What do you do when a 277-page retirement plan fails to explicitly address a retiree’s specific situation? You give deference to the plan administrator’s reasonable interpretation of ambiguous plan terms. So says the Third Circuit majority in this week’s notable decision: Dowling v. Pension Plan For Salaried Employees of Union Pac. Corp. & Affiliates, No. 16-1977, __F.3d__, 2017 WL 4079460 (3d Cir. Sept. 15, 2017). In this case, Dowling became disabled by multiple sclerosis in 1997 when he was about 50 years old. He was forced to leave his high-ranking position of Vice President for Corporate Development of Union Pacific Corporation and began receiving company sponsored long term disability benefits. About fifteen years later, when Dowling turned 65, he eligible to draw on his Union Pacific retirement. The years on disability counted towards his Credited Service. Instead of calculating Dowling’s pension based on his last ten years of actual work (up through 1997), the plan administrator assumed that Dowling had worked and been paid his final base salary for his credited years of service up until his retirement. Dowling challenged this calculation and took the position that his pension payment should be based on his ten years of income prior to 1997, rather than a hypothetical stream of income through 2012. This would result in a much higher monthly payment because of Dowling’s past significant performance bonuses. The district court granted summary judgment to Union Pacific since its interpretation of the plan was not unreasonable.
Ultimately, the Third Circuit agreed with the district court. It “pass[ed] no judgment as to which proffered interpretation is best, because at least three aspects of the plan combine to make it ambiguous and each party’s interpretation reasonable.” Because the Union Pacific plan explicitly grants the administrator the ability to construe and interpret the plan’s provisions, the court will pay deference to the administrator’s decision. The court also found little indication that conflict of interest played a role in the decision-making. Here, the plan is silent as to how to calculate Final Average Compensation specifically for disabled participants. The court also found that the plan is ambiguous due to its structure, where the relevant plan terms are strewn throughout three Articles of the massive plan document. The court determined that there is nothing unreasonable about the plan administrator’s interpretation which harmonizes Credited Service with the calculation of Final Average Compensation. Judge Ambro penned a dissent explaining why the plan’s plain terms require the plan administrator to calculate Dowling’s Final Average Compensation by looking to the pay he received during the ten years before he became disabled.
Below is Roberts Disability Law’s summary of this past week’s notable ERISA decisions.
Bosley v. Metro. Life Ins. Co., No. C 16-00139 WHA, 2017 WL 4071346 (N.D. Cal. Sept. 14, 2017) (Judge Williams Alsup). In this matter where the court, after a bench trial, found that MetLife owed some, but not all, of the long term disability benefits Plaintiff sought, the court granted Plaintiff’s motion for attorneys’ fees and prejudgment interest. The court determined that the appropriate lodestar amount to award is158.9 hours multiplied by $650 per hour, or $103,285, plus an additional $1,820 for Plaintiff’s reply brief in support of the motion for attorney’s fees (less estimated travel time for the hearing). The court also awarded prejudgment interest at the rate of ten percent, compounded annually.
Breach of Fiduciary Duty
Bluelink Marketing LLC & Gerald Owens v. Declan Carney & Tagcade LLC a/k/a Pubvantage, No. 16-CV-7151 (JLC), __F.Supp.3d__, 2017 WL 4083602 (S.D.N.Y. Sept. 15, 2017) (Judge James L. Cott). The court granted Defendants’ motion to enforce a settlement agreement requiring Carney to make installment payments to Plaintiffs, and create an LLC to effectuate an ERISA election, among other provisions. Plaintiffs claim that Defendants made statements amounting to an anticipatory repudiation of the indemnification clause. The court found that Plaintiffs’ remedy is to bring a breach of contract action, not add terms to an already complete agreement. The court found that the “parties’ oral agreement recited on the record at the March settlement conference satisfied all of the necessary elements of contract formation. And, after a review of the Winston factors, the Court further finds that the parties intended their oral settlement at the conference to be binding absent a formal written agreement.”
Alexander Acosta v. Carlos Calderon, et al., No. CV ADC-16-0964, 2017 WL 4011962 (D. Md. Sept. 11, 2017) (Magistrate Judge A. David Copperthite). The court held that Calderon and CRC are de facto fiduciaries because they had discretionary authority and control over unremitted employee contributions. However, plan assets under ERISA include employee contributions, not unpaid mandatory employer prevailing wage contributions. The court granted the Secretary’s motion for summary judgment in part.
Mark Morin, et al. v. Essentia Health, et al., No. 16-CV-4397 (RHK/LIB), __F.Supp.3d__, 2017 WL 4083133 (D. Minn. Sept. 14, 2017) (Judge Leo I. Brisbois). The court denied Defendants’ motion to dismiss for failure to state a claim. Defendants argued that Plaintiffs have failed to plausibly allege a breach of fiduciary duties where their claims of breach rest solely on allegations that the Plans paid more in recordkeeping fees than what was available to a single plan of similar size. The court found that Defendants have not shown that as a matter of law, the 6-year statute of repose bars claims of a breach of a continuing duty that occurred prior to January 1, 2012. The court also found that the FAC sufficiently states a claim for breach of the fiduciary duties of prudence and loyalty and the duty to monitor.
Disability Benefit Claims
Fortier v. Hartford Life & Accident Ins. Co. et al., No. CV 16-CV-322-LM, 2017 WL 4011147 (D.N.H. Sept. 11, 2017) (Judge Landya B. McCafferty). Here, Plaintiff contends that the long term disability plan violates Titles I and III of the ADA and “New Hampshire anti-discrimination laws” by treating those suffering from mental disabilities differently than those suffering from physical disabilities. The court determined that Plaintiff has not stated a viable claim for relief since differential-benefits claims are not cognizable under the ADA.
Pransch v. Guardian Life Ins. Co. of Am., No. 16-10723, 2017 WL 4054174 (E.D. Mich. Sept. 14, 2017) (Judge George Caram Steeh). The court granted judgment for Defendant on Plaintiff’s short-term disability claim based on the Plan’s exclusion for covering work related injuries. Plaintiff’s medical records include multiple statements that Plaintiff was injured at work while lifting boxes.
Gilrane v. Unum Life Insurance Company of America & Unum Group Corporation, No. 1:16-CV-403, 2017 WL 4018853 (E.D. Tenn. Sept. 12, 2017) (Judge Travis R. McDonough). The court determined that Unum did not abuse its discretion in terminating Plaintiff’s long term disability benefits claim after it had been paying her benefits for over ten years due to the effects of chronic inflammatory demyelinating polyneuropathy. Although Unum conducted only a “paper” medical review of her claim, the court found that this review was sufficient where there was a lack of objective medical evidence supporting Plaintiff’s claimed limitations, inconsistences within her treating physicians’ opinions, and surveillance footage showing Plaintiff walking and driving without difficulty.
Hanson v. American Electric Service Corporation, et al., No. 2:16-CV-755, 2017 WL 4011201 (S.D. Ohio Sept. 12, 2017) (Judge George C. Smith). In this long term disability matter, the court determined that Prudential’s review of Plaintiff’s medical records was arbitrary and capricious because it emphasized the opinions of its reviewing professionals and failed to acknowledge or distinguish the opinions of Plaintiff’s treating medical professionals. Prudential’s reviewers acknowledge many of Plaintiff’s conditions and limitations but conclusorily assert that she can work. Prudential’s failure to conduct a physical examination of Plaintiff raises questions about the accuracy of the review process. Failure to give any deference to the findings of the SSA is concerning but does not require a finding of abuse of discretion; it is just one factor, along with others, that weigh in finding Prudential’s decision was arbitrary and capricious. The court found that the proper remedy is a remand to Prudential to reassess Plaintiff’s long term disability claim. Court grants in part Plaintiff’s motion for judgment on the administrative record.
Bilyeu v. Morgan Stanley Long Term Disability Plan, et al., No. 16-15254, __F.App’x__, 2017 WL 3980534 (9th Cir. Sept. 11, 2017) (Before: FISHER and BYBEE, Circuit Judges, and BARTLE, District Judge). The court affirmed the district court’s decision that Unum did not improperly terminate her long term disability benefits under the plan’s mental health limitation and that Unum’s counterclaim seeking to recover the value of benefits it paid to Bilyeu seeks impermissible legal, rather than equitable, relief. The court disagreed with Plaintiff that once a plan administrator aids and encourages a claimant to apply for Social Security disability benefits to reduce the amount of the plan’s benefits, the administrator is estopped from denying the benefits based on the same disability as approved by the SSA. The court also rejected Unum’s “ill-gotten gains” theory of recovery on its counterclaim since Plaintiff did not deliberately mislead Unum about her ability to work. Lastly, the court found that Unum has not shown that its claim for money had and received falls on the equitable side of restitution.
Progressive Spine & Orthopaedics, LLC v. Anthem Blue Cross Blue Shield, No. CV 17-536 (KM)(MAH), 2017 WL 4011203 (D.N.J. Sept. 11, 2017) (Judge Kevin McNulty). In this matter where Progressive alleges that Anthem underpaid on its claim for reimbursement for surgery performed on, and billed to, its patient, the court remanded to state court Progressive’s state-law complaint asserting three claims against Anthem: (1) breach of contract; (2) quantum meruit; and (3) unjust enrichment. The court found that its state-law claims are based on alleged independent promises or obligations of Anthem to Progressive itself, and Progressive is not suing in its derivative capacity as an assignee of the patient’s ERISA plan benefits. Complete preemption under Section 502(a) does not apply because Anthem fails to satisfy the first prong of the Pascack test (that Progressive is the type of party that can bring a claim under ERISA Section 502(a)(1)(B).
Exhaustion of Administrative Remedies
Fortier v. Hartford Life & Accident Ins. Co. et al., No. CV 16-CV-322-LM, 2017 WL 4011147 (D.N.H. Sept. 11, 2017) (Judge Landya B. McCafferty). Defendant moved to dismiss Plaintiff’s claim for long term disability benefits on the basis that she failed to submit an appeal of the denial of her claim within 180 days. The court determined that the appeals period in this case commenced on the date which Plaintiff received the July 17, 2013 letter notifying her of the future termination of her benefits, not on September 13, 2013, which is the date that benefits stopped being paid. The July letter explained in plain terms that she had to appeal within 180 days. The LTD certificate is not ambiguous about Plaintiff’s obligation to appeal. Lastly, the court deferred ruling on the application of New Hampshire’s “notice-prejudice” rule to this ERISA appeal until summary judgment. On this basis, the court denied Defendants’ motion to dismiss the claim for benefits.
Life Insurance & AD&D Benefit Claims
Metropolitan Life Insurance Co. v. Teixeira, et al., No. CV1607486KMJBC, 2017 WL 3951597 (D.N.J. Sept. 8, 2017) (Judge Kevin McNulty). The court granted MetLife’s request for interpleader relief in part. The court ordered that MetLife may deposit the disputed life insurance benefits with the court and the competing beneficiaries will be compelled to make claims to those benefits without the ability to initiate any other action against MetLife for the interplead funds. However, MetLife will not be dismissed from the case in the event that there are any independent counterclaims. The court granted MetLife’s attorneys’ fees and costs request of $4,572.40.
Metropolitan Life Ins. Co. v. Hoenstine, et al., No. 14-CV-11525-DT, 2017 WL 4036301 (E.D. Mich. Sept. 13, 2017) (Judge Denise Page Hood). Applying the factors identified by the Sixth Circuit to determine whether undue influence has been exerted in a given case, the court determined that the last designated beneficiary, whom the insured knew as a caregiver for six months before his death, exerted undue influence in obtaining beneficiary status. Thus, the life insurance benefits are awarded to the beneficiaries of the prior designation form.
Alette Jackson v. Samantha Parks, No. CV 17-14-M-DWM, 2017 WL 4077006 (D. Mont. Sept. 14, 2017) (Judge Donald W. Molloy). In this interpleader action, the court determined that the insured’s ex-spouse is the rightful beneficiary of the contested life insurance proceeds. This is because ERISA preempts Montana Code Annotated § 72-2-814, which would otherwise revoke Jackson’s interest in those funds when she and the insured divorced.
Medical Benefit Claims
Rittinger v. Healthy Alliance Life Insurance Company, No. 4:16-CV-639, 2017 WL 4071153 (S.D. Tex. Sept. 14, 2017) (Judge Keith P. Ellison). Defendants denied Plaintiff’s claim for Roux-en-Y gastric bypass surgery on the basis that it is an exclusion in the Plan. The court found that Defendants lacked substantial evidence to deny Plaintiff’s claim based on the Plan’s exception for nausea and vomiting. Defendants’ interpretation of the Plan contradicts the plain terms which provides coverage to surgeries addressing both obesity and the listed health conditions.
Michael P. et al. v. Aetna Life Insurance Company, et al., No. 2:16-CV-00439- DS, 2017 WL 4011153 (D. Utah Sept. 11, 2017) (Judge David Sam). In this dispute over payment of residential treatment benefits, the court found that the treatment center, New Haven, does not meet the Plan’s definition of a Residential Treatment Facility, even though it was licensed by the State of Utah as a residential facility for youth. Because Plaintiffs failed to obtain precertification as required, Aetna properly denied Plaintiffs’ claim for coverage. The court also found that Aetna’s denial does not violate the Parity Act.
Pension Benefit Claims
Dowling v. Pension Plan For Salaried Employees of Union Pac. Corp. & Affiliates, No. 16-1977, __F.3d__, 2017 WL 4079460 (3d Cir. Sept. 15, 2017) (Before: AMBRO, HARDIMAN, and VANASKIE, Circuit Judges). The court affirmed the district court’s judgment in favor of the Defendant Plan on the issue of whether the Plan administrator erred by calculating Plaintiff’s Final Average Compensation by looking to the pay he received during the ten years before he retired rather the ten years before he became disabled. The court explained that the plan’s terminology, silence, and structure render the relevant text ambiguous, and the mere existence of a conflict of interest alone is insufficient to raise skepticism of the plan administrator’s reasonable interpretation.
Bryant, et al., v. Community Bankshares, Inc., et al., No. 2:14-CV-1074-WKW, 2017 WL 4017884 (M.D. Ala. Sept. 12, 2017) (Judge W. Keith Watkins). The court determined that the Plan administrator’s three reasons for disallowing Plaintiffs’ proper elections to diversify their investments in their individual ESOP accounts do not survive review under the arbitrary-and-capricious standard. “The decisions conflict with the clear, specific, and mandatory terms of the Plan governing stock valuation, a participant’s right to make a diversification election, and a participant’s right to exercise a put option on distributed shares and, at the same time, render those mandatory terms nugatory. The decisions also construe the Plan in a manner that contravenes the governing federal regulations.”
Peck v. SELEX Sys. Integration, Inc., No. CV 13-00073 (RJL), 2017 WL 3995529 (D.D.C. Sept. 8, 2017) (Judge Richard J. Leon). The court denied Plaintiff’s motion for reconsideration of its earlier judgment that the Administrative Committee reasonably construed and applied the deferred compensation Plan when it determined that his termination had been for cause. Plaintiff’s motion “is largely a repetition of the arguments raised in his original motion for summary judgment” and provided the court no reason to amend its earlier judgment.
Med. Soc’y of State of New York v. UnitedHealth Grp. Inc., No. 16-CV-5265 (JPO), 2017 WL 4023350 (S.D.N.Y. Sept. 11, 2017) (Judge J. Paul Oetken). In this matter where Plaintiffs allege that United has systematically violated the terms of its health insurance plans by refusing to pay the facility fees charged by out-of-network office-based surgery practices, the court granted in part and denied in part United’s motion to dismiss for failure to state a claim. Plaintiffs have plausibly alleged that United has refused to pay out-of-network OBS facility fees in violation of the terms of Plaintiffs’ United Plans but only some of the Physician Plaintiffs hold valid assignments from their patients. At this stage, the court found that the Association Plaintiffs survive the motion to dismiss because it is premature to predict conclusively that the Association Plaintiffs’ claims will require an unacceptable amount of individualized participation.
Prof’l Orthopaedic Assocs., P.A. v. Horizon Blue Cross Blue Shield of New Jersey, No. CV144731SRCCLW, 2017 WL 4023286 (D.N.J. Sept. 13, 2017) (Judge Stanley R. Chesler). The court denied the provider’s motion for summary judgment on its claim for benefits under ERISA Section 502(a)(1)(B). The court determined that Defendant’s reimbursement for services was calculated based on its determination of “150% of what would have been paid under Medicare,” which was consistent with the explicit, unambiguous terms of the Plan and based upon the actual rates of reimbursement for the applicable services under Medicare.
Liebman v. Metro. Life Ins. Co., No. 16-17440, __F.App’x__, 2017 WL 3971354 (11th Cir. Sept. 8, 2017) (Before MARTIN, JORDAN, and ROSENBAUM, Circuit Judges). The court affirmed the district court’s grant of summary judgment to MetLife on Plaintiff’s ERISA Section 510 claim. It held that the district court did not abuse its discretion in applying the sham affidavit rule to strike facts in Plaintiff’s declaration that were contrary to his deposition testimony. It also held that the district court did not abuse its discretion in denying Plaintiff’s Rule 59 motion, which was based in part on evidence discovered several months before the court granted summary judgment but was not presented to the court until after it issued its decision.
Statute of Limitations
Von Maack v. Wyckoff Heights Medical Center, No. 15 CIV. 3951 (ER), 2017 WL 4011395 (S.D.N.Y. Sept. 11, 2017) (Judge Edgardo Ramos). The court concluded that Plaintiff’s medical impairments were not sufficiently severe to warrant equitable tolling. She failed to allege any facts suggesting that her illnesses rendered her unable to comprehend her legal rights or prevented her from protecting or asserting her claims. Because Plaintiff failed to sufficiently plead facts warranting the application of equitable tolling, her EPA, FMLA, and ERISA claims are dismissed as time-barred with prejudice.
LEAVE YOUR MESSAGE
We know how to get your insurance claim paid. Call today at: