Justia ERISA Opinion Summaries

Fessenden’s employment was terminated after he began receiving short-term disability benefits. He then applied for long‐term disability benefits through his former employer’s benefits plan. The plan administrator, Reliance, denied the claim. Fessenden submitted a request for review with additional evidence supporting his diagnosis of Chronic Fatigue Syndrome. When Reliance failed to issue a decision within the timeline mandated by regulations governing the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132, he filed suit. Eight days later, Reliance finally issued a decision, again denying Fessenden’s claim. The district court granted Reliance summary judgment. The Seventh Circuit vacated. If the decision had been timely, the court would have applied an arbitrary and capricious standard because the plan gave Reliance the discretion to administer it. When a plan administrator commits a procedural violation, however, it loses the benefit of deference and a de novo standard applies. The court rejected Reliance’s argument that it “substantially complied” with the deadline because it was only a little bit late. The “substantial compliance” exception does not apply to blown deadlines. An administrator may be able to “substantially comply” with other procedural requirements, but a deadline is a bright line. View "Fessenden v. Reliance Standard Life Insurance Co." on Justia Law

Michael Easterday (“Decedent”) and Colleen Easterday (“Easterday”) married in 2004. Prior to marriage, Decedent worked for Federal Express and became a participant in a pension plan established by this former employer. He also purchased a $250,000 life insurance policy. Decedent designated Easterday the beneficiary of both during their marriage. The parties separated in 2013, and ultimately filed for divorce under section 3301(c) of the Pennsylvania Divorce Code, which provided for a divorce by mutual consent of the parties. She and Decedent subsequently settled their economic claims in a property settlement agreement (“PSA”) executed December, 2013. Pertinent here, the PSA provided that the parties would each retain "100% of their respective stocks, pensions, retirement benefits, profit sharing plans, deferred compensation plans, etc. and shall execute whatever documents necessary to effectuate this agreement." The issue this case presented was one of first impression for the Pennsylvania Supreme Court, namely, the interplay between provisions of the Divorce Code, the Probate, Estates and Fiduciaries Code, and the Rules of Civil Procedure. An ancillary issue centered on whether ERISA preempted a state law claim to enforce a contractual waiver to receive pension benefits by a named beneficiary. It was determined Decedent’s affidavit of consent was executed more than thirty days prior to the date it was submitted for filing (and rejected). The Superior Court ruled that because the local Prothonotary rejected the filing of Decedent’s affidavit of consent due to a lack of compliance with Rule 1920.42(b)(2)’s thirty-day validity requirement, grounds for divorce had not been established in accordance with section 3323(g)(2) of the Divorce Code at the time of Decedent’s death. Because the Decedent’s affidavit of consent was not filed, section 6111.2 of the PEF Code did not invalidate Easterday’s designation as the beneficiary of Decedent’s life insurance policy. Furthermore, the Superior Court determined ERISA did not preempt the state law breach of contract claim to recover funds paid pursuant to an ERISA-qualified employee benefit plan. The Pennsylvania Supreme Court affirmed the Superior Court's judgment. View "In Re: Estate of Easterday" on Justia Law

Lacko began working for BKD’s predecessor in 1999 and worked until September 2015, when she was Senior Manager in the Audit Department, with an annual salary of $93,250.04. She applied for benefits under the short term disability (STD) plan, claiming gastroparesis, diabetes, rheumatoid arthritis, congestive heart failure, breathing difficulties, anxiety, musculoskeletal impairments, and cognitive difficulties related to the medication needed to manage the other conditions. Although United approved her claims for STD benefits three times, it denied benefits in June 2016 for the period beyond November 22, 2015, concluding there was no change in Lacko’s medical condition when she stopped working or subsequently. United also denied her claim for long term disability benefits. Lacko sued under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001.. The district court granted United summary judgment. The Seventh Circuit reversed. United failed to adequately address a determination that Lacko was entitled to Social Security disability benefits and failed to recognize the significant distinction between her ability to perform unskilled work and the job of Senior Manager. The court noted that the Plan’s requirement of a “change” in a person’s physical or mental capacity in order to qualify for benefits does not by its terms preclude a degenerative condition from qualifying a claimant for benefits and noted United's conflict of interests, having issued the policies and serving as claims review fiduciary. View "Lacko v. United of Omaha Life Insurance Co." on Justia Law

Plaintiff, a former employee of Semi, filed a derivative lawsuit on behalf of a defined-contribution retirement savings plan and, in the alternative, as a putative class action on behalf of plan participants, claiming that Semi and others breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA). The Eighth Circuit affirmed the district court's dismissal of the complaint for failure to state a claim and held that, under Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (2014), plaintiff's allegations were insufficient to plausibly state a claim for breach of the duty of prudence. Finally, the court affirmed the denial of plaintiff's motion for leave to amend his complaint because he failed to submit a proposed amended complaint with his motion. View "Usenko v. MEMC LLC" on Justia Law

The Fifth Circuit reversed the district court's judgment granting plaintiff past and future long term disability (LTD) benefits and rendered judgment for Reliance. After plaintiff stopped work for a chicken processing plant, she sought LTD benefits under a policy governed by the Employee Retirement Income Security Act (ERISA).The court held that Reliance's contention that its decision that working in cold areas was not a material duty of plaintiff's regular occupation was supported by substantial evidence. The court held that precedent did not require that an administrator consider each of a claimant's job duties to determine her regular occupation. In any event, Reliance's classification was easily based on substantial evidence. View "Nichols v. Reliance Standard Life Insurance Co." on Justia Law

Plaintiffs sought to represent a proposed class of 20,000 current and former Penn employees who participated in Penn's Retirement Plan since August 2010. The Plan is a defined contribution plan under 29 U.S.C. 1002(34), tax-qualified under 26 U.S.C. 403(b), offering mutual funds and annuities. The University matches employees’ contributions up to 5% of compensation. As of December 2014, the Plan offered 48 Vanguard mutual funds, and 30 TIAA-CREF mutual funds, fixed and variable annuities, and an insurance company separate account. In 2012, Penn organized its investment fund lineup into four tiers, ranging from lifecycle or target-date funds for the “Do-it-for-me” investor to the option of a brokerage account window for the “self-directed” investor looking for additional options. Plan participants could select a combination of funds from the investment tiers. TIAA-CREF and Vanguard charge investment and administrative fees. The district court dismissed plaintiffs’ suit for breach of fiduciary duty, prohibited transactions, and failure to monitor fiduciaries under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001-1461, which alleged that defendants failed to use prudent and loyal decision-making processes regarding investments and administration, overpaid certain fees by up to 600%, and failed to remove underperforming options from the Plan’s offerings. The Third Circuit reversed and remanded the dismissal of the breach of fiduciary duty claims. While the complaint may not have directly alleged how Penn mismanaged the Plan, there was substantial circumstantial evidence from which the court could “reasonably infer” that a breach had occurred. View "Sweda v. University of Pennsylvania" on Justia Law

Llenos hung a noose from a basement ceiling beam, stood on a stool with the noose around his neck, and stepped off. Llenos died as a result. When Tran came home, she found her husband’s body. Though his death was initially reported as suicide, the medical examiner concluded from sexual paraphernalia on Llenos’s body that he died performing autoerotic asphyxiation, a sexual practice by which a person purposefully restricts blood flow to the brain to induce a feeling of euphoria. Llenos was covered by basic and supplemental life insurance policies, providing $517,000 in coverage, and including Accidental Death & Dismemberment (AD&D) policy riders providing an additional $60,000 in coverage. Minnesota Life paid $517,000 but denied Tran’s claim for the additional $60,000 in AD&D coverage, concluding that Llenos’s death was not “accidental” and fell under an exclusion for intentionally self-inflicted injury. Tran filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1)(B). The district court awarded Tran judgment, reasoning that the insurer had conceded the death was accidental. The Seventh Circuit reversed, finding that autoerotic asphyxiation was the ultimate and the proximate cause of Llenos’s death. Strangling oneself to cut off oxygen to one’s brain is an injury. When that injury kills, it is “an intentionally self-inflicted injury which resulted in death,” regardless of whether it was done recreationally or with an intent to survive. View "Tran v. Minnesota Life Insurance Co." on Justia Law

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

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

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