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Jean Tomasco's practice involves employer counseling and employment litigation, with an emphasis on ERISA and benefits litigation. Ms. Tomasco represents employers before state and federal courts and administrative agencies, including the Connecticut Commission on Human Rights and Opportunities. She has defended employers against all types of employment-related claims, including discrimination and wrongful discharge claims. Ms. Tomasco also counsels employers on a variety of employment matters, including hiring practices, termination of employees, employment-related immigration issues, unemployment compensation issues, wage and hour matters, drug testing, and personnel policies and handbooks. Read her full rc.com bio here.

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 Second Circuit Upholds Reduction of Attorneys’ Fees Sought in ERISA Benefits Case

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 Second Circuit Upholds District Court’s Choice of Equitable Remedies Under ERISA and Its Decision to Award Prejudgment Interest at the Federal Prime Rate

On July 3, 2018, a District Court in Alabama upheld, on reconsideration, its initial decision to dismiss a plaintiff’s breach of fiduciary duty claim under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), finding that ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), provided the plaintiff with an adequate remedy. This decision adds to the growing amount of case law regarding whether—and when—a breach of fiduciary duty claim should be dismissed in benefit claim litigation.
Continue Reading Court Upholds Dismissal of Breach of Fiduciary Claim, Finding Plaintiff Had an Adequate Remedy Under ERISA § 501(a)(1)(B)

In a recent news release, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor confirmed that its final rule amending the disability claims procedure requirements applicable to ERISA-covered employee benefit plans (the “Final Rule”) will go into effect on April 1, 2018.

Continue Reading No Fooling: U.S. Department of Labor Confirms That The Disability Claims Regulations Will Go Into Effect on April 1, 2018 Without Further Delay or Modification

In today’s Federal Register, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor has published its notice delaying, by 90 days, the applicable date of its final rule amending the disability claims procedure requirements applicable to ERISA-covered employee benefit plans (the “Final Rule”). The new claims procedures had initially been set to become applicable on January 1, 2018.  That date has now been delayed to April 1, 2018.

The new claims procedures of the Final Rule apply to all ERISA plans that provide disability benefits, which include not only short-term and long-term disability plans but also other types of ERISA plans with disability provisions, such as many retirement plans. The purpose of the delay is to provide EBSA with time to consider the Final Rule’s impact on the group disability insurance market, in light of President Trump’s Executive Order 13777 directing federal agencies to evaluate regulations (with input from affected entities) with an eye toward reducing regulatory burden and expense.
Continue Reading EBSA Formally Extends Applicability Date of Disability Claims Regulations to April 1, 2018; Time to Comment on the Regulations Ends Soon

In Hannan v. Hartford Financial Services, Inc., (2d Cir., April 25, 2017), the Second Circuit Court of Appeals affirmed dismissal of a potential ERISA class action against Family Dollar Stores, its employee benefits plan, and the plan’s group life insurance provider (Hartford), rejecting allegations by plan participants that the plan defendants had engaged in a so-called “cross-subsidization” scheme in violation of federal law. The Second Circuit confirmed that neither the negotiation of premium rates nor any alleged subsidization component between different types of life insurance provided under the plan constituted a breach of fiduciary duty or prohibited transaction under ERISA.

The background facts, as alleged in the complaint and summarized in the court decisions, are as follows. Family Dollar contracted with Hartford to provide group life insurance coverage to employees under the Family Dollar Stores, Inc. Group Insurance Plan (the “Plan”).  All employees were automatically enrolled in basic life insurance under the Plan at no cost to them. They also were offered the option (but were not obligated) to purchase supplemental life insurance coverage for which they would pay the premiums. 
Continue Reading Second Circuit Upholds Dismissal of ERISA Claims Against Plan Defendants for Alleged “Cross-Subsidization” Scheme

The Second Circuit Court of Appeals recently held that claim fiduciaries must strictly comply with ERISA claim regulations or lose the deferential standard of review, as we have discussed in previous posts: Second Circuit rejects “substantial compliance” rule, Insurer’s Failure to Establish “Special Circumstances” for Extension of Time to Decide LTD Appeal Warrants De Novo Review, and District of Connecticut Rules that Violations of Claims Procedure Regulations Result in Loss of Discretion.

While other courts have not applied the same strict level of scrutiny to the claims regulations as Halo and its progeny, the Ninth Circuit recently held that a procedural violation in the claims-handling process may warrant de novo review if it resulted in substantive harm to the claimant. In Smith v. Reliance Standard Life Ins. Co., Dkt. # No. 16-15319 (9th Cir., March 16, 2017), the Ninth Circuit Court of Appeals vacated a district court’s order in favor of the insurer on a plan participant’s claims for short- and long-term disability benefits, remanding the case back to the district court for further consideration.
Continue Reading Ninth Circuit Holds That Violation of DOL Claim Regulations Can Result in a Loss of Deference

Following the 2016 decision of the Second Circuit Court of Appeals in Halo v. Yale Health Plan, 819 F.3d 42 (2d Cir. 2016), in which the Second Circuit rejected the doctrine of “substantial compliance” with ERISA claim regulations in favor of a much stricter interpretation, courts within the Second Circuit have increasingly held insurers and other claims fiduciaries to a high standard of compliance with the claim regulations, regardless of the type of benefit at issue.

Under Halo, a plan’s failure to comply with the claims-procedure regulations will result in that claim being reviewed de novo, unless the plan has otherwise “established procedures in full conformity” with the regulations and can show that its failure to comply with the regulations was both inadvertent and harmless. We have previously written about this here and here.

Most recently, in Schuman v. Aetna Life Ins. Co., 2017 U.S. Dist. LEXIS 39388 (D. Conn. Mar. 20, 2017), the U.S. District Court for the District of Connecticut ruled that Halo compelled de novo review of a denial of long-term disability benefits, despite the grant of discretion in the plan. The plaintiff (plan participant) alleged several violations of the claims-procedure regulations, including: failure to adequately consider a vocational assessment submitted by the plaintiff; improper deference to the initial decision on appeal; failure to provide copies of internal policy guidelines upon request; and lack of adequate safeguards to ensure that claims decisions were made in accordance with the applicable plan document.
Continue Reading District of Connecticut Rules that Violations of Claims Procedure Regulations Result in Loss of Discretion

In a recent decision from the Southern District of New York in a case concerning a dispute over the denial of long-term disability (LTD) benefits, a District Court judge held that the LTD insurer had failed to establish special circumstances warranting an extension of the time frame for deciding the claimant’s appeal during the administrative review process. The Court determined that this constituted a violation of the claims processing regulations under ERISA, thereby warranting a de novo review of the insurer’s decision rather than the arbitrary and capricious standard of review that otherwise would apply.

The case, Salisbury v. Prudential Insurance Co. (Dkt. 15-cv-9799, S.D.N.Y.), involves a claim by an employee for LTD benefits under an employer-sponsored ERISA benefit plan. LTD benefits were provided through a group insurance policy issued by Prudential, who served as the claims administrator. After Prudential initially denied the employee’s claim for LTD benefits, the employee appealed the decision with Prudential, as claimants generally must exhaust their administrative remedies prior to initiating litigation. Under the existing U.S. Department of Labor (DOL) claim regulations, Prudential had 45 days to issue a decision on the appeal. 
Continue Reading Insurer’s Failure to Establish “Special Circumstances” for Extension of Time to Decide LTD Appeal Warrants De Novo Review