Justia ERISA Opinion Summaries

Plaintiffs, employed by defense contractor Qinetiq to work on a military base in Iraq, were enrolled in Qinetiq’s Basic Long Term Disability, Basic Life, and Accidental Death and Dismemberment insurance policies, governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, under a single contract with Prudential. Qinetiq paid the premiums. Plaintiffs also purchased, with their own funds, supplemental coverage under the same terms as the basic policies; there was a single summary plan description. An employee would file a single claim for basic and supplemental coverage benefits. The plan booklets provided that loss is not covered if it results from war, or any act of war, declared or undeclared. These exclusions applied to both the basic and supplemental policies. The plaintiffs were not otherwise uninsured for excluded injuries. Qinetiq obtained insurance required by the Defense Base Act, 42 U.S.C. 1651. After Prudential denied claims, the plaintiffs sued, alleging violations of the state consumer fraud acts and the Truth in Consumer Contract, Warranty, and Notice Act; breach of contract and breach of the implied covenant of good faith and fair dealing; and intentional or negligent misrepresentation or omission. They contended that Prudential fraudulently induced them to buy supplemental coverage knowing that any claim they filed would likely be subject to the war exclusions, rendering supplemental coverage effectively worthless. The district court dismissed, treating the basic and supplemental policies as components of a single plan, and holding that all state law claims were preempted by ERISA. The Third Circuit affirmed, holding that the supplemental coverage cannot be “unbundled” from ERISA coverage. View "Menkes v. Prudential Ins. Co. of Am." on Justia Law

Hayssen and its employees were parties to a Plant Closing Agreement that promised medical benefits upon retirement. In 1996, Bemis acquired Hayssen and assumed its obligations. Bemis reduced benefits under the Agreement: increasing co-pays and deductibles and eliminating its prescription drug program. Former employees sued under the Employee Retirement Income Security Act, 29 U.S.C. 1132, and the Labor-Management Relations Act, 29 U.S.C. 185(a). The court certified a class, but granted summary judgment to Bemis, reasoning that the Agreement did not establish a lifetime interest in a certain level of benefits. About a month later, Bemis eliminated all medical benefits under the Agreement. The Seventh Circuit reversed, concluding that the parties intended to provide lifetime medical coverage. On remand, the court granted a preliminary injunction forcing Bemis to restore the benefits eliminated in 2009 and provide a basic Medicare Part D drug benefit. The court awarded fees and costs, finding that the company’s position was not substantially justified. The judge struck billing entries that were vague or for time not reasonably expended on the case, concluded that the lawyers’ billing rates were reasonable, and calculated the lodestar amount to reach an award of $403,053.75, for four years of advocacy, including an appeal and trial preparation. The Seventh Circuit affirmed. View "Temme v. Bemis Co., Inc." on Justia Law

Plaintiff filed suit on behalf of himself and other participants in RJR's 401(k) retirement savings plan (collectively, "the participants"), alleging that RJR breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., when it liquidated two funds. The court affirmed the district court's holding that RJR breached its duty of procedural prudence and therefore bore the burden of proof as to causation. The court concluded, however, that the district court failed to apply the correct "would have" instead of "could have" legal standard in assessing RJR's liability. Accordingly, the court reversed and remanded for the district court to determine whether, under the correct legal standard, RJR's imprudence caused that loss. View "Tatum v. RJR Pension Investment Committee" on Justia Law

In 2011, Michigan passed the Health Insurance Claims Assessment Act, Mich. Comp. Laws 550.1731–1741, to generate revenue needed to fund its obligations under Medicaid. The Act functions by imposing a one-percent tax on all “paid claims” by “carriers” or “third party administrators” to healthcare providers for services rendered in Michigan for Michigan residents. “Carriers” include sponsors of “group health plan[s]” set up under the strictures of the Employee Retirement Income Security Act, 29 U.S.C. 1002–1461. On top of the tax, every carrier and third-party administrator paying the tax must submit quarterly returns with to the Michigan Department of the Treasury and “keep accurate and complete records and pertinent documents as required by the department.” Every carrier and third-party administrator must also “develop and implement a methodology by which it will collect the [tax]” subject to several conditions. SIIA sought a declaratory judgment that ERISA preempted the Act, and an injunction, to prevent implementation and enforcement of the Act against the ERISA-covered entities. The district court dismissed, concluding that the Act did not offend ERISA’s express preemption clause because the Act did not “relate to” an ERISA-governed benefit plan. The Sixth Circuit affirmed, finding that the statute escapes the preemptive reach of ERISA. View "Self-Ins. Inst. of Am., Inc. v. Snyder" on Justia Law

In 2010, plaintiffs and Tidyman’s Management Services Inc. (TMSI) filed a complaint against Michael A. Davis and John Maxwell in their capacities as officers and directors of TMSI and/or its subsidiary, Tidyman’s LLC, alleging breach of corporate duties arising out of a merger between TMSI and SuperValu, which created Tidyman’s LLC. Plaintiffs requested punitive damages and attorney fees. The merger at issue occurred despite advice from a financial advisor TMSI had retained that the company should be sold, and the complaint alleged that the directors and officers had misrepresented the merit of the transaction. TMSI is a Washington corporation with its principal place of business in Montana, and was a member of Tidyman’s LLC; employee shareholders owned TMSI. A corporate liability insurance policy was in place that purported to insure Davis and Maxwell against liability incurred in their positions as officers and directors of Tidyman’s LLC. The Policy was to provide a legal defense for Davis and Maxwell throughout the federal ERISA litigation. The issues this case presented to the Montana Supreme Court were: (1) whether the District Court was correct in concluding Montana law, rather than Washington law, applied in this case; (2) whether the District Court erred in concluding that the corporate liability insurer breached its duty to defend without analyzing coverage under the policy; (3) whether the District Court erred in denying the insurer a hearing and discovery on reasonableness and collusion related to the stipulated settlements; and (4) whether the District Court erred by awarding pre-judgment interest, or in its determination of when the interest began accruing. The Montana Court concluded that genuine issues of material fact regarding reasonableness precluded summary judgment on the amount of the stipulated settlements. Accordingly,the Court reversed judgment on the stipulated settlements and remanded this case for further proceedings. The Court affirmed on all other issues. View "Tidyman s et al. v. Davis et al." on Justia Law

The UMM Fund filed suit asserting three claims against the 210 Fund. The district court construed all three claims as pleading causes of action under section 502 of ERISA, 29 U.S.C. 1132(a)(3)(B), which provides a federal civil cause of action to an ERISA plan fiduciary to obtain equitable relief for harms resulting from violations of the terms of an ERISA plan and ERISA. The court concluded that the Section 515 claim was properly dismissed because the 210 Fund is not an employer and the 210 Fund's payments to the UMM Fund were not made in the interest of an employer; the district court erred in granting summary judgment in favor of the UMM Fund on its first two claims because the terms of each collective bargaining agreement (CBA) were not terms of an ERISA plan; and, although the UMM Fund has failed to state a claim under ERISA, the first two claims in the Amended Complaint can be construed as state law breach-of-contract claims. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Silverman v. Teamsters Local 210 Affiliated Health & Ins. Fund." on Justia Law

Plaintiffs initially filed suit in state court seeking to enjoin defendant insurers under New York law from obtaining reimbursement of medical benefits from plaintiffs' tort settlements. Defendants removed to federal court where the district court granted defendants' motion to dismiss under Rule 12(b)(6). The court held that plaintiffs' claims did not satisfy the Supreme Court's test for being subject to complete Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., preemption, which would have conferred federal subject-matter jurisdiction; such jurisdiction exists, however, under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d); therefore, the court reached the merits of the express preemption defense and concluded that N.Y. Gen. Oblig. Law 5-335 is saved from express preemption under ERISA section 514, as a law that "regulates insurance;" and therefore, the court vacated and remanded for further proceedings. View "Wurtz v. The Rawlings Co." on Justia Law

Employers that withdraw from underfunded multiemployer pension plans must pay their share of the shortfall. They can seek recalculation of the plans' assessment within 90 days, 29 U.S.C. 1399(b)(2)(A), and within another 60 days, may invoke a process that the Act calls arbitration, though it is neither contractual nor consensual. Central States Pension Fund concluded that US Foods has withdrawn in part and assessed liability in 2008 and in 2009. US Foods timely requested arbitration of the 2009 assessment, but did not timely seek arbitration of the 2008 assessment. In the Fund’s suit to collect the 2008 assessment, US Foods asked the court to order the arbitrator to calculate the amount due for 2008 and 2009 jointly. The court ruled that US Foods had missed the deadline for arbitral resolution of the 2008 assessment. US Foods appealed, relying on 9 U.S.C.16(a)(1)(B), which authorizes an interlocutory appeal from an order “denying a petition under section 4 of this title to order arbitration to proceed”. The Seventh Circuit dismissed for lack of jurisdiction. An order declining to interfere in the conduct of an arbitration is not an order “denying a petition under section 4 of this title to order arbitration to proceed” under section 16(a)(1)(B). View "Cent. States SE & SW Areas Pension Fund v. US Foods, Inc." on Justia Law

In 2005, General Warehouse, an employer obligated to contribute to the Central States Pension Fund on behalf of certain employees ceased to have an obligation to the Fund, which led to a complete withdrawal, incurring withdrawal liability of $1,262,568. Under the Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1301(b)(1), if a withdrawing employer is unable to pay in full, a pension plan can recover the deficiency jointly and severally from any other business under common control with the withdrawing The Fund sued to collect from General Warehouse, GEOBEO and other businesses under common control. The parties entered into a consent judgment, acknowledging that the named defendants were jointly and severally liable. The Fund then initiated an action to add the defendants to the group of business entities from which it can collect. The district court granted summary judgment in favor of the Fund. The Seventh Circuit affirmed, finding “overwhelming evidence” that the entities were under common control. View "Cent. States, Southeast SE & SW Areas Pension Fund v. CLP Venture LLC" on Justia Law

The New Jersey Prevailing Wage Act, N.J. Stat. 34:11-56.25 (PWA) provides that laborers on certain public works projects are to be paid the prevailing wage. Carpenters hired to work on the Revel Casino Project in Atlantic City claimed that the Revel Casino Project is a “public work” within the meaning of the PWA because it received financial assistance in the form of incentives, tax exemptions, and tax reimbursements from the New Jersey Economic Development Authority (EDA), which, they argued is a “public body” within the meaning of the Act. They assigned their claims for unpaid prevailing wages to the plaintiffs, employee benefit plans within the meaning of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and trust funds within the meaning of the Labor Management Relations Act (LMRA), 29 U.S.C. 141. The district court held that the claims were completely preempted under ERISA section 502(a). Although it did not directly address LMRA complete preemption, the court also noted that the complaint “seeks interpretation of the collective bargaining agreement.” The Third Circuit vacated and remanded with instructions to remand to state court, holding that neither statute completely preempts the PWA. View "NJ Carpenters v. Tishman Constr. Corp. of NJ" on Justia Law