Justia ERISA Opinion Summaries

A non-profit hospital ("plaintiff") that provided medical services to beneficiaries of Local 272 Welfare Fund ("Fund"), an employee benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1101, filed a complaint against defendants seeking payment for over $1 million in medical services provided to beneficiaries that the Fund had allegedly failed to reimburse. At issue was whether a healthcare provider's breach of contract and quasi-contract claims against an ERISA benefit plan were completely preempted by federal law under the two-pronged test for ERISA preemption established in Aetna Health Inc. v. Davila. The court held that an "in-network" healthcare provider may receive a valid assignment of rights from an ERISA plan beneficiary pursuant to ERISA section 502(a)(1)(B); where a provider's claims involved the right to payment and not simply the amount or execution of payment when the claim implicated coverage and benefit determinations as set forth by the terms of the ERISA benefit plan, that claim constituted a colorable claim for benefits pursuant to ERISA section 502(a)(1)(B); and in the instant case, at least some of plaintiff's claims for reimbursement were completely preempted by federal law. The court also held that the remaining state law claims were properly subject to the district court's supplemental jurisdiction.

The company purchased a disability benefits plan, regulated by the Employee Retirement Income Security Act. A part-owner and employee of the company received benefits for about four years before the insurer terminated benefits because her non-salary income was higher than her salary income had been. The plan defines "pre-disability earnings" as: "your monthly rate of earnings from the employer in effect just prior to the date disability begins" and "basic annual earnings" as the amount reported by the policyholder on a W-2, excluding commissions. The company argued that a provision allowing termination of benefits when "current earnings" reach a percentage of pre-disability earnings referred to earnings from all sources. The district court held that the employee was not entitled to benefits but denied the insurer reimbursement. The First Circuit reversed, in favor of the employee, finding that the insurer's interpretation of the plan was unreasonable.

A recent retiree (employee) unsuccessfully tried to enroll her adult dependent child in the medical plan. The district court found the plan administrator's decision to be in violation of ERISA and imposed penalties. The Seventh Circuit vacated in part and remanded to allow the plan administrator to make a decision under the correct contract language. The denial was incorrectly based on a version of the plan in effect at the time of application, rather than that in effect when the employee's ability to comply with a condition precedent to enrollment expired, but the language of the earlier plan was ambiguous and the evidence of the employee's compliance was unclear. The court affirmed an award of a $3,780 for failure to timely comply with the employee's first request for documents, but reversed a penalty of $11,440 for a second request, calling for documents that were not essential to the claim. The court remanded an award of attorney fees, stating outcome was "some success on the merits" for the employee but that the plan's position was not without merit.

The employee attempted to enroll in his employer's ERISA-regulated health care plan. The employer deducted premiums, but did not enroll the employee, who subsequently left the company and fell ill. The employee won $157,182 plus attorney fees under ERISA, then filed state law claims of fraud, misrepresentation, and breach of contract, which the employer removed to federal court. The district court denied remand and dismissed the claims as res judicata. The Tenth Circuit ordered remand to state court, holding that the state law claims are not completely preempted by ERISA and that the federal court did not have jurisdiction over those claims. While he was employed by the company, the employee would have had standing, under ERISA, to challenge the actions underlying the state claims; at the time he filed the suit, he did not have standing. Having already won an ERISA award, the employee no longer qualified as a former employee with a colorable ERISA claim.

The plaintiff's investment in his former employer's ERISA plan (Employee Retirement Income Security Act) was primarily in the employer's stock. The employer went out of business. The plaintiff, unable to recover from the plan, filed suit against the fiduciaries and an insurer. The district court found breach of fiduciary duty, but held that the plaintiff lacked standing to sue the insurer. The Seventh Circuit plan affirmed in part and remanded for calculation of damages. The plaintiff established breach of fiduciary duty. Although the plan was exempt from ERISA's diversification requirement, a prudent investor would not have remained so heavily invested in the employer's stock as its fortunes fell. It is arguable that the plaintiff waived the claim by initially agreeing to investment in the stock and not requesting diversification, but the burden of proving that defense was on the fiduciaries. The plan's exchange of "worthless stock for a worthless loan" was a violation of ERISA, but resulted in no damages. Rejecting a claim of adverse domination, the court affirmed that the plaintiff lacked standing to sue the insurer.

Participants in a defined-contribution retirement plan filed a class action suit under the Employee Retirement Income Security Act (ERISA, 29 U.S.C. 1002(34)), alleging mismanagement and payment of excessive funds. The district court certified the class, but entered summary judgment in favor of the defendants. The Seventh Circuit reversed in part, first upholding denial of a motion to amend the complaint and the court's decision to strike expert testimony relating to matters not in the original complaint. The court remanded a count it characterized as alleging that prudent fiduciaries, armed with the information presented to fiduciaries between 2002 and 2004, would have at least decided between maintaining the status quo and making changes to the common stock funds to limit investment and transactional drag. There is a genuine issue of material fact as to whether defendants breached the prudent man standard of care by failing to make a reasoned decision under circumstances in which a prudent fiduciary would have done so. The court also remanded a claim that prudent fiduciaries would have solicited competitive bids for record-keeping services on a periodic basis. The court affirmed summary judgment on a claim relating to the trustee's compensation including interest income from "float."