- In Pollitt v. Health Care Serv. Corp., 558 F.3d 615 (7th Cir. Mar. 10, 2009), cert. granted (Oct. 13, 2009), the Seventh Circuit vacated and remanded the district court’s finding that the Federal Employees Health Benefits Act (“FEHBA”) preempted a participant’s claim that Health Cares Services Corporation (“HCSC”) acted in bad faith by terminating her son’s coverage and seeking reimbursement of benefits previously provided. In so ruling, the court reasoned that removal under the “complete preemption” doctrine was not warranted because federal law does not completely occupy the field of health insurance coverage for federal workers. The Seventh Circuit remanded the case to the district court for evidentiary proceedings to determine: (i) whether HCSC was merely following a directive from the Department of Labor to terminate Ms. Pollitt’s son’s benefits, thereby entitling the matter to jurisdiction under the federal officer removal statute, 28 U.S.C. § 1442(a)(1); or (ii) whether HCSC was acting on its own initiative and thus appropriately sued in state court. The Supreme Court granted HCSC’s petition for certiorari on October 13, 2009 and agreed to consider the propriety of the Seventh Circuit’s decision with respect to applicability of the complete preemption doctrine and the federal officer removal statute. Oral argument before the Supreme Court is scheduled for March 3, 2010.
- On January 19, 2010, the U.S. Supreme Court declined plaintiffs’ petition for certiorari in Hecker v. Deere & Co., 556 F.3d 575 (7th Cir. 2009), rehearing denied, 569 F.3d 708, cert. denied, 2010 U.S. LEXIS 675 (U.S. Jan. 19, 2010). (The Seventh Circuit’s decision was discussed in the March 2009 Newsletter.) Several organizations, including the AARP, had filed amici briefs on behalf of plaintiffs, arguing, among other things, that: (i) it is inherently imprudent for fiduciaries of multi-billion dollar 401(k) plans to only offer retail mutual funds; (ii) the Seventh Circuit improperly expanded the scope of ERISA § 404(c); and (iii) the Seventh Circuit failed to give proper deference to DOL’s preamble.
- In Richards v. Hewlett-Packard Corp., No. 08-2538 (1st Cir. Jan. 19, 2010), the First Circuit reviewed de novo the decision of the long-term disability plan administrator’s determination to deny plaintiff benefits after ten years. The court agreed with the plan administrator and granted defendant’s motion for summary judgment. In so ruling, the court held that: (i) plaintiff’s proffered physician’s report should not be given controlling weight in the face of other medical reports; (ii) the Social Security Agency’s determination that plaintiff was disabled should only be given a high degree of deference in the rare case where the statutory criteria for disability are identical to the plan’s criteria, which was not the case here; and (iii) Prudential was not required to physically examine claimants merely because it had the right to do so, and could instead rely on medical records.
- In Cusson v. LibertyLife Assurance Co. of Boston, 2008 WL 118384 (1st Cir. Jan. 14, 2010), the First Circuit, applying MetLife Insurance Co. v. Glenn, 128 S. Ct. 2343 (2008), recognized that defendant LibertyLife was operating under a structural conflict of interest by virtue of both paying for and determining claims for disability benefits. The First Circuit declined to accord the conflict any special weight in determining whether LibertyLife’s decision to deny plaintiff benefits was an abuse of discretion, however, ruling that none of the facts or circumstances surrounding LibertyLife’s determination established that “Liberty’s decision was improperly influenced by its structural conflict of interest.” In so holding, the First Circuit rejected the plaintiff’s argument that it was LibertyLife’s “burden to show that the conflict did not affect its decision[.]” Rather, it stated, as with “any other aspect of an ERISA claim for improper denial of benefits . . ., [the plaintiff] bears the burden of showing that the conflict influenced Liberty’s decision.”
- In Dandridge v. Raytheon Co., 2010 U.S. Dist. LEXIS 5854 (D.N.J. Jan. 26, 2010), the court rejected plaintiff’s argument that MetLife Insurance Co. v. Glenn permits unlimited discovery in ERISA benefit claims. In so ruling, the court concluded that: (i) plaintiff was not entitled to discovery concerning the merits of defendants’ decision to deny benefits; (ii) plaintiff was entitled to discovery concerning defendants’ alleged conflict of interest; and (iii) plaintiff was not entitled to discovery concerning the alleged procedural irregularities because none of the alleged irregularities provided “a sufficient indicia of fraud, bias or mistake to permit unlimited discovery.”
- ¦In Skinner v. Northrop Grumman Retirement Plan B, 2010 U.S. Dist. LEXIS 6591 (C.D. Cal. Jan 26, 2010), the court granted defendants’ motion for summary judgment on plaintiffs’ claim for additional retirement benefits. In so ruling, the court determined that plaintiffs failed to demonstrate “reasonable reliance” on the 1998 SPD, which plaintiffs contended did not provide them sufficient notice of the plan’s offset provision. Although the court acknowledged that the Ninth Circuit had not directly ruled that plaintiffs must demonstrate “reasonable reliance” to recover benefits under a defective SPD, the court determined that a strict liability standard was inappropriate because it may cause employers to reduce or eliminate benefits.
- ¦In Zappley v. The Stride Rite Corp., No. 09-198 (W.D. Mich. Jan. 13, 2010), the district court concluded that a pro se plaintiff’s Section 510 claim was barred by the statute of limitations, but allowed his claim for benefits under Section 502(a)(1)(B) to proceed. With respect to his Section 510 claim, the court applied the three-year statute of limitations applicable to Michigan employment discrimination or wrongful termination claims, as Section 510 does not contain its own statute of limitations, and concluded that plaintiff’s claim accrued in 1987 when he allegedly was wrongfully discharged in order to preclude his plan benefits from vesting. The court allowed plaintiff’s claim for benefits to proceed, however, because, according to the court, the failure to exhaust administrative remedies is an affirmative defense, the existence of which did not appear on the face of plaintiff’s complaint.
- In Staelens v. Staelens, 2010 WL 94518 (D. Mass. Jan. 11, 2010), a district court declined to remand to state court an action brought by the estate of a deceased participant, upon ruling that a waiver by the participant’s ex-wife, made during a divorce settlement, was not specific enough to be enforceable. Although the waiver stated that the participant would “retain” his 401(k) benefits and the ex-wife would “renounce any interest in” his retirement benefits, the court concluded it was not specific enough to be a waiver because it did not expressly mention the participant’s designation of his ex-wife as the beneficiary.
- In Nationwide Children’s Hospital, Inc. v. D.W. Dickey & Son, Inc. Employee Health and Welfare Plan, No. 08 Civ. 1140 (S.D. Ohio Jan. 27, 2010), the district court, in denying defendant’s motion for judgment on the pleadings, held that a third-party administrator of a self-insured health plan is a proper defendant in a claim for benefits under Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), provided that the TPA controlled the administration of the plan or functioned as a fiduciary regardless of formal designation. In so ruling, the court rejected defendant’s reliance on 29 U.S.C. § 1132(d)(2), which provides that “[a]ny money judgment under this subchapter against an employee benefit plan shall be enforceable only against the plan as an entity and shall not be enforceable against any other person unless liability against such person is established in his individual capacity under this subchapter.” Observing that there is a split of authority within the Sixth Circuit, as well as among other Circuits, the court found that its conclusion was supported by those cases that, while not addressing explicitly the § 1132(d)(2) issue, concluded that a plan is not the only proper defendant in a suit to recover benefits under Section 502(a)(1)(B).
- In In re Hartford Financial Services Group, 2009 WL 135186 (D. Conn. Jan. 13, 2010), the district court denied, with very little analysis, Hartford’s motion to dismiss plaintiffs’ fiduciary breach claims associated with an ESOP’s investment in company stock because: (i) the Moench presumption of prudence was not applicable since the plan did not require investment in company stock; and (ii) the complaint complied “more than amply” with Twombly.
- In Fitts v. UNUM Life Ins. Co. of Am., Civ. No. 98-00617 (D.D.C. Jan. 13, 2010), the court addressed an application for attorney’s fees, following a resolution of a lawsuit after ten years of litigation, including two trips to the Court of Appeals. The underlying action alleged, inter alia, that UNUM violated ERISA by classifying her bipolar disorder as a “mental” illness, as opposed to a “physical” illness, thereby limiting her entitlement to disability benefits to 24 months. One of the provisions of the settlement agreement provided that plaintiff would be awarded “reasonable” attorney’s fees. When plaintiff requested more than $1.3 million in fees, UNUM objected. In ruling on plaintiff’s motion for fees, the court found: (i) a determination of whether the plaintiff was a “prevailing party” was not necessary because the plaintiff was entitled to fees as a result of the settlement agreement; (ii) the fact that UNUM’s attorney’s fees were significantly lower than plaintiff’s fees was not indicative of the reasonableness of plaintiff’s requested fees; and (iii) because some of plaintiff’s attorney’s billing entries were “less specific than is appropriate,” the court decided to reduce plaintiff’s requested fees by 15%, resulting in fees equaling $1,176.509.00.
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Rulings, filings and settlements of interest
- Proskauer Rose LLP
- Howard Shapiro, Myron D Rumeld, Robert Rachal and Russell L. Hirschhorn
- February 3 2010
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