Justia Civil Procedure Opinion SummariesArticles Posted in ERISA
Bristol SL Holdings, Inc. v. Cigna Health and Life Insurance Co.
Through a bankruptcy proceeding, Bristol became the successor-in-interest to Haven, an accredited mental-health and substance-abuse treatment center that regularly serviced patients insured by Cigna. Bristol alleged that Cigna violated the Employee Retirement Income Security Act of 1974 (ERISA) and state law by denying Haven’s claims for reimbursement for services provided. Haven was out-of-network for Cigna’s insureds. The district court dismissed Bristol’s ERISA claim, as an assignee of a healthcare provider, for lack of derivative standing, or lack of authority to bring a claim under ERISA, 29 U.S.C. 1132(a)(1)(B).The Ninth Circuit reversed. Under ERISA, a non-participant health provider cannot bring claims for benefits on its own behalf but must do so derivatively, relying on its patients’ assignments of their benefits claims. Other assignees also may have derivative standing if extending standing would align with the goal of ERISA. Refusing to allow derivative standing for Bristol would create serious perverse incentives that would undermine the goal of ERISA. Denying derivative standing to health care providers would harm participants or beneficiaries because it would discourage providers from becoming assignees and possibly from helping beneficiaries who were unable to pay up-front. View "Bristol SL Holdings, Inc. v. Cigna Health and Life Insurance Co." on Justia Law
Sheet Metal Workers’ Health & Welfare Fund of North Carolina v. Law Office of Michael A. DeMayo, LLP
Simpson's insurer, the Fund, paid Simpson’s medical costs ($16,225) arising from a car accident. Simpson hired the Firm to represent her in a personal injury suit. The Fund maintained a right of subrogation and reimbursement. Simpson settled her suit for $30,000. After depositing the settlement funds in a trust account, the Firm paid $9,817.33 to Simpson, $1,000.82 to other lienholders, and $10,152.67 to its own operating account for fees and expenses, offering the Fund $9,029.18. The Fund sued under the Employee Retirement Income Security Act (ERISA) section 502(a)(3), claiming an equitable lien of $16,225. The Firm issued a $9,029.18 check to the Fund, exhausting the settlement funds.The district court issued a TRO requiring the Firm to maintain $7,497.99 in its operating account. The Firm argued that the Fund sought a legal remedy because the Firm no longer possessed the settlement funds; ERISA 502(a)(3) only authorizes equitable remedies. The Fund argued that it sought an equitable remedy because the settlement funds were in the Firm’s possession pursuant to the TRO and cited the lowest intermediate balance test: a defendant fully dissipates a plaintiff’s claimed funds (by spending money from the commingled account to purchase untraceable items) only if the balance in the commingled account dipped to $0 between the date the defendant commingled the funds and the date the plaintiff asserted its right to the funds. The district court granted the Firm summary judgment, reasoning that the Firm dissipated the settlement funds before the TRO issued; the Fund could not point to specific recoverable funds held by the Firm and sought a legal remedy. The Sixth Circuit affirmed, concluding that no issues had been preserved for review. View "Sheet Metal Workers' Health & Welfare Fund of North Carolina v. Law Office of Michael A. DeMayo, LLP" on Justia Law
Card v. Principal Life Insurance Co.
Card was diagnosed with “chronic lymphocytic leukemia,” which can cause fatigue. Card alleges her worsening fatigue left her unable to perform her job as a night-shift nurse. She applied for disability benefits under an Employee Retirement Income Security Act (ERISA) plan administered by Principal, which denied her requests for short-term, long-term, and total disability benefits. Card sued. The district court granted Principal summary judgment. The Sixth Circuit reversed and remanded the case to Principal for further proceedings. Principal granted Card short-term disability benefits but requested additional information for her other claims. Card then filed motions in the district court, seeking attorney’s fees and asking the court to reopen the case because Principal had not reached a benefits decision for her other claims within the 45 days allegedly required by ERISA . The district court issued a “virtual order” on its docket, denying the motions for lack of jurisdiction.The Sixth Circuit first held that it had jurisdiction to review that order then vacated and remanded to the district court. A district court retains jurisdiction over a beneficiary’s ERISA suit during the remand. "As in every other ERISA case in this procedural posture," the prior decision remanded to the district for it to retain jurisdiction while Principal engaged in the new benefits determination. View "Card v. Principal Life Insurance Co." on Justia Law
Ramos v. Banner Health
A class of employees who participated in Banner Health, Inc.’s 401(k) defined contribution savings plan accused Banner and other plan fiduciaries of breaching duties owed under the Employee Retirement Income Security Act (ERISA). A district court agreed in part, concluding that Banner had breached its fiduciary duty to plan participants by failing to monitor its recordkeeping service agreement with Fidelity Management Trust Company: this failure to monitor resulted in years of overpayment to Fidelity and corresponding losses to plan participants. During the bench trial, the employees’ expert witness testified the plan participants had incurred over $19 million in losses stemming from the breach. But having determined the expert evidence on losses was not reliable, the court fashioned its own measure of damages for the breach. Also, despite finding that Banner breached its fiduciary duty, the district court entered judgment for Banner on several of the class’s other claims: the court found that Banner’s breach of duty did not warrant injunctive relief and that Banner had not engaged in a “prohibited transaction” with Fidelity as defined by ERISA. The class appealed, arguing the district court adopted an improper method for calculating damages and prejudgment interest, abused its discretion by denying injunctive relief, and erred in entering judgment for Banner on the prohibited transaction claim. Finding no abuse of discretion or other reversible error, the Tenth Circuit affirmed the district court in each instance. View "Ramos v. Banner Health" on Justia Law
Baker v. Iron Workers Local 25
The Labor Management Relations Act forbids employers from directly giving money to unions, 29 U.S.C. 186(a); an exception allows an employer and a union to operate a trust fund for the benefit of employees. Section 186(c)(5)(B) requires the trust agreement to provide that an arbitrator will resolve any “deadlock on the administration of such fund.” Several construction companies and one union established a trust fund to subsidize employee vacations. Six trustees oversaw the fund, which is a tax-exempt entity under ERISA 26 U.S.C. 501(c)(9). A disagreement arose over whether the trust needed to amend a tax return. Three trustees, those selected by the companies, filed suit, seeking authority to amend the tax return. The three union-appointed trustees intervened, arguing that the dispute belongs in arbitration.The court agreed and dismissed the complaint. The Sixth Circuit affirmed. While ERISA plan participants or beneficiaries may sue for a breach of statutory fiduciary duty in federal court without exhausting internal remedial procedures, this complaint did not allege a breach of fiduciary duties but rather alleges that the employer trustees’ own fiduciary duties compelled them to file the action to maintain the trust’s compliance with tax laws. These claims were “not directly adversarial to the [union trustees] or to the Fund.” View "Baker v. Iron Workers Local 25" on Justia Law
In re Becker
The Ninth Circuit denied a petition for a writ of mandamus challenging the district court's order transferring an action under the Employee Retirement Income Security Act (ERISA) from the Northern District of California to Minnesota federal court pursuant to a forum selection clause in a retirement plan. The panel held that mandamus relief was not warranted because the district court did not clearly err in transferring the case. The panel explained that courts are in near universal agreement: ERISA does not bar forum selection clauses. Therefore, the panel found no reason to disagree with their well-reasoned conclusion. In this case, the plan contained a forum selection clause and the district court properly enforced that clause. View "In re Becker" on Justia Law
Atkins v. CB&I, LLC
Plaintiffs, five former employees of CB&I who worked as laborers on a construction project in Louisiana, quit before the project ended and thus made them ineligible to receive the Project Completion Incentive under the term of that plan. Plaintiffs filed suit in state court seeking the bonus for the period they did work, arguing that making such employees ineligible for bonuses amounts to an illegal wage forfeiture agreement under the Louisiana Wage Payment Act. LA. STAT.ANN. 23:631, 23:632, 23:634. After removal to federal court, the district court concluded that the incentive program was an Employee Retirement Income Security Act (ERISA) plan because it required ongoing discretion and administration in determining whether a qualifying termination took place.The Fifth Circuit concluded that the employee benefit at issue—a bonus for completing the project—is not an employee benefit plan under ERISA. The court explained that the plan involves a single and simple payment; determining eligibility might require the exercise of some discretion, but not much; and the plan lacks the complexity and longevity that result in the type of "ongoing administrative scheme" ERISA covers. Therefore, there is no federal jurisdiction over this action. The court vacated and remanded for the case to be returned to state court. View "Atkins v. CB&I, LLC" on Justia Law
Wilcox v. Georgetown University
Participants in Georgetown University retirement plans sued the University and individual plan fiduciaries, seeking to bring individual and representative class action claims for breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA) 29 U.S.C. 1001–1461. They alleged that the plans paid excessive fees for record-keeping services and included investment options that consistently underperformed their benchmarks. In January 2019, the district court dismissed the complaint without prejudice, citing Article III standing as to some aspects of plan management, such as the inclusion of investment options neither plaintiff had selected. Regarding the duty of prudence, the court found that the excessive recordkeeping fees allegations provided no factual support for the assertion that the plans should pay only $35/year per participant. In May, the court denied as untimely their motion for leave to file an amended complaint.The D.C. Circuit vacated. Dismissal of a complaint without prejudice is generally not a final appealable order. Exceptions that apply where the record clearly indicates that the district court has separated itself from the case do not apply to this case. The January Order did not enter a final, appealable judgment; the district court erred when considering the motion to amend the complaint in refusing to apply the Rule 15(a)(2) standard, rather than the more restrictive standards under Rules 59(e) and 60(b). View "Wilcox v. Georgetown University" on Justia Law
Hendrix v. United Healthcare Insurance Company of the River Valley
Kathleen Hendrix ("Hendrix"), as administratrix of the estate of Kenneth Morris Hendrix, deceased, appeals a circuit court judgment dismissing Hendrix's medical-malpractice wrongful-death claim against United Healthcare Insurance Company of the River Valley ("United"). Kenneth, who was covered by a health-insurance policy issued by United, died after United refused to pay for a course of medical treatment recommended by Kenneth's treating physician. The trial court determined that Hendrix's claim was preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), because the claim "relate[s] to" the ERISA-governed employee-benefit plan pursuant to which United had issued Kenneth's health-insurance policy. In October 2015, Kenneth was injured in an automobile accident. His physician recommended Kenneth be admitted to an inpatient-rehabilitation facility. Hendrix claimed United "imposed itself as [Kenneth's] health care provider, took control of [Kenneth's] medical care, and made a medical treatment decision that [Kenneth] should not receive further treatment, rehabilitation, and care at an inpatient facility." Instead, Hendrix contended United made the decision Kenneth should have been discharged to his home to receive a lower quality of care than had been ordered by his physicians. Kenneth died on October 25, 2015, due to a pulmonary thromboembolism, which, the complaint asserts, would not have occurred had United approved inpatient rehabilitation. The Alabama Supreme Court concurred with the circuit court that Hendrix's claim related to an ERISA-governed benefit plan, and thus preempted by the ERISA statute. View "Hendrix v. United Healthcare Insurance Company of the River Valley" on Justia Law
Jander v. International Business Machines Corp.
The judgment the Second Circuit entered in its initial opinion in this appeal was vacated by the Supreme Court and remanded for reconsideration. The court reinstated the judgment.Plaintiffs, participants in IBM's employee stock option plain filed suit alleging that the plan's fiduciaries breached their duty of prudence under the Employee Retirement Income Security Act (ERISA). The district court granted defendants' motion to dismiss; this court reversed and remanded; and then the Supreme Court granted defendants' petition for certiorari, which presented the question whether a plaintiff can state a duty-of-prudence claim based on generalized allegations that the harm of an inevitable disclosure of an alleged fraud generally increases over time. The Supreme Court also granted the government's motion to participate in oral argument as an amicus curiae in support of neither party, so that it could present the views of the Department of Labor and the Securities and Exchange Commission. After oral argument, the Supreme Court vacated the judgment and remanded, explaining that defendants' and the government's post-certiorari arguments primarily addressed matters that fell beyond the question presented to the Supreme Court, and that had not been raised before this court.The court held that the arguments raised in the supplemental briefs either were previously considered by this court or were not properly raised. To the extent that the arguments were previously considered, the court will not revisit them. To the extent that they were not properly raised, they have been forfeited, and the court declined to entertain them. Accordingly, the court reversed the district court's judgment and remanded for further proceedings. View "Jander v. International Business Machines Corp." on Justia Law