Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Articles Posted in ERISA
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Until 2011, Woodbridge, the largest wholesale grocery distributor by revenue in the U.S., contributed to the fund pursuant to collective bargaining agreements (CBAs). Under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, Multiemployer Pension Plan Amendments Act (MPPAA), 29 U.S.C. 1381-1461, employers withdrawing from multi-employer pension plans must pay the share of the fund’s total unfunded vested benefits allocable to them. Woodbridge owes $189,606,875 and elected to satisfy its “withdrawal liability” through annual payments instead of a lump sum. Under the MPPAA, annual payments must be based on “the highest contribution rate at which the employer had an obligation to contribute under the plan.” The plan’s board claimed the single highest rate from the multiple contribution rates established in the three CBAs . Woodbridge argued that it was responsible only for a weighted average of those contribution rates. The board also claimed that Woodbridge’s payments should include a 10 % surcharge it had been paying under the 2006 Pension Protection Act, 29 U.S.C. 1085. The Third Circuit affirmed that the annual withdrawal liability payment should be based on the single highest contribution rate, but should not include the surcharge. The “highest contribution” rate means the single highest contribution rate established under any of the CBAs. View "Bd. of Trs. of the IBT Local 863 Pension Fund v. C&S Wholesale Grocers Inc" on Justia Law

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NJBSC is a Bergen County neurosurgical medical practice. NJBSC treated three patients who were members of health-care plans governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and administered by Aetna. Before surgery, each patient executed an assignment to NJBSC. Following treatment, Aetna allegedly underpaid or refused to pay claims for each of the patients. NJBSC filed suit The district court dismissed NJBSC’s complaint, holding that the assigned rights to payment did not give NJBSC standing to sue under ERISA. The Third Circuit reversed, holding that a patient’s explicit assignment of payment of insurance benefits to her healthcare provider, without direct reference to the right to file suit, is sufficient to give the provider standing to sue for those benefits under ERISA. View "N. Jersey Brain & Spine Ctr., v. Aetna Inc" on Justia Law

Posted in: ERISA, Insurance Law
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A Challenge employee consulted Dr. Mirza about back pain, agreed to undergo an endoscopic discectomy, and executed an assignment of her benefits under Challenge’s plan. Mizra completed the procedure and submitted a claim for $34,500, which was denied. Mirza submitted additional documents. The claim was denied again. Mirza went through internal review and, on August 12, 2010, received a letter denying his final appeal, indicating that the procedure was not covered because it was medically investigational, and notifying Mirza of his right to bring a civil action under the Employee Retirement Income Security Act, 29 U.S.C. 1001. Neither the letter nor the earlier denials mentioned that, under the plan, Mirza had one year from the final denial to seek judicial review. While the parties debate the substance of an earlier phone call, the first time Mirza received written notice of the one-year deadline was April 11, 2011. On March 8, 2012, Mirza sued. The district court granted defendants summary judgment. The Third Circuit vacated. Plan administrators must inform claimants of plan-imposed deadlines for judicial review in their notifications denying benefits. The appropriate remedy is to set aside the plan’s time limit and apply the limitations period from New Jersey’s six-year deadline for breach of contract claims. View "Mirza v. Ins. Admin. of Am., Inc" on Justia Law

Posted in: ERISA, Insurance Law
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During his employment with a subsidiary of Santander Holdings, Stevens received treatment for ankylosing spondylitis, a chronic inflammatory disease, and participated in a short-term disability plan (STD) and a long-term disability plan (LTD). When Stevens’ condition worsened, Liberty Mutual, the administrator of Santander’s plans, initially awarded STD benefits to Stevens, then determined that Stevens no longer suffered from a qualifying disability and terminated his benefits. Stevens sued under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001. The district court found that Liberty Mutual’s decision to terminate Stevens’s STD benefits was arbitrary and capricious and remanded with instructions to reinstate Stevens’s STD benefit payments retroactively and to determine his eligibility for LTD benefit payments. The Third Circuit dismissed an appeal for lack of jurisdiction, finding that the remand order to the plan administrator was not a “final decision” appealable pursuant to 28 U.S.C. 1291 at that time. The district court retained jurisdiction over the case and the order is not yet appealable. View "Stevens v. Santander Holdings USA Inc." on Justia Law

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Jeffrey Perelman is a participant in the defined employee pension benefit plan of GRC and alleges that his father, Raymond, as chairman of GRC and trustee of the Plan, breached his fiduciary duties by covertly investing Plan assets in the corporate bonds of struggling companies owned and controlled by Jeffrey’s brother, Ronald. Jeffrey claimed that these transactions were not properly reported; depleted Plan assets; and increased the risk of default, such that his own defined benefits are in jeopardy. The district court dismissed several claims for lack of standing; later granted summary judgment, rejecting all remaining claims; and denied Jeffrey attorneys’ fees and costs under the Employee Retirement Income Security Act, 29 U.S.C. 1132. The Third Circuit affirmed, rejecting arguments that Jeffrey had standing to seek monetary equitable relief such as disgorgement or restitution under ERISA section 502(a)(3) because he suffered an increased risk of Plan default with respect to his defined benefits, and in seeking relief on behalf of the Plan, no showing of individual harm was necessary. The court upheld the denial of attorneys’ fees and costs, rejecting claims that the lawsuit was a catalyst for the voluntary resolution of several issues, including Raymond’s resignation as Trustee. View "Perelman v. Perelman" on Justia Law

Posted in: ERISA
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Insurance companies allegedly refused to honor claims for payment of blood-clotting-factor products. After they paid the claims in full, the district court dismissed a complaint under the Employees Retirement Income Security Act (ERISA) and state law. Following dismissal, both the plaintiffs and defendants sought attorney’s fees and costs. The Third Circuit affirmed denial, but remanded one issue: whether the plaintiffs were entitled to interest on the delayed payment of benefits. On remand, they sought interest of $1.5 to $1.8 million, primarily under the Maryland Code, with $68,000 based on the federal Treasury bill rate. The companies agreed to pay $68,000.00 in interest and the district court dismissed the case. Plaintiffs then sought attorney’s fees and costs of $349,385.15. The district court denied the motion, finding that plaintiffs had failed to achieve “some degree of success on the merits” as required for an award of fees under ERISA. The Third Circuit reversed, holding that the court used an incorrect legal standard to evaluate eligibility for attorney’s fees and misapplied the “Ursic” factors. The “catalyst theory” of recovery is available to the plaintiffs and judicial action is not required under that theory in order to establish some degree of success. View "Templin v. Independence Blue Cross" on Justia Law

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Cottillion worked at United from 1960 until 1989; his benefits had vested under “the 1980 Plan.” Cottillion, then age 54, was among “terminated vested participants” (TVPs), distinct from Early Retirees, who retired at an age older than 59½ or 60, but younger than 65. United informed Cottillion that he could elect to have his monthly retirement benefit begin after October, 1995 (age 60), and that his monthly benefit would be $573.70 at age 60. The letter did not state that the amount depended on whether he elected to receive it at age 60 or later. In 2002, United amended the plan, to comply with Employee Retirement Income Security Act amendments, and receive favorable tax treatment. Later Plans included language, absent from the 1980 and 1987 Plans, stating that the benefits of TVPs who receive pensions before age 65 would be “actuarially reduced to reflect the earlier starting date.” In 2005, actuaries informed the plan that United had erroneously paid pensions that were not “actuarially reduced” to TVPs vested under the 1980 and 1987 Plans. Because deviations from the terms of ERISA-governed plans can jeopardize favorable tax treatment, United sought recoupment under the IRS’s voluntary correction program. Cottillion’s pension was eliminated, and he was told he should pay the Plan $14,475. The district court granted class certification and held that United’s actions violated ERISA's anti-cutback rule, 29 U.S.C. 1054(g). The Third Circuit affirmed. View "Cottillion v. United Ref. Co" on Justia Law

Posted in: ERISA
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Plaintiffs, investors in 401(k) benefit plans, brought suit on behalf of themselves and a putative class of benefit plans and plan participants that have held or continue to hold group annuity contracts with John Hancock. They alleged that John Hancock charged excessive fees for its services in breach of its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001. The Third Circuit affirmed dismissal of the suit, holding that John Hancock was not a fiduciary with respect to the alleged breaches with respect to setting fees. View "Santomenno v. John Hancock Life Ins. Co." on Justia Law

Posted in: ERISA
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Plaintiffs, employed by defense contractor Qinetiq to work on a military base in Iraq, were enrolled in Qinetiq’s Basic Long Term Disability, Basic Life, and Accidental Death and Dismemberment insurance policies, governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, under a single contract with Prudential. Qinetiq paid the premiums. Plaintiffs also purchased, with their own funds, supplemental coverage under the same terms as the basic policies; there was a single summary plan description. An employee would file a single claim for basic and supplemental coverage benefits. The plan booklets provided that loss is not covered if it results from war, or any act of war, declared or undeclared. These exclusions applied to both the basic and supplemental policies. The plaintiffs were not otherwise uninsured for excluded injuries. Qinetiq obtained insurance required by the Defense Base Act, 42 U.S.C. 1651. After Prudential denied claims, the plaintiffs sued, alleging violations of the state consumer fraud acts and the Truth in Consumer Contract, Warranty, and Notice Act; breach of contract and breach of the implied covenant of good faith and fair dealing; and intentional or negligent misrepresentation or omission. They contended that Prudential fraudulently induced them to buy supplemental coverage knowing that any claim they filed would likely be subject to the war exclusions, rendering supplemental coverage effectively worthless. The district court dismissed, treating the basic and supplemental policies as components of a single plan, and holding that all state law claims were preempted by ERISA. The Third Circuit affirmed, holding that the supplemental coverage cannot be “unbundled” from ERISA coverage. View "Menkes v. Prudential Ins. Co. of Am." on Justia Law

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The New Jersey Prevailing Wage Act, N.J. Stat. 34:11-56.25 (PWA) provides that laborers on certain public works projects are to be paid the prevailing wage. Carpenters hired to work on the Revel Casino Project in Atlantic City claimed that the Revel Casino Project is a “public work” within the meaning of the PWA because it received financial assistance in the form of incentives, tax exemptions, and tax reimbursements from the New Jersey Economic Development Authority (EDA), which, they argued is a “public body” within the meaning of the Act. They assigned their claims for unpaid prevailing wages to the plaintiffs, employee benefit plans within the meaning of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and trust funds within the meaning of the Labor Management Relations Act (LMRA), 29 U.S.C. 141. The district court held that the claims were completely preempted under ERISA section 502(a). Although it did not directly address LMRA complete preemption, the court also noted that the complaint “seeks interpretation of the collective bargaining agreement.” The Third Circuit vacated and remanded with instructions to remand to state court, holding that neither statute completely preempts the PWA. View "NJ Carpenters v. Tishman Constr. Corp. of NJ" on Justia Law