In Gross v. Sun Life Assur. Co. of Can., No. 09-11678-RWZ, 2018 U.S. Dist. LEXIS 107918 (D. Mass. June 28, 2018), a District Court decided the appropriate prejudgment interest rate for a Kentucky resident was the Massachusetts prejudgment rate (12 percent) rather than the federal rate at the time (.37 percent). The District Court awarded attorney’s fees in the amount of $625 per hour for Plaintiff’s Boston lawyer but refused to increase the rate for Plaintiff’s Kentucky lawyer in accordance with the Boston market rate. The Court also refused to compensate the Kentucky lawyer for work performed during the phases of litigation “infected” by misconduct.
Continue Reading Court Awards Pre-Judgment Interest To Kentucky Plaintiff at Massachusetts State Rate but Declines Boston Attorney Rates for Kentucky Lawyer
First Circuit
It May Be Time to Start Thinking About Equitable Claims Again
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
First Circuit rules that ERISA preemption of claim is an arbitrable issue
In Prime Healthcare Servs. – Landmark LLC v. United Nurses & Allied Prof’ls, Local 5067, 848 F.3d 41 (1st Cir. 2017), the First Circuit ruled that an arbitration agreement required the arbitrator to determine whether ERISA preempted the claims at issue.
Plaintiff purchased a financially troubled hospital that had a pension plan, and a collective bargaining agreement (CBA) with defendant. The CBA contained a broad arbitration provision. After the acquisition, the pension plan was terminated by the Pension Benefit Guaranty Corp. (PBGC), and the defendant union sought arbitration of its grievance that the termination violated the CBA. Ultimately, the district court ruled that the union’s claims were preempted by ERISA.
The Court noted that courts will determine questions of arbitrability only when there is a dispute of “substantive arbitrability” – whether the parties are bound by an arbitration clause, or whether the particular clause governs a particular type of controversy. “Procedural arbitrability” questions, in contrast, are presumptively determined by the arbitrator; these questions include things like defenses of waiver, delay, or any other procedural rule that grows out of the dispute and bears on its final disposition.
Continue Reading First Circuit rules that ERISA preemption of claim is an arbitrable issue
Mutual fund redemptions payable to participants are not plan assets, and broker can retain interest earned while holding the cash
In re Fid. ERISA Float Litig., 829 F.3d 55 (1st Cir. 2016), held that Fidelity did not breach fiduciary duties to the plans at issue by allegedly earning interest on cash on its way to participants after a redemption had been made. The case involved a number of 401(k) plans that had hired Fidelity as trustee to act as intermediary between the plans, the participants and the mutual funds in which the participants’ funds were invested. In a nutshell, when a participant desired to make a withdrawal, the mutual fund would sell the shares and transfer the cash to Fidelity; Fidelity held the cash at least overnight in an account that allegedly earned interest for Fidelity; and it then distributed the cash to the participant. The plaintiffs, various participants and one plan administrator, sued on behalf of the plans.
Continue Reading Mutual fund redemptions payable to participants are not plan assets, and broker can retain interest earned while holding the cash
Failure to disclose contractual limitation in ERISA claim denial letter is per se prejudicial
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 Failure to disclose contractual limitation in ERISA claim denial letter is per se prejudicial
First Circuit Applies Younger abstention doctrine to ERISA preemption claim
In Sirva Relocation, LLC v. Richie, 794 F.3d 185 (1st Cir. 2015), ERISA preemption met federal abstention, and lost. Knight was an employee of Sirva, which had a disability plan insured by Aetna. Knight received 24 months of disability benefits, which were then terminated under a mental illness limitation; he responded by filing a discrimination charge against Sirva and Aetna with the Massachusetts Commission Against Discrimination (MCAD), alleging that Sirva and Aetna paid disparate benefits depending on whether the claimant suffered from a physical or mental impairment. Sirva and Aetna moved to dismiss, arguing ERISA preemption, and, after a three-year wait, MCAD denied the motion without prejudice.
Continue Reading First Circuit Applies Younger abstention doctrine to ERISA preemption claim
Second Circuit Evaluates Split in Circuits, and Rules That Order Remanding Claim to Administrator Is Generally Not Appealable
In Mead v. Reliastar Life Ins. Co., — F.3d –, 2014 WL 4548868 (2d Cir. Sept. 16, 2014), the district court determined that Reliastar’s decision on plaintiff’s disability claim was arbitrary and capricious, and remanded the matter to Reliastar to calculate the benefits owed for plaintiff’s own-occupation disability, and to determine whether she was disabled from any occupation. Reliastar appealed, and plaintiff moved to dismiss for lack of appellate jurisdiction, arguing that the remand order was not a “final decision” under 28 U.S.C. § 1291. The court noted that it had “never definitively decided whether, or under what circumstances, a district court’s remand to an ERISA plan administrator is immediately appealable.” It held now that it was not appealable.
Continue Reading Second Circuit Evaluates Split in Circuits, and Rules That Order Remanding Claim to Administrator Is Generally Not Appealable
Remand May Be Sufficient Success on the Merits to Support Attorneys’ Fee Award
Gross v. Sun Life Assur. Co. of Canada, 763 F.3d 73 (1st Cir. 2014), a divided decision, concerned the question whether a remand by the First Circuit to the administrator qualified for an award of attorneys’ fees. In a prior decision, Gross v. Sun Life Assur. Co. of Canada, 734 F.3d 1 (1st Cir. 2013), the court had accepted plaintiff’s argument that deferential review was not triggered by plan language requiring that proof of disability be “satisfactory to” the insurer. Gross 2013 also found that the administrative record was inadequate to assess plaintiff’s entitlement to benefits, and remanded to the administrator. Plaintiff then apparently filed a motion with the First Circuit seeking attorneys’ fees for the litigation in the district court and on appeal, leading to Gross 2014.
Continue Reading Remand May Be Sufficient Success on the Merits to Support Attorneys’ Fee Award
Disability Benefit Underpayment Claim Accrues When Benefit Calculated
Long-term disability plans typically pay benefits on a monthly basis. When there is a dispute about the calculation of benefits, when does that claim accrue? And does each new underpayment give rise to a new claim? The First Circuit answered those questions in Riley v. Met Life Ins. Co., — F.3d –, 2014 WL…
Effect of Requiring “Satisfactory” Proof Is A Popular Issue in the Circuits This Year
Every so often a bit of legal synchronicity seems to occur. Sometimes its personal, like when you have several cases with the same uncommon issue, or multiple cases in the same rarely visited court. In 2013, there appears to be a larger force at work that has caused three circuits to address the question whether a plan that requires proof to be satisfactory to the insurer confers discretion.
It has long been clear that a plan document must give discretionary authority to an insurer in order to require courts to conduct an arbitrary and capricious review. It is also well-established that no “magic words” are required to give discretion. However, the vast majority of plans intending to grant discretion use the magic words anyway, and say that the insurer has “discretionary authority to determine claims and construe the plan” or some variant.
But what happens when a plan does not use the magic words?
Continue Reading Effect of Requiring “Satisfactory” Proof Is A Popular Issue in the Circuits This Year