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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

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

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