Justia ERISA Opinion Summaries

The Sixth Circuit affirmed the Bankruptcy Court’s order in Conco’s Chapter 11 bankruptcy, interpreting Conco’s Confirmed Plan to prohibit the sale of the Employee Stock Ownership Plan (ESOP)-held Conco stock (Equity Interests) and enjoining any such sale through December 31, 2018. The creditor’s committee had agreed to support the Plan, which provided both defined distributions and contingent distributions, to be funded by the operation of the Conco’s business, to continue through December 31, 2018. The Plan guaranteed the creditors a higher recovery than if the business were sold. ESOP participants sued Conco, its Board of Directors, the ESOP, and ESOP Trustees (ERISA Litigation) claiming breach of fiduciary duties by not evaluating and responding to offers by to purchase the Equity Security Interests. The Bankruptcy Court found, and the Sixth Circuit agreed, that the four corners of the Confirmed Plan, and the creditors’ abandonment of an objection under the absolute priority rule of 11 U.S.C. 1129(b)1 to the ESOP’s retention of the Equity Interests, evidenced an intent for the Equity Interests not to be sold through December 31, 2018. View "In re: Conco, Inc." on Justia Law

Plaintiffs, CNH employees who retired between 1994 and 2004, filed suit in 2004, seeking a declaration that they were entitled to lifetime healthcare benefits without paying premiums, based on collective-bargaining agreements (CBAs), negotiated by UAW beginning in 1971. The case was remanded to the district court twice. While the second remand was pending, the Supreme Court (Tackett, 2015) abrogated Sixth Circuit precedent creating an inference in favor of employees in collective-bargaining cases. Initially, the district court ruled in favor of CNH, noting that it was “[c]onstrained by the Supreme Court’s decision” in Tackett. On reconsideration, the district court found not only that plaintiffs’ rights were vested even after Tackett, but also that CNH’s proposed changes were unreasonable. The Sixth Circuit affirmed as to vesting, noting that the CBA is ambiguous and extrinsic evidence indicated that parties intended for the healthcare benefits to vest for life. The court remanded because the court failed to properly weigh the costs and the benefits of the proposed plan, as previously instructed. “To find ambiguity in this case, partially from the silence as to the parties’ intentions, does not offend the Supreme Court’s mandate from Tackett that we not infer vesting from silence.” View "Reese v. CNH Industrial, N.V." on Justia Law

Plaintiffs, Medicare-eligible retirees from Kelsey-Hayes' Detroit automotive plant, retired before the plant’s 2001 closing and were members of a UAW bargaining unit. The final (1998) collective bargaining agreement (CBA) provided for comprehensive healthcare for retirees. A Plant Closing Agreement stated that it did not extinguish pension or retiree healthcare obligations. Kelsey-Hayes continued to provide retiree healthcare coverage for 10 years, consistent with the 1998 CBA. In 2011, Kelsey-Hayes announced that it was replacing the retirees’ group-insurance plan with company-funded health reimbursement accounts (HRAs) from which retirees could purchase individual Medicare supplemental insurance plans. In 2012, Kelsey-Hayes contributed $15,000 to each participant’s HRA; in 2013 and 2014, it contributed $4,300 per year. Plaintiffs sued under the Labor Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Income Security Act, 29 U.S.C. 1001. The Sixth Circuit stayed litigation pending the Supreme Court’s 2015 Tackett decision. The district court then granted the plaintiff-retirees partial summary judgment and ordered defendants to reinstate the group insurance plan. The Sixth Circuit affirmed, distinguishing the language and history of the Kelsey-Hayes CBAs from the language at issue in Tackett. Tackett explicitly overruled Sixth Circuit precedent and held that a presumption toward lifetime benefits violates basic principles of contract interpretation; however, pre-Tackett courts’ interpretation of language that parties subsequently agree to maintain can inform interpretation of their intent at the time they entered into the CBA. View "International Union, United Automobile, Aerospace & Agricultural Implement Workers of America v. Kelsey-Hayes Co." on Justia Law

The economic health of Cliffs, a publicly-traded iron-ore and coal-mining company, depends on Chinese economic growth. In 2011, Chinese construction projects drove iron-ore prices to all-time highs. Cliffs financed the purchase of Bloom Lake Mine in Quebec. Projecting that the mine would increase cash-flow, Cliffs upped its stock dividend to double the S&P 500 average. In 2012, a global demand slump halved the price of iron ore. The mine became a major liability. In 2013, Cliffs stock performed worse than any other company in the S&P 500. Cliffs lost 95% of its value between 2011 and 2015. Plaintiffs are Cliffs employees who participated in the company’s 401(k) defined-contribution plan, which allowed participants to invest in 28 mutual funds, including an array of target-date, stock, and bond funds, or an Employee Stock Ownership Plan (ESOP) that invested solely in Cliffs stock. If the employee failed to choose an investment option, the fiduciary directed contributions into a money-market fund. The Sixth Circuit affirmed dismissal of plaintiffs’ class action under the Employee Retirement Income Security Act, 29 U.S.C. 1104(a)(1), which claimed that the plan’s fiduciaries imprudently retained Cliffs stock as an investment option. The court stated that any change in policy with respect to diversification and ESOPs must come from Congress. View "Saumer v. Cliffs Natural Resources, Inc." on Justia Law

While Kwasny was managing partner at a now-dissolved law firm, the firm established a 401(k) profit-sharing plan for its employees. Kwasny was named as a trustee and fiduciary of the plan. Between September 2007 and November 2009, the plan sustained losses of $40,416.302 because plan contributions withdrawn from employees’ paychecks were commingled with the firm’s assets and were not deposited into the plan. In 2011, the Secretary of Labor received a substantiated complaint from a plan member; investigated; and filed suit to recover the lost funds, remove Kwasny as trustee and fiduciary of the plan, and enjoin Kwasny from acting as a plan fiduciary in the future. The Third Circuit affirmed summary judgment in favor of the Secretary, remanding for determination of whether the judgment should be offset by a previous Pennsylvania state court default judgment entered against Kwasny for the same misdirected employee contributions. The court rejected arguments based on res judicata and on the statute of limitations. There is no genuine issue of disputed fact regarding Kwasny’s violation of the Employee Retirement and Income Security Act. View "Secretary United States Department of Labor v. Kwasny" on Justia Law

Prather, age 31, tore his Achilles tendon. His surgery to repair the injury was uneventful. He returned to work. Four days later he collapsed, went into cardiopulmonary arrest, and died as a result of a blood clot in the injured leg that had traveled to a lung. Prather’s widow applied for benefits under his Sun Life group insurance policy (29 U.S.C. 1132(a)(1)), which limited coverage to “bodily injuries ... that result directly from an accident and independently of all other causes.” Sun Life refused to pay. The Seventh Circuit ruled in favor of Prather’s widow, noting that deep vein thrombosis and pulmonary embolism are risks of surgery, but that even with conservative treatment, such as immobilization of the affected limb, the insured had an enhanced risk of a blood clot. The forensic pathologist who conducted a post-mortem examination of Prather did not attribute his death to the surgery. Prather’s widow then sought attorneys’ fees of $37,170 under ERISA, 29 U.S.C. 1132(g)(1). The Seventh Circuit awarded $30,380, stating that there is no doubt of Sun Life’s culpability or of its ability to pay without jeopardizing its existence; the award of attorneys’ fees is likely to give other insurance companies in comparable cases pause; and a comparison of the relative merits of the contending parties clearly favors the plaintiff. View "Prather v. Sun Life Financial Insurance Co." on Justia Law

Plaintiff worked at a Maine law firm for more than twenty-five years and, for many years, was an equity partner. In 2012, Plaintiff filed a long term disability (LTD) claim with Defendant Standard Insurance Company, the claim administrator and insurer of the employee welfare benefit plan offered by Plaintiff’s law firm to its employees. The plan was insured by an LTD policy, also issued by Defendant and which covered Plaintiff. Defendant told Plaintiff that it would approve her claim and that it would use January 28, 2012 as the disability onset date. This appeal concerned only what disability onset year should be used to calculate Plaintiff’s monthly disability amount, Plaintiff arguing that the onset date was on November 2011. The district court entered judgment for Defendant. The First Circuit reversed, holding that Defendant’s decision to use the 2012 onset date was arbitrary and capricious. Remanded to the district court with direction to order Defendant to award Plaintiff retroactive benefits based on a disability onset date of no later than 2011. View "Doe v. Standard Insurance Co." on Justia Law

Plaintiff brought this case pursuant to the Employee Retirement Income Security Act (ERISA), seeking reimbursement for certain expenses connected with the treatment of her teenage son. The plan administrator, Blue Cross Blue Shield of Massachusetts HMO Blue, Inc. (BCBS) denied the portions of Plaintiff’s claim that were in dispute in this case. The district court upheld BCBS’s action. The First Circuit affirmed, holding that, applying the plain language of the ERISA plan, the clear weight of the evidence dictated a finding that the disputed charges were not medically necessary, as defined in the plan, and therefore were not covered. View "Stephanie C. v. Blue Cross Blue Shield of Massachusetts HMO Blue, Inc." on Justia Law

Plaintiffs are health care providers who furnish medical services to subscribers of employee health benefits plans. Defendants are health insurers, plan administrators, and/or claims administrators for the relevant employee benefit plans. These two cases involved reimbursement disputes: In DB Healthcare, Blue Cross determined that certain blood tests were investigational and thus excluded from coverage; In Advanced Women's Health Center, Anthem determined that the Center used faulty practices to bill for the tests and so was not entitled to reimbursement. At issue was whether a health care provider designated to receive direct payment from a health plan administrator for medical services was authorized to bring suit in federal court under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. The court held before, and reiterated, that health care providers are not "beneficiaries" within the meaning of ERISA's enforcement provisions. Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc. emphasized this rule and held that a non-participant healthcare provider cannot bring claims for benefits on its own behalf but must do so derivatively. The court concluded that the providers in DB Healthcare lacked derivative standing because they do not hold valid assignments. The court also concluded that the Center lacked derivative authority because the claims fell outside the scope of those assigned rights. Accordingly, the court affirmed the judgment. View "DB Healthcare, LLC v. Blue Cross Blue Shield of Arizona, Inc." on Justia Law

Plaintiffs were Cumberland University employees, participating in its 403(b) defined contribution pension plan. In 2009, the University adopted a five percent matching contribution. In 2014, the University amended the Plan to replace the five percent match: the University would determine the amount of its matching contribution on a yearly basis, retroactive to 2013. The University announced that its matching contribution for the 2013–14 and 2014-2015 years would be zero percent. The Plan stated: An Employer cannot amend the Plan to take away or reduce protected benefits under the Plan and that “all Plan Participants shall be entitled to . . . [o]btain, upon request to the Employer, copies of documents governing the operations of the Plan.” As of January 2017, the University had not produced a summary plan description after the 2009 Summary Plan Description, despite repeated requests, nor did it provide formal written notice of the amendment within a reasonable period. Plaintiffs filed a class action complaint, alleging violations of the Employee Retirement Income Security Act, 29 U.S.C. 1001, by wrongful denial of benefits, cutbacks, failure to provide notice, and breach of fiduciary duty. The district court dismissed without prejudice for failure to administratively exhaust the claims. The Sixth Circuit reversed, holding, as a matter of first impression, that plan participants need not exhaust administrative remedies before proceeding to federal court when they assert statutory violations under ERISA. View "Hitchcock v. Cumberland University 403(b) DC Plan" on Justia Law