the proceeds of such settlement. Trustees Of The Carpenters’ Health And Welfare Trust Fund Of St. Louis v. Lanny H. Darr, et al., No. 10-CV-0130-SMY-SCW, 2016 WL 2766615 (S.D. Ill. May 13, 2016) (Judge Staci M. Yandle).


Ninth Circuit

•· In lawsuit for long term disability benefits, denying Defendants’ Motion to Transfer the case to the Southern District of New York, where Defendant Standard is an insurance company that conducts business throughout the United States, including in both California and New York, the group policyholder is headquartered in northern California, and designated Santa Clara as “the situs of plan administration,” and where Plaintiff is a resident of New York but chose to file suit in the Northern District of California. Sharma v. Globalfoundries U.S., Inc., No. 5:15-CV-03631-EJD, 2016 WL 2742399 (N.D. Cal. May 11, 2016) (Judge Edward J. Davila).

Welfare Benefit Claims (Other)

Ninth Circuit

•· No abuse of discretion to deny legal defense fund benefits to Peace Officer terminated for off-duty associations where plan provided coverage only for any act or omission within the scope of employment. Plaintiff waived any objection to court’s consideration of Board’s final decision where he knowingly chose to stay the case pending the Fund’s final determination of the Plaintiff’s claim through the Fund’s administrative claims process. Cuevas v. Peace Officers Research Ass’n of California Legal Def. Fund, No. 14-CV-02540-BLF, 2016 WL 2754434 (N.D. Cal. May 12, 2016) (Judge Beth Labson Freeman).

Withdrawal Liability & Unpaid Contributions

Second Circuit

•· Granting summary judgment in favor of National Retirement Fund and the Fund’s manager in withdrawal liability action against Caesars Entertainment Corporation and Caesars Entertainment Resort Properties, LLC. Nat’l Ret. Fund v. Caesars Entm’t Corp., No. 15CV2048LAKJLC, 2016 WL 2621068 (S.D.N.Y. May 5, 2016) (Judge James L. Cott).

Seventh Circuit

•· Funds are entitled to the sum of $32,773.98 in contributions from Wright together with liquidated damages, costs and attorneys’ fees. Chicago Reg’l Council of Carpenters Pension Fund v. Wright Contstruction & Installation, Inc., No. 11 C 6928, 2016 WL 2755325 (N.D. Ill. May 12, 2016) (Judge Harry D. Leinenweber).

Eighth Circuit

•· Granting Motion for a Creditor’s Bill in Equity and to Pierce the Corporate Veil. Greater St. Louis Construction Laborers Welfare Fund, Et Al., V. Stika Concrete Contracting, Co., Inc., et al., No. 4:14-CV-01406 ERW, 2016 WL 2803229 (E.D. Mo. May 13, 2016) (Judge E. Richard Webber).

* 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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