Justia ERISA Opinion Summaries

A participant in two ERISA-qualified retirement plans at a university sought to change the beneficiary designation shortly before his death, naming trust accounts for his grandchildren as primary beneficiaries and removing his wife as a primary beneficiary. The plan documents required spousal consent for such changes. The participant’s wife, who was still living at the time, had previously executed a Wisconsin statutory power of attorney appointing her son-in-law as her agent. The agent signed the spousal consent form on her behalf, but the power of attorney did not expressly grant authority to waive her spousal survivor annuity rights. The plan recordkeeper rejected the beneficiary change form as deficient, and the participant died soon thereafter. The wife died about a year later. The plaintiffs, including family members and trustees, sought to enforce the beneficiary change, arguing that the power of attorney provided sufficient authority.After the recordkeeper’s rejection, the plaintiffs made a claim for benefits with the university as plan administrator. The university denied the claim, determining that Wisconsin law required a specific grant of authority in the power of attorney to waive spousal survivor benefits, which was absent in this case. The plaintiffs appealed the denial, but the university upheld its decision. Plaintiffs then filed suit in the United States District Court for the Northern District of Illinois, asserting claims under ERISA for benefits, breach of fiduciary duty, and negligence. The district court granted summary judgment for the defendants, concluding the waiver was invalid and finding no merit in the other claims.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The Seventh Circuit held that under Wisconsin law, specifically Wis. Stat. § 244.41(1)(f), a power of attorney must expressly grant authority to an agent to waive spousal rights to a joint and survivor annuity. Because the power of attorney did not contain such an express grant, the attempted waiver was invalid, and the plaintiffs’ ERISA claim failed. The court also affirmed dismissal of the fiduciary duty and negligence claims and denied the plaintiffs’ motion to certify a question to the Wisconsin Supreme Court. View "Havlik v. University of Chicago" on Justia Law

Segerdahl Corporation, a direct-mail printing company wholly owned by an employee stock ownership plan (ESOP), was sold to a private equity firm in 2016. Bruce Rush, a senior manager and ESOP shareholder, alleged that the sale was improperly organized and approved for less than the company’s fair market value. He claimed that the Defendants—the ESOP trustee GreatBanc and several Segerdahl Board members—breached their fiduciary duties under ERISA by favoring financial buyers, inadequately marketing the company, and failing to secure a higher sale price. The sale process involved negotiations led by JP Morgan, with only financial buyers considered, culminating in an agreement with ICV Partners for $265 million.The United States District Court for the Northern District of Illinois, Eastern Division, certified a class of ESOP shareholders and denied summary judgment for most claims. After a three-week bench trial, the district court issued a comprehensive opinion finding in favor of Defendants on all counts. The court determined that the Defendants did not intentionally depress the sale price, had obtained the best possible price given Segerdahl’s declining performance, and had fulfilled their fiduciary obligations. The district court also found no prohibited transactions under ERISA and concluded that Rush failed to prove damages, rejecting expert testimony that relied on hypothetical buyers and unsupported valuations.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s legal conclusions de novo and factual findings for clear error. The appellate court affirmed the district court’s judgment, holding that there was no clear error in the findings that Defendants did not breach their fiduciary duties, did not engage in prohibited transactions, and that the sale price reflected fair market value. The district court’s decision was affirmed in full. View "Rush v GreatBanc Trust Co." on Justia Law

A group of affiliated truck dealerships in the Midwest operated through a complex structure of multiple limited liability companies. Each dealership location had a “Sales” company that owned assets and an “Employee Solutions” (ES) company that hired employees and leased them to the Sales company. The ES companies entered collective-bargaining agreements requiring pension contributions to a union fund. Over time, the ES companies stopped contributing and employing workers, transferring employees to newly created entities. One of the companies, ES Alsip, incurred withdrawal liability for ceasing contributions. The pension fund assessed over $6 million in liability, which was disputed and partially paid following an arbitration that substantially reduced the amount. Ultimately, higher courts reinstated the original liability.The United States District Court for the District of Columbia granted summary judgment to the pension fund, holding that ES Summit was liable for delinquent contributions for work performed at another dealership, ES Alsip’s withdrawal liability was properly calculated and subject to an increased interest rate, and that multiple affiliated entities and individuals were jointly and severally liable for the obligations. The court also imposed liability on successors and individual owners, the Bouchers, based on their house-flipping activities.On review, the United States Court of Appeals for the District of Columbia Circuit affirmed in part, reversed in part, and remanded. The court held that the delinquent-contribution claim against ES Summit was not adequately pleaded and reversed summary judgment on that issue. It affirmed the allocation of a partial payment to interest rather than principal, but reversed the application of an increased interest rate retroactively. The court affirmed the finding that each Sales entity was a single employer with its corresponding ES entity and upheld successor liability against Laborforce and ESI. However, it found genuine disputes of fact regarding the personal liability of the Bouchers and remanded that issue. View "Trustees of the IAM National Pension Fund v. M & K Employee Solutions" on Justia Law

Kevin Flowers, a participant in an employee benefits plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), receives prescription drug benefits administered by Caremark, a pharmacy benefits manager. Flowers alleges that Caremark unjustly enriches itself by limiting maintenance prescription coverage to either CVS retail pharmacies or Caremark’s mail-order delivery service. He claims this violates Arkansas statutes requiring PBMs not to mandate home delivery and to provide reasonably adequate and accessible pharmacy networks, leading him and similarly situated individuals to pay out of pocket at local pharmacies.Reviewing the case, the United States District Court for the Western District of Arkansas granted Caremark’s motion to dismiss. The court determined that Flowers failed to plausibly plead a violation of the Mail Order Provision because Caremark did not require prescriptions to be filled solely through home delivery. Regarding the Network Adequacy Provision, the district court found that ERISA preempted the Arkansas requirements, particularly those imposing geographic coverage standards for pharmacy networks.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s dismissal de novo. The court affirmed the district court’s ruling, holding that Flowers did not plausibly allege a violation of the Mail Order Provision. The court also concluded that the geographic coverage requirements imposed by Arkansas regulations under the Network Adequacy Provision are preempted by ERISA, as they force PBMs to tailor their networks in ways that interfere with nationally uniform plan administration and constitute an impermissible connection with ERISA plans. The court expressly left open whether the Network Adequacy Provision, without its implementing regulations, would also be preempted. The court affirmed the district court’s dismissal of Flowers’s claims. View "Flowers v. Caremark PCS Health, LLC" on Justia Law

Dr. Jeffrey M. Ahn, an otolaryngologist practicing in New Jersey and New York, treated patients insured by Cigna Health and Life Insurance Company, which provides ERISA-governed health plans. After submitting claims for approximately fifty treatments, Dr. Ahn received denial notices from Cigna, many of which stated his claims were rejected because he was not a licensed provider. Upon appeal, Cigna sometimes reversed or modified the denial reasons. Dr. Ahn contended that these statements were defamatory and filed suit in New Jersey Superior Court, alleging defamation, defamation per se, and tortious interference.Cigna removed the case to the United States District Court for the District of New Jersey and sought dismissal or summary judgment, arguing ERISA preemption and a statute of limitations defense. Initially, the District Court deferred ruling on preemption, as it was unclear which claims related to ERISA plans. After discovery, Dr. Ahn withdrew two claims, leaving only defamation per se. Cigna again moved for summary judgment, submitting evidence that all relevant plans were governed by ERISA. Dr. Ahn presented no contrary evidence. The District Court found the plans were ERISA plans and held that Dr. Ahn’s defamation per se claim was preempted because it concerned statements made in explanation of benefits forms, which are part of ERISA plan administration.On appeal, the United States Court of Appeals for the Third Circuit reviewed the District Court’s decision de novo. The Third Circuit held that ERISA preempts a healthcare provider’s state-law defamation claim when the alleged defamatory statements appeared in explanation of benefits forms sent to beneficiaries of ERISA plans. The court reasoned that such communications are a central aspect of plan administration and that allowing state-law claims would undermine uniformity in ERISA administration. The Third Circuit affirmed the District Court’s grant of summary judgment in favor of Cigna. View "Ahn v. Cigna Health and Life Insurance Co" on Justia Law

Employees participating in a 401(k) plan offered by their employer, a clinical laboratory company, brought a class action alleging that the plan’s fiduciaries breached their duties under ERISA by retaining two particular investment options: the Fidelity Freedom Funds and the Invesco Global Real Estate Fund. The plaintiffs argued that these funds underperformed compared to alternatives, were riskier, and that the plan’s managers failed to remove them despite subpar performance. They also claimed that internal policy statements required the funds’ removal and that the plan’s managers failed in their duty to monitor investments and breached trust obligations.The United States District Court for the District of New Jersey initially denied a motion to dismiss the case, allowing discovery to proceed. After discovery, the District Court granted summary judgment in favor of the defendants. The court found that the plan’s fiduciaries had fulfilled their obligations by hiring investment advisors, regularly reviewing investment performance, seeking relevant training, and following up on concerns regarding the challenged funds. The court concluded there was no breach of fiduciary duty or related failures.On appeal, the United States Court of Appeals for the Third Circuit reviewed the District Court’s grant of summary judgment de novo, considering all facts and inferences in favor of the plaintiffs. The Third Circuit held that ERISA’s fiduciary standard is process-oriented, not outcome-based. The Court found that the fiduciaries had used a prudent process—hiring advisors, critically assessing their recommendations, meeting with fund managers, and maintaining regular oversight—even if the investments did not always outperform alternatives. The Court further held that internal policy statements were nonbinding and that the fiduciaries did not abuse their discretion. Consequently, the Third Circuit affirmed the District Court’s summary judgment in favor of the defendants on all claims. View "Johnson v. Quest Diagnostics Inc" on Justia Law

The appellant, Mark Justman, sought to recover accidental death life insurance benefits following the death of his wife, Karen Justman, who died from septic shock caused by a bacterial infection after eating raw oysters. At the time of her death, she was employed by Accenture LLP and was covered by both basic and optional accidental death and dismemberment (AD&D) insurance through a group plan. Prudential Insurance Company of America served as the Claims Administrator in 2021, while Accenture was designated as the Plan Administrator. After Prudential denied Justman’s claim on the grounds that the death was due to illness rather than an accident, Justman exhausted Prudential’s administrative appeals process without success.Justman then filed suit in the United States District Court for the Eastern District of Pennsylvania against both Prudential and Accenture, asserting wrongful denial of benefits under ERISA § 502(a)(1)(B) and breach of fiduciary duty for allegedly failing to provide required summary plan descriptions (SPDs). Prudential settled, leaving only Accenture as a defendant. The District Court dismissed Justman’s claims, finding insufficient factual allegations that Accenture controlled the benefits determination or failed to provide SPDs within statutory deadlines. The court allowed Justman to amend his complaint multiple times but found that further amendment would be futile and dismissed the case with prejudice.On appeal, the United States Court of Appeals for the Third Circuit affirmed the District Court’s rulings. The Third Circuit held that a proper defendant in an ERISA § 502(a)(1)(B) claim is the entity with authority over benefits determinations, which in this case was Prudential, not Accenture. The court also concluded that Justman’s claims regarding failure to provide SPDs and breach of fiduciary duty were not plausibly pleaded. The Third Circuit found no abuse of discretion in the denial of leave to amend or reconsideration and affirmed the dismissal with prejudice. View "Justman v. Accenture LLP" on Justia Law

A company operating a nationwide truck leasing business contributed to a multiemployer pension plan on behalf of employees in several bargaining units, including a group in Dallas, Texas (Local 745). After the company and Local 745 negotiated a one-year extension to their collective-bargaining agreement, the pension plan’s trustees rejected the extension, citing concerns that the company was aligning expiration dates to minimize future withdrawal liability. The plan subsequently notified the company that unless it agreed to treat any 2022 withdrawal of Local 745 as a 2021 withdrawal, the participation of Local 745 would be terminated. The company did not accept, and the trustees voted to terminate Local 745’s participation effective December 25, 2021.The company filed suit in the United States District Court for the Northern District of Illinois, seeking to enjoin the expulsion of Local 745 and arguing that the trustees lacked authority under the plan’s Trust Agreement. The district court initially granted a temporary restraining order but later vacated it and denied a preliminary injunction. After discovery, the district court granted summary judgment to the pension plan, finding the plan’s trustees had the authority to expel Local 745 and had not acted arbitrarily or capriciously. The district court also dismissed the plan’s counterclaim seeking a judicial declaration of Local 745’s withdrawal date, holding that this issue must first be resolved through mandatory arbitration under federal law.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s rulings. The appellate court held that the Trust Agreement granted the trustees discretionary authority to interpret plan provisions, and their decision to expel Local 745 was reasonable and not arbitrary or capricious. The court also affirmed the dismissal of the counterclaim, holding that disputes over withdrawal liability and related determinations must proceed to arbitration before judicial review. The case was remanded for further proceedings on attorney fees. View "Penske Truck Leasing, LP v. Central States Southeast and Southwest Areas Pensi" on Justia Law

After the death of Dana Kleinsteuber, her husband, Charles Kleinsteuber, sought accidental death and dismemberment (AD&D) benefits under an ERISA-governed insurance plan administered and insured by Metropolitan Life Insurance Company (MetLife). Dana Kleinsteuber, who suffered from end-stage renal disease (ESRD) due to a long history of an eating disorder, was using home dialysis as treatment. On the day of her death, she apparently failed to properly close her chest port after a dialysis session, resulting in severe blood loss and subsequent cardiac arrest. Emergency responders stopped the bleeding, but she died shortly after.MetLife initially denied the claim on the basis that Dana’s death resulted from natural causes related to her ESRD, and that an exclusion in the plan applied for losses caused or contributed to by illness or its treatment. Following an extensive administrative appeal submitted by Mr. Kleinsteuber, which included evidence from Dana’s doctor and other records, MetLife reconsidered and acknowledged the death was accidental. However, it maintained the exclusion applied because the death was caused or contributed to by the treatment for her ESRD. After Mr. Kleinsteuber exhausted his administrative remedies, he filed suit in the United States District Court for the District of Minnesota. The district court granted summary judgment for MetLife, finding the exclusion applicable.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court held that MetLife provided a full and fair review and that its conflict of interest deserved little weight. The court interpreted the plan exclusion de novo, finding that the ordinary meaning of “caused or contributed to” included Dana’s death under these circumstances. Applying an abuse-of-discretion standard to MetLife’s ultimate decision, the court found substantial evidence supported the denial. As a result, the Eighth Circuit affirmed the district court’s judgment, upholding MetLife’s denial of benefits. View "Kleinsteuber v. Metropolitan Life Ins. Co." on Justia Law

A group of former employees of a company that operated a manufacturing facility in Virginia sued the company after it announced it would close and began terminating employees. They alleged violations of the Worker Adjustment and Retraining Notification Act (WARN Act) due to insufficient notice of the plant closure, and violations of the Employee Retirement Income Security Act (ERISA) relating to the improper termination of a severance plan. The employees initially named an investment group and several related parties as defendants, claiming they were alter egos or successors of the company and should be jointly liable. However, before trial, the employees voluntarily dismissed the investment group and related parties without prejudice, focusing instead on the liability of the company itself.The United States District Court for the Western District of Virginia granted summary judgment in part, including dismissing claims by employees who signed releases, and ultimately entered a money judgment against the company after a bench trial. The employees were unable to collect on this judgment due to the company's insolvency. They then filed a new lawsuit against the investment group and various related parties, seeking to enforce the prior judgment on alter ego and veil piercing theories and claiming federal jurisdiction under the WARN Act and ERISA.The United States Court of Appeals for the Fourth Circuit reviewed the district court's dismissal of the new lawsuit for lack of subject matter jurisdiction. The Fourth Circuit held that federal courts lack subject matter jurisdiction to enforce a prior federal judgment against parties not found liable in the original action, absent independent allegations of new federal statutory violations. The court affirmed the district court's dismissal, concluding that neither federal question jurisdiction nor ancillary jurisdiction applied because the plaintiffs did not allege new violations of the WARN Act or ERISA. View "Messer v. Garrison Investment Group, LP" on Justia Law