Running an employee benefit claims operation is a complex undertaking, which requires continual training and oversight. A robust quality assurance organization can play an important part in the overall management mix. Curran v. Aetna Life Ins. Co., 13-cv-289, 2016 WL 3843085 (S.D.N.Y. July 11, 2016), gives a concrete example of a quality assurance review catching a significant error that would have resulted in an incorrect six-figure payment, and documenting the correction of the problem in a responsible, non-biased way. I always think that an organization’s strength is best revealed by how it responds to a problem, so Aetna deserves a gold star for this case. Continue reading
In Halo v. Yale Health Plan, 819 F.3d 42 (2d Cir. 2016), the Second Circuit made a significant change to the impact of ERISA claim regulations on subsequent litigation, rejecting the rule that it is sufficient for claim administrators to substantially comply with the regulations. Instead, the court held that, unless there is strict compliance with the regulations, courts will ordinarily conduct a de novo review of claim determinations, though it established a path for administrators to retain the arbitrary and capricious standard of review. Continue reading
In Burrell v. Prudential Ins. Co. of America, — F.3d –, 2016 WL 1426092 (5th Cir. Apr. 11, 2016), plaintiff argued that the plan did not give discretionary authority to Prudential, because the plan merely defined “Claim Fiduciary” as the person or entity “designated in the Plan (including the Summary Plan Description, Insurance Contracts or appendices, which are part of the plan) … to have discretionary authority[.]” The SPD designated Prudential as the Claim Fiduciary, and plaintiff argued that a grant of discretion in the SPD is insufficient. The Fifth Circuit rejected that argument, holding that the terms of an SPD can control if the SPD is incorporated into the plan, and it clearly was here.
Estate of Barton v. ADT Security Svcs. Pension Plan, — F.3d. –, 2016 WL 1612755 (9th Cir. Apr. 21, 2016), involved a plaintiff who worked for about 20 years (with a couple of interruptions) for ADT and affiliated entities. His employers went through several mergers and acquisitions during the period, and some (but perhaps not all) of them participated in the pension plan at issue. Continue reading
Tibble v. Edison Int’l, — F.3d –, 2016 WL 1445220 (9th Cir. Apr. 13, 2016) (“Tibble II”), marks the Ninth Circuit’s second review of the case after its earlier decision was vacated by the Supreme Court. Tibble v. Edison Int’l, 135 S.Ct. 1823 (2015) (“Tibble I”). Tibble I concerns the commencement of the statute of limitations for breach of fiduciary duty under 29 U.S.C. § 1113, which provides that an action must be brought within six years of “the last action which constituted a part of the breach or violation.” Continue reading
There is a lot about ERISA litigation that is hard to understand, but perhaps the most opaque issue is subrogation, which is the law governing when and how plans can recover benefits from participants. It seems that the Supreme Court is constantly changing the rules (while denying that it’s changing the rules), based on its interpretation of old treatises written about procedure in courts that don’t exist anymore. Continue reading
The Connecticut Law Tribune reported on Friday that St. Francis Hospital & Medical Center settled a class action lawsuit alleging that its pension plan failed to comply with ERISA because it improperly contended it was exempt as a church plan.
The suit alleged that the plan was underfunded by $140 million. The parties reportedly agreed to settle for $107 million, payable over 10 years.
Certainly the settlement discussions involved consideration of Kaplan v. Saint Peter’s Healthcare Sys., 810 F.3d 175, 177 (3d Cir. 2015), and Stapleton v. Advocate Health Care Network, 817 F.3d 517 (7th Cir. Mar. 17, 2016), both of which drastically narrowed the church-plan exemption.
About twenty states, including Vermont, have passed laws requiring all entities that provide health care services to report information to a state agency; these are called “all payer claims databases” or APCDs. Though they may have many purposes, they all generally are intended to enforce a universal and consistent (within the particular state, at least) submission of data that permits study, evaluation, manipulation and dissemination of the data, with an aim of improving health care outcomes and reducing costs. Of course, each state that establishes an APCD likely will have its own requirements, scope and format, which likely will differ in some respects from other states’ APCDs. And because a primary intent of ERISA was to avoid such patchwork, state-by-state regulation of employee benefit plans, a conflict was inevitable.
That conflict came to a head in Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016), and the Supreme Court held that ERISA won, by preempting Vermont’s APCD law. Continue reading
It is well-established that ERISA contains what is commonly referred to as a “church-plan exemption” which provides that plans established by churches are not required to abide by ERISA’s many rules and regulations. For many years, a number of courts have held that this exemption also applied to plans that were established by organizations that are affiliated with churches, such as schools (think Notre Dame or Georgetown) or hospitals. In two major decisions a couple of months apart, the Third and Seventh Circuits have held that the exemption is not as broad as other courts have concluded. These cases signal a major new area of ERISA litigation. Continue reading
In Santana-Diaz v. Metro. Life Ins. Co., 816 F.3d 172 (1st Cir. 2016), the court held “that ERISA requires a plan administrator in its denial of benefits letter to inform a claimant of not only his right to bring a civil action, but also the plan-imposed time limit for doing so. Because MetLife violated this regulatory obligation, the limitations period in this case was rendered inapplicable[.]” The First Circuit thus reversed the district court, which had held that the failure to provide notice was not dispositive because plaintiff was aware of the limitation through the group policy. Continue reading