Those involved in disability claims administration may wish to consider the potential impacts of the current global pandemic. In the current crisis, disability claims regulations may not be at the top of many peoples’ minds. However, insurers, plan administrators, and other involved in disability claims administration may wish to reevaluate the applicable Department of Labor deadlines and requirements in light of present pressures on medical personnel, persons with serious health problems, and business disruptions. Continue Reading
As discussed in an earlier post on this blog, in Intel Corporation Investment Policy Committee et al. v. Sulyma, No. 18-1116 (Feb. 26, 2020), the U.S. Supreme Court addressed the statute of limitations for breach of fiduciary duty lawsuits under ERISA. In general, fiduciary breach claims are covered by the 6-year statute of limitations in 29 U.S.C. § 1113(1). However, there is a 3-year statute of limitations if the plaintiff had “actual knowledge” of the breach. 29 U.S.C. § 1113(2). Writing for a unanimous Court, Justice Alito held that “actual knowledge” “does in fact mean what it says.” According to the Justice, under this standard a plaintiff must be actually aware of the fiduciary breach – not merely have information from which he or she could have become aware of the violation – for the 3-year statute of limitations to start running.
The allegations in Sulyma may help plan sponsors, administrators, and other plan fiduciaries understand the impacts of Justice Alito’s opinion. Continue Reading
Believe it or not, the Supreme Court of the United States just decided whether “to have ‘actual knowledge’ of a piece of information, one must in fact be aware of it.” The Court said “yes,” and it was unanimous. Most non-lawyers (and even some lawyers) would probably be surprised that this issue was even being debated. But it was a question that had divided the lower courts, with the Sixth Circuit ruling that “actual knowledge” did not require actually seeing or reading a document that was provided. The Supreme Court agreed with the six other circuits that had concluded that “actual knowledge” means what it says. The Court’s opinion potentially holds a silver lining for defendants though when it comes to class certification. Continue Reading
In Ariana M. v. Humana Health Plan of Texas, Inc., No. 18-20700, 2019 WL 5866677 (5th Cir. Nov. 8, 2019), the Fifth Circuit Court of Appeals rejected a plaintiff’s petition for attorneys’ fees under 29 U.S.C. § 1132(g). This case concerns Humana Health Plan of Texas, Inc.’s denial of benefits for hospitalization to treat an eating disorder. On a prior appeal, Ariana M. v. Humana Health Plan of Texas, Inc., 884 F.3d 246 (5th Cir. 2018) (en banc) (“Ariana I”), the Fifth Circuit concluded that the District Court erred by conducting a deferential review of the claim decision, that it remanded the case for a de novo review of Humana’s decision.
On remand and de novo review, the District Court found Humana had not erred and entered summary judgment in Humana’s favor. Nonetheless, Ariana filed a fee petition, asserting that her success in Ariana I in convincing the appellate court to change the standard of review and remand her case entitled her to fees regardless of whether she ultimately won her claim for benefits. The District Court denied her petition.
In a recent summary order in an ERISA LTD benefits case, the Second Circuit Court of Appeals rejected a plaintiff’s appeal concerning the amount of attorneys’ fees awarded by the district court. In Solnin v. Sun Life and Health Insurance Co. et al., after plaintiff prevailed on her claim for benefits, her counsel filed a motion seeking attorneys’ fees of over $515,000, along with costs and interest. Plaintiff’s attorneys, who had their offices in Manhattan (Southern District of New York), argued that their rates should be fixed at Southern District rates, rather than the typically lower rates used in the Eastern District of New York where the case was litigated. The District Court (Hurley, J.) determined that the local rates for the Eastern District should apply. The District Court also found that a 25 percent across-the-board reduction in fees was appropriate given that plaintiff’s counsel had engaged in “impermissible billing practices” including vague descriptions, block billing, and questionable entries, and further noting that decisions in similar cases seemed to suggest that the firm had “a pattern of excessive billing for their time considering their experience.” Solnin I, 2018 WL 4853046 (E.D.N.Y., Sept. 28, 2018). The District Court ultimately awarded slightly over $222,000 in fees, instead of the $500,000-plus that plaintiff had requested. Continue Reading
The Ninth Circuit recently issued two decisions in Dorman v. Charles Schwab Corp.: the first overrules the decision in Amaro v. Continental Can. Co., 724 F.2d 747 (9th Cir. 1984) (Dorman, – F.3d –, No. 18-15281, 2019 WL 3926990 (9th Cir. Aug. 20, 2019) (slip op.) (“Dorman I”)); and the second concludes that an individual’s ERISA claim may be subject to the plan’s arbitration provision (Dorman, — F. App’x –, No. 18-15281, 2019 WL 3939644 (9th Cir. Aug. 20, 2019) (slip op.) (“Dorman II”)).
Dorman, a former Schwab employee, filed a putative class action under ERISA §502(a)(2) and (3), alleging that defendants violated ERISA and breached their fiduciary duties by including poorly performing Schwab-affiliated investment funds in the defined contribution 401(k) retirement plan to generate fees for Schwab. Dorman I, 2019 WL 3926990 at *1-*2.
In December 2014, the plan was amended to require that “[a]ny claim, dispute or breach arising out of or in any way related to the plan shall be settled by binding arbitration.” Id., 2019 WL 3926990 at *2. Continue Reading
The Second Circuit Court of Appeals recently issued an opinion in Frommert v. Conkright, affirming a district court decision regarding appropriate equitable remedies under ERISA and the amount of prejudgment interest to be applied. The Second Circuit’s views on each of these issues should be of interest to plan fiduciaries as well as practitioners.
This litigation has a long history, dating back to 1999, and has generated many court opinions along the way, from the district court level all the way up to the U.S. Supreme Court. Indeed, this is the Second Circuit’s fourth decision in this case. (Readers are likely familiar with this case from the 2010 Supreme Court decision, which addressed the standard of review and held that an honest mistake does not strip a plan administrator of the deference otherwise granted to it to construe plan terms.)
By means of background, the litigation was initiated by Xerox employees who had left the company in the 1980s, received distributions of the retirement benefits they had earned up to that point, and who were subsequently rehired by Xerox. In addition to the issues concerning interpretation of the Plan and related documents, the primary focus of the case was how to account for the employees’ past distributions when calculating their current benefits so as to avoid a “double payment” windfall. Continue Reading
Wilderness therapy, also referred to as outdoor behavioral healthcare, is a treatment modality that uses expeditions into the wilderness as a means of addressing behavioral and mental health issues. Claims that health plans pay for wilderness therapy have been denied for various reasons, including the lack of accreditation of the program or licensing of the providers, or that the treatment is not medically necessary.
In the majority of recent wilderness therapy coverage suits, plaintiffs allege wilderness program exclusions violate the Mental Health Parity and Addiction Equity Act (“Parity Act”). Several recent district court decisions provide guidance on whether the criteria used to deny coverage of “wilderness programs” may be considered a potential Parity Act violation. Continue Reading
In Vest v. Resolute FP US, Inc., 905 F.3d 985 (6th Cir. 2018), the Sixth Circuit Court of Appeals upheld dismissal of a claim by the beneficiary of a deceased employee that the employer breached its fiduciary duty under ERISA §502(a)(3), 29 U.S.C. §1132(a)(3) by failing to notify the decedent of his right to port or convert his group life insurance coverage to an individual life insurance policy after he ceased active employment. Continue Reading
As we approach the end of the year and mid-term elections, expectations for meaningful policy from a lame duck Congress are at a record low. Surprisingly, however, the earlier passage of the Tax Cuts and Jobs Act (commonly referred to as “Tax Reform”) resulted in an unsettled desire among those in the U.S. House of Representatives and U.S. Senate to accomplish something rare – bipartisan legislation improving retirement and savings for millions of Americans.
The two pieces of legislation that have bipartisan support are the Retirement Enhancement and Savings Act (RESA) and the Family Savings Act of 2018 (FSA). Continue Reading