Justia ERISA Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
Patterson v. United Healthcare Insurance Co.
United provided Patterson's medical insurance under a plan subject to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1101. Patterson received a summary plan description, an ERISA-mandated synopsis of important plan terms but was not given a plan document with all of a plan’s governing language. The summary said that if a beneficiary recovered from a third party for an insured incident, the plan had a right to reimbursement. Patterson was injured in a traffic accident. United covered his medical expenses and notified Patterson it would invoke the reimbursement right. Patterson sued the other driver in state court and joined the plan, seeking a declaratory judgment that it had no reimbursement right. United’s lawyers claimed that no plan document existed. Patterson recovered and settled with the plan for $25,000. Months later, Patterson’s wife suffered injuries in another traffic accident. United paid her medical expenses. Patterson’s wife sued the driver in state court. She obtained a declaratory judgment after the plan's lawyers produced a plan document, stating that it took precedence over the summary and not including a reimbursement right.Patterson then filed a purported class action under ERISA, seeking the return of the $25,000. The district court dismissed the complaint. The Sixth Circuit affirmed in part. Patterson had standing to sue only on his own behalf but has cognizable claims for breach of fiduciary duty and engagement in prohibited transactions. View "Patterson v. United Healthcare Insurance Co." on Justia Law
Laake v. Western & Southern Financial Group Flexible Benefits Plan
The Plan is an employee welfare benefit plan under the Employee Retirement Income Security Act (ERISA). W&S denied Laake’s claim for extended long-term disability (LTD) benefits, indicating that Plan limited LTD benefit to 24 months if the disabling condition is due to any mental, nervous, psychiatric condition or chronic pain.” The Plan refers to “chronic pain syndrome.” No medical doctor had ever diagnosed Laake with “Chronic Pain Syndrome.” Although the Plan fails to define “Chronic Pain Syndrome,” Schedule C—which lists conditions that are excluded from extended LTD benefits—explicitly incorporates the Diagnostic and Statistical Manual of Mental Disorders, which does not specifically include “Chronic Pain Syndrome,” but does detail the symptoms and features of “Pain Disorder.” W&S did not ask Laake’s physicians in its questionnaires about the Mental Illness exclusion or “Chronic Pain Syndrome.” None of her physicians indicated that there was any psychological basis for her pain.The district court determined that Laake was entitled to benefits, imposed penalties against W&S, and awarded Laake attorney’s fees and costs, 29 U.S.C. 1132(g)(1). The Sixth Circuit affirmed. In denying benefits without any explanation or supporting evidence, W&S acted arbitrarily and capriciously. Because W&S provided notice that implied one basis for its denial of benefits, but in its final decision included an entirely new basis, it failed to substantially comply with ERISA’s notice requirements. The court noted a finding that W&S engaged in particularly “egregious conduct throughout the course of this litigation.” View "Laake v. Western & Southern Financial Group Flexible Benefits Plan" on Justia Law
Tranbarger v. Lincoln Life & Annuity Co. of New York
After gallbladder surgery, Tranbarger began suffering from multiple medical conditions, including physical pain and chronic fatigue. At work, Tranbarger continued as an accounts receivable manager, a primarily sedentary position. Her supervisor modified some of her responsibilities to accommodate her reduced capacity. Tranbarger resigned in July 2016, citing pain and fatigue.Through her employer, Tranbarger was enrolled in Lincoln's disability insurance plan. About 14 months after resigning, Tranbarger filed a claim for long-term disability benefits. Tranbarger was entitled to benefits if she could show “total disability” such that she was “unable to perform each of the [m]ain [d]uties” of an accounts receivable manager during a six-month “Elimination Period” following her resignation. Tranbarger presented a Social Security ruling in her favor, doctors’ notes, and statements from individuals otherwise familiar with her condition. Lincoln denied Tranbarger’s claim. She sued under the Employee Retirement Income Security Act (ERISA).The Sixth Circuit affirmed a judgment in favor of Lincoln. Tranbarger did not demonstrate a continuous inability to perform the main duties of an accounts receivable manager during the six months following her resignation. Although she provided diagnoses from the Mayo Clinic and established that she suffered pain and fatigue, there was little evidence about whether Tranbarger could perform her job functions. View "Tranbarger v. Lincoln Life & Annuity Co. of New York" on Justia Law
Trustees of Sheet Metal Workers Local 7 v. Pro Services, Inc.
The trustees of three multi-employer benefit funds sued Pro Services under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and the Labor Management Relations Act (LMRA), 29 U.S.C. 141, to recover unpaid benefit contributions allegedly owed by Pro Services, an industrial contractor that supplies skilled trade workers in the construction and manufacturing industries. Under the terms of a collective bargaining agreement (CBA) and fund documents, Pro Services must contribute to the fringe benefit funds for work performed within the CBA’s Trade Jurisdiction. The Funds relied on audits conducted by a third-party firm to allege that nearly $8 million in contributions and damages arose from hours worked by 230 Full-Service Maintenance Technicians (FMTs) employed by Pro Services, from 2013-2019.The district court granted Pro Services summary judgment—it was undisputed that the FMTs worked in manufacturing, and the court concluded that the CBA covered workers in the construction industry based only on a caption in the CBA. The Sixth Circuit reversed. The standard form caption cannot be used to limit the application of the CBA’s substantive terms, without the court first finding those substantive provisions ambiguous; the CBA is unambiguous. View "Trustees of Sheet Metal Workers Local 7 v. Pro Services, Inc." on Justia Law
Gragg v. UPS Pension Plan
Gragg worked as a driver for 31 years. For the first 26 years, he was an employee of Overnite; after UPS acquired Overnite, he was an employee of UPS. In 2008, UPS reclassified his position from nonunion to union, so that two different pension plans funded his pension. In 2010, each plan sent him information indicating that, after Gragg turned 65, each plan would reduce his monthly payment by $1754, which was the anticipated amount of his Social Security benefit. Gragg turned 65 in 2018. The following month, each plan reduced the amount of Gragg’s monthly benefit by the entire amount of his Social Security benefit—for a combined monthly reduction of $3508. Gragg’s overall monthly income declined by $1754, rather than remaining stable as promised by the letters. Gragg filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1)(B).The district court held Gragg’s suit was barred by a six-year limitations period, having accrued when he received the letters. The Sixth Circuit reversed. The letters did not cause the injury upon which Gragg sued; the underpayments did. Before that injury, his claim had not accrued. An ERISA claim based on the letters alone would have rested upon “contingent future events that may not occur as anticipated, or indeed may not occur at all.” View "Gragg v. UPS Pension Plan" on Justia Law
Operating Engineers’ Local 324 Fringe Benefits Funds v. Rieth-Riley Construction Co.
The Sixth Circuit reversed the judgment of the district court dismissing this ERISA action for lack of jurisdiction on the grounds that no contract bound the parties, holding that the presence of a live contract goes to the merits of this action, not the district court's jurisdiction to hear it.A group of employee benefits funds sued Defendant in a federal district court alleging breach of contract for late contributions under the Employee Retirement Income Security Act (ERISA). Defendant responded that no contract existed and that the presence of a live contract was a jurisdictional prerequisite to Plaintiffs' ERISA suit, meaning that the claim should have been brought under the National Labor Relations Act and that the National Labor Relations Board had exclusive jurisdiction to hear Plaintiffs' grievances. The district court dismissed the suit without prejudice, holding that it lacked jurisdiction to hear Plaintiffs' claim. The Sixth Circuit reversed, holding that the presence of a live contract is not an essential jurisdictional fact in an action brought under section 515 of ERISA. Rather, the presence of a live contract goes to the merits of Plaintiffs' ERISA claim. View "Operating Engineers' Local 324 Fringe Benefits Funds v. Rieth-Riley Construction Co." on Justia Law
Forman v. TriHealth, Inc.
In a suit under the Employee Retirement Income Security Act (ERISA) 29 U.S.C. 1104(a)(1)(B), concerning the duty of prudence as applied to the investment options that a company offers to its employees for their 401(k) and other defined-contribution plans, plaintiffs (employees) argued: (1) that the employer, TriHealth, should not have offered its employees the option of investing their retirement money in actively managed funds, (2) that the performance of several funds was deficient at certain points, (3) that the overall fees charged for the investment options were too high, and (4) that even if a prudent investor might make available a wide range of valid investment decisions in a given year, only an imprudent financier would offer a more expensive share when he could offer a functionally identical share for less.The Sixth Circuit reversed, in part, the dismissal of the suit, rejecting the first three claims as foreclosed by recent precedent. However, the plaintiffs’ claim that TriHealth offered them more expensive mutual fund shares when shares with the same investment strategy, the same management team, and the same investments were available to their retirement plan at lower costs stated a plausible claim that TriHealth acted imprudently. View "Forman v. TriHealth, Inc." on Justia Law
Smith v. CommonSpirit Health
Smith worked for CommonSpirit and participated in CommonSpirit’s defined-contribution 401(k) plan. CommonSpirit's administrative committee administers the plan, which serves more than 105,000 people and manages more than $3 billion in assets. It offers 28 different funds in which employees may invest their contributions, including several index funds with management fees as low as 0.02% and several actively managed funds with management fees as high as 0.82%. The actively managed Fidelity Freedom Funds are the default investment if employees do not choose to place their contributions in a different fund instead; they are “target date” funds and managers change the allocation of the underlying investments over time. Other target-date funds have lower costs. Smith sued CommonSpirit and the administrative committee under the Employee Retirement Income Security Act (ERISA) for breach of fiduciary duty. 29 U.S.C. 1132(a)(2), seeking to represent a proposed class of similarly situated plan participants and claiming that the plan should have offered a different mix of fund options. The Seventh Circuit affirmed the dismissal of her suit. ERISA does not give courts a broad license to second-guess the investment decisions of retirement plans. It supplies a cause of action only when retirement plan administrators breach a fiduciary duty by, for example, offering imprudent investment options. Smith has not alleged facts from which a jury could plausibly infer that CommonSpirit breached any such duty. View "Smith v. CommonSpirit Health" on Justia Law
Fulkerson v. Unum Life Insurance Co. of America
Tymoc died in a single-car accident. At the time of the accident, Tymoc was traveling between 80-100 miles per hour; the speed limit was 60 miles per hour speed. As Tymoc attempted to pass multiple cars, the gap between a car in the right lane and a box truck in the left lane closed. Tymoc veered to the right, causing his vehicle to drive off the road, roll down an embankment, striking multiple trees, and flip over several times.Through his employer, Tymoc was covered by Unum life insurance; the policy provided both basic life insurance coverage and an additional accidental death benefit. Unum approved a $100,000 payment of group life insurance benefits but withheld $100,000 in accidental death benefits, explaining that Tymoc’s conduct—speeding and reckless driving—caused his death, thereby triggering the policy’s crime exclusion. In a suit under the Employee Retirement Income Security Act, 29 U.S.C. 1001– 1191d, the district court entered in Fulkerson’s favor as to the accidental death benefits. The Sixth Circuit reversed. Reckless driving falls within the unambiguous plain meaning of crime. View "Fulkerson v. Unum Life Insurance Co. of America" on Justia Law
Hawkins v. Cintas Corp.
The Cintas “defined contribution” retirement plan has a “menu” of investment options in which each participant can invest. Each Plan participant maintains an individual account, the value of which is based on the amount contributed, market performance, and associated fees. Under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. 1102(a)(1), the Plan’s fiduciaries have the duty of loyalty—managing the plan for the best interests of its participants and beneficiaries—and a duty of prudence— managing the plan with the care and skill of a prudent person acting under like circumstances. Plaintiffs, two Plan participants, brought a putative class action, contending that Cintas breached both duties. Plaintiffs had entered into multiple employment agreements with Cintas; all contained similar arbitration provisions and a provision preventing class actions.The district court declined to compel arbitration, reasoning that the action was brought on behalf of the Plan, so that it was irrelevant that the two Plaintiffs had consented to arbitration through their employment agreements–the Plan itself did not consent. The Sixth Circuit affirmed. The weight of authority and the nature of ERISA section 502(a)(2) claims suggest that these claims belong to the Plan, not to individual plaintiffs. The actions of Cintas and the other defendants do not support a conclusion that the plan has consented to arbitration. View "Hawkins v. Cintas Corp." on Justia Law