Justia ERISA Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
Davis v. Hartford Life & Accident Insurance Co.
Davis, insured under a Hartford long-term disability policy, began missing work due to chronic back pain, neuropathy, and fatigue caused by multiple myeloma. Relying on the opinion of Davis’s oncologist, Dr. Reddy, Hartford approved Davis’s claim for short-term disability benefits through April 17, 2012. In June, Hartford approved Davis for long-term disability benefits, retroactive to April, for 24 months. Davis could continue to receive benefits beyond that time if he was unable to perform one or more of the essential duties of “Any Occupation” for which he was qualified by education, training, or experience and that has comparable “earnings potential.” Reddy's subsequent reports were inconsistent. An investigator found “discrepancies" based on surveillance. Davis’s primary care physician and neurologist both concluded that Davis could work full-time under described conditions. Reddy disagreed, but would not answer follow-up questions. An orthopedic surgeon conducted an independent review and performed an examination, and reported that Davis was physically capable of “light duty or sedentary work” within certain restrictions. Other doctors agreed. Hartford notified Davis that he would be ineligible for benefits after April 17, 2014.Davis filed suit under the Employee Retirement Income Security Act, 29 U.S.C. 1132(a). The Sixth Circuit affirmed summary judgment in favor of Hartford. Hartford reasonably concluded that Davis could work full-time, under certain limitations; the decision was not arbitrary. View "Davis v. Hartford Life & Accident Insurance Co." on Justia Law
Zirbel v. Ford Motor Co.
Donna’s former husband, Carl, retired from Ford in 1998 and participated in Ford’s retirement plan. “In the event of an error” in calculating a pension, the plan requires a beneficiary to return the overpayment “without limitation.” A committee runs the plan, with “discretionary authority" to reduce the repayment. Carl and Donna divorced in 2009. Donna received half of the marital portion of Carl’s pension. Donna agreed to postpone drawing the pension. In 2013, Ford offered a lump sum payment in place of future monthly benefits and a $351,690 retroactive payment for the postponed monthly benefits. After paying taxes, Donna invested some of the money and gave some to her children. Ford audited Donna’s benefits. It discovered that the retroactive pension payment mistakenly included benefits from 1998, when Carl retired, instead of 2009. The payment should have been $108,500. Ford requested repayment; the committee invited Donna to apply for a hardship reduction. The application required disclosure of her finances, including her other substantial retirement funds and an inheritance. Donna did not apply; she sued.The Sixth Circuit affirmed summary judgment for Ford. The committee’s actions were neither wrong nor arbitrary. Donna did not establish that Ford’s inclusion of an incorrect retroactive-payment amount constituted constructive fraud. She knew that the retroactive payment was too high when she got it, the plan put her on notice that Ford could demand repayment, and she has the capacity to return the money. View "Zirbel v. Ford Motor Co." on Justia Law
DaVita, Inc. v. Marietta Memorial Hospital Employee Health Benefit Plan
Beginning in 2017, DaVita provided dialysis treatment to Patient A, who was diagnosed with end-stage renal disease (ESRD). Patient A assigned his insurance rights to DaVita. Through August 2018, the costs of Patient A’s dialysis were reimbursed by the Employee Health Benefit Plan, governed by the Employee Retirement Income Security Act (ERISA), at its bottom tier, which applied to providers who are “out-of-network.” All dialysis providers were out-of-network. While most out-of-network providers are reimbursed in the bottom tier based on a “reasonable and customary” fee as understood in the healthcare industry, dialysis providers are subject to an “alternative basis for payment”; the Plan reimburses at 87.5% of the Medicare rate. Patient A was exposed to higher copayments, coinsurance amounts, and deductibles and was allegedly at risk of liability for the balance of what was not reimbursed . The Plan identified dialysis as subject to heightened scrutiny, which allegedly incentivizes dialysis patients to switch to Medicare. Patient A switched to Medicare. DaVita and Patient A sued, alleging that the Plan treats dialysis providers differently from other medical providers in violation of the Medicare Secondary Payer Act (MSPA) and ERISA. The Sixth Circuit reversed, in part, the dismissal of the claims. A conditional payment by Medicare is required as a precondition to suing under the MSPA’s private cause of action; the complaint sufficiently alleges such a payment. DaVita plausibly alleged that the Plan violates the nondifferentiation provision of the MSPA, resulting in denials of benefits and unlawful discrimination under ERISA. View "DaVita, Inc. v. Marietta Memorial Hospital Employee Health Benefit Plan" on Justia Law
Black v. Pension Benefit Guaranty Corp.
Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) creates an insurance program to protect employees’ pension benefits. The Pension Benefit Guaranty Corporation (PBGC)—a wholly-owned corporation of the U.S. government—is charged with administering the pension-insurance program. PBGC terminated the “Salaried Plan,” a defined-benefit plan sponsored by Delphi by an agreement between PBGC and Delphi pursuant to 29 U.S.C. 1342(c). Delphi had filed a voluntary Chapter 11 bankruptcy petition and had stopped making contributions to the plan. The district court rejected challenges by retirees affected by the termination.The Sixth Circuit affirmed. Subsection 1342(c) permits termination of distressed pension plans by agreement between PBGC and the plan administrator without court adjudication. Rejecting a due process argument, the court stated that the retirees have not demonstrated that they have a property interest in the full amount of their vested, but unfunded, pension benefits. PBGC’s decision to terminate the Salaried Plan was not arbitrary and capricious. View "Black v. Pension Benefit Guaranty Corp." on Justia Law
Wallace v. Oakwood Healthcare, Inc.
Wallace participated in Oakwood’s employee welfare benefit plan, which provided long-term disability (LTD) benefits, subject to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001. Effective January 1, 2013, Oakwood switched the insurer responsible for that plan from Hartford to Reliance. Wallace took medical leave in October 2012, returning to work in April 2013. Wallace took medical leave again in May 2013 and has not returned to work. Reliance denied her claim for LTD benefits citing the pre-existing condition provision of its plan document and describing the review process, including that “failure to request a review within 180 days … may constitute a failure to exhaust the administrative remedies … and may affect ability to bring a civil action.” The plan document did not describe the review process or an exhaustion requirement. After discussions with Reliance, Wallace submitted an unsuccessful claim to Hartford. Wallace filed suit under ERISA. The district court granted Wallace judgment against Reliance based on the administrative record.The Sixth Circuit affirmed the denial of Reliance’s motion to dismiss on the basis of exhaustion. A plan document must detail claims review procedures and remedies. The court vacated the judgment on the record; further fact-finding is necessary to determine whether Wallace was eligible for LTD benefits and in what amount. Wallace may have been covered under transfer of insurance and pre-existing conditions limitation credit provisions, but the record does not permit a definitive finding. View "Wallace v. Oakwood Healthcare, Inc." on Justia Law
Morehouse v. Steak N Shake
Rebecca, employed by SNS, enrolled herself and her husband in SNS’s health-benefits coverage. In 2013, Rebecca fell at work and injured her knee. Her injury was too severe to permit her to continue working. She signed a form requesting to open a workers’ compensation claim and to receive a leave of absence. The form did not mention the “Family and Medical Leave Act.” SNS sent a letter instructing her to complete paperwork for processing her absence under the FMLA. She did so. SNS approved her leave of absence as FMLA leave (rather than paid leave) for the first 12 weeks, but did not give her any other written notice of that designation. SNS deducted her insurance contributions from her workers’ compensation checks. SNS notified Rebecca when her FMLA leave expired, stating that, if her employment was terminated, she could continue health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Having received no premium payment weeks later, SNS notified Rebecca that the benefits had been discontinued. SNS terminated her employment. Rebecca sued, alleging that SNS failed to notify her of the right to temporarily continue health-benefit coverage under COBRA and breached its fiduciary duty under ERISA by failing to so notify her. The district court determined that a qualifying event occurred with the reduction in Rebecca’s work hours on the day after her injury, requiring notice. The Sixth Circuit reversed because the terms of Rebecca’s insurance coverage did not change upon her taking a leave of absence. No “qualifying event” occurred to trigger a COBRA notification obligation. View "Morehouse v. Steak N Shake" on Justia Law
K.B. v. Methodist Healthcare – Memphis Hospitals
Knox-Bender suffered injuries from a car accident. She sought medical treatment at Methodist Healthcare. Methodist billed her $8,000 for the treatment. Payments to Methodist were made on Knox-Bender’s behalf by her employer-sponsored healthcare plan, her automobile insurance plan, and her husband’s healthcare plan. Knox-Bender says that the insurance plans had already agreed with Methodist on the price of her care. She claims that, despite this agreement, Methodist overcharged her and that this was common practice for Methodist. She and a putative class of other patients, sued in Tennessee state court. During discovery, Methodist learned that Knox-Bender’s husband’s healthcare plan was an ERISA plan, 29 U.S.C.1001(b) that covered $100 of her $8,000 bill. Methodist removed the case to federal court claiming complete preemption under ERISA. The district court denied Knox-Bender’s motion to remand and entered judgment in favor of Methodist. The Sixth Circuit reversed. The complete preemption of state law claims under ERISA is “a narrow exception to the well-pleaded complaint rule.” Methodist has not met its burden to show that Knox-Bender’s complaint fits within that narrow exception. Since Knox-Bender has not alleged a denial of benefits under her husband’s ERISA plan, ERISA does not completely preempt her claim. Even if Methodist had shown that Knox-Bender alleged a denial of benefits, it would also have show that Knox-Bender complained only of duties breached under ERISA, not any independent legal duty. View "K.B. v. Methodist Healthcare - Memphis Hospitals" on Justia Law
Wilson v. Safelite Group, Inc.
Plaintiff filed suit against Safelite for breach of contract and negligent misrepresentation arising from the company's alleged mismanagement of its deferred compensation plan for executive employees. The Sixth Circuit affirmed the district court's grant of Safelite's motion for partial summary judgment, holding that the Safelite Plan qualifies as an employee pension benefit plan under 29 U.S.C. 1002(2)(A)(ii) and is not a bonus plan as defined in 29 C.F.R. 2510.3-2(c). Therefore, the Safelite Plan was not exempted from coverage under the Employee Retirement Income Security Act. View "Wilson v. Safelite Group, Inc." on Justia Law
Trustees of Operating Engineers Local 324 v. Bourdow Contracting, Inc.
Trucking, owned by Bourdow, his wife, and their sons, sold and transported dirt, stone, and sand throughout lower Michigan and engaged in construction site preparation and excavation. Trucking employed other members of the Bourdow family. Trucking executed collective bargaining agreements (CBAs), under which it made fringe benefit payments to the Union’s pension fund (Fund). Experiencing financial difficulties, Trucking terminated its CBA. In 2012, the Fund informed Trucking that it had incurred withdrawal liability ($1,163,279) under the Employee Retirement Income Security Act (ERISA), 29 U.S.C 1381(a). Trucking missed its first withdrawal liability payment. The Fund filed suit, which was stayed when Trucking filed for Chapter 7 bankruptcy. The Fund filed a proof of claim. Trucking did not object; the claim was allowed, 11 U.S.C. 502(a). The Fund received $52,034. Contracting was incorporated the day after Trucking missed its first withdrawal payment; it bid on its first project two days before Trucking's bankruptcy filing. Contracting engages in construction site preparation and excavation in lower Michigan. Contracting is owned by the Bourdow sons; it employs other family members and retains the services of other professionals formerly retained by Trucking. The Fund sought to recover the outstanding withdrawal liability, alleging that Contracting was created to avoid withdrawal liability, and is responsible for that liability under 29 U.S.C 1392(c), and that Contracting is the alter ego of Trucking. The Sixth Circuit affirmed summary judgment in favor of the Fund, applying the National Labor Relations Act’s alter-ego test and citing the factors of business purpose, operations, customers, supervision, ownership, and intent to evade labor obligations. View "Trustees of Operating Engineers Local 324 v. Bourdow Contracting, Inc." on Justia Law
Pension Benefit Guaranty Corp. v. Findlay Industries, Inc.
The Pension Benefit Guaranty Corporation (PBGC) insures uninterrupted payment of benefits under terminated private-sector pension and health plans subject to ERISA, 29 U.S.C. 1001–1461. PBGC is funded by insurance premiums paid by sponsoring companies and from assets acquired from terminated plans and recovered from underfunded plan sponsors in bankruptcy. The plan's sponsor and “trades or businesses” related to the sponsor through common ownership are jointly and severally liable for those liabilities. PBGC sued to collect $30 million in underfunded pension liabilities from Findlay Industries following its 2009 shutdown and looked to hold liable a trust started by Findlay’s founder, Philip Gardner, and to apply the federal-common-law doctrine of successor liability to hold Michael, Philip’s son, liable. Michael, a 45 percent shareholder and former CEO of Findlay, had purchased Findlay’s assets and started his own companies using the same land, hiring many of the same employees, and selling to Findlay’s largest customer. The district court ruled against PBGC. The Sixth Circuit reversed. An entity that owns land and leases it to an entity under common control should be considered, categorically, a “trade or business” under ERISA, to recognize the differences between ERISA and the tax code, satisfy the purposes of ERISA, and be consistent with other circuits. Refusing to apply successor liability here would allow Findlay to fail to uphold its promises to employees, then engage in clever financial transactions that leave PBGC to pay millions in pension liabilities. View "Pension Benefit Guaranty Corp. v. Findlay Industries, Inc." on Justia Law