Justia ERISA Opinion Summaries

Derek Kramer, the plaintiff, joined American Electric Power Service Corporation (AEP) in 2018 and later participated in the AEP Executive Severance Plan. In 2020, AEP terminated Kramer’s employment due to his executive assistant’s misuse of a company credit card and Kramer’s alleged interference with an investigation into his company-issued cell phone. Kramer applied for severance benefits under the Plan, but AEP denied his claim, citing termination for cause. Kramer appealed the decision, but the Plan’s appeal committee upheld the denial.Kramer then filed an ERISA action in the United States District Court for the Southern District of Ohio, seeking benefits and alleging interference. He also demanded a jury trial. The district court struck his jury demand, limited discovery to procedural claims, and denied his motion to compel the production of documents protected by attorney-client privilege. The court ultimately granted judgment in favor of AEP and the Plan, finding that the denial of benefits was not arbitrary and capricious.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court’s rulings, holding that the Plan was a top-hat plan exempt from ERISA’s fiduciary requirements, thus the fiduciary exception to attorney-client privilege did not apply. The court also upheld the district court’s decision to strike Kramer’s jury demand, citing precedent that ERISA denial-of-benefits claims are equitable in nature and not subject to jury trials. Finally, the court found that the district court correctly applied the arbitrary-and-capricious standard in reviewing the denial of benefits and that the decision was supported by substantial evidence. The Sixth Circuit affirmed the district court’s judgment in favor of AEP and the Plan. View "Kramer v. American Electric Power Service Corp. Executive Severance Plan" on Justia Law

Jeremy Smith, a customer care technician for Cox Enterprises, Inc., received long-term disability benefits for seven years due to severe back pain and multiple surgeries. In 2019, Aetna, the plan administrator, terminated his benefits, concluding he could work under certain conditions. Smith appealed, providing additional medical evidence, including a consultative examination from Dr. Harris, which supported his disability claim. Aetna upheld the termination, leading Smith to file a lawsuit under the Employee Retirement Income Security Act (ERISA).The United States District Court for the Eastern District of Virginia granted summary judgment in favor of Cox Enterprises, Inc. Welfare Benefits Plan. The court found that Aetna's decision was supported by substantial evidence and that it was reasonable for Aetna to discount the opinions of Smith's primary care physician and the Social Security Administration's disability determination.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court held that Aetna abused its discretion by failing to adequately discuss and consider conflicting evidence, particularly Dr. Harris's consultative examination and the Social Security Administration's disability determination. The court found that Aetna did not engage in a deliberate and principled reasoning process, as required by ERISA regulations. Consequently, the Fourth Circuit reversed the district court's decision and remanded the case for further proceedings, instructing the district court to remand the matter to Aetna for reconsideration of Smith's claim. View "Smith v. Cox Enterprises, Inc. Welfare Benefits Plan" on Justia Law

Michael Gifford, a beneficiary of the Operating Engineers 139 Health Benefit Fund, sought reimbursement for out-of-network medical expenses incurred during his treatment for a stroke and subsequent brain aneurysm surgery. The Fund denied the claim, stating the services were not provided in an emergency and were not medically necessary. Gifford's wife, Suzanne, appealed the decision, but the Fund upheld the denial after consulting two independent medical reviewers who concluded the surgery was not an emergency and not medically necessary.The United States District Court for the Eastern District of Wisconsin granted the Fund's motion for summary judgment, agreeing that the Fund's decision was not arbitrary and capricious. The court also granted the Fund's motion for a protective order, limiting discovery to the administrative record. The Estate of Michael Gifford, represented by Suzanne, appealed the decision, arguing that the Fund failed to conduct a full and fair review by not considering a surgical note from Dr. Ahuja, which was not included in the administrative record.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision. The appellate court held that the Fund's denial of benefits was not arbitrary and capricious, as the Fund reasonably relied on the independent medical reviewers' reports and the administrative record. The court also found that the Fund was not required to seek out additional information not provided by the claimant. Additionally, the court upheld the district court's grant of the protective order, finding no abuse of discretion in limiting discovery to the administrative record. The court concluded that the Fund provided a full and fair review of the claim, and the denial of benefits was reasonable. View "Estate of Gifford v Operating Engineers 139 Health Benefit Fund" on Justia Law

Ariel Torres, a former Starbucks employee, and Raphyr Lubin, the husband of another former Starbucks employee, filed a putative class action against Starbucks. They alleged that Starbucks sent them deficient health-insurance notices under the Employee Retirement Income Security Act (ERISA), as amended by the Consolidated Omnibus Budget Reconciliation Act (COBRA). Starbucks moved to compel arbitration based on employment agreements signed by Torres and Lubin’s wife. Torres agreed to arbitration, but Lubin opposed it, arguing he was not a party to his wife’s employment agreement.The United States District Court for the Middle District of Florida denied Starbucks’s motion to compel arbitration for Lubin. The court found that Lubin was not a party to his wife’s employment agreement and was not suing to enforce it. Instead, Lubin sought to enforce his own statutory right to an adequate COBRA notice. The court held that no equitable doctrine of Florida contract law required Lubin to arbitrate and that Starbucks waived its argument that Lubin’s rights were derivative of his wife’s rights.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the district court’s decision. The court held that Lubin, not being a party to the arbitration agreement, could not be compelled to arbitrate. The court also found that the arbitration agreement’s delegation clause did not apply to Lubin, as he was not a party to the agreement. Additionally, the court rejected Starbucks’s arguments based on equitable estoppel, third-party beneficiary doctrine, and the derivative claim theory, concluding that none of these principles required Lubin to arbitrate his claim. The court affirmed the district court’s order denying Starbucks’s motion to compel arbitration. View "Lubin v. Starbucks Corporation" on Justia Law

Participants in Deloitte LLP’s 401(k) retirement plan filed a class action lawsuit against the plan fiduciaries, alleging that they breached their fiduciary duty under the Employee Retirement Income Security Act (ERISA) by allowing excessive administrative and recordkeeping fees. The plaintiffs claimed that the fees were higher than those of comparable plans and that the fiduciaries failed to obtain lower fees.The United States District Court for the Southern District of New York dismissed the action, finding that the plaintiffs did not plausibly allege that the fees were excessive relative to the services provided. The court also denied the plaintiffs' motion to file an amended complaint, deeming it futile as the proposed amendments did not cure the deficiencies in the original complaint.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that the plaintiffs failed to provide sufficient factual allegations to support a plausible inference that the defendants breached their duty of prudence. The court noted that the plaintiffs did not adequately compare the services provided by the plan to those of the comparator plans, nor did they provide context to show that the fees were excessive. The court also upheld the dismissal of the derivative claim for failure to monitor, as it was dependent on the primary claim of breach of fiduciary duty. View "Singh v. Deloitte LLP" on Justia Law

Five current and former employees of Parker-Hannifin Corporation, representing a class of participants in the Parker Retirement Savings Plan, filed a lawsuit against Parker-Hannifin Corporation and related entities. They alleged that Parker-Hannifin violated the Employee Retirement Income Security Act of 1974 (ERISA) by imprudently retaining the Northern Trust Focus Funds, providing higher-cost shares, and failing to monitor its agents in their fiduciary duties.The United States District Court for the Northern District of Ohio dismissed the plaintiffs' claims. The court found that the plaintiffs did not state a viable claim of breach of fiduciary duty because they failed to identify meaningful benchmarks for comparison, and their evidence of high turnover rates and limited performance history was insufficient. The court also found the plaintiffs' allegations regarding higher-cost shares to be speculative and conclusory. Consequently, the court dismissed the failure-to-monitor claim as it was contingent on the success of the other claims.The United States Court of Appeals for the Sixth Circuit reviewed the case and reversed the district court's judgment. The appellate court held that the plaintiffs sufficiently pleaded facts to state a claim for imprudent retention of the Focus Funds, noting that the funds' high turnover rates and underperformance could indicate a flawed decision-making process. The court also found that the plaintiffs plausibly alleged that Parker-Hannifin failed to negotiate for lower-cost shares, which could constitute a breach of the duty of prudence. The court remanded the case for further proceedings consistent with its opinion. View "Johnson v. Parker-Hannifin Corp." on Justia Law

Eric and Todd Romano, trustees of the Romano Law, PL 401(k) Plan, filed a class action against John Hancock Life Insurance Company. They claimed that John Hancock breached its fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) by not passing through the value of foreign tax credits received from mutual funds to the defined-contribution plans. The Romanos argued that John Hancock should have used these credits to reduce the administrative fees charged to the plans.The United States District Court for the Southern District of Florida granted summary judgment in favor of John Hancock, concluding that John Hancock was not an ERISA fiduciary regarding the foreign tax credits and did not breach any fiduciary duties. The court also ruled that the Romanos and the class lacked Article III standing because they failed to establish loss causation.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the district court's decision. The appellate court held that John Hancock was not an ERISA fiduciary concerning the foreign tax credits because these credits were not plan assets. The court explained that the foreign tax credits were a result of John Hancock's ownership of mutual fund shares and were not held in trust for the benefit of the plans. Additionally, the court found that John Hancock did not have discretionary authority over the management or administration of the separate accounts that would make it a fiduciary under ERISA. Consequently, the Romanos' claims for breach of fiduciary duty and engaging in prohibited transactions failed as a matter of law. View "Romano v. John Hancock Life Insurance Company (USA)" on Justia Law

Eric Gilbert filed for Chapter 7 bankruptcy, listing his interest in retirement accounts worth approximately $1.7 million. The issue was whether these accounts could be accessed by creditors due to alleged violations of federal law governing retirement plans. The Bankruptcy Court ruled that the accounts were protected from creditors, and the District Court affirmed this decision.The Bankruptcy Court dismissed the trustee John McDonnell's complaint, which sought to include the retirement accounts in the bankruptcy estate, arguing that the accounts violated ERISA and the IRC. The court found that the accounts were excluded from the estate under § 541(c)(2) of the Bankruptcy Code, which protects interests in trusts with enforceable anti-alienation provisions under applicable nonbankruptcy law. The District Court upheld this ruling, agreeing that ERISA's anti-alienation provision applied regardless of the alleged violations.The United States Court of Appeals for the Third Circuit reviewed the case and affirmed the lower courts' decisions. The court held that the retirement accounts were excluded from the bankruptcy estate under § 541(c)(2) because ERISA's anti-alienation provision was enforceable, even if the accounts did not comply with ERISA and the IRC. The court also dismissed McDonnell's claims regarding preferential transfers and fraudulent conveyances, as the transactions in question did not involve Gilbert parting with his property. Additionally, the court found no abuse of discretion in the Bankruptcy Court's decisions to dismiss the complaint with prejudice, shorten the time for briefing, and strike certain items from the appellate record. View "In re: Gilbert" on Justia Law

Plaintiffs M.S. and L.S. sought insurance coverage for mental health treatments for their child, C.S., under a health benefits plan provided by M.S.'s employer, Microsoft Corporation. The plan, administered by Premera Blue Cross, is subject to ERISA and the Parity Act. Premera denied the claim, stating the treatment was not medically necessary. Plaintiffs pursued internal and external appeals, which upheld the denial. Plaintiffs then sued in federal district court, alleging improper denial of benefits under ERISA, failure to produce documents in violation of ERISA’s disclosure requirements, and a Parity Act violation for applying disparate treatment limitations to mental health claims.The United States District Court for the District of Utah granted summary judgment to Defendants on the denial-of-benefits claim but ruled in favor of Plaintiffs on the Parity Act and ERISA disclosure claims. The court found that Defendants violated the Parity Act by using additional criteria for mental health claims and failed to disclose certain documents required under ERISA. The court awarded statutory penalties and attorneys’ fees to Plaintiffs.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court vacated the district court’s grant of summary judgment on the Parity Act claim, finding that Plaintiffs lacked standing to bring the claim. The court reversed the district court’s ruling that Defendants violated ERISA by not disclosing the Skilled Nursing InterQual Criteria but affirmed the ruling regarding the failure to disclose the Administrative Services Agreement (ASA). The court upheld the statutory penalty for the ASA disclosure violation and affirmed the award of attorneys’ fees and costs to Plaintiffs. View "M.S. v. Premera Blue Cross" on Justia Law

Art Iron, Inc. faced a lawsuit from the Board of Trustees of the Shopmen’s Local 499 Pension Plan seeking over one million dollars in withdrawal liability under ERISA. The key issue was whether Robert Schlatter, Art Iron’s sole shareholder, and his wife, Mary Schlatter, were personally liable for this withdrawal liability due to their operation of businesses allegedly under common control with Art Iron.The United States District Court for the Northern District of Ohio granted summary judgment in favor of the Board, finding both Robert and Mary Schlatter personally liable. The court determined that Robert’s consulting business and Mary’s jewelry-making activities were trades or businesses under common control with Art Iron, thus making them jointly and severally liable for the withdrawal liability.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court’s judgment regarding Robert Schlatter, agreeing that his consulting business was a trade or business under common control with Art Iron. The court applied the Groetzinger test, which considers whether the activity is continuous and regular and primarily for income or profit, and found that Robert’s consulting business met these criteria.However, the court reversed the district court’s judgment regarding Mary Schlatter. It found that her jewelry-making activities did not constitute a trade or business under the Groetzinger test, as her activities lacked the necessary continuity and regularity in 2017, the year of Art Iron’s withdrawal from the Plan. Consequently, Mary Schlatter was not personally liable for the withdrawal liability.The Sixth Circuit thus affirmed the district court’s judgment as to Robert Schlatter and reversed and remanded the judgment as to Mary Schlatter. View "Shopmen’s Local No 499, Bd of Trustees v. Art Iron, Inc." on Justia Law