Articles Posted in US Court of Appeals for the Fifth Circuit

by
Plaintiff filed suit against Prudential and Turner for violations of the Employee Retirement Income Security Act of 1974 (ERISA) and state law. Prudential counterclaimed, seeking repayment of short term disability (STD) benefits it allegedly paid in error. The district court rejected plaintiff's claims and granted summary judgment for Prudential on its repayment counterclaim. The Fifth Circuit reversed and remanded the district court's dismissal of plaintiff's claims for fiduciary breach and failure to provide documents as to Turner and his claim for plan benefits and discrimination as to Prudential; reversed and remanded the grant of summary judgment to Prudential on its claim for reimbursement; affirmed the dismissal of plaintiff's fiduciary breach and failure to provide document claims against Prudential; affirmed the application of the abuse of discretion standard to plaintiff's claims for plan benefits; instructed the district court to consider anew any discovery requests related to plaintiff's surviving claims; and vacated the award of prejudgment interest to Prudential. View "Manuel v. Turner Industries Group, LLC" on Justia Law

by
Plaintiff filed suit alleging that DBG had discontinued its Employee Retirement Income Security Act (ERISA) health plan without notifying him, in violation of the Consolidated Omnibus Budget Recovery Act's (COBRA) notice requirements. The Fifth Circuit reversed the district court's dismissal of the COBRA claim and held that plaintiff adequately alleged that DBG did not fulfill its notice obligations under COBRA, and that DBG's letter was insufficient to support dismissal of his notice claim. The court held that the district court abused its discretion when it ruled that plaintiff was legally barred from obtaining a penalty award, and remanded the case to the district court to determine whether, in light of the foregoing analysis, to award a civil penalty, and if it did, the amount of such penalty. The court also remanded to the district court for it to determine whether attorneys fees were applicable in this case. View "Hager v. DBG Partners, Inc." on Justia Law

by
Plaintiff filed suit against Whole Foods executives, alleging that they breached their fiduciary duties by allowing employees to continue to invest in Whole Foods stock while its value was artificially inflated due to a widespread overpricing scheme. The Fifth Circuit affirmed the district court's dismissal of the claims, holding that plaintiff failed to plausibly allege an alternative action that defendants could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it. View "Martone v. Robb" on Justia Law

by
NCMC filed suit alleging that Aetna underpaid out-of-network providers like NCMC in violation of the Employee Retirement Income Security Act of 1974 (ERISA) and Texas law. Aetna counterclaimed, alleging that NCMC fraudulently and negligently misrepresented its billing practices by routinely waiving patient responsibilities yet billing Aetna for the total out-of-network cost. The Fifth Circuit held that Aetna's reliance on any alleged misrepresentation by NCMC was not justifiable and Aetna failed to establish a conflict in substantial evidence on this element of its fraud and negligent representation claims; any error in excluding Aetna's damages expert was harmless, and the district court did not abuse its discretion in excluding evidence of physician compensation; the district court abused its discretion by denying Aetna leave to amend without providing reasons; but denial of leave to amend was warranted because Aetna's counterclaims were untimely and unduly prejudicial to NCMC. In regard to NCMC's cross-appeal, the court held that any error in denying NCMC's motion to compel was harmless; the district court therefore did not err in granting Aetna's Rule 52(c) motion for judgment as a matter of law; but the district court's order denying attorney fees must be vacated and remanded for an explanation. Accordingly, the court affirmed in part, reversed in part, and remanded. View "North Cypress Medical Center Operating Co. v. Aetna Life Insurance Co." on Justia Law

by
The Fifth Circuit affirmed the district court's dismissal of plaintiff's third amended complaint for failure to state a claim. Plaintiff, a former employee of Idearc, Inc., alleged that defendants breached their duties of loyalty and prudence as Employee Retirement Income Security Act (ERISA) fiduciaries. The court held that the district court properly dismissed plaintiff's substantive duty-of-prudence claim in light of Fifth Third Bancorp v. Dudenhoeffer; plaintiff's duty-of-prudence claim could not rest solely on defendants' procedural failings; and plaintiff's allegations did not give rise to a plausible inference that defendants' concern about the stock price was self-serving. View "Kopp v. Klein" on Justia Law

by
The Hospital filed suit against insurance companies and third party plan administrators, alleging various claims under the Employee Retirement Income Security Act (ERISA). The Fifth Circuit held that the hospital sufficiently pleaded its claims for ERISA plan benefits and state law breach of contract, and thus reversed the dismissal of these claims. The court remanded for the district court to consider these two claims, as well as the claim for attorneys' fees. The court affirmed the dismissal of the Hospital's ERISA claims under 29 U.S.C. 1132(a)(3) and the denial of leave to amend the complaint out of time. View "Innova Hospital San Antonio LP v. Blue Cross & Blue Shield of Georgia" on Justia Law

by
Business groups challenged the “Fiduciary Rule” promulgated by the Department of Labor (DOL) in April 2016. The Rule is a package of seven different rules that broadly reinterpret the term “investment advice fiduciary” and redefine exemptions to provisions concerning fiduciaries that appear in the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and the Internal Revenue Code, 26 U.S.C. 4975. The business groups alleged the Rule’s inconsistency with the governing statutes; DOL’s overreaching to regulate services and providers beyond its authority; DOL’s imposition of legally unauthorized contract terms to enforce the new regulations; First Amendment violations; and the Rule’s arbitrary and capricious treatment of variable and fixed indexed annuities. The Fifth CIrcuit vacated the district court’s rejection of all of those challenges. DOL’s interpretation of “investment advice fiduciary” relies too narrowly on a purely semantic construction of one isolated statutory provision and wrongly presupposes that the statutory provision is inherently ambiguous. Congress intended to incorporate the well-settled meaning’” of “fiduciary.” In addition, the Fiduciary Rule renders the second prong of ERISA’s fiduciary status definition in tension with its companion subsections. DOL therefore lacked statutory authority to promulgate the Rule with its overreaching definition of “investment advice fiduciary.” View "Chamber of Commerce of the USA v. United States Department of Labor" on Justia Law

by
The Fifth Circuit granted en banc review of this case to reconsider Pierre v. Conn. Gen. Life Ins. Co., 932 F.2d 1552, 1562 (5th Cir. 1991), and to determine the default standard of review that applies when a beneficiary challenges a plan denial based on a factual determination of ineligibility. The court held that the Texas insurance code provision only renders discretionary clauses unenforceable, but does not attempt to prescribe the standard of review for federal courts deciding Employee Retirement Income Security Act (ERISA) cases. The court overruled Pierre and held that Firestone Tire & Rubber Co. v. Bruch's, 489 U.S. 101, 115 (1989), default de novo standard applied when the denial was based on a factual determination. The court held that Vega v. National Life Insurance Services, Inc., 188 F.3d 287 (5th Cir. 1999), will continue to provide the guiding principles on the scope of the record for future cases that apply de novo review to fact-based benefit denials. Therefore, the court vacated and remanded for the district court to apply the de novo standard of review. View "Ariana M. v. Humana Health Plan of Texas, Inc." on Justia Law

by
The Fifth Circuit affirmed the district court's dismissal of a putative class action alleging that the RadioShack board of directors and plan administrative committee breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Plaintiffs alleged that defendants violated ERISA by allowing plan participants to invest in RadioShack stock despite the company's descent into bankruptcy. The court held that the complaint did not plausibly state any fiduciary claims with respect to the Plan and that plaintiffs did not have standing to bring claims regarding the Puerto Rico Plan. View "Singh v. RadioShack Corp." on Justia Law

by
The Fifth Circuit affirmed the district court's dismissal of a putative class action alleging that the RadioShack board of directors and plan administrative committee breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Plaintiffs alleged that defendants violated ERISA by allowing plan participants to invest in RadioShack stock despite the company's descent into bankruptcy. The court held that the complaint did not plausibly state any fiduciary claims with respect to the Plan and that plaintiffs did not have standing to bring claims regarding the Puerto Rico Plan. View "Singh v. RadioShack Corp." on Justia Law