The U.S. Supreme Court recently declined to review a significant decision of the Second Circuit which (1) clarified the scope of California’s statutory ban on discretionary clauses in life and disability insurance contracts, and (2) clarified the meaning of a “full and fair review” under the version of ERISA’s claims-procedure regulation applicable to all claims
On July 1, 2021, the Departments of Health and Human Services (HHS), Labor, and Treasury (together, “the Departments”), and the Office of Personnel Management, issued Requirements Related to Surprise Billing; Part I (Interim Final Rules (IFR) with Request for Comments). This is the first set of regulations implementing the federal No Surprises Act (NSA), which was enacted as part of the Consolidated Appropriations Act of 2021.
Medicare and Medicaid already prohibit surprise billing/balance billing, and the NSA extends this protection to patients insured through employer-based and individual health plans. The NSA applies to fully insured and self-insured group health plans, including grandfathered plans, but they do not apply to excepted benefits (such as limited-scope dental and vision plans, and most health flexible spending arrangements), or to health reimbursement arrangements.
To be considered, written comments to the IFR must be received by 5 p.m. on September 7, 2021. If the agency is persuaded by any of the comments and so chooses, the rule can be amended in light of those comments.
Continue Reading Implementing Regulations for The No Surprises Act: Part I
Though there are many legal complexities that can arise in a typical ERISA lawsuit, one thing that is typically not in dispute is whether there is an ERISA Plan at issue. Pension plans, 401(k) plans, health plans, and group insurance plans are all easy to spot, categorize and confirm as ERISA plans. There are outliers, to be sure, like when the plan is established or maintained by a possibly exempt employer (like a religious organization, community college, or Native American tribe). Or when the plan allows employees to purchase individual insurance policies at a discount. Or when the dispute involves a severance plan, as is demonstrated by Atkins v. CB&I, L.L.C., No. 20-30004, 2021 WL 1085807 (5th Cir. Mar. 22, 2021).
In Atkins, the defendant construction company established a Project Completion Incentive Plan (“PCIP”) that would pay eligible employees a bonus of 5% of their earnings while they worked on a particular construction project, if they stayed on the project until their work was completed. The plaintiffs, who acknowledged that they were not eligible for bonuses because they quit before their work on the project ended, sued in Louisiana state court, arguing that the PCIP involved a wage forfeiture that was illegal under Louisiana law. The employer removed the case to federal court on the grounds of ERISA complete preemption, and the district court agreed that ERISA governed. As the Fifth Circuit noted, “[t]hat jurisdictional determination also resolved the merits” because, if ERISA governs, “then everyone agrees the Plaintiffs do not have a claim” because ERISA preempts Louisiana law, and because the plaintiffs “are not eligible for the bonus under the terms of the plan.”
The Fifth Circuit held that the PCIP was not an ERISA plan.
Continue Reading When is a Severance Plan NOT an ERISA Plan
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)
A recent decision by the Eighth Circuit Court of Appeals, Jones v. Aetna Life Ins. Co., No. 16-1714, 2017 U.S. App. LEXIS 8112 (8th Cir. May 8, 2017), provides another signal that those of us defending against benefit claims increasingly may have to contend with simultaneous equitable claims for breach of fiduciary duty. Though the law is developing in this area (when is ERISA law not “developing”?), and likely will vary from circuit to circuit, you can expect more plaintiffs to add an equitable claim to a benefits complaint, and you can expect at least some courts to allow those claims to go forward. What strategies will prove most effective in responding to this latest tactic? While there are no definitive answers at this point, there are some ideas to consider.
Continue Reading It May Be Time to Start Thinking About Equitable Claims Again
The U.S. District Court for the Northern District of New York has ruled that the so-called “probate exception” to federal jurisdiction precludes federal courts from adjudicating cases implicating federal question jurisdiction, including cases arising under ERISA. In so doing, the N.D.N.Y. joins ranks with a small but growing number of federal district and circuit courts that recognize the “probate exception” as an absolute bar to federal jurisdiction over any in rem action in the custody of a state probate court.
The case, captioned In re Boisseau, 2017 U.S. Dist. LEXIS 11964 (N.D.N.Y. Jan. 30, 2017), came before the N.D.N.Y. by way of a notice of removal filed by Hanover HHR Employee Benefit Plan. The Plan sought removal of a “Petition to Extinguish Claim” that was filed by Brenda M. Boisseau, individually and as Executor of the Estate of Edward Boisseau in the Surrogate’s Court for the State of New York, Oswego County.
The decedent, Mr. Boisseau, was a beneficiary of the Plan who had prostate cancer. Upon Mr. Boisseau’s passing, his wife commenced a personal injury action against Mr. Boisseau’s treatment providers. That lawsuit was settled, at which time the Plan asserted a lien against the settlement fund for $299,975.73 in medical expenses it had paid on Mr. Boisseau’s behalf.
Continue Reading “Probate Exception” Bars Federal Jurisdiction over ERISA Dispute
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…
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 ERISA governs plans established by church-related organizations
In Penn. Chiro. Assoc. v. Independence Hosp. Indem. Plan, Inc., — F.3d –, 2015 WL 5853690 (7th Cir., Oct. 1, 2015), two chiropractors who had signed preferred provider agreements with an insurer claimed that the insurer violated ERISA in determining payments to them. In particular, plaintiffs claimed that the insurer had improperly recouped overpayments without holding a hearing.
As the court described the function of the agreement: “Providers bill the insurer directly and do not know (or care) whether a given patient obtained the coverage as part of an ERISA welfare-benefit plan or through some other means, such as an affinity-group policy or an insurance exchange under the Affordable Care Act.”
Continue Reading Preferred provider agreements do not support ERISA claim
Typically, ERISA litigation starts with a concrete plan, whether it is a retirement plan or an insurance plan. It is much more unusual to have an ERISA dispute turn on whether there is a plan at all. It is still more unusual to have the employee arguing that ERISA governs, and the employer arguing that it does not. But that is the dispute in Okun v. Montefiore Med. Ctr., 793 F.3d 277, 279 (2d Cir. 2015).
Continue Reading When does ERISA govern a severance plan?