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Virginia Beach Police Benevolent Association v. Reich, 96 F.3d 1440 (4th Cir. 1996) - Virginia Beach Police Benevolent Association (PBA) entered into a collective bargaining agreement (CBA) with an employer, Ocean Breeze. That agreements established a health benefits plan for PBA members, the "Centurion Plan." The Centurion Plan actively solicited health insurance business in various states. Under § 3(40)(A)(i) of ERISA, multiple employer welfare plans established or maintained under a CBA are not subject to state insurance regulations. Centurion sought an advisory opinion from the Secretary of Labor finding that the Centurion Plan is established pursuant to a CBA, however the Secretary elected not to issue opinions of this nature on a case-by-case basis, but instead decided to develop regulations. PBA and Centurion brought action seeking a judicial review of the Secretary of Labor's failure to make a determination under the Administrative Procedures Act, or in the alternative a writ of mandamus ordering the Secretary to make a determination, or a declaratory judgment that the Centurion Plan is established pursuant to a CBA. Both the district court and the Fourth Circuit held that the Secretary's refusal to make a individual determination while it is developing general regulations was not a "final agency action," a prerequisite for judicial review under the APA. Furthermore, under the APA, action that is committed to an administrative agency's discretion is unreviewable by the courts. ERISA's legislative history makes it clear that the Secretary had discretion to issue a determination. The court also denied plaintiffs' request for a writ of mandamus finding that the Secretary had no clear duty to make a finding under ERISA ' 3(40)(A)(i), and held that it lacked jurisdiction to issue a declaratory judgment that the Centurion Plan was established or maintained pursuant to a CBA.
Kent v. United of Omaha Life Insurance Co., 96 F.3d 803 (6th Cir. 1996) - Plaintiff brought action alleging that the plan administrator failed to comply with ERISA notice requirements when it terminated her disability benefits. The district court found that United gave Kent adequate notice of the denial of claim and her right to appeal. Further, in light of the evidence that Kent was able to return to work, the trial court concluded that a denial of benefits was not an abuse of discretion and therefore the company was not required to revisit the coverage issue. The Court agreed that the alleged defects in the claim procedure did not warrant reversal of the trial court. A remand was not necessary because it would be a useless formality. In light of the plain language giving the fiduciary broad discretion to make coverage decisions, additional evidence is only pertinent to the extent that it shows the fiduciary's decision was an abuse of discretion. Such a conclusion is patently untenable because most, if not all, the objective medical evidence supports the conclusion that plaintiff was not disabled. Second, even apart from the needlessness of remedies, the procedures utilized to inform the plaintiff substantially complied with ERISA. Although the first letter did not meet the statute's and regulation's requirements and the second letter was given 90 days after the decision to deny her claim, the court viewed the myriad of communications between the claimant, her counsel and the insurer which were sufficient to meet the purposes of Sec. 1133 insuring that the claimant understood the reasons for the denial as well as her rights to review the decision. The first letter merely stated that she was denied benefits because she was not disabled under the plan. United also phoned her and explained the position. She retained counsel and United sent him a letter explaining that her benefits were being denied citing the plan's provisions and informed her that the medical reports did not support a finding of continued disability under the plan, and informed her of her right to appeal. While her appeal was pending, she filed claim.
Perez v. Aetna Life Insurance Co., 96 F.3d 813 [20 EBC 1841] (6th Cir. 1996), reh'g, en banc, granted, vacated, 106 F.3d 146 (6th Cir. 1997) - After a severe work injury, plaintiff became totally disabled and received benefits under his employers' long-term disability plan, and workers' compensation benefits from the state of Michigan. Michigan law required recipients of unemployment benefits to obtain retraining, therefore, Perez began retraining at the community college. Aetna continued to pay his disability benefits during the four years Perez took to complete his associate's degree; however, it notified him that benefits would terminate two months thereafter. Before the benefits were terminated, Perez enrolled in a twelve-week computer-training course. His rehabilitation counselor wrote a letter to Aetna explaining that the computer course was necessary for Perez to be "competitively employable," and requested that benefits continue until he completes the program. Aetna denied the request. After he completed the course, Perez was offered a lab technician job, but after one week he left and never returned, and sought reinstatement of his workers' compensation benefits that were denied. Thereafter, he brought suit alleging that Aetna wrongfully terminated his disability benefits. First, the Sixth Circuit refused to hear Aetna's argument that collateral estoppel (the finding of the magistrate of Michigan that Perez was not totally disabled) since Aetna did not raise this at trial court level. Next, the Court found that the district court determined that either under abuse of discretion or de novo review, Aetna correctly terminated Perez' benefits and therefore it granting summary judgment to Aetna. The Sixth Circuit, however, found that the district court was required to distinguish the standard of review, and that under de novo, summary judgment to Aetna was not appropriate. Nothing in the plan gave Aetna the discretionary authority to determine eligibility for benefits. Simply because Aetna has the ability to require written proof before continuing disability benefits did not mean that Aetna has the discretionary authority to decide whether that proof is sufficient within the meaning of the Plan. Nor did the fact that the proof had to be "satisfactory" give it discretionary authority. This language probably creates an objective standard-- Aproof satisfactory to a reasonable person." Since the language did not clearly give Aetna discretionary authority, the proper standard is de novo. The plain reading of the plan requires Perez to be able to engage in gainful activity "in which other people of similar background are actually employed as their principle means of support" is that Perez () be capable of working at a job where individuals with similar education, training, or experience were actually working; and (2) that such jobs provide the principal means of support for such individuals. Perez' rehabilitation counselor advised Aetna that Perez' was not competitively employable, and Aetna provided no rebuttable evidence. Aetna did not show that someone with Perez' "skills" (training and experience) was actually performing a "reasonable occupation." Reasonable education meant that the claimant who ceases being disabled (1) the claimant is fitted by education, training, or experience to perform a particular job; (2) someone of similar education, training, or experience must actually be performing such a job; and (3) those people performing that job must be using it as their principle means of support. It held that "when a claimant was not employable and such evidence is unrefuted by any contrary vocational evidence, the claimant has shown enough evidence to resist a grant of summary judgment to the plan administrator." Aetna could not just assume that people with associate's degree must be able for work at some job. Aetna had no evidence from which it could conclude that there is any job being performed by someone of Perez' education, training or experience. It could not point to any particular job that Perez' can perform. Aetna argued that it did not have to point to any job. The Court found this to be a misinterpretation of the plan.
Delk v. Ford Motor Company, 96 F.3d 182 (6th Cir. 1996) - Participants in Ford's Supplemental Unemployment Benefit Plan (SUB Plan) brought action challenging Ford's administration of ERISA plan. The SUB Plan provided unemployment benefits to laid off workers, however, benefits would be offset by any "state benefit and other benefits" that are "receive or receivable." The SUB Plan permits Ford to recoup overpayments unless, inter alia, "notice has not been given within 120 days from the date overpayment was established or created." The plaintiffs argued that Ford breached the SUB Plan by failing to notify them of overpayments of SUB benefits before it acted to recoup the benefits. They claimed that the 120 day period began when the Secretary of Labor determined that the workers were eligible for Trade Readjustment Allowances (TRA) benefits on April 17, 1980. The Sixth Circuit agreed with the district court that notice was timely. No member of the class had actually received benefits until May 14, 1980. On April 17, 1980, The DOL did not establish which workers would receive benefits or in what amounts. The states themselves had not made any determination in April 1980. Ford could not have been expected to know the amounts of overpayments at that time. It was simply not sensible to construe the phrase "established or created" as April 17, 1980, before any of the Arthur plaintiffs actually received any TRA benefits and before the state had determined which employees would receive TRA benefits and in what amounts. Furthermore, if the SUB Plan had begun recoupment in April, employees would have had a lapse in benefits. By waiting, the SUB Plan ensured that workers were receiving benefits.
Thompson v. American Home Assurance Company, 95 F.3d 429 (6th Cir. 1996) - Beneficiary sought benefits under a group accidental death policy issued by defendants. The district court found that ERISA governed plaintiffs' cause of action, and granted summary judgment in her favor. The Sixth Circuit reversed the grant of summary judgment finding that there was a genuine issue of material fact as to whether the policy at issue was part of an "employee welfare plan" as defined by ERISA. Burns International Security. In determining whether a plan is an ERISA plan, a district court must undertake a three-step factual inquiry: (1) the court must apply the "safe-harbor" regulations established by the DOL to determine whether the program was exempted from ERISA; (2) the court must look to see whether "from the surrounding circumstances a reasonable person could ascertain the intended benefits, the class of beneficiaries, the source of financing, and procedures for receiving the benefits" and (3) the court must ask whether the employer "established or maintained" the plan with the intent of providing benefits to its employees." The DOL regulations set out a "safe harbor" provision that excludes employee insurance policy from ERISA coverage if (1) the employer makes no contributions to the policy; (2) employee participation in the policy is completely voluntary; (3) the employer's sole function are, without endorsing the policy, to permit the insurer to publicize the policy to employees, collect premiums through payroll deductions and remit them to the insure; and (4) the employer receives no consideration in connection with the policy other than reasonable compensation for administrative services actually rendered in connection with the payroll deductions. C.F.R. § 2510.3-1(j). Criteria 1, 2 and 4 are admittedly satisfied. There is a question as to whether Burns "endorsed" the plan. Following the First Circuit's decision in Johnson v. Watts Regulator Co., 63 F.3d 1129 (1st Cir. 1995), the Sixth Circuit held that "endorsement of a program requires more than merely recommending it." The proper focus is whether employees could reasonably conclude that the employer had endorsed the policy based on their observations of the employer's activities in connection with the plan. Employer neutrality is the key to invoke the safe harbor. If the employer separates itself from the program, making it reasonably clear that the program is a third party's offering, not subject to the employer's control, then the safe harbor may be accessible. The introductory letter encouraging employees to obtain accident insurance was not printed on Burn's letterhead nor did it refer to the accident insurance policy as Burn's plan. Burn's name, however, was featured on the cover of the policy description. The Sixth Circuit found that on remand, the court would have to look at the circumstances of its placement to determine whether it was there for identification or endorsement. It is unclear from the record whether Burns was the plan administrator or whether it participated in either devising the terms of the policy or in processing claims. Also, if the court finds on remand that the policy is not excluded from ERISA coverage under the safe harbor, it must make the other two determinations. Only upon completion of the three-step inquiry can the district court ascertain that an ERISA plan exists, thus requiring the application of the federal common law of ERISA to the underlying insurance claim.
Wendy's International v. Karsko, 94 F.3d 1010 (6th Cir. 1996) - After an automobile accident with an uninsured motorist, Karsko was paid $66,757.19 from an employee health plan administered by Wendy's International. Subsequently, she received $110,000 from her Nationwide under her uninsured motorist policy. Wendy's brought an ERISA action against both Karsko and Nationwide to recover the amounts paid to Karsko under the plan's subrogation clause. Karsko and Wendy's settled their dispute, and thus, the only question remaining was Wendy's was entitled to subrogation from Nationwide. The Court of Appeals for the Sixth Circuit held that it was not.
The SPD provided that "if [the beneficiary is] reimbursed or recover monies from the person responsible for the loss, the plan shall be reimbursed the total amount of the benefits paid by the plan[.]" The court found that Wendy's reasonably interpreted this language to include Nationwide as a "person responsible for the loss" because in a legal sense it is obligated to the insured under certain circumstances. Although under the subrogation clause, it can recover from Nationwide, the court found that Nationwide fulfilled its obligation to Wendy's when it paid Karsko the $110,000, the full amount of coverage under her uninsured motorist policy. Despite this, Wendy's argued that it is entitled to relief since Nationwide knowingly violated the terms of the plan, and under the common law doctrine, a "third party with notice of a subrogation interest may not release its liability to the subrogee by settling with the subrogor." The court found that the treatise on which Wendy's relies, COUCH ON INSURANCE, 2d (Revised e.) '' 61:201-102 applied in actions against tortfeasors or the tortfeasor's insurance companies. The uninsured motorist was the tortfeasor in this case, not Nationwide. Having paid Karsko the full amount owed under her policy, and having done nothing to evade liability, no existing principle of common law would require them to incur further liability from this accident.
Rousch v. Weastec, Inc., 96 F.3d 840 (6th Cir. 1996) - Plaintiff alleged that her former employer terminated her because of her kidney condition and bladder infection, and to interfere with her rights under the employer's health plan in violation of the American with Disability Act and ERISA. The district court granted summary judgment in favor of the employer. The Court of Appeals for the Sixth Circuit held that because plaintiff had fully recovered from her kidney ailments these ailments did not qualify as a physical impairment that substantially limits a major life activity. It rejected her argument that the possibility of recurrence was sufficiently limiting so as to render her disabled. Nonetheless, the court found that but that a question of fact remained as to whether plaintiff's bladder condition was a disability within the ADA. Based on evidence that plaintiff's bladder condition continued to cause her pain, and that her doctor recommended seeing her monthly or semi-monthly for treatment, an issue is raised regarding whether plaintiff was substantially limited in her ability to work. As to her ERISA claim, the court found insufficient evidence that the employer intentionally interfered with plaintiff's right to benefits in violation of ERISA § 510. Plaintiff claimed that the defendant's human resource manager told her that she would be terminated if she took medical leave again, and that she was a liability to the company. She also argued that her employer's change of insurance carriers and the new provider's listing of large benefits claims to demonstrate the employer's anticipated savings under the new plan. The evidence showed that plaintiff exceeded the time allowed for medical leave. She worked four out of fifteen months of her employment, during which time the employer had paid her medical benefits. Thus, the human resource manager's statements did not evidence intent to interfere with her rights under the ERISA protected plan. Furthermore, that the employer changed insurance carriers does not prove intent to discriminate, but rather evidenced its desire to provide medical benefits to its employees at no cost to the employees.
Amato v. Equicor Severance Pay Plan, 97 F.3d 1451 (6th Cir. 1996) - Plaintiff brought action alleging that his former employer breached its fiduciary duty by failing to give him notice of job elimination, and thus, disqualifying him from receiving benefits under the employer's severance plan. Plaintiff worked for Equicor for 30 years before Cigna purchased it. As an incentive for employees to remain during the transition, Equicor established a severance plan providing benefits to some of its employees whose jobs were eliminated as a result of the reorganization. An employee is not entitled to benefits if he resigns or retires after he has been offered a Asuitable position" within the range of his salary. Amato did receive an offer from Cigna, however, he chose to resign since the salary was lower and terms of employment were not as desirable. He made a claim for benefits, which were denied by Equicor. The Sixth Circuit upheld the district court's decision that Equicor's non-payment of benefits was not against the terms of the plan. The plan exempted from coverage (1) an employee whose employment with Equicor terminates solely because he becomes employed by Cigna and (2) an employee who relationship with Equicor terminates when his employing company or its assets are sold and the employee is employed by the successor. Nothing in this language requires that the employment with Cigna be "suitable" to plaintiff. Plaintiff could have continued employment with Cigna had he not resigned prior to the Plan's expiration. The Court also rejected plaintiff's contention that Equicor violated ERISA ' 510 by refusing to provide him notice of job elimination. To make out a discrimination claim, there must be a specific intent to interfere with the attainment of any right to which the employee may become entitled. The Court found that Equicor had not duty to eliminate plaintiff's job in order to allow him to receive benefits under the Plan. The vesting of plaintiff's right to severance pay was wholly dependent on the employer's decision regarding termination, and plaintiff had not demonstrated that the employer engaged in prohibited conduct in violation of § 510. Finally, the court held that ERISA preempted any state law claims for breach of contract that plaintiff had against Equicor.
Ahng v. Allsteel, Inc., 96 F.3d 1033 (7th Cir. 1996) - Plaintiff brought suit alleging Allsteel violated ERISA ' 204(g) by amending the pension plan to reduce supplemental early retirement benefits. § 204(g) prohibits an employer from amending its pension plans that result in the reduction of accrued benefits. The Seventh Circuit had previously held in Meredith v. Allsteel, Inc., 11 F.3d 1354 (7th Cir. 1993) that early retirement benefits were not "accrued benefits" protected by § 204(g). However, in light of the Retirement Equity Act (REA) which amended § 204(g) in 1994, the court was forced to overrule that part of the Meredith decision. REA made it clear that "a plan may not be amended to eliminate or reduce an early retirement benefit or a 'retirement-type' subsidy so long as the employee satisfies (or will be able to satisfy) the relevant eligibility requirements in place at the time of the amendment."
Wilson v. Prudential Insurance Co. of America, 97 F.3d 1010 (8th Cir. 1996) - District court properly interpreted exclusion clause of an ERISA plan in denying medical benefits to an agricultural worker who suffered work-related injuries and was not covered by worker's compensation. See detailed analysis.
Nielsen v. Trans World Airlines, 95 F.3d 710 (8th Cir. 1996) - The Court of Appeals for the Eighth Circuit upheld the district court's award of attorneys' fees in the amount of $20,000 to TWA. After entering judgment against plaintiffs' on their ERISA claim, the district court found that although plaintiffs "may have had some legitimate disputes with TWA in other areas" their ERISA suit had no merit. The district court exercised its Rule 11 discretionary authority to award fees against a party who has acted in bad faith or vexatiously, and the Eighth Circuit found nothing in the record to indicate that the court abused this discretion.
Lake v. Sacramento Savings Bank, 99 F.3d 1146 (9th Cir. 1996) - The Court of Appeals for the Ninth Circuit affirmed the district court's grant of summary judgment to the employer on Plaintiff's ERISA § 510 claim. There was a lack of evidence regarding the Bank's specific intent to interfere with ERISA benefits, and thus the district court finding that the Bank terminated plaintiff solely because it believed he was attempting to use bank documents for fraudulent purposes was not clearly erroneous.
Kalvinskas v. California Institute of Technology, 96 F.3d 1305 (9th Cir. 1996) - While an employee of Caltech, Kalvinskas became disabled and took medical leave in 1990. He was eligible and did receive benefits under the Caltech's long-term disability plan. While on medical leave, he retained his status as an employee of Caltech and his right to return to work if his health improved. In 1992, Kalvinskas turned 65 and became eligible to receive retirement benefits under two of CIT's pension plans in which he participated. The pension plans required Kalvinskas to retire before receiving benefits. Caltech made a decision to offset Kalvinskas' disability benefits by the amount of pension benefits he could have received under the retirement plan, thereby reducing his income from Caltech to zero. Kalvinskas brought action alleging that Caltech's decision effectively forced him into retirement in violation of the ADEA. The Ninth Circuit held that although the ADEA permits an employer to offset long-term disability benefits by the pension benefits for which the employee is "eligible," Kalvinskas was not "eligible" at the time of the offset because he had not retired. By offsetting his LTD benefits by the amount of the pension payments he could receive only by retiring, and thus, reducing his income to zero, Caltech "required" his involuntary retirement within the meaning of ' 4(f)(2) of the ADEA. Kalvinskas would have no choice but to retire in face of Caltech's decision.
Arizona State Carpenters Pension Trust Fund v. Citibank (Arizona), 96 F.3d 1310 (9th Cir. 1996), op. withdrawn, 108 F.3d 216, [20 EBC 2656] (9th Cir. 1997) - Trustees of pension plan brought ERISA action and other state claims against Citibank for breach of fiduciary in failing to notify the trustees of defaults on payments made by the Trust Funds' investment managers. Citibank claimed that it was not a fiduciary within the meaning of ERISA. Under ERISA, a fiduciary is "anyone who exercises discretionary authority or control respecting the management or administration of an employee benefit plan." To determine whether an entity is an ERISA fiduciary, it is necessary to determine the "functional terms of control and authority over the plan. 29 U.S.C. ' 1002(21)(A). Looking at the custodial agreements between the Trustee and Citibank, the Ninth Circuit Court of Appeals found that Citibank was not an ERISA fiduciary. The agreements delegated to Citibank authority to hold and receive funds, to invest funds as directed by the trustee, and to furnish regular reports on the funds' activity. Citibank was not required to provide advice with respect to investments. Nor was it responsible for the adequacy of employer contributions or enforcing payment thereof. It had no responsibilities for monies paid or property paid upon written authorization from the Trustees, and had no duty to determine the rights or benefits of anyone claiming an interest in the fund. Next, the court determined whether fiduciary status may be implied by the action of Citibank, and found that it could not. The court held that "[a] person or entity who performs only ministerial services or administrative functions within a framework of policies, rules, and procedures established by others is not an ERISA fiduciary." Citibank was simply required to provide the Trustee with reports of account activities, which did not amount to an assumption of control or authority over the funds. The Court further held that any state claims brought against Citibank that relate to the employee benefit plan are preempted. Here, the state claims arose from the agreement between the Trustee and Citibank, and the Trustees stipulated the agreements were "plan documents," therefore those state claims "relate to" an ERISA plan.
Chiles v. Ceridian Corporation, 95 F.3d 1505 (10th Cir. 1996) - Plaintiffs are former employees Imprimis, a division of Control Data, who were on disability leave and receiving benefits under Control Data's LTD Plan. The Plan's SPD provides that while the employee is on LTD status, the company will pay the premiums for all the company-sponsored benefits including medical, dental and life insurance coverage for which the employee and his dependents are enrolled. The SPD further states that the company will continue paying all premiums until the employee and his dependents are no longer eligible for the plans. In 1989, Control Data sold Imprimis to Seagate and as part of the sale, Seagate agreed to administer the plaintiffs' rights "according to the terms of the Control Data Plan." Control Data transferred to Seagate assets to cover liabilities from the LTD Plan, and thereafter the new LTD plan (Seagate LTD Plan) was created to cover the employees that had participated in the Control Data plan, but did not provide coverage for new participants. Control Data sent the plaintiffs a letter notifying them that it would continue the health, dental and life insurance plans after the sale, and that it would continue to pay their premiums. Under the program, Control Data reserved the right to change or cancel it at any time. A few years later, Control Data informed the disabled plaintiffs' that they would have to pay their own health premiums. The district court granted summary judgment to the defendants.
On appeal, the defendants argued that plaintiffs had no vested right in LTD benefits and that they were free to amend the plan at any time pursuant to the reserved right to amend in the SPD. The plaintiffs argued that the SPD explicitly promised that the company would pay insurance premiums as long as they remained disabled, which is inconsistent with the reservation of the right to modify, and therefore creates an ambiguity sufficient to defeat summary judgment. The Tenth Circuit found that Control Data retained the discretionary right to change benefits, and therefore, may generally terminate the benefits at any time, even if the plaintiffs had already qualified. Thus, the health benefit premium payments did not vest once plaintiffs qualified for long-term disability. However, the Control Data LTD Plan also provided that "If the group LTD plan terminates, and if on the date of such termination you are totally disabled, your LTD benefits and your claim for such benefits will continue as long as you remain totally disabled." The Court found this language meant that Control Data established only one circumstance under which it could not modify the plaintiffs' benefits, to wit, "if the plan ... terminated," thus plaintiffs' vested right in the Control Data LTD plan turned on whether the plan terminated when it was sold to Seagate. The Court held that the plan did terminate when Imprimis was sold to Seagate who assumed the assets and obligation of the former plan and became the plan administrator. The final question for the Court was whether plaintiff's vested benefits included company paid insurance premiums or whether the vesting language only included the disability benefits alone. Although the SPD contained language that can be read as inconsistent with the Plan documents, the plaintiffs established a prima facie case by pointing to language in the SPD that might lead a reasonable person to believe that company paid insurance premiums were included as benefits under the LTD plan.
