Justia ERISA Opinion SummariesArticles Posted in Contracts
Raniero Gimeno v. NCHMD, Inc., et al.
Plaintiff’s spouse was a medical doctor employed by NCHMD, Inc., which is a subsidiary of NCH Healthcare System, Inc. NCHMD’s human resources staff helped the spouse complete enrollment paperwork for life insurance benefits through an ERISA plan. Plaintiff was the primary beneficiary under the plan, and NCH Healthcare was the named plan administrator. After Plaintiff’s spouse died, Plaintiff filed a claim for benefits with the plan’s insurance company. The insurance company refused to pay any supplemental benefits because it had never received the form. Plaintiff sued NCHMD and NCH Healthcare, asserting a claim under ERISA, 29 U.S.C. Section 1132(a)(1)(B). The district court granted Defendants’ motion to dismiss and denied Plaintiff leave to amend. On appeal, the Eleventh Circuit reversed the district court’s ruling. The court wrote that at issue is whether Section 1132(a)(3) creates a cause of action for an ERISA beneficiary to recover monetary benefits lost due to a fiduciary’s breach of fiduciary duty in the plan enrollment process? The court answered “yes”, and explained that under the court’s precedents, a court may order typical forms of equitable relief under Section 1132(a)(3). As the Supreme Court and many sister circuits have recognized, courts in equity could traditionally order an “equitable surcharge”— that a fiduciary pay a beneficiary for losses caused by the fiduciary’s breach of fiduciary duty. Accordingly, the court held that a beneficiary of an ERISA plan can bring a lawsuit under Section 1132(a)(3) against a fiduciary to recover benefits that were lost due to the fiduciary’s breach of its duties. View "Raniero Gimeno v. NCHMD, Inc., et al." on Justia Law
RiverStone Group, Inc v. Midwest Operating Engineers Fringe Benefit Funds
RiverStone operates quarries in three midwestern states. Under a collective bargaining agreement (CBA), RiverStone contributed to the Fringe Benefit Funds for certain employees, based on hours worked by the members of the bargaining unit. The CBA expired in May 2016. Nothing in the agreement imposes on RiverStone an obligation to make contributions after the agreement. RiverStone sought a declaratory judgment that it had no obligation to make contributions to the employees’ pension fund on behalf of individuals hired after the CBA expired. The Funds filed a counterclaim.The district court granted RiverStone summary judgment, holding that RiverStone did not have a contractual duty to contribute to the Funds on behalf of the new employees and that it lacked jurisdiction to evaluate noncontractual sources of liability, such as the National Labor Relations Act (NLRA) so the dispute fell within the exclusive jurisdiction of the National Labor Relations Board. The Seventh Circuit affirmed. The dispute is over an obligation that does not arise under any contract. Once a CBA has expired, the Employee Retirement Income Security Act, 29 U.S.C. 1145, does not confer jurisdiction on the district court to determine whether the employer’s failure to make post-contract contributions violated the NLRA. View "RiverStone Group, Inc v. Midwest Operating Engineers Fringe Benefit Funds" on Justia Law
Jacqueline Fisher v. Aetna Life Insurance Company
Plaintiff argued that the insurance contract between the parties was governed by a document provided on January 9, 2014, instead of February 19, 2014; that she is entitled to a judgment based on the insurance company’s miscalculation of her copay; and that even if the February 19 document controls, the Patient Protection and Affordable Care Act, 42 U.S.C. Section 18022(c)(1) (“ACA”), mandates that the insurance company must apply the individual out-of-pocket limit rather than the family out-of-pocket limit; and that the generic-brand cost differential Plaintiff paid for her name-brand medication should count toward her out-of-pocket limit. Plaintiff filed a breach of contract claim under ERISA, and the district court granted Defendant judgment on the breach of contract claims under ERISA. The Second Circuit affirmed the district court’s judgments. The court held that the February document governed the relationship between the parties because Plaintiff was on notice as to its terms. Further, Plaintiff is not entitled to a money judgment for her copay because Defendant agreed to pay Plaintiff the copay differential. The court also found that the ACA does not provide that the annual limitation on cost-sharing applies to all individuals regardless of whether the individual is covered under an individual “self-only” plan or is covered by a plan that is other than self-only for plans effective before 2016. Finally, the court held that the ACA nor the February document required Defendant to apply the brand-generic cost differential costs to Plaintiff’s out-of-pocket limit. View "Jacqueline Fisher v. Aetna Life Insurance Company" on Justia Law
Soto v. Disney Severance Pay Plan
Soto, a former Disney employee, alleged that Disney improperly denied her severance benefits upon her termination for physical illness that rendered her unable to work. Soto, a longtime employee had experienced a severe stroke and other medical problems, which left her unable to work. Disney formally terminated Soto’s employment, paid Soto sick pay, short-term illness benefits, and long-term disability benefits but did not pay her severance benefits. She filed suit under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1132(a)(1)(B); (a)(3), alleging that the Plan Administrator improperly determined that she did not experience a qualifying “Layoff” as required for severance benefits.The Second Circuit affirmed the dismissal of her case. Her complaint does not plausibly allege that the interpretation of “Layoff” and resulting denial of severance benefits to Soto were arbitrary and capricious. The Plan Administrator had reasoned bases, relating to taxation, for its interpretation of “Layoff” and consequent denial of severance benefits. The court noted an IRS regulation that defines an “involuntary” “termination of employment” as one arising from “the independent exercise of the unilateral authority of the [employer] to terminate to [employee’s] services, . . . where the [employee] was willing and able to continue performing services.” View "Soto v. Disney Severance Pay Plan" on Justia Law
Zirbel v. Ford Motor Co.
Donna’s former husband, Carl, retired from Ford in 1998 and participated in Ford’s retirement plan. “In the event of an error” in calculating a pension, the plan requires a beneficiary to return the overpayment “without limitation.” A committee runs the plan, with “discretionary authority" to reduce the repayment. Carl and Donna divorced in 2009. Donna received half of the marital portion of Carl’s pension. Donna agreed to postpone drawing the pension. In 2013, Ford offered a lump sum payment in place of future monthly benefits and a $351,690 retroactive payment for the postponed monthly benefits. After paying taxes, Donna invested some of the money and gave some to her children. Ford audited Donna’s benefits. It discovered that the retroactive pension payment mistakenly included benefits from 1998, when Carl retired, instead of 2009. The payment should have been $108,500. Ford requested repayment; the committee invited Donna to apply for a hardship reduction. The application required disclosure of her finances, including her other substantial retirement funds and an inheritance. Donna did not apply; she sued.The Sixth Circuit affirmed summary judgment for Ford. The committee’s actions were neither wrong nor arbitrary. Donna did not establish that Ford’s inclusion of an incorrect retroactive-payment amount constituted constructive fraud. She knew that the retroactive payment was too high when she got it, the plan put her on notice that Ford could demand repayment, and she has the capacity to return the money. View "Zirbel v. Ford Motor Co." on Justia Law
Moore v. Estate of Moore
Defendant Beulah Jean James Moore ("Beulah") appealed the grant of summary judgment entered in favor of plaintiff Billy Edward Moore ("Billy"), individually and as executor of the estate of his brother and Beulah's husband, Jimmy Lee Moore ("Jimmy"), in an action filed by Billy seeking the enforcement of a prenuptial agreement. The Alabama Supreme Court concluded summary judgment was appropriate. Beulah argued that language in the prenup discussing "spousal consents or waivers" granted her the proceeds of Jimmy's 401(k) plan and the pension plan unless a spousal waiver was executed . However, the Court found agreement made clear that Jimmy and Beulah agreed that the separate property each brought into the marriage--including the 401(k) plan and the pension plan--would remain separate. Jimmy and Beulah further agreed that neither of them would "claim, demand, assert any right to, take or receive any part of the property of the other as described on Schedules 1 and 2," which included the 401(k) plan and the pension plan. The second clause of section 4.4 allowed the owner of "an IRA or other plan account" to "direct" the "distribution of benefits" to one through a "beneficiary designation." Under this clause, Jimmy was permitted to name Billy as the designated beneficiary of the 401(k) plan and the pension plan, which he had done before he married Beulah, who had, in turn, renounced her claim to the plans. "Nothing in section 4.4 suggests that the failure to execute a spousal consent or waiver changes the parties' clear intent throughout the entire prenuptial agreement to renounce claims to the other's property; instead, the purpose of the requirement is to ensure that the parties' desires to retain control over the distribution of their accounts through a beneficiary designation is accomplished." Under those circumstances, Beulah breached the prenuptial agreement by retaining the benefits from the 401(k) plan and the pension plan. Thus, the trial court properly entered a summary judgment in favor of Billy. View "Moore v. Estate of Moore" on Justia Law
Stone v. Signode Industrial Group LLC
Signode assumed an obligation to pay health-care benefits to a group of retired steelworkers and their families. Signode then exercised its right to terminate the underlying benefits agreement and also stopped providing the promised benefits to the retired steelworkers and their families, despite contractual language providing that benefits would not be “terminated … notwithstanding the expiration” of the underlying agreement. The retirees and the union filed suit under the Labor-Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1132(a)(1)(B). The Seventh Circuit affirmed the district court’s entry of a permanent injunction, ordering Signode to reinstate the benefits. The agreement provided for vested benefits that would survive the agreement’s termination. While there is no longer a presumption in favor of lifetime vesting, the court applied ordinary contract law interpretation rules and concluded that the agreement unambiguously provided retirees with vested lifetime health-care benefits. Even if the agreement were ambiguous, industry usage and the behavior of the parties here provide enough evidence to support vesting such that resolution of any ambiguity in favor of the plaintiffs as a matter of law would still be correct. View "Stone v. Signode Industrial Group LLC" on Justia Law
Air Evac EMS, Inc. v. USAble Mutual Insurance Co.
The Eighth Circuit affirmed the district court's dismissal of Air Evac's claims in an action alleging that Arkansas Blue inadequately reimbursed Air Evac for ambulance services that Air Evac provided Arkansas Blue plan members. The court held that Air Evac's assignment did not convey the right to sue for equitable relief under section 1132(a)(3) of the Employee Retirement Income Security Act (ERISA). Furthermore, the district court did not err by finding that Arkansas Blue's conduct was not actionable because it fell within the Arkansas Deceptive Practices Act's safe harbor for actions or transactions permitted under the laws administered by the insurance commissioner. Finally, the district court did not err by rejecting Air Evac's claims for breach of contract and unjust enrichment. View "Air Evac EMS, Inc. v. USAble Mutual Insurance Co." on Justia Law
Encompass Off Solutions, Inc. v. Louisiana Health Service & Indemnity Co.
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
Pearce v. Chrysler Group LLC Pension Plan
In 2008, facing insolvency, Chrysler offered certain employees incentives to take early retirement, in addition to benefits they had earned under its Pension Plan. Pearce, then 60 years old, had worked for Chrysler for 33 years, and was eligible for the buyout plus the Plan’s 30-and-Out benefits--a monthly pension supplement “to help early retirees make ends meet until eligible for Social Security.” Chrysler provided Pearce with Pension Statements that repeatedly advised him to consult the Summary Plan Document (SPD). The SPD cautioned that “[i]f there is a conflict ... the Plan document and trust agreement will govern.” With respect to the 30-and-Out benefits, the SPD stated: “You do not need to be actively employed at retirement to be eligible ... you must retire and begin receiving pension benefits within five years of your last day of work for the Company.” Pearce believed that he could not lose his 30-and-Out benefits if he lost his job and declined the buyout offer. Chrysler terminated him that same day. Pearce was told that, because he had been terminated before retirement, he was ineligible for the 30-and-Out benefits; the SPD omitted a clause contained in the Plan, which said that an employee who was terminated was ineligible. Pearce sued under the Employee Retirement Income Security Act, 29 U.S.C. 1001. The Sixth Circuit reversed the district court’s grant of summary judgment to the Plan on Pearce’s request for reformation, affirmed summary judgment rejecting Pearce’s request for equitable estoppel, and remanded. Analyzing Pearce’s request for reformation under contract law principles, the court should consider information asymmetry--Chrysler had access to the Plan while Pearce did not but repeatedly referred Pearce to the SPD--and other factors. View "Pearce v. Chrysler Group LLC Pension Plan" on Justia Law