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

While working as a dentist, Fleisher obtained long-term disability insurance coverage under separate policies. He obtained the North American policy by membership in a professional organization. The Standard policy is an employee benefit, governed by the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B) and provides for monthly benefits to a maximum of "$10,000 before reduction by Deductible Income," defined to include "[a]ny amount you receive or are eligible to receive because of your disability under another group insurance coverage," but to exclude benefits paid under "any individual disability insurance policy." In 2008, Fleisher became disabled and claimed benefits under both policies. Shortly after Fleisher began collecting under both policies, Standard reduced his monthly benefits from $10,000 to $8,500 based on its determination that the North American policy was another group insurance coverage, and that the $1,500 in benefits he receives under it is deductible income. The district court dismissed his ERISA suit. The Third Circuit affirmed, finding the decision supported by substantial evidence and not unreasonable. View "Fleisher v. Std. Ins. Co." on Justia Law

Participants in an employer-sponsored 401(k) plan brought suit under the Employment Retirement Income Security Act of 1974, 29 U.S.C. 1001, and the Investment Company Act of 1940, 15 U.S.C. 80a-1, claiming excessive fees on annuity insurance contracts offered to plan participants. The district court dismissed the ICA claims because only those maintaining an ownership interest in the funds could sue under the derivative suit provision and the participants are no longer investors in the funds in question. As to the ERISA claims, the court dismissed because participants failed to make a pre-suit demand upon the plan trustees to take appropriate action and failed to join the trustees as parties. The Third Circuit affirmed with regards to the ICA claims, but vacated on the ERISA counts, holding that the statute does not require pre-suit demand or joinder of trustees. View "Santomenno v. John Hancock Life Ins. Co." on Justia Law

In 2005, the Secretary of Labor filed suit for breach of fiduciary duty, alleging that defendants had established a health benefit plan that was a multi-employer welfare arrangement governed by the Employee Retirement Income Security Act. Defendants had retained, as compensation, a substantial portion of payments made by businesses to enroll their employees. The complaint alleged improper diversion of funds and that defendants were required by ERISA to use the assets only for the defraying reasonable plan expenses for the benefit of plan participants. The district court ruled in favor of defendants. The Third Circuit vacated, characterizing the scheme appearing to be "an aggressively marketed, but inadequately funded health benefit plan masquerading as an ERISA-exempt plan in order to evade the solvency controls imposed by state insurance regulation."View "Sec'y of Labor v. Doyle" on Justia Law

When William and Adele divorced in 2008, she waived her right to proceeds from his 401(k) plan, governed by the Employee Retirement Income Security Act, 29 U.S.C. 1001-1461. He did not replace her as named beneficiary before he died intestate, nine months later. Because of a 2009 Supreme Court case, Kennedy v. Plan Administrator, 555 U.S. 285, the plan was obligated to pay the proceeds to Adele in accordance with plan documents regardless of the waiver. The district court held that estate could not attempt to recover the funds by bringing suit directly against Adele to enforce her waiver. The Third circuit reversed in part. Permitting suits against beneficiaries after benefits have been paid does not implicate any concern of expeditious payment or undermine any core objective of ERISA. View "Estate of Kensinger v. URL Pharma Inc." on Justia Law

Plaintiffs brought a class action against their former employer, Siemens, and its retirement plans, claiming violation of the Employee Retirement Income Security Act in refusing to provide permanent job separation (PJS) pension benefits when Siemens terminated their employment. The Third Circuit reversed in part and directed entry of judgment in favor of Siemens on all issues. By their plain terms, the Siemens plans do not provide for PJS benefits. Siemens did not establish an ERISA section 204 "transition" plan by virtue of 13-day arrangement in 1998 that was part of Siemens' purchase of a business unit from Westinghouse, nor was Siemens obligated to provide PJS benefits under section 208, based on the purchase from Westinghouse. View "Shaver v. Siemens Corp." on Justia Law

After defendant was in a serious automobile accident, a benefit plan administered by plaintiff paid $66,866 for his medical expenses. Defendant then recovered $110,000 from third parties, with the assistance of counsel. Plaintiff, which had not sought to enforce its subrogation rights, demanded reimbursement of the entire $66,866 it had paid without allowance for legal costs, which had reduced defendant's net recovery to less than the amount it demanded. Plaintiff sued for "appropriate equitable relief" pursuant to the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(3) B). The district court ordered plaintiff to pay the entire. $66,866. The Third Circuit vacated, holding that defendant may assert equitable limitations, such as unjust enrichment, on plaintiff's equitable claim. View "US Airways, Inc v. McCutchen" on Justia Law

Representatives of a putative class of participants in a 401(k) sued under the Employment Retirement Income Security Act, 29 U.S.C. 1001, claiming breach of fiduciary duty. They alleged that defendants inadequately selected investment options to include in the plan. The district court dismissed Fidelity defendants, holding they were not fiduciaries, and dismissed others for failure to state a claim. The Third Circuit affirmed. Fidelity did not a function as a fiduciary with respect to selecting and maintaining the range of investment options; its status as a directed trustee does not subject it to liability for these activities. There was no claim that Fidelity knew the selection of investment options constituted a breach of fiduciary duty and Fidelity is not liable as a non-fiduciary. Plaintiffs did not state a plausible claim. An ERISA defined contribution plan should offer participants meaningful choices about how to invest retirement savings. The plan at issue contains a variety of investment options including company stock, commingled funds, and mutual funds, with 73 distinct investment options. Among the retail mutual funds specifically targeted in the complaint were funds with a variety of risk and fee profiles, including low-risk and low-fee options.

Employee, suffering depression and related disorders, received short-term disability benefits for 26 weeks. The administrator denied the employee long-term disability benefits. The district court ruled in favor of the employee in a suit under the Employee Retirement Income Security Act, 29 U.S.C.1132(a)(1)(B) and denied the plan's claim for overpaid benefits. The Third Circuit vacated and remanded. The administrator acted consistently with a plan provision requiring it to determine whether employee was incapable of performing the requirements of any job for any employer … for which the individual is qualified or may reasonably become qualified … , other than a job that pays less than 60 percent of his former pay.The administrator acted without meaningful conflict of interest.The plan specifies the receipt of Social Security benefits as a particular fund from which reimbursement is to be made and gives rise to an equitable lien by agreement over those funds that are overpayments under the plan.

The company filed a Chapter 11 bankruptcy petition and continued to make payments to pension plans, as required by collective bargaining agreements. When the company was sold and it no longer employed individuals covered by the plans, the pension fund filed a claim for $5,890,128 (withdrawal liability) and requested that the claim be classified as an administrative expense. The bankruptcy court classified the claim as unsecured debt. The district court reversed and remanded, holding that the portion of withdrawal liability attributable to the post-petition period was entitled to priority. The Third Circuit affirmed. If entire withdrawal liability were automatically classified as a general unsecured claim, it would undercut the purpose of the Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1381, amendment to the Employee Retirement Income Security Act: to secure the finances of pension funds and prevent an employer's withdrawal from negatively affecting the plan and its employee beneficiaries.

The decedent, killed in a motorcycle accident in 2008, was covered by a life insurance policy, subject to the Employee Retirement Income Security Act, 29 U.S.C. 1101. The insurance company denied a claim by the decedent's widow, claiming that the decedent's anti-coagulant medications contributed to his death so that it fell within an exclusion for medical conditions. The district court concluded that the policy gave the company discretionary authority to determine eligibility and entered summary judgment in the company's favor. The Third Circuit reversed in part and remanded. Deferential review was not appropriate, given the language of the policy. The words "proof of loss satisfactory to Us," surrounded by procedural requirements, do not notify participants that the company has the power to re-define the entire concept of a covered loss on a case-by-case basis. The district court's interpretation of the medical exclusion, in favor of the company, was correct; the clause was not ambiguous.