The U.S. Court of Appeals for the Second Circuit has ruled that New York’s anti-subrogation statute, N.Y. Gen. Oblig. Law § 5-335(a), applies both to “offsets” for prospective benefit payments and to reimbursements for prior benefit disbursements.  In so holding, the Second Circuit ruled that a Plan’s choice-of-law provisions may not be dispositive of which jurisdiction’s anti-subrogation statute will apply to govern disbursement and/or recovery of that Plan’s assets.

The case, Arnone v. Aetna Life Ins. Co., 860 F.3d 97 (2d Cir. 2017), arose after the plaintiff-appellant, Salvatore Arnone, a New York resident, was injured while working in New York at the site of a customer of his employer.   Arnone filed for, and received, disability benefits through an ERISA-governed plan (“Plan”) insured and administered by Aetna.  Arnone also commenced a personal injury action in New York state court against his employer’s customer.  Arnone eventually settled the personal injury suit for a lump-sum payment.
Continue Reading Second Circuit Clarifies New York Anti-Subrogation Law Prohibits Offsets For Settlements; Declares Plan’s Choice-of-Law Provisions May Not Govern Offset And Subrogation Rights

In Okuno v. Reliance Standard Life Ins. Co., 836 F.3d 600 (6th Cir. 2016), the court considered the proper interpretation of a mental illness limitation on coverage for disabilities “caused by or contributed to by” mental illness.
Continue Reading Sixth Circuit adopts “but for” test for applying mental illness limitation

Bos v. Bd. of Trustees, 795 F.3d 1006 (9th Cir. 2015), involved the owner of a company that participated in a multi-employer pension plan. Because the owner had full control over the company finances, he was personally responsible for making the required contributions. Moreover, he signed a promissory note for some $360,000 in payments that the company had failed to make. Then he filed bankruptcy. The bankruptcy court and the district court held that the debt was not dischargeable, because it was incurred due to the debtor’s “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” 11 U.S.C. § 523(a)(4). To so hold, the lower courts had concluded that the unpaid contributions were plan assets, and plaintiff’s control over those unpaid contributions made him a fiduciary, which gave rise to non-dischargeability.
Continue Reading Unpaid employer contributions cannot be plan assets; debt is dischargeable in bankruptcy

Bd. of Trustees v. Moore, 800 F.3d 214 (6th Cir. 2015), considered whether a summary plan description (SPD) that was the only document containing a subrogation provision was a binding plan document. The Board of Trustees of the National Elevator Industry (NEI Board) established a health benefits plan, pursuant to two relevant documents. The first was a Trust Agreement between the NEI Board and participating elevator companies, which provided for the establishment and funding of a health benefit plan. The Trust Agreement did not, however, contain any details of a health plan. The NEI Board never created a plan document, but did create an SPD, which details the terms of the plan, and contains a subrogation provision. The Plan’s director of health claims administration testified that the SPD constituted both the plan and the summary of that plan.
Continue Reading SPD can be governing plan document when there is no actual plan

Williams v. Natl. Union Fire Ins. Co. of Pitt., 2015 WL 4080909 (9th Cir. July 7, 2015) involved the death of “an acclaimed horticulturist” from pulmonary embolism triggered by deep vein thrombosis after flying approximately 28 hours over five days. Plaintiff was covered by an AD&D policy through his employer. The policy covered death as “a direct result of an unintended, unanticipated accident that is external to the body[.]”
Continue Reading Death Resulting From DVT Caused By Long Flights Not Covered Under AD&D Policy

Heimeshoff v. Hartford Life & Acc. Ins. Co., 134 S. Ct. 529 (2013), held that a contractual limitation period in an ERISA plan is enforceable as written unless the period is unreasonably short, or a “controlling statute prevents the limitations provisions from taking effect.” In Heimeshoff, there was no dispute that the contractual limitation provision was consistent with the law of the forum state (Connecticut). But what happens when the contractual limitation period is shorter than the minimum period allowed by applicable state law?
Continue Reading State Law Is Not A “Controlling Statute” Overriding Contractual Limitation

In Stiso v. Intl. Steel Group, 2015 WL 3555917 (6th Cir. June 9, 2015), the court reversed a ruling by the district court that dismissed a claim for make-whole relief, and directed the district court “to grant an equitable remedy [against the employer and insurer] equivalent to the promised increase in benefits to plaintiff.”

The decision was written by Judge Merritt, a senior judge who did not participate in the en banc decision in Rochow v. Life Ins. Co. of N. Am., 780 F.3d 364 (6th Cir. 2015), which rejected a claim for make-whole relief in the form of disgorgement of profits. The Stiso panel also included Judge Boggs, who was in the majority in Rochow, and Judge Stranch, who had issued the lengthy dissent in Rochow.
Continue Reading Sixth Circuit At it Again: Orders Make-Whole Relief in Disability Benefit Claim

In Becker v. Williams, — F.3d –, 2015 WL 348872 (9th Cir. Jan. 28, 2015), the plan participant called the plan administrator to change the beneficiary of his pension plans from his ex-wife to his son. His employer sent him beneficiary change forms, but he never completed them in the years before he died. After his death, both the son and ex-wife claimed the benefits, and the employer interpleaded.
Continue Reading Beneficiary Designation Forms Are not Plan Documents; Change of Beneficiary By Phone Was Sufficient

In Brake v. Hutchinson Tech. Inc. Grp. Disability Income Ins. Plan, 774 F.3d 1193 (8th Cir. 2014), the court determined that, where a policy insuring a South Dakota resident was issued in Minnesota to a Minnesota employer, and provided that it was governed by Minnesota law, then a South Dakota regulation precluding discretionary clauses

In Rice v. ReliaStar Life Ins. Co., 770 F.3d 1122 (5th Cir. 2014), the police responded to a 911 call about the decedent, Rice, sitting in his car, in his garage, with a gun to his head, threatening suicide. After various failed efforts by the police to get him to surrender, he walked toward the police, refused to drop his gun, said “I want to commit suicide,” and was shot and killed.
Continue Reading Insurer Reasonably Denied AD&D Claim Following “Suicide By Cop”