Justia ERISA Opinion Summaries

Aramark, a company that self-funds employee health benefit plans governed by ERISA, contracted with Aetna to serve as third-party administrator for these plans. Under the agreement, Aetna was responsible for processing claims, managing provider networks, and handling various administrative tasks. Aramark alleged that Aetna breached its fiduciary duties by paying improper or fraudulent claims, retaining undisclosed fees, providing inadequate subrogation services, making post-adjudication adjustments detrimental to Aramark, and commingling plan assets.Aramark filed suit in the United States District Court for the Eastern District of Texas, asserting ERISA claims for breach of fiduciary duty and prohibited transactions. Aetna responded by seeking to compel arbitration in a Connecticut federal district court, relying on the arbitration clause in the parties’ Master Services Agreement (MSA), and moved to stay the Texas proceedings pending arbitration. The district court denied the stay, holding that the parties had not “clearly and unmistakably” delegated the threshold question of arbitrability to an arbitrator. The court found that the MSA's arbitration clause carved out disputes seeking equitable relief—such as Aramark’s ERISA claims—from arbitration and that these claims were equitable in nature.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s denial of a motion to stay litigation pending arbitration de novo. It held that the threshold issue of arbitrability was not clearly and unmistakably delegated to an arbitrator under the terms of the MSA, especially given the placement of the carve-out for equitable relief. The Fifth Circuit further held that Aramark’s ERISA claims constituted equitable, not legal, relief under Supreme Court and Fifth Circuit precedent. The Fifth Circuit affirmed the district court’s orders, finding no error or abuse of discretion. View "Aramark Services v. Aetna Life Insurance" on Justia Law

A former professional football player sought disability benefits from a retirement plan administered under the Employee Retirement Income Security Act (ERISA), arguing that he qualified for the highest tier of benefits due to multiple concussions suffered during his career. The plan granted him some benefits but denied the top category. He filed suit, claiming improper denial of benefits and lack of a full and fair review.The United States District Court for the Northern District of Texas ruled in favor of the plaintiff, ordering the plan to award the higher benefits and granting approximately $1.2 million in attorney’s fees, plus $600,000 in conditional fees. On appeal, however, a panel of the United States Court of Appeals for the Fifth Circuit reversed the district court’s judgment, holding that the plaintiff was not entitled to reclassification to the highest benefits tier due to his failure to immediately appeal the denial, making any further review futile. The panel remanded for entry of judgment for the plan.On remand, the district court nonetheless reaffirmed its prior fee award, reasoning that the plaintiff’s success in exposing flaws in the plan’s review process, as reflected in favorable factual findings, constituted sufficient success to support attorney’s fees.The United States Court of Appeals for the Fifth Circuit, reviewing the fee award for abuse of discretion, reversed the district court’s decision. The Fifth Circuit held that under 29 U.S.C. § 1132(g)(1), attorney’s fees may only be awarded if a party achieves “some degree of success on the merits,” which requires more than favorable factual findings or moral victories. Because the plaintiff received no relief—monetary, injunctive, or declaratory—the award of attorney’s fees was improper. The court reversed the fee award. View "Cloud v. NFL Player Retirement Plan" on Justia Law

Several participants in a terminated employee stock ownership plan asserted claims under the Employee Retirement Income Security Act (ERISA) following the sale and dissolution of their plan. The plan, created by A360, Inc. in 2016, purchased all company stock and became its sole owner. In 2019, A360 and its trustee sold the plan’s shares to another entity, amending the plan at the same time to include an arbitration clause that required all claims to be resolved individually and prohibited representative, class, or group relief. The plan was terminated shortly thereafter, and the proceeds were distributed to participants. The plaintiffs alleged that the defendants undervalued the shares and breached fiduciary duties, seeking plan-wide monetary and equitable relief.The United States District Court for the Northern District of Georgia considered the defendants’ motion to compel arbitration based on the plan’s amended arbitration provisions. The district court determined that although the plan itself could assent to arbitration, the arbitration provision was unenforceable because it precluded plan-wide relief authorized by ERISA. The court found that the provision constituted a prospective waiver of statutory rights and concluded that, per the plan amendment’s own terms, the arbitration provision was not severable and thus entirely void.The United States Court of Appeals for the Eleventh Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Eleventh Circuit held that the arbitration provision was unenforceable under the effective vindication doctrine because it barred participants from seeking plan-wide relief for breaches of fiduciary duty, as provided by ERISA. The court joined other circuits in concluding that such provisions violate ERISA’s substantive rights and affirmed the district court’s invalidation of the arbitration procedure and denial of the motion to compel arbitration. View "Williams v. Shapiro" on Justia Law

After divorcing in 2010, a former employee and his ex-spouse entered into a court-approved domestic relations order in North Carolina that divided his employer-sponsored retirement plan benefits. The order stipulated that the ex-spouse would be treated as a surviving spouse, entitling her to survivor benefits under the plan, and stated that her portion of the benefit "may be reduced as necessary" to cover the cost of the survivor annuity. Years later, when the employee retired and began receiving benefits, he argued that the plan administrator improperly reduced his monthly payment by factoring the cost of the survivor annuity into his share, rather than allocating the cost solely to his ex-spouse’s portion. He also claimed that the plan administrator failed to timely provide all requested plan documents, warranting statutory penalties.The United States District Court for the Western District of North Carolina granted summary judgment for the employer and plan administrator. The court found that the plan administrator correctly interpreted the qualified domestic relations order (QDRO) to permit, but not require, allocating the cost of the survivor annuity to the ex-spouse’s share, and that the benefit calculation was consistent with the plan terms and not an abuse of discretion. Additionally, the court held that the plaintiff was not prejudiced by any delay in receiving plan documents and denied statutory penalties.On appeal, the United States Court of Appeals for the Fourth Circuit affirmed. The Fourth Circuit concluded that de novo review was appropriate for interpreting the QDRO, while the plan administrator’s benefit calculations were reviewed for abuse of discretion. The court held that the QDRO’s language was unambiguous and permissive, not mandatory, regarding who should bear the cost of the survivor annuity. The court also upheld the denial of statutory penalties, finding no prejudice or bad faith. The district court’s summary judgment for the defendants was affirmed. View "Gasper v. EIDP, Inc." on Justia Law

An individual received health insurance through his employer, with the plan administered by a third-party insurer. After being injured in a car accident, he recovered damages from the other driver’s employer and, based on communications from his insurer and its agent, paid $25,000 in reimbursement to the plan. He later learned that the full plan document did not contain a reimbursement obligation, contrary to what was represented in the summary plan description. A similar situation occurred when his wife was injured in a separate accident; litigation in state court ultimately resulted in a declaratory judgment that the plan did not provide for reimbursement, and this was affirmed on appeal.The individual then sued the insurer, its agent, and his employer in federal court under the Employee Retirement Income Security Act of 1974 (ERISA), alleging he was defrauded into paying reimbursement. The United States District Court for the Northern District of Ohio dismissed most claims, but allowed one ERISA claim under § 1132(a)(3) to proceed. While his federal appeal was pending, the plaintiff filed state law claims in state court, which were removed to federal court. The district court held that these state law claims were completely preempted by ERISA and dismissed the action, reasoning that the claims were duplicative of the pending federal lawsuit and arose from the same events.On appeal, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s dismissal. The appellate court held that the plaintiff’s state law claims were completely preempted by ERISA under the standard articulated in Aetna Health Inc. v. Davila, because the claims sought relief for benefits allegedly due under the terms of an ERISA-governed plan and did not rely on a legal duty independent of ERISA or the plan. The court further concluded that dismissal, rather than remand or amendment, was appropriate due to the duplicative nature of the proceedings. View "Patterson v. UnitedHealth Group, Inc." on Justia Law

Cheriese Johnson began experiencing a range of symptoms, including coughing and pain in her hands and feet, prior to her employment in July 2016 with The William Carter Company. She purchased a long-term disability insurance policy from Reliance Standard that became effective in October 2016. During the three months before her coverage began, Johnson sought medical care for various symptoms and received several diagnoses, but not scleroderma. In early 2017, after her policy was active, she was diagnosed with scleroderma—a rare autoimmune disease—following a lung biopsy. Johnson then filed a claim for long-term disability benefits, which Reliance Standard denied, arguing her disability was caused by a preexisting condition for which she had received treatment during the policy’s lookback period.After her claim was denied and her appeal was unsuccessful, Johnson sued Reliance Standard in the United States District Court for the Northern District of Georgia under the Employee Retirement Income Security Act (ERISA). She moved for judgment on the administrative record, while Reliance Standard sought summary judgment. The district court granted summary judgment to Reliance Standard, finding its decision to deny benefits was correct under the terms of the policy.On appeal, the United States Court of Appeals for the Eleventh Circuit reversed the district court’s judgment. Applying ERISA’s interpretive framework and reviewing the plan administrator’s decision de novo, the Eleventh Circuit held that Reliance Standard’s interpretation of the policy was both incorrect and unreasonable. The court concluded that Johnson had not received medical treatment “for” scleroderma during the lookback period because neither she nor her doctors suspected or intended to treat that specific condition at that time. The court found that Reliance Standard’s interpretation was arbitrary and capricious, and remanded for further proceedings consistent with its opinion. View "Johnson v. Reliance Standard Life Insurance Company" on Justia Law

Several individuals, representing a class, challenged a health insurance company’s refusal to cover gender-affirming care for transgender individuals diagnosed with gender dysphoria. The company, acting as a third-party administrator for employer-sponsored, self-funded health plans, denied coverage for such treatments based on explicit plan exclusions requested by the employer sponsors. Some plaintiffs also alleged that they were denied coverage for treatments that would have been covered for other diagnoses, such as precocious puberty, but were denied solely because of the concurrent diagnosis of gender dysphoria.The United States District Court for the Western District of Washington certified the class and granted summary judgment in favor of the plaintiffs. The district court rejected the company’s arguments that it was not subject to Section 1557 of the Affordable Care Act because its third-party administrator activities were not federally funded, that it was merely following employer instructions under ERISA, and that it was shielded by the Religious Freedom Restoration Act (RFRA). The district court also found that the exclusions constituted sex-based discrimination under Section 1557.On appeal, the United States Court of Appeals for the Ninth Circuit agreed with the district court that the company is subject to Section 1557, that ERISA does not require administrators to enforce unlawful plan terms, and that RFRA does not provide a defense in this context. However, the Ninth Circuit held that the district court’s analysis of sex-based discrimination was undermined by the Supreme Court’s intervening decision in United States v. Skrmetti, which clarified the application of sex discrimination standards to exclusions for gender dysphoria treatment. The Ninth Circuit vacated the summary judgment and remanded the case for further proceedings to consider whether, under Skrmetti, the exclusions at issue may still constitute unlawful discrimination, particularly in cases involving pretext or proxy discrimination or where plaintiffs had other qualifying diagnoses. View "PRITCHARD V. BLUE CROSS BLUE SHIELD OF ILLINOIS" on Justia Law

Two former employees of the University of California, after leaving their positions, delayed applying for retirement benefits under the University of California Retirement Plan (the Plan) until several years after reaching the normal retirement age of 60. When they eventually applied, both requested retroactive monthly retirement payments dating back to when they first became eligible. The Regents of the University of California denied these requests, interpreting the Plan to provide benefits only from the date of application forward. The plaintiffs, representing a class of similarly situated former employees, argued that the Plan entitled them to retroactive benefits or, alternatively, that The Regents breached a fiduciary duty by failing to inform them that retroactive benefits were unavailable.The Superior Court of Alameda County granted summary adjudication to The Regents on the breach of contract claim, finding that the Plan did not provide for retroactive monthly benefits prior to a member’s application. The court later held a bench trial on the breach of fiduciary duty claim, ultimately concluding that The Regents had not breached its duty to inform members about their retirement options, as the Plan documents and related communications were sufficient to fully and fairly inform a reasonable plan beneficiary.The California Court of Appeal, First Appellate District, Division Four, reviewed the case. It held that the Plan’s language unambiguously requires a member to apply for retirement benefits before those benefits become payable, and that retroactive monthly benefits are not available for periods before an application is filed. The court also affirmed that The Regents met its fiduciary duty of disclosure by providing adequate information about the Plan and its options. The judgment in favor of The Regents was affirmed. View "Mass v. Regents of the University of California" on Justia Law

In this case, several former employees of a seafood company participated in an employee stock ownership plan (ESOP) that was funded by a $92 million loan used to purchase all outstanding company stock from four directors and officers. The plaintiffs alleged that these directors and officers manipulated sales projections and inventory figures to inflate the stock’s valuation, causing the ESOP to overpay by tens of millions of dollars. They further claimed that the plan’s trustee failed to conduct proper due diligence before agreeing to the purchase price. The plaintiffs sought restoration of plan losses, disgorgement of profits, and other equitable relief under ERISA, asserting breaches of fiduciary duty.The plaintiffs filed suit in the United States District Court for the Northern District of Georgia without first exhausting the plan’s internal administrative remedies, despite acknowledging that the plan provided such procedures. They argued that exhaustion was not required for their claims and, alternatively, that they were excused from exhausting due to futility and inadequacy of the remedy. The defendants moved to dismiss on exhaustion grounds. The district court granted the motions, finding that Eleventh Circuit precedent required exhaustion for ERISA claims, and rejected the plaintiffs’ arguments for excusal. The court also denied the plaintiffs’ request for a stay to allow exhaustion, but did not specify whether the dismissal was with or without prejudice.On appeal, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s dismissal. The appellate court held that ERISA plaintiffs must exhaust available administrative remedies before seeking judicial review, including for breach of fiduciary duty claims, and that no valid excuse relieved the plaintiffs of this obligation. The court also remanded the case for the district court to clarify whether the dismissal was with or without prejudice. View "Bolton v. Inland Fresh Seafood Corporation of America, Inc." on Justia Law

SuperValu, Inc. participated in a multiemployer pension plan, contributing on behalf of its employees for over a decade. In September 2018, SuperValu sold several stores to Schnuck’s Markets, Inc., with five of those stores employing workers covered by the pension plan. This sale qualified for a statutory “safe harbor,” meaning SuperValu did not incur withdrawal liability for the sold stores, as Schnuck’s agreed to continue contributions. Later, SuperValu closed its remaining stores and fully withdrew from the plan, triggering withdrawal liability. The pension fund calculated SuperValu’s total liability and the annual installment payments required, using statutory formulas. In calculating the payment schedule, the fund deducted the sold stores’ contribution base units for only the most recent five years, not the entire ten-year lookback period, which resulted in higher annual payments for SuperValu.SuperValu challenged the fund’s calculation, arguing that the contribution base units for the sold stores should have been excluded for all ten years, not just five. The dispute was submitted to arbitration under federal law, where the arbitrator ruled in favor of the fund. SuperValu then sought review in the United States District Court for the Northern District of Illinois, Eastern Division. The district court granted summary judgment to the fund, holding that the relevant statutory text did not require the deduction of the sold stores’ units for the entire ten-year period, and that SuperValu’s arguments based on legislative history and statutory purpose could not override the plain language.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s decision de novo. The Seventh Circuit held that the statute governing the payment schedule for withdrawal liability does not require a pension fund to deduct contribution base units for stores sold under the safe harbor provision for the entire ten-year lookback period. The court affirmed the district court’s judgment. View "SuperValu, Inc. v. UFCW Unions and Employers Midwest Pension Fund" on Justia Law