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The DOL brought suit under the Employee Retirement Income Security Act (ERISA) for breach of fiduciary duties and self-dealing by City National in administering City National's employee profit-sharing plan. The Ninth Circuit affirmed the district court's order as to liability and held that City National engaged in prohibited self-dealing under section 406(b) of ERISA by setting and approving its own fees from Plan assets for serving as its own recordkeeper. Furthermore, such conduct was not exempt under section 408(c)(2) as reasonable compensation for services provided by a fiduciary such as recordkeeping services. In regard to damages, the panel affirmed in part and reversed in part, holding that the loss associated with a prohibited transaction is at least the entire cost of the prohibited transaction. In cases where the fiduciary has engaged in self-dealing, the panel has previously held that the "entire cost" of the transaction is the total amount of the illegal compensation that the fiduciary paid itself. Therefore, the district court correctly determined that the expenses were City National's burden to prove and any doubts related to damages should be resolved in the DOL's favor. In this case, no reasonable jury could find in favor of City National given the paucity of the evidence demonstrating that the additional offsets represent expenses actually incurred by CNB in servicing the Plan. View "Acosta v. City National Corporation" on Justia Law

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This case arose from a dispute between decedent Gerald Miletello's ex-wife Sandra and widow Pam about who was entitled to the funds in Gerald's 401(k) retirement account. The Fifth Circuit affirmed the district court's judgment that Sandra was entitled to $500,000 of the 401(k) balance because she had timely received a qualified domestic relations order (QDRO). The court explained that Congress has modified the Employee Retirement Income Security Act (ERISA) to make clear that a QDRO will not fail solely because of the time at which it was issued. Rather, the QDRO provisions merely prevent her from enforcing her interest until the QDRO is obtained. View "Miletello v. R M R Mechanical, Inc." on Justia Law

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The Fifth Circuit affirmed the district court's judgment in favor of Principal in an action brought by plaintiff, alleging that Principal abused its discretion by denying her benefits. The court held that Principal's benefits denial was supported by substantial evidence. The court held that, at bottom, there was no abuse of discretion in Principal's reliance on its own treating physicians' reports detailing an absence of plaintiff's impairments. The court also held that, although Principal had a structural conflict of interest that it both evaluates and pays claims, this factor had little weight in light of the extensive investigation that Principal conducted. View "Foster v. Principal Life Insurance Co." on Justia Law

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The First Circuit affirmed district court's grant of judgment in favor of Defendant Metropolitan Life Insurance Co. (MetLife) on Plaintiff's suit challenging the denial of long-term disability (LTD) benefits for Plaintiff under his employee welfare benefit plan (Plan), holding that MetLife's decision to deny LTD benefits to Plaintiff based on physical disability was reasonable and substantially supported by the evidence. MetLife, the Plan's administrator, denied Plaintiff's claim for benefits, concluding that the medical information provided by Plaintiff did not support the conclusion that Plaintiff was precluded from performing his job due to his medical conditions. After exhausting his administrative remedies, Plaintiff brought suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001-1461. The district court granted judgment on the administrative record to MetLife. The First Circuit affirmed, holding (1) MetLife adequately considered the conditions documented by Plaintiff's physician and physiatrist; (2) MetLife consistently interpreted the Plan; (3) MetLife provided Plaintiff with sufficient information regarding the requisite showing to qualify for LTD benefits; and (4) MetLife did not act in an arbitrary or capricious manner by considering the functional limitations of Plaintiff's condition. View "Santana-Diaz v. Metropolitan Life Insurance Co." on Justia Law

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Trucking, owned by Bourdow, his wife, and their sons, sold and transported dirt, stone, and sand throughout lower Michigan and engaged in construction site preparation and excavation. Trucking employed other members of the Bourdow family. Trucking executed collective bargaining agreements (CBAs), under which it made fringe benefit payments to the Union’s pension fund (Fund). Experiencing financial difficulties, Trucking terminated its CBA. In 2012, the Fund informed Trucking that it had incurred withdrawal liability ($1,163,279) under the Employee Retirement Income Security Act (ERISA), 29 U.S.C 1381(a). Trucking missed its first withdrawal liability payment. The Fund filed suit, which was stayed when Trucking filed for Chapter 7 bankruptcy. The Fund filed a proof of claim. Trucking did not object; the claim was allowed, 11 U.S.C. 502(a). The Fund received $52,034. Contracting was incorporated the day after Trucking missed its first withdrawal payment; it bid on its first project two days before Trucking's bankruptcy filing. Contracting engages in construction site preparation and excavation in lower Michigan. Contracting is owned by the Bourdow sons; it employs other family members and retains the services of other professionals formerly retained by Trucking. The Fund sought to recover the outstanding withdrawal liability, alleging that Contracting was created to avoid withdrawal liability, and is responsible for that liability under 29 U.S.C 1392(c), and that Contracting is the alter ego of Trucking. The Sixth Circuit affirmed summary judgment in favor of the Fund, applying the National Labor Relations Act’s alter-ego test and citing the factors of business purpose, operations, customers, supervision, ownership, and intent to evade labor obligations. View "Trustees of Operating Engineers Local 324 v. Bourdow Contracting, Inc." on Justia Law

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Former employees of Honeywell, who retired before age 65 during the terms of Honeywell's 2007 and 2010 collective bargaining agreements (CBAs), filed a class action alleging that Honeywell's announced plan to terminate early retiree healthcare benefits at the end of 2017 breached the CBAs and violated the Employee Retirement Income Security Act of 1974 (ERISA), because those healthcare benefits vested when each class member retired. The Eighth Circuit agreed with the Sixth Circuit and held that the Supreme Court's decision in CNH Indus. N.V. v. Reese, 138 S. Ct. 761 (2018), was controlling in this case. Under Reese, the court held that plaintiffs' retiree healthcare benefits were not vested as a matter of law. Therefore, the court reversed and remanded for further proceedings. View "Pacheco v. Honeywell International Inc." on Justia Law

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Encompass filed suit against Blue Cross for violations of the Employee Retirement Income Security Act (ERISA), breach of contract, defamation, and tortious interference with business relations. After Blue Cross largely prevailed at trial, the district court granted a new trial because of error in the jury charge. At the second trial, Encompass prevailed on all claims. The Fifth Circuit held that charging the jury with an incorrect standard of liability supported granting a new trial, and thus the district court did not abuse its discretion by granting Encompass a new trial on the breach of contract claims. The court also held that the district court did not abuse its discretion by granting a new trial on the tort claims considering the interdependence of the tort and contract issues. Finally, the court held that the application of contra non valentem was not wrong as a matter of law, and Blue Cross abused its discretion by arbitrarily denying Encompass's claims for covered services under ERISA. View "Encompass Off Solutions, Inc. v. Louisiana Health Service & Indemnity Co." on Justia Law

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In this Employee Retirement Income Security Act (ERISA) suit, the First Circuit affirmed the district court's judgment finding that Plaintiff’s appeal from the expiration of her long-term disability (LTD) benefits was untimely and granting a motion for judgment on the administrative record for the disability insurer and the plan under which Plaintiff received the benefits, holding that the district court did not err. After Hartford Life and Accident Insurance Company (Hartford) gave notice to Plaintiff that the LTD benefits it had provided her under the Dartmouth Hitchcock Clinic Company Long Term Disability Plan (Plan) would expire, Plaintiff filed an untimely appeal. Plaintiff then brought this action arguing that even if the appeal was untimely, the untimeliness should be excused. The district court granted a motion for judgment on the administrative record for Hartford and the Plan. The First Circuit affirmed, holding (1) the ERISA regulation defining an “adverse benefit determination” requires that the 180-day time limit start from the date of notice of termination of benefits; (2) Hartford properly followed the terms of the Plan, which met the ERISA requirements; (3) the ERISA substantial compliance doctrine did not excuse Plaintiff’s untimely ERISA administrative appeal; and (4) the New Hampshire notice-prejudice rule did not apply to Plaintiff’s situation. View "Fortier v. Hartford Life & Accident Insurance Co." on Justia Law

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Three small employers in Montana filed suit against health insurance companies, alleging claims under the Employee Retirement Income Security Act of 1974 (ERISA), as well as state law claims based on defendants' representations. The Ninth Circuit affirmed the district court's dismissal of plaintiffs' ERISA claims and held that plaintiffs failed to state a claim for breach of fiduciary duty under 29 U.S.C. 1132(a)(2) where defendants did not exercise control over plan assets when charging or spending the allegedly excessive premiums. However, the panel reversed the district court's dismissal of plaintiffs' state law claims and held that ERISA did not expressly preempt state-law claims against an insurer that did not bear on an ERISA-regulated relationship. Furthermore, the state law claims were not barred by conflict preemption. The panel reversed the district court's dismissal with prejudice of the state-law claims so that plaintiffs may amend their complaint to state the fraud allegations with greater particularity. View "The Depot, Inc. v. Caring for Mountanans, Inc." on Justia Law

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Plaintiff filed suit against Anthem, the administrator of an Employee Retirement Income Security Act (ERISA) covered plan, after Anthem denied preauthorization for both bariatric surgery (weight loss surgery) and the follow-up surgery. The Fifth Circuit held that Anthem did not abuse its discretion in either the first- or second-level appeal of the denial of benefits. The court explained that Anthem satisfied the very low, very deferential abuse-of-discretion standard. Therefore, the court affirmed the district court's assessment of the first-level appeal, reversed the district court's assessment of the second-level appeal, and dismissed plaintiff's cross appeal as moot. View "Rittinger v. Healthy Alliance Life Insurance Co." on Justia Law