Justia ERISA Opinion SummariesArticles Posted in U.S. Court of Appeals for the Sixth Circuit
Brown v. BlueCross BlueShield of Tenn., Inc.
Harrogate, a healthcare provider, participates in Blue Cross networks. Harrogate’s patients sign an “Assignment of Benefits,” allowing Harrogate to bill Blue Cross directly for services. The Provider Agreement allows Blue Cross to perform post-payment audits and recoup overpayments from Harrogate. Blue Cross paid Harrogate's claims for antigen leukocyte cellular antibody (ALCAT) tests, which purport to identify certain food allergies. Blue Cross claims that these tests have “little or no scientific rationale.” Investigational treatments are not “covered, compensable services” under Blue Cross’s Manual, which is incorporated by reference into the Provider Agreement. That Agreement also specifies that Harrogate may not “back-bill” patients for un-reimbursed, investigational treatments unless, before rendering such services, “the Provider has entered into a procedure-specific written agreement with the Member, which has advised the Member of his/her payment responsibilities.” Blue Cross began recouping ALCAT payments. Harrogate filed suit under the Employee Retirement Income Security Act. The district court dismissed, holding that Harrogate did not meet the statutory definition of “beneficiary” and had not received a valid assignment for the purpose of conferring derivative standing to bring suit under ERISA. The Seventh Circuit affirmed. While Harrogate had derivative standing through an assignment of benefits, its claim regarding recoupments falls outside the scope of that assignment. View "Brown v. BlueCross BlueShield of Tenn., Inc." on Justia Law
Hogan v. Jacobson
In 2011, Hogan sued the Life Insurance Company of North America for violating the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, by denying her benefits claim under a disability insurance policy. The Sixth Circuit affirmed the grant of judgment against her. While appeal was pending, Hogan filed a state court suit against two nurses who worked for the Life Insurance Company and who had provided opinions regarding Hogan’s eligibility for benefits after reviewing her claim. Hogan carefully pleaded her claims in the second suit to avoid reference to the Life Insurance Company or ERISA, alleging only that the nurses committed negligence per se by giving medical advice without being licensed under Kentucky’s medical-licensure laws. The defendants removed the case to federal court on the basis of ERISA’s complete-preemptive effect. The district court denied Hogan’s attempts to remand the case to state court and later granted the defendants’ motion to dismiss. The Sixth Circuit affirmed the denial of remand and the dismissal. Hogan’s artfully pleaded state-law claims are simply claims for the wrongful denial of benefits under an ERISA plan that arise solely from the relationship created by that plan. The court denied defendants’ motion for sanctions on appeal because Hogan’s arguments were not frivolous. View "Hogan v. Jacobson" on Justia Law
United Food & Commercial Workers v. Rubber Assocs., Inc.
During negotiations, Rubber Associates proposed to the Union that it decrease its contribution rate to the United Food and Commercial Workers Union Employer Pension Fund (governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001) from 62 cents per hour to 30 cents per hour. The Fund’s actuary opined that collecting withdrawal liability would result in a better funding status for the Fund than accepting reduced contributions. Rubber Associates agreed to maintain its previous contribution rate. Negotiations resumed without success. The Union authorized a strike, which lasted for 17 months. After the Union unilaterally disclaimed interest in representing its employees, Rubber Associates was deemed to have withdrawn from the Fund, pursuant to the Multiemployer Pension Protection Amendments Act (MPPAA). The Fund calculated Rubber Associates’ withdrawal liability obligation at $1,713,169, which the arbitrator awarded in full. The Fund sued to enforce the award. Rubber Associates counterclaimed that, because withdrawal from the Fund was union-mandated, its liability should be calculated by an alternate method, making its liability only $312,000. The Sixth Circuit affirmed dismissal of the counterclaim, declining to recognize a claim under the federal common law of ERISA for equitable relief in the case of union-mandated withdrawals. View "United Food & Commercial Workers v. Rubber Assocs., Inc." on Justia Law
Pfeil v. State St. Bank & Trust Co.
Under the Employee Retirement Income Security Act, 29 U.S.C. 1001, plan fiduciaries have a duty of prudence that generally requires diversification. To “solve the dual problems of securing capital funds for necessary capital growth and of bringing about stock ownership by all corporate employees,” Employee Stock Ownership Plans (ESOPs) are permitted to invest primarily in qualifying employer securities, rather than diversifying across securities of many companies. In 1995, the Third and Sixth Circuits adopted a presumption that an ESOP fiduciary’s decision to remain invested in employer securities is prudent. In 2008, GM faced severe business problems that resulted in its bankruptcy. GM employees, invested in the GM ESOP, sued State Bank, the fiduciary of the GM Common Stock Plan. That Plan lost money in 2008, but State declined to stop buying GM stock until November, 2008, and did not sell GM stock until March, 2009. In 2010, the district court dismissed, applying the presumption of prudence. In 2012, the Sixth Circuit remanded. After class certification, the district court, applying the presumption, granted State summary judgment. In the meantime, the Supreme Court abrogated the presumption altogether. The Sixth Circuit affirmed summary judgment, noting that during the relevant period, State’s managers repeatedly discussed whether to continue the GM investments, engaging in a “prudent process.” View "Pfeil v. State St. Bank & Trust Co." on Justia Law
Durand v. Hanover Ins. Group, Inc.
In 2007, Durand filed an Employee Retirement Income Security Act, 29 U.S.C. 1001–1461 (ERISA) class action against her former employer and the pension plan it sponsors, challenging the projection rate used by the Plan to calculate the lump-sum payment Durand elected to receive after ending her employment at the Company in 2003. The Plan then used a 401(k)-style investment menu to determine the interest earned by members’ hypothetical accounts. Durand alleged that it impermissibly used the 30-year Treasury bond rate instead of the projected rate of return on her investment selections in the “whipsaw” calculation required under pre-2006 law. The Sixth CIrcuit reversed dismissal for failure to exhaust administrative remedies. Defendants then answered the complaint and raised defenses, including that the claims of putative class members “who received lump-sum distributions after December 31, 2003” were barred due to an amendment to the Plan that took effect after that date. Plaintiffs argued that the 2004 Amendment was an illegal reduction or “cutback” in benefits. The Sixth Circuit affirmed that the “cutback” claims were time-barred and did not relate back to the “whipsaw” claim asserted in the original class complaint. View "Durand v. Hanover Ins. Group, Inc." on Justia Law