In Gonzalez De Fuente v. Preferred Home Care Of New York LLC, et al., No. 20-3985-CV, __F.App’x__, 2021 WL 2308786 (2d Cir. June 7, 2021), Plaintiff-Appellants, certified home health aides who are participants in an employee benefit plan, sued their employers alleging violations of the New York State Home Care Worker Wage Parity Law, Public Health Law § 3614-c and ERISA Sections 406(a), 406(b), 502(a)(2), and 502(a)(3). Specifically, Plaintiffs allege that Defendants-Appellees retained millions of dollars in the plan’s captive insurance company, HealthCap Assurance, Inc., rather than using the funds to provide better health benefits for the plan participants. Relying on Thole v. U.S. Bank N.A, 140 S. Ct. 1615 (2020), the district court dismissed the Plaintiffs’ complaint for lack of standing on the ERISA claims and declined to exercise supplemental jurisdiction over the New York Wage Parity claim. Plaintiffs argued that Thole does not apply because the Defendants’ alleged misappropriated funds caused them concrete harm in the form of increased out-of-pocket costs and reduced coverage.
The Second Circuit agreed with the district court. It explained that to establish standing under Article III of the Constitution, a plaintiff must demonstrate (1) an injury in fact that is concrete, particularized, and actual or imminent, (2) that the injury was caused by the defendant, and (3) that the injury would likely be redressed by the requested judicial relief. ERISA plan fiduciaries must discharge their duties according to the instruments and documents of the plan. Plaintiffs do not have standing to bring their ERISA claims because they do not allege that they were denied any health benefits promised under the plan nor that the plan was insolvent or otherwise incapable of providing continuing benefits. Instead, Plaintiffs allege that HealthCap’s alleged retention of plan funds violates the Wage Parity Law which forbids them from retaining any “portion of the dollars spent or to be spent to satisfy the wage or benefit portion” of employee compensation. N.Y. Pub. Health Law § 3614-c(5)(a). But this does not support standing for Plaintiffs’ ERISA claims because they have received all their promised health benefits and are legally entitled to receive those benefits for the remainder of their employment. The court did not express any view on the Wage Parity claim, over which it does not exercise supplemental jurisdiction. Lastly, the court found that the district court did not err in denying the Plaintiffs leave to amend their complaint because they did not show they can cure their lack of standing.
*Please note that this blog is a summary of a reported legal decision and does not constitute legal advice. This blog has not been updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The case above was 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.
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