Justia ERISA Opinion Summaries

Two hospitals in Tennessee, Saint Francis Hospital and Saint Francis Hospital-Bartlett, sued Cigna Health and Life Insurance Company, claiming that Cigna routinely underpaid them for emergency services provided to Cigna members. The hospitals, which are out-of-network providers for Cigna, argued that Cigna had a quasi-contractual obligation to pay the reasonable value of their services based on federal and state laws requiring hospitals to treat emergency patients and insurers to cover emergency care.The United States District Court for the Western District of Tennessee dismissed the hospitals' claims. The court found that the hospitals' complaint did not meet the pleading standards of Rule 8, that Tennessee common law did not support their claims, and that the Employee Retirement Income Security Act (ERISA) preempted their claims.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's dismissal. The Sixth Circuit held that neither federal law (specifically the Affordable Care Act) nor Tennessee law imposed a duty on Cigna to pay the full value of out-of-network emergency services. The court noted that the ACA's requirement for insurers to provide "coverage" for emergency services did not mean that insurers had to pay the full cost. The court also found that Tennessee common law did not support the hospitals' claims for quantum meruit and unjust enrichment, as there was no contractual or statutory duty for Cigna to pay the full value of the services.The Sixth Circuit concluded that the hospitals' claims failed because they could not establish that Cigna had a legal obligation to pay more than what was stipulated in its contracts with its members. The court did not address the ERISA preemption issue, as the dismissal was affirmed on other grounds. View "AMISUB (SFH), Inc. v. Cigna Health & Life Ins. Co." on Justia Law

Tiara Yachts, Inc. hired Blue Cross Blue Shield of Michigan (BCBSM) to administer its self-funded healthcare benefits plan. Tiara Yachts alleges that BCBSM systematically overpaid certain claims, thereby squandering plan assets, and then profited from these overpayments through a program that clawed back the overpayments and kept a portion of the recovered funds. Tiara Yachts sued BCBSM under the Employee Retirement Income Security Act (ERISA), claiming breaches of fiduciary duty and self-dealing.The United States District Court for the Western District of Michigan granted BCBSM's motion to dismiss, holding that Tiara Yachts had not plausibly alleged that BCBSM acted as an ERISA fiduciary. The court also held that ERISA’s remedial provisions could not provide the relief Tiara Yachts sought.The United States Court of Appeals for the Sixth Circuit reviewed the case and reversed the district court's decision. The appellate court held that Tiara Yachts plausibly alleged that BCBSM acted as an ERISA fiduciary by exercising control over plan assets when it overpaid claims and by exercising discretion over its compensation through the Shared Savings Program (SSP). The court found that BCBSM’s control over the claims-processing apparatus and its ability to profit from overpayments through the SSP indicated fiduciary status.The Sixth Circuit also held that Tiara Yachts could seek recovery on behalf of the plan under 29 U.S.C. § 1132(a)(2) and could seek equitable relief, such as restitution and disgorgement, under 29 U.S.C. § 1132(a)(3). The court concluded that Tiara Yachts’ claims for restitution and disgorgement were equitable in nature and that the complaint plausibly alleged that BCBSM retained specific funds from the SSP, satisfying the traceability requirement for equitable relief. The case was remanded for further proceedings consistent with the appellate court's opinion. View "Tiara Yachts, Inc. v. Blue Cross Blue Shield of Michigan" on Justia Law

BlueCross BlueShield of Tennessee (BlueCross) is an insurer and fiduciary for an ERISA-governed group health insurance plan. A plan member in New Hampshire sought coverage for fertility treatments, which BlueCross denied as the plan did not cover such treatments. The Commissioner of the New Hampshire Insurance Department initiated an enforcement action against BlueCross, alleging that the denial violated New Hampshire law, which mandates coverage for fertility treatments. BlueCross sought to enjoin the state regulatory action, arguing it conflicted with its fiduciary duties under ERISA.The United States District Court for the Eastern District of Tennessee denied BlueCross's request for relief and granted summary judgment to the Commissioner. The court found that the Commissioner’s enforcement action was against BlueCross in its capacity as an insurer, not as a fiduciary, and thus was permissible under ERISA’s saving clause, which allows state insurance regulations to apply to insurers.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court’s decision. The Sixth Circuit held that the Commissioner’s action was indeed against BlueCross as an insurer, aiming to enforce New Hampshire’s insurance laws. The court noted that ERISA’s saving clause permits such state actions and that BlueCross could not use its fiduciary duties under ERISA to evade state insurance regulations. The court also referenced the Supreme Court’s decision in UNUM Life Insurance Co. of America v. Ward, which established that state insurance regulations are not preempted by ERISA when applied to insurers. Thus, the Sixth Circuit concluded that ERISA did not shield BlueCross from the New Hampshire regulatory action. View "BlueCross BlueShield of Tennessee v. Nicolopoulos" on Justia Law

Plaintiffs, current and former employees of DENSO International America, Inc., alleged that the company's 401(k) Plan overpaid for recordkeeping and administrative services, breaching the fiduciary duty of prudence under the Employee Retirement Income Security Act of 1974 (ERISA). They claimed that the Plan's fiduciaries failed to use their significant bargaining power to negotiate lower fees, resulting in excessive costs compared to similar plans.The United States District Court for the Eastern District of Michigan dismissed the plaintiffs' complaint, stating that it failed to provide the necessary "context specific" facts to support an ERISA overpayment-for-recordkeeping-services claim. The court found that the plaintiffs did not sufficiently detail the types and quality of services provided to the Plan compared to those provided to other plans.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The Sixth Circuit held that the plaintiffs did not plausibly allege a breach of the duty of prudence because they failed to provide specific details about the services received by the Plan and how they compared to those received by the comparator plans. The court emphasized that a meaningful benchmark is necessary to evaluate whether the fees were excessive relative to the services rendered. The court also noted that general allegations about the fungibility of recordkeeping services and the bargaining power of mega plans were insufficient without specific context.The Sixth Circuit concluded that the plaintiffs' complaint did not meet the required pleading standards and affirmed the district court's dismissal of the case. View "England v. DENSO International America, Inc." on Justia Law

Derek Kramer, the plaintiff, joined American Electric Power Service Corporation (AEP) in 2018 and later participated in the AEP Executive Severance Plan. In 2020, AEP terminated Kramer’s employment due to his executive assistant’s misuse of a company credit card and Kramer’s alleged interference with an investigation into his company-issued cell phone. Kramer applied for severance benefits under the Plan, but AEP denied his claim, citing termination for cause. Kramer appealed the decision, but the Plan’s appeal committee upheld the denial.Kramer then filed an ERISA action in the United States District Court for the Southern District of Ohio, seeking benefits and alleging interference. He also demanded a jury trial. The district court struck his jury demand, limited discovery to procedural claims, and denied his motion to compel the production of documents protected by attorney-client privilege. The court ultimately granted judgment in favor of AEP and the Plan, finding that the denial of benefits was not arbitrary and capricious.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court’s rulings, holding that the Plan was a top-hat plan exempt from ERISA’s fiduciary requirements, thus the fiduciary exception to attorney-client privilege did not apply. The court also upheld the district court’s decision to strike Kramer’s jury demand, citing precedent that ERISA denial-of-benefits claims are equitable in nature and not subject to jury trials. Finally, the court found that the district court correctly applied the arbitrary-and-capricious standard in reviewing the denial of benefits and that the decision was supported by substantial evidence. The Sixth Circuit affirmed the district court’s judgment in favor of AEP and the Plan. View "Kramer v. American Electric Power Service Corp. Executive Severance Plan" on Justia Law

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

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