Justia ERISA Opinion Summaries

Supor, a construction contractor, got a job on New Jersey’s American Dream Project, a large retail development, and agreed to use truck drivers exclusively from one union and to contribute to the union drivers’ multiemployer pension fund. The project stalled. Supor stopped working with the union drivers and pulled out of the fund. The fund demanded $766,878, more than twice what Supor had earned on the project, as a withdrawal penalty for ending its pension payments without covering its share, citing the 1980 Multiemployer Pension Plan Amendments Act (MPPAA), amending ERISA, 29 U.S.C. 1381. Under the MPPAA, employers who pull out early must pay a “withdrawal liability” based on unfunded vested benefits. Supor claimed the union had promised that it would not have to pay any penalty. The Fund argued that the statute requires “employer[s]” to arbitrate such disputes. Supor argued that it was not an employer under the Act.The district court sent the parties to arbitration, finding that an “employer” includes any entity obligated to contribute to a pension plan either as a direct employer or in the interest of an employer of the plan’s participants. The Third Circuit affirmed, finding the definition plausible, protective of the statutory scheme, and supported by three decades of consensus. View "J Supor & Son Trucking & Rigging Co., Inc. v. Trucking Employees of North Jersey Welfare Fund" on Justia Law

A plan participant sued under the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B), claiming that an insurance-company fiduciary wrongfully terminated his benefits. The participant enrolled in his former employer’s welfare benefit plan, which provided long-term disability and life insurance benefits through group insurance policies. When his health deteriorated and he could no longer do his job, the participant claimed benefits. The insurance company, which funded and administered those policies, authorized benefits. Its in-house medical professionals reaffirmed that conclusion for two years. Then, with no recent change to the participant’s medical condition, the company used a third-party vendor to retain an outside physician to evaluate the participant. After an in-person examination, that physician concluded that the participant was not totally disabled. The company terminated benefits. The participant administratively appealed, and the cycle repeated. The company’s multiple requests for additional outside medical reviews were irregular in their timing and prompting.The Third Circuit affirmed summary judgment in favor of the participant. The insurance company performed two functions that are in financial tension: it determined eligibility for benefits and funded benefits. That creates a structural conflict of interest, which, combined with significant deviation from normal eligibility-review processes, influenced its fiduciary decision-making. The company abused its discretion in terminating the participant’s benefits. The court properly ordered their retroactive reinstatement. View "Noga v. Fulton Financial Corp Employee Benefit Plan" on Justia Law

The plaintiffs are participants in the Allergan Savings and Investment Plan, which provides various investment options, including an employee stock ownership feature for buying Allergan stock. According to the plaintiffs, the defendants were Plan fiduciaries and owed them commensurate duties under the Employee Retirement Income Security Act (ERISA). They claim that, although the public was unaware, the defendants knew or should have known that, before the divestiture of its generic-drug business, Allergan had conspired with other generic-drug manufacturers to fix prices, thereby artificially boosting its financial performance and its stock price. The plaintiffs cited inquiries from members of Congress and the Antitrust Division of the Department of Justice, seeking information about large price increases in certain generic drugs. The plaintiffs do not allege that Allergan was ever charged in connection with the investigation but claim that the defendants’ failure to remove Allergan stock as a Plan investment option or otherwise take action to protect Plan participants, violated ERISA.The Third Circuit affirmed the dismissal of the complaint. Even viewed in the light most favorable to the plaintiffs, the well-pled factual allegations fail to support a plausible inference that Allergan conspired with competitors to fix prices. Because all of the plaintiffs’ causes of action ultimately rest on the premise that the defendants knew or should have known about that supposed illegal conduct, the absence of allegations sufficient to support the existence of it is fatal to each of their claims. View "In re: Allergan ERISA Litigation" on Justia Law

J.L. and D.W. were covered by employer-sponsored Aetna insurance plans that provided out-of-network benefits only in cases of “Urgent Care or a Medical Emergency” (J.L.) or not at all (D.W.). J.L. needed bilateral breast reconstruction surgery and there were no in-network physicians available to perform the procedure. D.W. required facial reanimation surgery—a niche procedure performed by only a few U.S. surgeons. Both were referred for treatment to the Plastic Surgery Center, an out-of-network New Jersey medical practice. The Center negotiated with Aetna, which agreed to pay a “reasonable amount.” The Center billed $292,742 for J.L.’s services, Aetna paid only $95,534.04. Of the $420,750 the Center billed for D.W.’s services, Aetna paid only $40,230.32.The district court dismissed common law breach of contract, promissory estoppel, and unjust enrichment claims, holding that section 514(a) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1000, expressly preempted all claims. The Third Circuit reversed as the breach of contract and promissory estoppel claims, which do not require impermissible “reference to” ERISA plans. The claims, as pleaded, plausibly seek to enforce obligations independent of the plan and do not require interpretation or construction of ERISA plans. The claims plausibly arise out of a relationship that ERISA did not intend to govern. View "Plastic Surgery Center, P.A. v. Aetna Life Insurance Co" on Justia Law

Bergamatto began working as a longshoreman in 2000 and stopped working in 2010. In 2013, he applied for retirement benefits under his pension plan, which is covered by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001. The 2010 plan said that “[t]he provisions … in effect during the Participant’s last year of credited service shall be applied to determine the Participant’s right to benefits and the amount thereof.” The 2010 plan originally precluded longshoremen hired between October 1996 and September 2004 from accruing benefits for work performed before October 2004. A 2013 amendment to the 2010 plan provided that, “[e]ffective October 1, 2012, Participants hired on or after October 1, 1996 shall receive pension benefit accruals for years of credited service earned from 1996 through 2004[.]” A 2015 plan eliminated the language preventing employees hired between October 1996 and September 2004 from accruing benefits for work prior to October 2004. Bergamatto’s application for pension benefits was approved based on only the years of credited service starting in October 2004 on the basis that the 2010 plan required that benefit determinations be made based on the plan provisions in force during the participant’s last year of credited service. The fund’s Board of Trustees agreed. The Third Circuit affirmed summary judgment in favor of the defendants, finding the Board of Trustees’ interpretation of the 2015 and 2010 plans “reasonably consistent” with the plans’ unambiguous language. View "Bergamatto v. Board of Trustees of NYSA-ILA Pension Fund" on Justia Law

This appeal involved one type of partial withdraw under the Multiemployer Pension Plan Amendments Act (MPPAA): "bargaining out," which occurs when an employer permanently ceases to have an obligation to contribute under one or more but fewer than all collective bargaining agreements under which the employer has been obligated to contribute but continues to perform work of the type for which contributions were previously required.The Third Circuit affirmed the district court's judgment and held that, under 29 U.S.C. 1385(b)(2)(A)(i), "work . . . of the type for which contributions were previously required" does not include work of the type for which contributions are still required. In this case, because CEC continues to contribute to its pension plan for engineering work at its remaining three casinos, it was not liable under section 1385(b)(2)(A)(i). View "Caesars Entertainment Corp. v. International Union of Operating Engineers Local 68 Pension Fund" on Justia Law

Plaintiffs sought to represent a proposed class of 20,000 current and former Penn employees who participated in Penn's Retirement Plan since August 2010. The Plan is a defined contribution plan under 29 U.S.C. 1002(34), tax-qualified under 26 U.S.C. 403(b), offering mutual funds and annuities. The University matches employees’ contributions up to 5% of compensation. As of December 2014, the Plan offered 48 Vanguard mutual funds, and 30 TIAA-CREF mutual funds, fixed and variable annuities, and an insurance company separate account. In 2012, Penn organized its investment fund lineup into four tiers, ranging from lifecycle or target-date funds for the “Do-it-for-me” investor to the option of a brokerage account window for the “self-directed” investor looking for additional options. Plan participants could select a combination of funds from the investment tiers. TIAA-CREF and Vanguard charge investment and administrative fees. The district court dismissed plaintiffs’ suit for breach of fiduciary duty, prohibited transactions, and failure to monitor fiduciaries under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001-1461, which alleged that defendants failed to use prudent and loyal decision-making processes regarding investments and administration, overpaid certain fees by up to 600%, and failed to remove underperforming options from the Plan’s offerings. The Third Circuit reversed and remanded the dismissal of the breach of fiduciary duty claims. While the complaint may not have directly alleged how Penn mismanaged the Plan, there was substantial circumstantial evidence from which the court could “reasonably infer” that a breach had occurred. View "Sweda v. University of Pennsylvania" on Justia Law

Dr. McCann, a radiologist certified in the specialty of interventional radiology, purchased a supplemental long-term disability insurance policy from Provident. After initially issuing payments under the policy, Provident terminated Dr. McCann’s disability benefits based on a determination that Dr. McCann was primarily practicing as a diagnostic radiologist—rather than as an interventional radiologist—at the time he became disabled. The Third Circuit remanded for a determination of whether to consider whether Dr. McCann’s medical conditions prevent him from being able to perform his “substantial and material duties” as an interventional radiologist, as required by the terms of the policy. The court concluded that the claim was governed by the Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001. The Department of Labor has promulgated a safe harbor regulation exempting certain plans from the definition of an “employee welfare benefit plan” but McCann’s then-employer sufficiently endorsed the plan under which his policy was purchased to render the safe harbor inapplicable. Provident incorrectly defined Dr. McCann’s occupation in administering his disability claim; the claim must be evaluated in the context of his specialty—interventional radiology. View "McCann v. Unum Provident" on Justia Law

Sports Medicine performed shoulder surgery on “Joshua,” who was covered by a health insurance plan, and charged Joshua for the procedure. Because it did not participate in the insurers’ network, Sports Medicine was not limited to the insurer’s fee schedule and charged Joshua $58,400, submitting a claim in that amount to the insurers on Joshua’s behalf. The claim form indicated that Joshua had “authorize[d] payment of medical benefits.” The insurer processed Joshua’s claim according to its out-of-network cap of $2,633, applying his deductible of $2,000 and his 50% coinsurance of $316, issuing him a reimbursement check for the remaining $316, and informing him that he would still owe Sports Medicine the remaining $58,083. Sports Medicine appealed through the insurers’ internal administrative process and had Joshua sign an “Assignment of Benefits & Ltd. Power of Attorney.” Sports Medicine later sued for violations of the Employee Retirement Income Security Act (ERISA), and breach of contract, citing public policy. The district court dismissed for lack of standing because Joshua’s insurance plan included an anti-assignment clause. The Third Circuit affirmed, holding that the anti-assignment clause is not inconsistent with ERISA and is enforceable. View "American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield" on Justia Law

St. Peter’s, a non-profit healthcare entity, runs a hospital, employing over 2,800 people, with ties to a New Jersey Roman Catholic Diocese. The Bishop appoints most Board of Governors members and retains veto authority over Board actions. The hospital has daily Mass and Catholic devotional pictures throughout the building. In 1974, St. Peter’s established a non-contributory defined benefit retirement plan; operated the plan subject to the Employee Retirement Income Security Act (ERISA); and represented that it was complying with ERISA. In 2006 St. Peter’s sought a church plan exemption from ERISA, 26 U.S.C. 414(e); 29 U.S.C. 1002(33), continuing to pay ERISA-mandated insurance premiums while the application was pending. In 2013, Kaplan, who worked for St. Peter’s until 1999, filed a putative class action alleging that St. Peter’s did not provide ERISA-compliant summary plan descriptions or pension benefits statements, and that, as of 2011, the plan was underfunded by $70 million. While the lawsuit was pending, St. Peter’s received an IRS private letter ruling. affirming the plan’s status as an exempt church plan. The Third Circuit initially affirmed the denial of a motion to dismiss, concluding that St. Peter’s was not a church. The court reversed, following a June 5, 2017, order by the Supreme Court of the United States. View "Kaplan v. Saint Peter's Healthcare System" on Justia Law