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

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

Plaintiff, a maintenance director, had a stroke and began leave under the Family and Medical Leave Act, 29 U.S.C. 612(a)(1) in January 2008. He received disability benefits from Unum. The doctor cleared him to return to work starting on May 1, with conditions that he not work more than four hours per day or lift loads in excess of 20 pounds. The administrator notified plaintiff that part-time work was not available. The doctor cleared him to work full-time, but did not change the lifting restriction. On April 20, the employer terminated plaintiff's employment and notified him that he would not be rehired with lifting restrictions. Until July 2008, when the restrictions were lifted, he received benefits from Unum. The district court rejected claims under the Americans with Disabilities Act, the Pennsylvania Human Relations Act, and the FMLA. The Third Circuit affirmed. The FMLA does not require an employer to provide reasonable accommodation to facilitate return to an equivalent position following leave. Entitlement to restoration requires that the employee be able to perform essential job functions without accommodation. Having represented to Unum that he was disabled, plaintiff was estopped from claiming that he was able to perform all essential functions. View "Macfarlan v. Ivy Hill SNF, LLC" 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

The insured was driving his pickup truck when he was injured after swerving to avoid a cardboard box lying in the middle of his lane. Allstate stipulated that an unidentified vehicle dropped the box, but rejected a claim for uninsured motorist benefits and sought a declaratory judgment. The insured responded with counterclaims for breach of contract and insurance bad faith under 42 Pa. Cons. Stat.8371. The district court entered judgment for Allstate, finding that the injuries did not "arise out of ownership, maintenance or use of an uninsured auto." The Third Circuit reversed, rejecting an argument that the harm was caused by a box, not a vehicle. Physical contact with an uninsured vehicle is not required for an accident to "arise out of" the use of an uninsured vehicle. Accepting for purposes of appeal that an unidentified vehicle that dropped the box was an uninsured vehicle, there is a sufficient causal connection. The court noted that the insurance law is to be liberally construed in order to afford the greatest possible coverage to injured claimants. View "Allstate Prop. & Cas. v. Squire" 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

The company issued the family auto insurance when they lived in New Jersey. The family moved to Pennsylvania, and made the company aware of the permanent relocation, before being involved in a traffic accident in Pennsylvania that killed one member of the family and injured others. The policy of the other driver has paid its limit. New Jersey law limits personal injury protection claims to $250,000 per person; under Pennsylvania law the family would be entitled to "stacked" underinsured motorist benefits. The district court granted the company declaratory relief, finding that New Jersey law applied to the contract. The Third Circuit remanded holding that Pennsylvania’s choice-of-law rules do not apply, but that New Jersey choice-of-law rules point to Pennsylvania law as governing the dispute. The court affirmed the grant of summary judgment to the company on a counterclaim alleging that it engaged in a bad faith denial of insurance coverage.

An intoxicated driver struck a pole, resulting in the death of his passenger. The passenger's estate sued defendant, claiming that defendant illegally sold liquor to 19-year-old, who provided it to the driver. Defendant's claim for defense and indemnification from its liability insurer was rejected because the policy contained a liquor liability exclusion. Defendant then sued its insurance agent, who sought a defense under his professional liability policy with AAIC. The agent had a gap in coverage before obtaining the AAIC policy and the parties disputed the retroactive coverage date. The district court granted summary judgment to AAIC. The Third Circuit affirmed. Since the agent allowed his coverage to lapse, the retroactive date was the inception date of the first AAIC policy issued (2006); the "wrongful act" occurred when the agent failed to exercise the proper degree of care in placing insurance for defendant. The agent began placing coverage for defendant in 2002, so the act did not occur "wholly after" the retroactive date.

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 insurance company sought a declaratory judgment that a plane crash that killed five people did not trigger coverage under a fleet insurance policy issued to an aircraft maintenance and charter company. The policy identifies the company's clients (including Wyndham) as "named insureds" and as "insured owners," but Wyndham did not participate in its negotiation. Wyndham filed a counterclaim seeking coverage. The crash involved a plane rented by a Wyndham employee to attend a work-related meeting, but did not involve the charter company in any way. The court held that Wyndham was entitled to coverage. The Third Circuit reversed. New Jersey law allows reformation, on the basis of mutual mistake, against a party that did not participate in negotiation of a contract and the insurance company sufficiently pled mutual mistake. Although the contract appears to provide third parties with coverage when using aircraft without the charter company's involvement, both contracting parties believed that the language did not expand coverage to entities unaffiliated with the charter company, such as Wyndham. The premium went down with the addition of the language at issue because the intent was to limit coverage for to aircraft owned, used by, or at the direction of the charter company.

Doctors and a patient challenged the Patient Protection and Affordable Care Act requirement, effective in 2014, that all non-exempt applicable individuals either maintain a certain minimum level of health insurance or pay a monetary penalty (26 U.S.C. 5000A) and a provision that penalizes certain employers if they fail to offer full-time employees the opportunity to enroll in an employer-sponsored insurance plan that satisfies the individual mandate's minimum essential coverage requirement (26 U.S.C. 4980H(a)).The district court dismissed for lack of standing. The Third Circuit affirmed. There is no evidence that the patient-plaintiff or doctors are in any way currently impacted by the law or that harm is imminent.