Justia ERISA Opinion Summaries

Plaintiff sued defendant alleging breach of fiduciary duty and sought damages under the "other appropriate equitable relief" provision of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. 1132(a)(3), where defendant denied plaintiff's life insurance coverage claims for her deceased daughter on the grounds that her daughter did not qualify for coverage under the plan's "eligible dependent children" provision. At issue was whether section 1132(a)(3) allowed the remedy of surcharge, which would permit recovery of the life insurance proceeds lost by plaintiff because of defendant's breach of fiduciary duty. Also at issue was whether the court should recognize equitable estoppel as part of the common law of ERISA. Further at issue was whether the district court erred in granting plaintiff's motion for summary judgment. The court held that the remedy of surcharge was not available under section 1132(a)(3) and that the district court did not err in limiting plaintiff's damages to the premiums withheld by defendant where plaintiff sought a legal, not equitable, remedy, and that, to the extent plaintiff sought to sanction defendant, this remedy was also not allowed under ERISA. The court also declined to use estoppel principles to modify the unambiguous terms of an ERISA plan. The court further held that the district court did not err in granting plaintiff's motion for summary judgment where defendant lacked standing to prosecute its cross-appeal where defendant was not aggrieved by a judgment requiring it to pay an amount that it always agreed that it owed and where defendant already refunded the premiums.

Respondents, on behalf of beneficiaries of the CIGNA Corporation's ("CIGNA") Pension Plan, challenged the new plan's adoption, claiming that CIGNA's notice of the changes was improper, particularly because the new plan in certain respects provided them with less generous benefits. At issue was whether the district court applied the correct legal standard, namely, a "likely harm" standard, in determining that CIGNA's notice violations caused its employees sufficient injury to warrant legal relief. The Court held that although section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1022(a), 1024(b), 1054(h), did not give the district court authority to reform CIGNA's plan, relief was authorized by section 502(a)(3), which allowed a participant, beneficiary, or fiduciary "to obtain other appropriate relief" to redress violations of ERISA "or the [plan's] terms." The Court also held that, because section 502(a)(3) authorized "appropriate equitable relief" for violations of ERISA, the relevant standard of harm would depend on the equitable theory by which the district court provided relief. Therefore, the Court vacated and remanded for further proceedings.

The employee failed to provide information requested to supplement his request for leave under the Family and Medical Leave Act (FMLA), exhausted his vacation time, was discharged for insubordination, and applied for benefits through a plan covered by the Employee Retirement Income Security Act, 29 U.S.C. 1001. The administrator denied the claim because the plan specifically excludes discharge for insubordination. A review committee affirmed. The district court entered summary judgment upholding the denial. The Sixth Circuit affirmed, holding that the administrator was not required to go beyond the language of the plan and determine whether the termination violated FMLA. The administrator did not have the ability to resolve the FMLA claim between the employee and employer and it is irrelevant that the review committee made some effort to consider the FMLA issue.

The plaintiff stopped working in November, 2005, due to a variety of ailments, and filed a disability claim in August, 2007. The claim was denied in September. The plaintiff's appeal, received in April, 2008, 11 days after the stated 180-day deadline, was denied. She filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132. A magistrate upheld the denial. The Seventh Circuit affirmed. The plaintiff failed to exhaust administrative remedies. The plan has a clear deadline; the plaintiff was not denied meaningful access to review procedures and did not allege that pursuing administrative remedies would be futile. The court rejected a "substantial compliance" argument, noting that the plaintiff did not offer an explanation for the late filing. The Plan was not required to show prejudice as a result of the delay to justify rejecting the claim. Letters sent by the plaintiff could not reasonably be construed as notice of appeal. The Plan has procedures to minimize conflicts of interest and its refusal to consider the appeal was not arbitrary.

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.

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."