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

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.