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Benefit Claims & Claims Process Litigation

Controversial Sixth Circuit Panel’s Decision on Disgorgement of Profits in ERISA Disability Benefits Case Set for Oral Argument in Rehearing En Banc

In Rochow v. Life Ins. Co. of Am., 737 F.3d 415 (6th Cir. 2013), a panel of judges for the Sixth Circuit awarded an ERISA disability benefits claimant’s estate not only the amount of benefits that the participant was owed, but also a disgorgement award under ERISA § 502(a)(3). Dissenting, the Hon. David McKeague remarked that the Sixth Circuit panel took “an unprecedented and extraordinary step to expand the scope of ERISA coverage. The disgorgement of profits undermines ERISA's remedial scheme and grants the plaintiff an astonishing $3,797,867.92 windfall under the catchall provision in § 502(a)(3).” Id. at 431 (McKeague, J. dissenting).

On March 7, 2014, the case was slated for oral argument, in a rehearing en banc, on June 18, 2014.

For more on the decision and the highly anticipated rehearing en banc, keep reading here.

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Unresolved Claim For Attorney’s Fees Does Not Prevent Judgment From Becoming “Final”

In a recent ERISA case, the Supreme Court clarified that an outstanding claim for attorney’s fees does not prevent a judgment from becoming “final” for the purposes of filing a timely appeal. Ray Haluch Gravel Co. v. Cent. Pension Fund of Int'l Union of Operating Engineers & Participating Employers, 134 S. Ct. 773 (2014). The decision provides clarity for meeting appeal deadlines for both ERISA and non-ERISA cases and abrogates prior decisions from the Third, Fourth, Eighth, and Eleventh Circuits.

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Supreme Court Upholds Plan's Limitation Period That Begins To Run Before A Final Denial

ERISA plans frequently provide a contractual limitations period which defines when a claimant may file a lawsuit if they are denied benefits.  Courts have typically upheld those limitations periods.  However, in order to bring a lawsuit in the first place, the claimant must have received a final denial on his/her claim.  What happens when the plan’s limitations period begins to run before that final denial is even issued?  The Supreme Court just answered that question.

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Tenth Circuit Says “Enough is Enough” And Rejects Plan Participants’ Belated Attempt To Add Vague Claims For “Equitable Relief” Post-Amara

We all know that Section 502(a)(3) of ERISA allows a participant “to obtain other appropriate equitable relief” to redress violations of ERISA. Though it is unclear what “equitable relief” might be “appropriate” under the circumstances, in its landmark 2011 decision, Cigna v. Amara, the Supreme Court suggested (in dicta) that such “equitable relief” may come in the form of injunctive relief, estoppel or reformation. Click here to read our full advisory on Cigna v. Amara.

However, it is axiomatic that “equitable relief” is only “appropriate” when no other provision of ERISA provides adequate relief. So, what happens when plaintiffs belatedly seek to assert a claim for some amorphous “equitable relief” after they have unsuccessfully tried a claim under another provision of ERISA? The Tenth Circuit recently rejected such an attempt to vaguely assert some entitlement to “equitable relief” post-Amara, bringing six and a half years of litigation to a close. See Jensen v. Solvay Chemicals, Inc., No. 11–8092, 2013 WL 3306356 (10th Cir. July 2, 2013).

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Seventh Circuit: Participant May Be Entitled To “Make-Whole” Surcharge If Incorrect Coverage Information Caused Decision To Have Surgery

Can the advice of a customer service agent as to whether a medical procedure is covered by a plan provide a right to benefits when the agent’s advice (1) was not intended to be binding and (2) is contrary to the terms of the plan? The United States Court of Appeals of the Seventh Circuit recently indicated that providing such incorrect advice may indeed create an equitable claim. Why? Read on to find out.

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Rosy Relief in Sight for the Plan in CGI Technologies & Solutions v. Rose

On April 22, 2013, the Supreme Court granted the petition for a writ of certiorari in CGI Technologies & Solutions v. Rose, et al., and then immediately vacated and remanded the Ninth Circuit’s judgment in light of US Airways, Inc. v. McCutchen, 569 U.S. ____ (2013).

The facts of this case are quite similar to McCutchen. However, unlike in McCutchen, the plan in CGI Technologies & Solutions v. Rose expressly disclaims the common-fund and make-whole doctrines. Thus, on remand under McCutchen, we expect that the Ninth Circuit will allow the express terms of the plan to govern and require Rose to reimburse the plan in full for medical expenses it incurred on her behalf.

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Fourth Circuit Joins Third Circuit In Holding ERISA Does Not Preempt Post-Distribution Suits Against Beneficiaries

ERISA requires that “[e]very employee benefit plan . . . be established and maintained pursuant to a written instrument” that “specif[ies] the basis on which payments are made to and from the plan.” 29 U.S.C. §§ 1102(a)(1), (b)(4). ERISA then directs the plan administrator to discharge his duties “in accordance with the documents and instruments governing the plan.” Id. § 1104(a)(1)(D).

In Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009), the Supreme Court held that an ERISA plan administrator must distribute benefits to the beneficiary named in the plan, regardless of any state-law waiver purporting to divest that beneficiary of his right to the benefits. However, Kennedy explicitly left open the question of whether, once the benefits are distributed by the administrator, the decedent’s estate can enforce a waiver against the plan beneficiary. See id. at 299 n. 10 (“Nor do we express any view as to whether the Estate could have brought an action in state or federal court against [the plan beneficiary] to obtain the benefits after they were distributed.”). The Fourth Circuit recently addressed this question in the affirmative, following the Third Circuit’s holding in Estate of Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3d Cir. 2012). See Andochick v. Byrd, No. 1:11–cv–739, 2013 WL 781978 (4th Cir. March 4, 2013).

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Claims Spanning Decades, Ten Subclasses No Problem for ERISA Class Cert Bid in Seventh Circuit

Federal Rule of Civil Procedure 23(b)(2) authorizes class action treatment if the defendant “has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” But is it really possible for a defendant to “act” or “refuse to act” the same way with respect to a group that is so large and varied that it is broken into 10 separate and distinct subclasses? Judge Posner thinks so. Indeed, writing on behalf of a three-judge panel of the Seventh Circuit, Judge Posner recently affirmed certification under Rule 23(b)(2) of a class of more than 4,000 individuals who participated in an ERISA-governed pension plan over a span of 23 years, and comprising 10 distinct subclasses. See Johnson v. Meriter Health Services Employee Retirement Plan, --- F.3d ----, 2012 WL 6013457 (7th Cir. Dec. 4, 2012).

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Ninth Circuit Finds The “Fiduciary Exception” To The Attorney-Client Privilege Extends To Insurance Companies Acting As Fiduciaries To ERISA Plans

October 2, 2012 | Posted by Costin, Emily | Topic(s): Benefit Claims & Claims Process Litigation, Other Interesting Cases & Issues

In a matter of first impression, the Ninth Circuit recently held that the attorney-client privilege does not apply to communications between an insurer and counsel before a claims decision is made. Creating a split with the Third Circuit, the Ninth Circuit held that the “fiduciary exception” to the attorney-client privilege should be extended to insurers that administer benefit plans governed by ERISA, and acting in a fiduciary capacity. See Stephan v. Unum Life Ins. Co. of Am., No. 10-16840l, --- F.3d ----, 2012 WL 3983767 (9th Cir. Sept. 12, 2012). This is a chilling decision for all practitioners who advise insurers of ERISA plans.

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U.S. Airways Class Action Fails to Take Off

On July 18, 2012, Judge Rosemary Collyer of the United States District Court for the District of Columbia denied certification of a class of 1,350 U.S. Airways pilots in an ERISA class action to recover interest on lump sum pension distributions, in a case that has been pending for more than a decade. Judge Collyer held that the named plaintiff’s exhaustion of his administrative remedies under the pension plan did not suffice for the entire class, and does not, as a matter of law, excuse the entire putative class from exhausting their administrative remedies. Therefore, the pilots’ claims could not be maintained as a class action.

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Cert Alert: Supreme Court to Consider Appeal regarding Right of Plans to Seek Reimbursements from Plan Participants

On June 25, the Supreme Court granted the petition for a writ of certiorari submitted by US Airways, regarding the Third Circuit’s ruling in US Airways, Inc. v. McCutchen, 663 F.3d 671 (3d Cir. 2011). The Third Circuit held that a judgment requiring a plan participant to provide full reimbursement to the plan administrator for medical expenses which the administrator paid to the participant constituted “inappropriate and inequitable relief.”

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ERISA Blocks NFL Players’ Claims

January 30, 2012 | Posted by Costin, Emily | Topic(s): Benefit Claims & Claims Process Litigation, ERISA Preemption, Other Interesting Cases & Issues

On December 28, 2011, the United States District Court for the District of Colorado blocked a chiropractor’s attempt to recover benefits for providing services to NFL players and their families under a new Colorado statute, holding the doctor’s claims were preempted by ERISA.

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The Third Circuit’s “Take-Off” on Procedural Factors and the Content of Benefit Denial Letters in Miller v. American Airlines, 632 F.3d 837 (3d Cir. 2011)

November 1, 2011 | Posted by Elizabeth Wilson Vaughan | Topic(s): Benefit Claims & Claims Process Litigation

Earlier this year, the Third Circuit considered whether American Airlines properly terminated a commercial airline pilot’s claim for long-term disability (“LTD”) benefits, where the pilot’s putative disability claim arose from a psychotic episode.

In Miller v. American Airlines, 632 F.3d 837 (3d Cir. 2011), the Third Circuit reversed the decision of the United States District Court for the Middle District of Pennsylvania, which had granted summary judgment for American Airlines, the benefits plan and the plan administration committee. In reaching its decision, the Third Circuit parsed through the contents of the termination letter that was sent to the pilot and weighed the impact of its contents in determining whether the decision to terminate the pilot’s LTD benefits was arbitrary and capricious.

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