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

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.


Continue Reading Remand Directing Change in Standard of Judicial Review Is Not Sufficient Success on the Merits to Support Attorneys’ Fee Award

The Department of Labor’s (“DOL”) conflict of interest rule, informally coined the “fiduciary rule,” sparked much debate when the regulations were proposed in 2015, and finalized in 2016, to expand the definition of fiduciary under the Employee Retirement Income Security Act of 1974 (“ERISA”).  However, the fiduciary rule was continuously challenged in the courts, and appears to have met its final fate at the hands of the Fifth Circuit nearly 2 years later.
Continue Reading Fifth Circuit Reaffirms Decision to Vacate Fiduciary Rule

In Ariana M. v. Humana Health Plan of Tex., 2018 U.S. App. LEXIS 5227, *5, 2018 WL 1096980 (March 1, 2018) (“Ariana M. II”), a majority of judges of the U.S. Court of Appeals for the Fifth Circuit, in an en banc decision, recently overturned its quarter century old holding in Pierre v. Connecticut General Life Insurance Company, 932 F.2d 1552 (5th Cir. 1991), which held that the factual determinations of ERISA benefit plan claim administrators are entitled to deference, regardless of whether the plan includes a grant of discretionary authority. Under Pierre, the Fifth Circuit has long held that such factual determinations can only be overturned if they are found to be arbitrary and capricious. In overturning its holding in Pierre, the Fifth Circuit joined nine sister circuits in ruling that all aspects of ERISA benefit denials will be reviewed de novo unless the governing plan delegates discretionary authority to the claim administrator.
Continue Reading Fifth Circuit Joins Sister Circuits by Overruling Default Deferential Standard of Review

On May 22, 2017, Department of Labor (DOL) Secretary Alexander Acosta announced in an op-ed in the Wall Street Journal that the DOL would not issue another delay of the “fiduciary rule,” and that it was set to generally become effective on June 9, 2017. As we now know, certain provisions of the fiduciary rule went into effect on that date, with others being delayed until July 1, 2019. However, the fiduciary rule remains under attack in the courts. Two notable appellate court decisions were issued within days of one another, and both were decided by three judge panels. One case upheld narrow provisions of the fiduciary rule, and the other effectively completely invalidated the rule. Shortly after the second decision, the Department of Labor announced that it would not enforce the fiduciary rule “pending further review.”
Continue Reading The Fate of the Department of Labor Fiduciary Rule Could Be Uncertain

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

For more than twenty-five years, the law of the Fifth Circuit has been that health and disability benefit denials based on factual determinations (e.g., whether a beneficiary is disabled or whether a treatment is medically necessary within the meaning of a plan) are reviewed by courts under an abuse of discretion standard, regardless of whether a subject plan includes discretionary “Firestone” language. Pierre v. Connecticut General Life Ins. Co., 932 F.2d 1552, 1553 (5th Cir.) cert. denied, 112 S. Ct. 453 (1991).

The Fifth Circuit’s so-called “Pierre deference” was recently challenged in the case of Ariana M. v. Humana Health Plan of Texas Inc., No. 16-20174 (5th Cir. Apr. 21, 2017). In Ariana M., the plaintiff argued that a Texas statute prohibiting the use of discretionary clauses in insurance policies overrode the Fifth Circuit’s default Pierre deference, under which district courts are directed to “reject[ ] an administrator’s factual determinations in the course of a benefits review only upon the showing of an abuse of discretion.” Dutka ex rel. Estate of T.M. v. AIG Life Ins. Co., 573 F.3d 210, 212 (5th Cir. 2009).  The plaintiff argued that Texas’s specific ban on the use of discretionary language in insurance policies precluded the district court from conducting a deferential review of Humana’s factual findings, and thus compelled application of the more favorable de novo standard.

The Fifth Circuit rejected the plaintiff’s argument, unanimously finding that “Texas’s anti-discretionary clause law concerns what language can and cannot be put into an insurance contract in Texas.  It does not mandate a specific standard of review for insurance claims.B” Consequently, “Texas’s anti-discretionary clause law does not change [the Fifth Circuit’s] normal Pierre deference”, and courts in the Circuit will continue to apply Pierre deference to all factual determinations even in cases arising out of insurance policies issued in Texas. In this regard, Ariana M. preserves the status quo.
Continue Reading Fifth Circuit Maintains Default Deferential Standard Of Review In Denial Of Benefit Claims, But Suggests It May Soon Be Overruled

Lee v. Verizon Commc’ns, Inc., — F.3d –, 2016 WL 4926159 (5th Cir. Sept. 15, 2016), held that a defined benefit pension plan participant does not have Article III standing to challenge the plan’s alleged violation of ERISA, in the absence of “concrete injury” to himself.

The case is a putative class action growing out of an amendment to Verizon’s pension plan that terminated it for retirees and replaced it with an annuity. One of the claims asserted fiduciary misconduct in violation of 29 U.S.C. § 1109(a), which requires a fiduciary to “make good … any losses to the plan” from a breach of duty. In an unreported 2015 decision, 623 Fed.Appx. 132 (5th Cir. 2015) (Lee 2015), the court had affirmed the dismissal of that claim for lack of standing. Lee 2015 had held that, though the plaintiff had statutory standing to assert a violation of ERISA by a plan fiduciary, he did not have Article III standing because “standing for defined-benefit plan participants requires imminent risk of default by the plan, such that the participant’s benefits are adversely affected,” and he had not alleged any likelihood of such injury.

The plaintiff petitioned for certiorari, and the Supreme Court granted the petition and vacated Lee 2015 and remanded it for reconsideration in light of Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016). Spokeo had addressed the question whether and when a statutory violation satisfied the concrete harm required for Article III standing.  
Continue Reading “Bare violation” of ERISA without concrete injury does not confer standing

Hunter v. Berkshire Hathaway, Inc., 829 F.3d 357, 358 (5th Cir. 2016), involved the interpretation of parties’ rights and obligations regarding a pension plan following a corporate acquisition. Its discussion of the extent to which an employer can obligate itself not to change a plan, even when benefits are not vested, is noteworthy.
Continue Reading Extra-ERISA contractual obligation regarding pension plan is enforceable

In Gomez v. Ericsson, Inc., 828 F.3d 367, 369 (5th Cir. 2016), the central question was whether ERISA governed Ericsson’s Standard Severance Plan and Top Contributor Enhanced Severance Plan of 2010. The issue arose because, after plaintiff was laid off and signed a standard release, he wiped the hard drive on his company laptop before returning it. Ericsson asserted that the laptop had materials that did not exist elsewhere, and it denied plaintiff the benefits under the Plans. Plaintiff sued, and that brought up the question whether ERISA governed.
Continue Reading Fifth Circuit provides guidance on when ERISA governs severance plans