Justia ERISA Opinion Summaries

A multiemployer pension fund managed by the Operating Engineers Local 324 Pension Fund assessed withdrawal liability against Ace-Saginaw Paving Company after Ace partially withdrew from the fund in December 2018. The dispute centered on the interest rate assumption used to calculate the withdrawal liability. Ace argued that the rate should match the fund’s minimum funding interest rate of 7.75%, resulting in a lower liability, while the fund’s actuary used a much lower rate of 2.27% (the PBGC rate), resulting in a significantly higher liability. The actuary’s choice of rate was based on policy considerations and a desire to protect the fund’s remaining employers, rather than his best estimate of the fund’s anticipated investment experience.The parties proceeded to arbitration, as required by ERISA. The arbitrator found that the actuary’s use of the 2.27% rate violated 29 U.S.C. § 1393(a)(1) because it was not the actuary’s best estimate of anticipated experience under the plan. The arbitrator ordered the fund to recalculate Ace’s withdrawal liability using a rate that complied with the statutory requirements. The United States District Court for the Eastern District of Michigan affirmed the arbitrator’s findings and granted summary judgment to Ace on the statutory violation, but declined Ace’s request to require use of the minimum funding rate as the remedy, instead allowing the fund’s actuary another opportunity to select a compliant rate.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court’s judgment. The court held that the actuary’s use of the PBGC rate was not his best estimate and thus violated ERISA. The court also held that, on remand, the actuary may use a different rate from the minimum funding rate only if it is justified by factors that improve the accuracy of the withdrawal liability calculation, not by policy considerations. The court denied both parties’ requests for attorney’s fees. View "Ace-Saginaw Paving Co. v. Operating Engineers Local 324" on Justia Law

The case involves a dispute over the management of an ERISA fund, specifically the Southern Ohio Painters Health and Welfare Plan and Trust. Plaintiffs, including union-appointed trustees and the International Union of Painters and Allied Trades District Council No. 6, allege that two union-appointed trustees, Smith and Clark, have engaged in actions that violate their fiduciary duties. These actions include procedural changes that benefit themselves and undermine the union's authority, such as amendments to the Trust Agreement that make it difficult to remove trustees and provide benefits to retired trustees.The United States District Court for the Southern District of Ohio dismissed the plaintiffs' claims against the employer-appointed trustees and denied the plaintiffs' request for a preliminary injunction. The plaintiffs sought to remove Smith and Clark as trustees, terminate their employment with the Fund, and prevent the Fund from paying their legal expenses, among other relief. The district court found that the plaintiffs failed to demonstrate irreparable harm, a necessary requirement for a preliminary injunction.The United States Court of Appeals for the Sixth Circuit reviewed the district court's denial of the preliminary injunction. The appellate court affirmed the district court's decision, agreeing that the plaintiffs did not show they would suffer irreparable harm without the injunction. The court noted that the plaintiffs' concerns about self-dealing and the inability to exercise fiduciary duties were speculative and could be addressed through monetary damages. The court also declined to exercise pendent jurisdiction over the district court's dismissal of the claims against the employer-appointed trustees, as the issues were not inextricably intertwined with the appeal of the preliminary injunction denial. View "Int'l Union of Painters & Allied Trades v. Smith" on Justia Law

The Grand Traverse Band of Ottawa and Chippewa Indians and its employee welfare plan (the Plan) alleged that Blue Cross Blue Shield of Michigan (Blue Cross) breached fiduciary duties under ERISA and related duties under Michigan state law. The Tribe claimed that Blue Cross submitted false claims, causing the Tribe to overpay for hospital services. The Tribe also alleged violations of the Michigan Health Care False Claims Act (HCFCA) and sought to amend its complaint to include additional facts.The United States District Court for the Eastern District of Michigan dismissed the Tribe’s ERISA and common-law fiduciary duty claims as time-barred, granted summary judgment to Blue Cross on the HCFCA claim, and denied the Tribe’s motion for leave to amend its complaint a second time. The court found that the Tribe had actual knowledge in 2009 that it was not receiving Medicare-Like Rates (MLR) and thus the claims were time-barred. The court also concluded that Blue Cross was not directly governed by the MLR regulations, and therefore, the Tribe could not prove a violation of the HCFCA based on Blue Cross’s failure to apply MLR.The United States Court of Appeals for the Sixth Circuit affirmed the district court’s decisions. The appellate court agreed that the Tribe’s fiduciary duty claims were time-barred because the Tribe knew in 2009 that it was not receiving MLR. The court also upheld the summary judgment on the HCFCA claim, finding that the MLR regulations did not apply to Blue Cross. Additionally, the court found no error in the district court’s denial of the Tribe’s motion for leave to amend its complaint, as the proposed amendments would not have cured the deficiencies in the ERISA claim. View "Grand Traverse Band of Ottawa & Chippewa Indians v. Blue Cross Blue Shield of Michigan" on Justia Law

A group of former managers of Ruby Tuesday, Inc. participated in two top-hat retirement plans administered by Regions Bank. These plans were unfunded and designed for high-level employees, meaning they were exempt from certain ERISA fiduciary duties. When Ruby Tuesday filed for bankruptcy, the managers lost their benefits and sued Regions Bank, alleging breaches of state-law fiduciary, trust, contract, and tort duties. They also sought equitable relief under ERISA to recover their lost benefits.The United States District Court for the Eastern District of Tennessee dismissed the state-law claims, ruling that ERISA preempted them. The court also granted summary judgment to Regions Bank on the ERISA claim, concluding that the requested monetary relief did not qualify as equitable relief under ERISA.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court's decision, holding that ERISA preempted the state-law claims because they related to an ERISA-covered plan. The court emphasized that allowing state-law claims would undermine ERISA's uniform regulatory scheme. Additionally, the court held that the monetary relief sought by the plaintiffs did not qualify as equitable relief under ERISA. The court reasoned that the plaintiffs' request for an "equitable surcharge" was essentially a request for legal damages, which ERISA does not permit under its equitable relief provision.Thus, the Sixth Circuit affirmed the district court's judgment in favor of Regions Bank, concluding that the plaintiffs could not pursue their state-law claims or obtain the requested monetary relief under ERISA. View "Aldridge v. Regions Bank" on Justia Law

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