Justia ERISA Opinion Summaries

Schorsch enrolled in a long-term disability plan in 1991, but apparently never received a summary plan description or explanation of the Employee Retirement Income Security Act, 29 U.S.C.1132. In 1992 she was in an automobile accident; in 1993 Schorsch began receiving disability benefits. In 2006, at the plan’s request, Schorsch underwent a medical exam, which resulted in a report finding her capable of performing a medium duty job. The plan notified Schorsch that it would terminate her benefits, but did not mention a surveillance report, which was part of the determination. , Schorsch’s counsel sent a letter, but neither Schorsch nor her attorney submitted a request for review. The plan notified Schorsch that the appeals period had passed. Schorsch’s claimed breach of contract and unreasonable denial of benefits under Illinois law and ERISA violations. The plan had lost the administrative record relating to Schorsch’s claim. The district court granted summary judgment on the ground of failure to exhaust administrative remedies. The Seventh Circuit affirmed. There are exceptions that may excuse a failure to exhaust, but Schorsch offered no evidence of reasonable reliance on information missing from the notice or that alleged deficiencies were material. View "Schorsch v. Reliance Standard Life Ins. Co." on Justia Law

This appeal and purported class-appeal primarily concerned two issues arising under the Employee Retirement Income Security Act of 1974 (ERISA), 28 U.S.C. 1001 et seq. The first issue was whether trustees of a multi-employer pension fund acted as fiduciaries when they amended the pension plan. The second issue was whether the claims asserted in this case were time-barred. The court concluded that the dismissal of Counts I-V was proper because the trustees were not acting as fiduciaries in amending the Plan, and in reaching that conclusion, the court deemed the contrary rulings of the court in Chambless v. Masters, Mates & Pilots Pension Plan and Siskind v. Sperry Retirement Program, to have been abrogated by subsequent decisions of the Supreme Court. The court also concluded that fact issues remained as to whether Counts VII-IX were properly dismissed as time-barred. View "Janese v. Fay" on Justia Law

Plaintiffs are retirees who received benefits under Commonwealth Industries’ pension plan. They allege that the Plan underpaid them, in violation of the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B), when it did not include a subsidy for early retirement in its benefit calculations when it switched from a defined-benefit to a cash-balance plan in 1998. The district court dismissed all but one plaintiff (Corley) on limitations grounds and granted summary judgment to the defendants on the merits of Corley’s claims. The court reasoned that, as of 1998, Corley was not yet entitled to his early-retirement subsidy because he was then not yet 55, so the early-retirement benefit had not accrued yet, and the amendment did not reduce any accrued benefit. The Sixth Circuit affirmed with respect to the time-barred plaintiffs, but vacated as to Corley. On remand, the district court should consider whether the benefits payable to Corley under the relevant versions of the Plan constituted “an early retirement benefit” or “a retirement-type subsidy” which would be protected from elimination or reduction, or “an optional form of benefit” which would only be protected from elimination, 29 U.S.C. 1054(g)(2)(A), (B).View "Fallin v. Commonwealth Indus., Inc." on Justia Law

Plaintiffs are retired unionized employees of defendant and were covered by collective bargaining agreements that addressed healthcare benefits. The parties contest whether the CBAs guaranteed employees and their spouses lifetime healthcare benefits after retirement. After retiring, the employees and spouses continued to receive healthcare insurance from defendant. Between ages 62 to 65, defendant paid 80% of the premium costs. When the retirees turned 65, defendant assumed 100% of premium costs. In 2006, defendant informed plaintiffs that the company was instituting a new healthcare plan that would no longer cover 100% of the premiums. Plaintiffs claimed violations of the Labor Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Income Security Act, 29 U.S.C. 1132. The district court ruled in plaintiffs’ favor as to employee coverage, but in favor of defendant as to spouses. The Sixth Circuit reversed in part, in favor of plaintiffs. Although healthcare is a “welfare benefit,” not entitled to the same ERISA protection as pension benefits, employers are free to waive their power to alter welfare benefits. Defendant did so by offering vested healthcare coverage to retired employees and spouses, and by agreeing that CBAs could only be modified with signed, mutual consent of the parties. View "Moore v. Menasha Corp." on Justia Law

Eloise Walker, mother of the decedent, appealed the grant of summary judgment in favor of Pamela Wright-Dallas, the named beneficiary under the decedent's benefits plans. Walker argued that the district court erred because it made a ruling without first reviewing the entire administrative record, and in the alternative, the district court erred by applying the wrong standard of review. The court found no plain error and rejected Walker's claim that the district considered an inadequate record; the district court properly applied the abuse-of-discretion standard; and a heightened standard of review was not warranted. Accordingly, the court affirmed the judgment. View "Trustees of the Local No. 1, et al. v. Walker" on Justia Law

Miller, a Fund beneficiary, fell from a ladder and was injured. He hired attorney Darr on a contingent fee basis to sue the person who was supposed to hold the ladder. The Fund advanced $86,709.73 in medical and disability benefits on the condition that Miller repay from any recovery, without deducting attorneys’ fees. Miller and Darr, signed a subrogation agreement. The lawsuit settled for $500,000. Calculating his fee based on $413,290.27, Darr submitted $57,806.48 to the Fund, stating that he was withholding $28,903.25 as a fee. To avoid jeopardizing Miller’s benefits Darr later submitted the $28,903.25. The Fund indicated that if Darr pursued his claim, it would consider Darr and Miller in breach of Plan terms and in repudiation of the subrogation agreement and would consider terminating coverage and seeking relief under ERISA. Darr sued the Fund in Illinois state court under the common fund doctrine, which permits a party who creates a fund in which others have an interest to obtain reimbursement for litigation expenses incurred in creating that fund. The district court enjoined Darr’s lawsuit. The Seventh Circuit vacated. A federal court may not enjoin “proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments,” 28 U.S.C. 2283.View "Trs. of the Carptenters' Health & Welfare Trust v. Darr" on Justia Law

Four plaintiffs each established an employee benefit plan under the Employee Retirement Income Security Act funded by a combination of employer contributions and covered employee payroll deductions; each entered into a Benefit Management Service Agreement with PBA, which specified that PBA would provide services, such as paying medical providers for claims incurred under the Plans. Each Agreement required PBA to establish a segregated bank account for each Plan into which it would deposit the funds that it received from the corresponding plaintiff for paying the medical claims and authorized PBA to pay medical claims by writing checks from this account. PBA not only failed to use funds supplied by plaintiffs to pay the claims incurred under the corresponding Plan, but commingled and misappropriated Plan funds. PBA did not pay all claims, despite receiving money for payment of those claims from the respective plaintiffs. The amounts unpaid for the plaintiffs are: $501,380.75, $409,943.88, $384,574.17, and $44,290.12. The district court found that PBA was a fiduciary under ERISA (29 U.S.C. 1002(21)(A)), had breached its fiduciary duties, and that ERISA preempted Permco’s breach-of-contract claims. The Sixth Circuit affirmed. View "Guyan Int'l, Inc. v. Prof'l Benefits Adm'rs, Inc." on Justia Law

Jeranek, a beneficiary of the Humana Plan, was hospitalized in 2006. Three days later, she was admitted at Nu-Roc Nursing Home. She was 88 years old and suffered from a variety of maladies that required her to use 14 prescription medications. A physician estimated at the time of her admission that Jeranek had a life expectancy of about one year. Jeranek was a resident at Nu-Roc for 702 days. On several occasions she declined medical treatment and her physician understood that she was to receive comfort care only. From November 15 until November 19, 2006, Jeranek’s stay at Nu-Roc was paid for by Medicare. Humana paid $50,097.67 to Nu-Roc for services provided from November 20, 2006, to September 30, 2007, but later determined that its disbursement had been a mistake, reasoning that “custodial” care was not covered by the Plan. Humana sought reimbursement for its previous payments and denied coverage for October 1, 2007 through October 22, 2008, when costs for Jeranek’s care totaled $64,669.74. The district court determined that Humana’s denial of coverage was not arbitrary and granted summary judgment for the Plan. The Seventh Circuit affirmed. View "Becker v. Chrysler LLC Health Care Benefits Plan" on Justia Law

Multiemployer pension plans are created by collective bargaining agreements to provide benefits to employees of different firms. When an employer withdraws from an MPP, the plan remains liable to employees who have vested pension rights, but can no longer look to the employer to cover these obligations. The Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1381-1461, assesses the employer with an exit price equal to its pro rata share of the funding shortfall (difference between present value of fund assets and present value of future obligations). Estimating the shortfall depends on estimating the amount by which current assets can be expected to grow with compound interest. To avoid having an employer new to a plan inherit withdrawal liability where existing members failed to fund the plan adequately in prior years, the statute creates default rules for assigning each employer a share of only so much of the shortfall as occurred while the employer was participating, 29 U.S.C. 1391(b)(2)-(4). Disputes about withdrawal liability are resolved by arbitration. The arbitrator in this case ruled that MMP trustees had over-assessed CPC’s withdrawal liability by $1,093,000. The district judge upheld the ruling. The Seventh Circuit affirmed, noting the “Hideous complexities” involved and its own lack of expertise. View "Chicago Truck Drivers, Helpers, & Warehouse Workers Union (Indep.) Pension Fund v. CPC Logistics, Inc." on Justia Law

The Fund is a multiemployer defined-benefit pension plan. Honerkamp, a New York employer, contributed to the Fund pursuant to collective bargaining agreements with its employees. In 2008, the trustees announced that the Fund was in critical status as defined by the Pension Protection Act of 1996, 29 U.S.C. 1085(b)(2) and began drafting a rehabilitation plan. Because the rehabilitation plan would figure prominently in negotiations between Honerkamp and the union, the parties extended existing agreements. The final rehabilitation plan set forth new schedules of reduced benefits and increased contributions. According to the plan, the Fund was unlikely to emerge from critical status within the statutory 10-year rehabilitation period because employer contribution rates required for that result would exceed amounts that employers would have had to pay to withdraw from the Fund. The trustees therefore designed schedules “to impose approximately the same burden actuarially on employers that a withdrawal from the [Fund] would produce.” Following negotiations, Honerkamp withdrew from the Fund. The trustees sued, arguing that the PPA prevented Honerkamp from withdrawing and required the company to make certain ongoing pension contributions pursuant to the rehabilitation plan. The district court granted summary judgment to Honerkamp. The Second Circuit affirmed. View "Trs. of Local 138 Pension Trust Fund v. F.W. Honerkamp Co. Inc." on Justia Law