ERISA Watch – Parent Has Standing under the Affordable Care Act to Challenge Denial of Son’s Gender Reassignment Surgery

This week’s notable decision is Tovar v. Essentia Health, No. 16-3186, __F.3d__, 2017 WL 2259632 (8th Cir. May 24, 2017).  In Tovar, Plaintiff is an employee who filed suit against her employer and the administrator of the employer’s self-insured health plan under Title VII, Minnesota Human Rights Act (MHRA), and the Affordable Care Act (ACA) for the denial of coverage for gender reassignment surgery for her son.  The district court granted Defendants’ motion to dismiss and Plaintiff appealed.  The Eighth Circuit Court of Appeals held that the protections against discrimination against employees on basis of sex under Title VII and the MHRA did not extend to the alleged discrimination against Plaintiff because of her son’s sex, and, however, Plaintiff does have standing to bring a claim under the ACA.  The court found that Plaintiff had Article III standing to challenge the denial of gender reassignment surgery benefits because she alleges that Defendants’ discriminatory conduct denied her the benefits of her insurance policy and forced her to pay out of pocket for some of her son’s prescribed medication.  The court remanded to the district court to determine in the first instance whether Plaintiff’s claim against HealthPartners, Inc. and HPAI should be dismissed for failure to state a claim under the ACA.

It was a light week on ERISA decisions so enjoy a quick skim of the rest of the notable decisions.

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

Attorneys’ Fees

Fifth Circuit

Unum Life Insurance Company Of America v. Mohedano, et al, No. 3:13-CV-446, 2017 WL 2226613 (S.D. Tex. May 19, 2017) (Judge George C. Hanks, Jr.).  Although Unum was the successful party in this litigation, the court exercised its discretion to deny Unum attorneys’ fees for time expended while litigating the interpleader of life insurance benefits and the appeal of its denial of accidental death and dismemberment (“AD&D”) benefits.

Eighth Circuit

Chesterfield Spine Center, LLC v. Gilster-Mary Lee Corp., No. 4:15 CV 1169 RWS, 2017 WL 2213738 (E.D. Mo. May 19, 2017) (Judge Rodney W. Sippel).  The court granted Defendant’s uncontested motion for attorneys’ fees in the amount of $19,614.77.  Although Plaintiff did not act in bad faith, “it is a sophisticated ERISA plaintiff which has brought many of these types of cases and is certainly familiar with the statutory exhaustion requirements and its obligation to timely appeal the denial of benefits, yet it chose to prosecute this case despite its failure to do so.”

Disability Benefit Claims

Seventh Circuit

Miller v. The Hartford Life And Accident Insurance Co., & Springleaf Finance, Inc. Disability Plan, No. 116CV00166TWPDML, 2017 WL 2214938 (S.D. Ind. May 19, 2017) (Judge Tanya Walton Pratt).  The court granted Defendants’ motion for administrative remand and to stay proceedings in order for Hartford to consider the first two pages of a three-page Physician’s Statement that were not considered by Hartford (or included in its claim file) due to a scanning error of its vendor, Xerox.  The court noted that Plaintiff’s objection to the remand on the basis that Hartford was negligent in failing to notice the missing pages is immaterial to the issue of whether Hartford failed to provide Plaintiff a full and fair review by not considering the two pages.

Ninth Circuit

Hart v. Unum Life Insurance Company of America, No. 15-CV-05392-TEH, 2017 WL 2265395 (N.D. Cal. May 24, 2017) (Judge Thelton E. Henderson).  On de novo review of a long term disability benefit denial for a former nurse with degenerative disc disease, the court granted Plaintiff’s motion for judgment.  The court struck Plaintiff’s Public Report of the Market Conduct Examination of the Claims Practices of Unum and the California Settlement Agreement (“CSA”) from the record since consideration of Unum’s past claim practices is not necessary for the court’s de novo review.  Since Unum had been paying Plaintiff’s benefits for almost eight years, Unum would be expected to provide some evidence of Plaintiff’s medical progression at the time it terminated her benefits.  Unum did not grant sufficient weight to Plaintiff’s history of pain.  Medical reviewing doctors who did not evaluate Plaintiff in person are entitled to lesser weight.

Gonda, Jr. v. Permanente Medical Group, Inc. In Its Capacity As Plan Administrator; Permanente Medical Group, Inc. Long Term Disability Plan For Physicians, No. 15-16484, __F.App’x__, 2017 WL 2241824 (9th Cir. May 22, 2017) (Before: W. FLETCHER and TALLMAN, Circuit Judges, and HUCK, District Judge).  The court affirmed the district court’s determination that Plaintiff waived his ERISA long term disability claim against Defendants because, as part of an employment arbitration proceeding, he signed a broad release of claims and expressly waived his right to bring any and all claims and causes of action arising under ERISA against TPMG and its related persons and entities.

Tenth Circuit

Chen v. Centurylink, as Sponsor & Adm’r of the CenturyLink Employee Benefit Plan, No. 15-CV-01651-MSK-KMT, 2017 WL 2199008 (D. Colo. May 18, 2017) (Judge Marcia S. Krieger).  Although Defendant paid Plaintiff long term disability benefits for 19 years, it was not arbitrary and capricious to terminate those benefits after Defendant had three doctors examine medical records and they concluded that her medical conditions did not prevent her from working a sedentary job.  The court also noted that some doctor visit reports omit any reference to severe fatigue and do not suggest Plaintiff is unable to engage in daily activities or travel.  The Social Security disability award was based on Plaintiff’s condition back in 1996 so it was not arbitrary for Standard to refuse to give more weight to the Social Security award.

Discovery

Sixth Circuit

Card v. Principal Life Insurance Company, No. CV 5:15-139-KKC, 2017 WL 2260695 (E.D. Ky. May 23, 2017) (Judge Karen K. Caldwell).  In this case involving a denial of long term disability benefits, the court denied Plaintiff’s motion to enforce a document subpoena since Federal Rule of Civil Procedure 45(d)(2)(B)(i) provides that “[a]t any time, on notice to the commanded person, the serving party may move the court for the district where compliance is required for an order compelling production or inspection.”  Here, the subpoena to MES Peer Review Services designated a law office in Massachusetts as the place of compliance.  Thus, the motion to enforce should be brought in the U.S. District Court for the District of Massachusetts.

ERISA Preemption

Third Circuit

Johnson-Barbato v. Anthem Blue Cross Blue Shield, No. CV 16-05270 (JMV), 2017 WL 2290825 (D.N.J. May 25, 2017) (Judge John Michael Vazquez).  Plaintiff alleges that Defendant refused to make medical claim payments as required by a group health plan issued to her through her employer.  The court concluded that Plaintiff’s claims for breach of contract and breach of the covenant of good faith and fair dealing are completely preempted by Section 502(a) of ERISA.

Life Insurance & AD&D Benefit Claims

Sixth Circuit

Wolf v. Causley Trucking, Inc, et al., No. 15-CV-12530, 2017 WL 2240753 (E.D. Mich. May 23, 2017) (Judge Thomas L. Ludington).  The Magistrate Judge did not err in rejecting Plaintiff’s claim that Defendants wrongfully commingled the life insurance proceeds with the general assets of Causley trucking since there is no requirement that the assets of an employee benefit plan be held in trust where the assets of the plan consist of insurance contracts or policies.  29 C.F.R. § 2550.403b-1.  The court also determined that the benefits awarded to Plaintiff were rational in light of the plan’s provisions.

Smith v. Metro. Life Ins. Co., No. 16-13737, 2017 WL 2213574 (E.D. Mich. May 19, 2017) (Judge Denise Page Hood).  The court affirmed MetLife’s decision to deny AD&D benefits where the policy excludes any death that is caused or contributed to by physical illness as well as the voluntary intake of any poison, and the insured died as a result of ingesting washer fluid in craving for alcoholic beverage.  The insured’s liver and heart disease also contributed to her passing.

Medical Benefit Claims

Eighth Circuit

Tovar v. Essentia Health, No. 16-3186, __F.3d__, 2017 WL 2259632 (8th Cir. May 24, 2017) (Before BENTON, BEAM, and MURPHY, Circuit Judges).  In this case where Plaintiff challenges the denial of gender reassignment surgery benefits for her son with gender dysphoria, the court determined that she alleged an injury cognizable under Article III because she contends that the Defendants’ discriminatory conduct denied her the benefits of her insurance policy and forced her to pay out of pocket for some of her son’s prescribed medication.  The court remanded to the district court to determine in the first instance whether Plaintiff’s claim against HealthPartners, Inc. and HPAI should be dismissed for failure to state a claim under the Affordable Care Act.

Pleading Issues & Procedure

Third Circuit

Robinson v. William James Derrah, Sr., No. CV 16-06323, 2017 WL 2242865 (E.D. Pa. May 23, 2017) (Judge Gerald J. Pappert).  In this matter where a non-attorney in prison attempted to file a complaint on behalf of his mother for pension benefits for his deceased father, the court dismissed the complaint because a power of attorney confers the authority to make certain legal decisions on behalf of another but does not authorize the holder to act as an attorney in court.

Seventh Circuit

George v. CNH Health & Welfare Benefit Plan, et al., No. 16-CV-1678-JPS, 2017 WL 2241513 (E.D. Wis. May 22, 2017) (Judge J.P. Stadtmueller).  In this matter where Plaintiffs allege that Defendants used improper payment methodology in processing health insurance claims, the court, following Moyle, Silva, and New York State Psychiatric Association, denies Defendants’ motion to dismiss as it relates to “duplicative” claims.

Tenth Circuit

Blough v. Rural Electric Coop, Inc., No. 16-6176, __F.App’x__, 2017 WL 2260924 (10th Cir. May 23, 2017) (Before BRISCOE, HOLMES, and PHILLIPS, Circuit Judges).  In this dispute involving a claim for ERISA Plan benefits, the court affirmed the district court’s dismissal of the action and denial of Rule 60 relief from judgment where Plaintiff’s attorney did not file a response to the dismissal motion because the attorney’s father was extremely ill and later hospitalized, defendants’ counsel had agreed to a two-week extension, and the attorney is a solo practitioner whose only legal assistant was also a family member.  The attorney did not seek an extension of time from the court.  The Tenth Circuit held that denial of reconsideration was not an abuse of discretion.

Statute of Limitations

Second Circuit

Moses v. Revlon Inc., No. 16-2960-CV, __F.App’x__, 2017 WL 2274287 (2d Cir. May 24, 2017) (PRESENT:  Barrington D. Parker, Richard C. Wesley, Christopher F. Droney, Circuit Judges).  In this matter where Plaintiff alleged that she should have begun receiving increased benefits under a pension belonging to her late husband in 2004, the court affirmed the district court’s determination this this claim is time-barred.  Plaintiff had sufficient information that she should have known of the miscalculation when it initially occurred in 2004.  The six-year statute of limitation began running in 2004 but she did not bring suit until 2015, long after the statute of limitation had expired.

Eleventh Circuit

Webb v. Liberty Mutual Insurance Company, No. 16-14565, __F.App’x__, 2017 WL 2297615 (11th Cir. May 25, 2017) (Before MARTIN, JILL PRYOR, and ANDERSON, Circuit Judges).  The life insurance policy’s contractual limitations period is unambiguous and required Plaintiff to file her action within one year and thirty days of the loss, which she did not do.  However, the contractual limitations period would be unreasonable in Plaintiff’s case if she reasonably relied upon Liberty’s written statement that it was “conducting further review.”  Because her reliance on this statement was a factual question the district court did not evaluate, the court vacated the district court’s determination that the claim is time-barred and remanded for the court to make the determination in the first instance.

Statutory Penalties & Notice Violations

Eleventh Circuit

Valdivieso v. Cushman & Wakefield, Inc., No. 8:17-CV-118-T-23JSS, 2017 WL 2191053 (M.D. Fla. May 18, 2017) (Judge Steven D. Merryday).  Plaintiff states a plausible claim for violation of 29 C.F.R. § 2590.606–4(b)(4)(viii) where the COBRA notice states that coverage may generally last for up to 18 months but did not include the day on which coverage ends.  Plaintiff also states a plausible claim for violation of 29 C.F.R. § 2590.606–4(b)(4)(xii) because Cushman & Wakefield’s notice neither includes a payment address nor duplicates the model notice.