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ERISA Litigation Attorney | Lane Powell Law Firm

ERISA (11th Cir.): Tougher for Claimants to Win ERISA Statutory Penalty Claims

Posted in ERISA

We see plaintiffs asserting an ERISA claim for statutory penalties more frequently now.

These claims seek statutory penalties (up to $110 per day), alleging the plan administrator “fail[ed] or refus[ed] to comply with a request for information” by the beneficiary. 29 U.S.C. 1332(c)(1).

How easy is it for plaintiffs to win a statutory penalty claim for failing to provide information? Not all that easy.

Here’s the case of Smiley v. Hartford Life and Accident Insurance Company, Smile Brands, Inc. et al, __ Fed. Appx. __, 2015 WL 4385673 (11th Cir. July 17, 2015) (Kudos for some nice work by my friends Elizabeth Bondurant and Russ Buhite).

FACTS: Smiley requested and received relevant ERISA Plan documents from plan administrator Smile Brands. After Smiley’s ERISA benefits were terminated, she again requested plan documents. This time, however, she made the request to claims administrator Hartford. Hartford provided Smiley with an outdated address (contained in the Plan documents) for the plan administrator. Smiley then sent a second request for plan documents to the outdated address. The letter was returned as “undeliverable.”

11th CIRCUIT HELD: Statutory Penalty Claim Properly Dismissed.

  1. ERISA authorizes the imposition of a daily penalty upon a plan administrator that “fails or refuses to comply with a request for information which such administrator is required…to supply to a participant or a beneficiary.” 19 U.S.C. 1332(c)(1).  Op. at 2.
  2. A plan administrator is either “the person specifically so designated” in Plan documents, or a company acting as a plan administrator. Op. at 2-3.
  3. Hartford was not the plan administrator and therefore not subject to statutory penalties. Op. at 3.
  4. Hartford also was not a “de facto administrator[.]” “We have consistently rejected the use of de facto plan administrator doctrine ‘where a plaintiff has sought to hold a third-party administrative services provider liable, rather than the employer….’” Op. at 3.
  5. Statutory penalties should not be awarded here because the plan administrator, Smile Brands, “did not refuse or fail to provide Smiley with the Plan documents.” Smile Brands “had no knowledge that Smiley was attempting to obtain the same Plan documents until it was served with Smiley’s amended complaint….” Op. at 4.
  6. Smiley failed to show any prejudice in denying disclosure of the requested documents. “Although a plaintiff need not demonstrate [prejudice] to obtain [statutory penalties], a court may consider those factors, among others, in making its determination.” Op. at 4-5.

KEY TAKE AWAY: The circuits are not consistent in how they approach the statutory penalty claim. Surveys suggest that the $110 per day penalty is rarely if ever given, and awards (if they occur) typically range from ten to fifty dollars per day, with an average of about $33 per day.

ERISA 11th Circuit: Claimant Has “Duty to Investigate” When Asserting Equitable Tolling of a Contractual Limitations Provision

Posted in ERISA

You already know that contractual limitations provisions in ERISA plans are generally enforceable and can bar untimely claims.

But when does the court apply “equitable tolling” to extend the time by which a claimant may file suit beyond the contractual limitations provision? Rarely.

And, what happens if the claim denial letter fails to set out the date by which a claimant must file suit? The contractual limitations provision still may be enforceable.  

Here’s the case of Wilson v. Standard Insurance Company, 2015 WL 3477864 (11th Cir. June 3, 2015)(Equitable tolling rejected even though claim denial letter failed to state date by which civil claim must be brought.)

The case also provides some guidance on what should go into a claim denial letter.

FACTS: Wilson filed her lawsuit seeking ERISA-governed long term disability benefits 34 months after the three year contractual limitations period expired. Wilson contended the three year period should be “equitably tolled” because the letter denying her claim “did not give her notice” that the policy imposed a three year limitations period, rather than the six year contractual limitations period under state law. The district court dismissed the claim as untimely and Wilson appealed.

ISSUE: When does “equitable tolling” trump a contractual limitations provision?

11th CIRCUIT HELD: AFFIRMED—Plaintiff’s Claim Dismissed: Equitable tolling does not trump the contractual limitations provision.

  1. “’[W]e must give effect to [an ERISA] Plan’s limitation provision unless we determine either that the period is unreasonably short, or that a ‘controlling statute’ prevents the limitations provision from taking effect.’ Neither of those two exceptions applies in this case.” Op. at 2.
  2. Heimeshoff left open the possibility that equitable tolling ‘may apply,’ but only ‘[t]o the extent the participant has diligently pursued both internal review and judicial review but was prevented from filing suit by extraordinary circumstances.’” (Emph. added by court.) Op. at 3.
  3. ERISA regulations require “that a claims denial letter include notice about the administrative review procedures and the time limits for filing…as well as the fact that the claimant has a right to bring a civil action under 502(a) of ERISA. “ Op. at 5.
  4. “What is anything but clear, however, is whether the regulation also requires a claims denial letter to include notice about the time limits applicable to filing a civil action.” Op. at 5.
  5. “[F]or purposes of this opinion only we will construe the regulation in Wilson’s favor and assume the correct interpretation of it is that a claim denial letter must notify the claimant of her time limit for filing a lawsuit under ERISA….” Op. at 5-6.
  6. “Even with that assumption in Wilson’s favor, however, it does not follow that Standard’s failure to interpret the ambiguous regulation that way renders the contractual limitations period unenforceable.” Op. at 6.
  7. “Equitable tolling generally does not apply in the absence of diligence.” Op. at 7.
  8. “’Wilson has not explained why she waited more than four years to request a copy of the LTD policy, and she has not demonstrated that [Standard] discouraged her from seeking a copy of the policy sooner.’” Op. at 8.
  9. “A plaintiff is not reasonably diligent when she fails to investigate basic issues that are relevant to her claim or to proceed with it in a reasonably prompt fashion…. Her lawsuit easily could have been timely filed if she had exercised even minimal diligence in discovering the terms of the policy.” Op. at 9.

ERISA (9th Cir.) A Day Late, But Not A Dollar Short — Counting The 180 Day Appeal Period Gets Easier For Claimants

Posted in Uncategorized

You know that under ERISA regulations a claimant has at least 180 days to appeal a benefit denial. ERISA plans set out contractual timelines for appeals.

But what happens when that 180 day period runs out on a weekend? Is an appeal filed on the following Monday timely?

Here’s the case of LeGras v. Aetna Life Insurance Company, __ F.3d __, 2015 WL 3406182 (9th Cir. May 28, 2015) (180 day appeal period ended on Saturday, and Claimant filed appeal on following Monday: 9th Circuit reverses trial court dismissal and deems appeal timely).

FACTS: LeGras received long term disability benefits under the Fed-Ex ERISA plan for 24 months. On April 18, 2011, Aetna, a plan administrator, then terminated benefits effective May 24, 2011 and informed LeGras that he could “file a request to appeal this decision within 180 days of receipt of this notice.” The 180 day appeal period ended Saturday, October 15, 2011. LeGras mailed his appeal on Monday, October 17, 2011.

ISSUE: Whether an appeal, filed after the appeal period expired on Saturday, was timely.

DISTRICT COURT HELD: Appeal was not timely and granted motion for judgment on the pleadings for failure to exhaust administrative remedies.

NINTH CIRCUIT HELD: REVERSED (with dissenting opinion).


  1. Under ERISA regulations, a “reasonable opportunity for a full and fair review” is “at least 180 days following receipt of a notification of an adverse benefit determination within which to appeal.” Op. at 6.
  2. An ERISA deadline that “falls on a weekend…extends to the following business day.” Op. at 7.
  3. “Although the stricter time computation method may be convenient for Aetna’s purposes, it would be contrary to the purposes of ERISA to adopt a method that is decidedly protective of plan administrators, not plan participants.” Op. at 8.
    •  “An ERISA plan is a contract…and the terms of this contract are not ambiguous. By the Plan’s terms, LeGras had 180 days to file his appeal with Aetna by mail.” Op. at 14-15.
    •  “LeGras messed up; he failed to abide by his contract and now seeks an excuse to set aside his failure….He could have mailed that appeal on any one of the 180 days after April 18, 2011. Dissent at 15.
    •  “To get around the plain terms of the contract, the majority is forced to create federal common law….” Dissent at 16.

ERISA (3rd Circuit): Even a Voluntary Settlement Can Mean “Some Success on the Merits” When Awarding Attorney Fees?

Posted in Uncategorized

You know that a court has discretion to award attorney fees under ERISA if a party shows “some degree of success on the merits.”

But how do you define “success”? A new third circuit case reminds one of that old Milton Berle line: “If opportunity doesn’t knock, build a door.”

Here’s the case of Templin et al v. Independence Blue Cross et al., __ F.3d __ (3rd Cir. May 8, 2015)(Even voluntary settlements, where no judgment was entered, can result in an award of attorney fees under the “catalyst” theory.)

FACTS: Plaintiffs sought payment for blood-clotting products under an ERISA plan. Defendants moved to dismiss for failure to exhaust administrative remedies. The Court denied the motion and Defendants eventually paid the claims, and settled the claims. Plaintiffs then sought $349,385 in attorney fees.

DISTRICT COURT HELD: Attorney fees denied because the court had never made a substantive determination on whether Plaintiffs were entitled to the recovery, and the parties settled the claim “without a judgment from the Court.”

THIRD CIRCUIT HELD: Reversed and attorney fees awarded.

  1. “[T]he ERISA statute does not limit fee awards to the prevailing party.” Op. at 7.
  2. “[T]he Supreme Court has specifically acknowledged that attorney fees are available even ‘without a formal court order.’” Op. at 8.
  3. At least four other circuits have adopted the “catalyst” theory to statutes that lack prevailing-party requirements. Op. at 8.
  4. “[U]nder the catalyst theory, a party is eligible for attorney’s fees where his or her litigation efforts resulted in a voluntary, non-trivial, and more than procedural victory….” Op. at 10.
  5. Plaintiffs sued for interest on unpaid amounts. The Court held plaintiffs were entitled to recovery of attorney’s fees because the parties settled for “100% of the interest sought.” [W]e find that the pressure of the lawsuit caused [Defendants] to change their position….” Op. at 11.

ERISA: Public School Teacher’s Employee Benefits Governed by ERISA? Yes!

Posted in Employee Benefits Litigation, ERISA

When you see a claim for disability or life insurance benefits by a public school teacher, you might assume the claim is not governed by ERISA because of the governmental plan exception.

But don’t stop there. You need to see how the benefit was set up. If the benefit was funded through a union plan, ERISA might apply.

Here’s the case of Wilson v. Provident Life and Accident, __ F. Supp. 3d __, (W.D. Washington April 29, 2015) (“Where unions of public employees enter insurance agreements that are not a result of collective bargaining, the plans may be found to be nongovernmental [and therefore governed by ERISA].”).

FACTS: Public school teachers were eligible for life insurance benefits through a Plan independently created by a union, for the benefit of its employees, and government employees. The benefit was funded through a contract between the union and Unum/Provident. After a teacher’s claim for insurance benefits was denied, suit followed with assertion of state law bad faith claims. Unum removed the case, contending the claim was governed by ERISA. Plaintiff claimed, however, that ERISA did not apply because of the “governmental plan” exception to ERISA.

ISSUE: Whether a public school teacher’s life insurance benefit claim was governed by ERISA?


  1. One exception to application of ERISA is a governmental plan, defined as “a plan established or maintained for its employees…by the government of any State or political subdivision thereof.” Op. at 4.
  2.  “It is undisputed that the WEA (union) is an ‘employee organization’ for ERISA purposes, and [the school district] is a political subdivision…” Op. at 4.
  3.  The school district employees “enrolled in a Group Plan that covered employees from multiple school districts and from the WEA, and was governed by [the WEA’s contract with Provident.]”
  4.  “Other courts have held that a private plan does not become a public plan merely through a public employer’s participation.” Op. 7, fn 4.
  5.  The Court finds that “the Group Plan is not a governmental plan…. The Group plan was not the result of collective bargaining, but the result of a separate negotiation between the WEA and Provident; the District merely ‘elected’ to participate in the Plan.” Op. at 8.
  6.  “Where unions of public employees enter insurance agreements that are not a result of collective bargaining, the plans may be found to be nongovernmental (and governed by ERISA).” Op. at 8.
  7.  The plan is governed by ERISA because “the Plan was independently created by the WEA for the benefit of its employees along with government employees [and the school districts played no direct role in the Plan’s creation.]” Op. at 10.

ERISA: Supreme Court to Determine Whether Money is Fungible…When it Comes to Recovery of Overpayments from ERISA Beneficiaries

Posted in ERISA

When it comes to recovery of overpayments from ERISA beneficiaries…

money is a fungible commodity in the Eleventh Circuit, but is not a fungible commodity in the Ninth Circuit.

This week the U.S. Supreme Court agreed to address recovery of overpayments to ERISA beneficiaries.

  1. The Problem: Many times an ERISA plan may overpay a beneficiary. Under ERISA, beneficiaries are promised prompt payment of benefits if they are injured or disabled on the job, but they also agree to repay whatever they get later from the Social Security Administration or from a settlement in a lawsuit.
  2. The Issue: Currently, getting that overpayment back from the beneficiary can be lots more challenging if the overpayment occurs in the Ninth Circuit…

In the Ninth Circuit money, apparently, is not a fungible unit of exchange. ERISA plans cannot recover funds from the beneficiary unless specific funds from a settlement or the Social Security Administration can be tracked. If the beneficiary spends that money before the plan can get a court order forcing repayment, the insurer is out of luck. Bilyeu v. Morgan Stanley Long Term Disability Plan, 683 F. 3d 1083 (2012)(Plaintiff received $30,000 in overpayments. Court refused to order repayment because the funds could not be tracked.)   The Eighth Circuit follows this line of reasoning, too.

But money in the Eleventh Circuit is a fungible unit of exchange, making recovery of ERISA plan overpayments lots easier. Last November 2014 the Eleventh Circuit determined that when a plan unambiguously gives itself a first-priority claim to third party payments, then an equitable lien attaches immediately upon the receipt of specifically identifiable funds. This makes it irrelevant that the funds were subsequently spent or dissipated. Board of Trustees of the National Elevator Industry Health Benefit Plan v. Montanile, 593 F. App’x 903 (11th Cir. 2014)(The Plan spent $124,000 in medical expenses. When Montanile obtained $500,000 from a lawsuit… he spent it quickly. The Court rejected Montanile’s argument that no repayment was required because the funds had dissipated). Most circuits follow this analysis.

  1. The US. Supreme Court Accepts Review. By accepting review of Montanile this week, the Supreme Court may endeavor to resolve this interesting split, which has complicated recovery of overpayments.

ERISA: 6 New Trends in DOL Enforcement Actions

Posted in ERISA

The U.S. Department of Labor (DOL) and the Employee Benefits Security Administration (EBSA) just issued a “Fact Sheet” describing Fiscal Year 2014 civil and criminal enforcement activity under ERISA.

Here is a copy of the fact sheet.

Key Take Aways on DOL’s Enforcement Efforts:

  1. EBSA oversees about 684,000 retirement plans, 2.4 million health plans and a similar number of welfare plans. These plans cover about 141 million workers, plus their dependents.
  2. More criminal investigations, but fewer guilty pleas.   In 2014, DOL closed 365 criminal investigations: that is about 30% more than 4 years earlier. It represents a continuing trend of more criminal investigations that started around 2000. They indicted 106 individuals and obtained 85 “guilty pleas or convictions”. This is lower.
  3. More civil investigations, focused on protection of plan assets and participants’ benefits. The DOL closed about 4000 civil investigations in 2014. This is up in more recent years, but in 2002 there were 25% more civil investigations. The DOL’s strategic plan through 2018 calls for increased civil enforcement.
  4. Monetary results lower.   The Fact Sheet claims $599.7 million was restored through enforcement. This is low compared to more recent years.
  5. Compliance Assistance. EBSA provides incentives to fiduciaries who voluntarily report and self-correct ERISA violations. About 1643 applications were filed last year to disclose and self-correct violations.
  6. Late Filings. About 25,000 applications for the Delinquent Filer Voluntary Compliance Program were filed last year.

ERISA — 5 Quick Points: Blowing a Deadline for Decision is Not Necessarily Fatal to Abuse of Discretion Standard

Posted in Employee Benefits Litigation, ERISA

You already know that ERISA regulations require the plan administrator to render a decision on an administrative appeal within 45 days.

If more time is needed, the ERISA regulations require that the plan administrator notify the beneficiary before the 45 day period expires that more time is needed due to special circumstances.

BUT what should be in the plan administrator’s notice letter to the beneficiary indicating more time is needed?

Here’s the case of Dimery v. Reliance Standard Life Ins. Co., slip op. 12-17550 (9th Cir. March 11, 2015)(unpublished).

FACTS: Dimery sought disability benefits under Genentech’s ERISA-governed plan. Reliance notified Dimery that it wanted an independent medical evaluation, but did not expressly state it needed additional time beyond the 45 day period. On the 64th day, Reliance affirmed the decision terminating Dimery’s benefits.

Dimery sued for wrongful denial of benefits, and argued Reliance’s failure to provide a decision within 45 days required the court to apply de novo review, rather than “abuse of discretion” review.

ISSUE: Whether the plan administrator’s failure to provide adequate notice beyond the 45 day appeal period changes the standard of review to de novo review rather than “abuse of discretion” review?

NINTH CIRCUIT HELD: Abuse of Discretion Review Applied, Despite the Untimely Decision (Due to Inadequate Notice).

  1. 29 C.F.R. § 2560.503-1(i)(1)(i), (i)(3)(i) requires the plan administrator to render a decision on an administrative appeal of a denial of benefits within 45 days. Extra time is allowed if the administrator provides notice before the 45 day period expires that additional time is required due to special circumstances. Op. at 2.
  2. The court found that the plan administrator’s notice letter was insufficient. Op. at 3.
  3. However, “ERISA procedural violations do not alter the standard of review unless violations cause the beneficiary substantive harm.” Op. at 3. “‘[P]rocedural violations of ERISA do not alter the standard of review unless those violations are so flagrant as to alter the substantive relationship between employer and employee….’” Op. at 3.
  4. Also, there was no evidence the denial of benefits was “necessarily the mechanical result of a violation of the terms of the Plan.” The Plan did not state that a particular result would ensue from a failure to adhere to the time limits for reviewing the denial of benefits. Op. at 3
  5. Finally, Dimery failed to identify “any substantive harm resulting from Reliance’s untimely decision.” Op. at 3

KEY TAKE AWAY: The notice letter to the beneficiary should expressly state: (1) when the 45 day period expires, and (2) why more time is needed.


How about those Gonzaga University Bulldogs (Men’s Team and Women’s Team) in the Sweet Sixteen?

ERISA: 6th Circuit — Plop Plop, Fizz Fizz: Oh What A RELIEF It Is: No Disgorgement For Arbitrary Denial Of Benefits

Posted in ERISA

Does an arbitrary and capricious denial of ERISA governed disability benefits create a right to disgorgement of profits? NO.

The Sixth Circuit helps clarify the point in Rochow v. LINA, __F.3d__, 2015 WL 925794 (6th Cir. Mar. 5, 2015)(PDF)(En banc decision reverses trial court decision ordering about $3 million disgorgement of profits for arbitrary/capricious denial of disability benefits.)

FACTS:  Rochow sued LINA claiming it had wrongfully denied ERISA-governed disability benefits. After the district court ruled that the denial of benefits was arbitrary and capricious, and entered judgment in 2005, LINA appealed. The 6th Circuit affirmed the decision in 2007. 482 F.3d 860 (6th Cir. 2007). Plaintiff then moved for an equitable accounting and disgorgement of profits. The district court granted that motion, and ordered LINA to disgorge about $3 million in profits it made on the benefits withheld. LINA appealed, again. This time a divided panel affirmed the disgorgement decision by the trial court. 737 F.3d 415 (6th Cir. 2013). The court granted LINA’s petition for rehearing en banc.

ISSUE: Is Rochow entitled to recover about $3 million in disgorgement of profits for LINA’s arbitrary and capricious denial of long-term disability benefits?

6th Circuit HELD: NO. (Majority 9 judges, Dissent 6 judges).

  1. The majority decision assumed that the trial court concluded that LINA had breached its fiduciary duty by arbitrarily and capriciously denying benefits. Op. at 6.
  2. The majority held that Rochow was made whole under § 502(a)(1)(B) through recovery of his disability benefits and attorney’s fees, and potential recovery of prejudgment interest. Op. at 9, 10.
  3. Allowing Rochow to recover disgorged profits under § 502(a)(3) would result in impermissible duplicative recovery. Op. at 10.
  4. The Supreme Court has established that “‘where Congress elsewhere provided adequate relief for a beneficiary’s injury, there will likely be no need for further equitable relief, in which case such relief normally would not be appropriate.’” Op. at 8. (emphasis in original).
  5. There is no cited “case that allowed disgorgement of profits under 502(a)(3) after the claimant recovered for wrongful denial of benefits under 502(a)(1)(B).” Op. at 9.
  6. Citing Supreme Court precedent, the majority opinion reiterates: equitable relief is available only for injuries caused by violations that § 502 does not elsewhere adequately remedy. Op. at 8.
  7. The underlying decision incorrectly presented a new measure of damages that would apply virtually every time a court decided benefits were denied on an arbitrary and capricious basis. This would be plainly beyond and inconsistent with ERISA’s purpose to make claimants whole. Op. at 9.
  8. The court remanded the matter to the district court to consider whether Rochow is entitled to prejudgment interest, cautioning that any interest awarded cannot be “at a rate so high that the award amounts to punitive damages.” Op. at 14.
  9. The dissent held that breach of fiduciary duty is a separate claim that by definition results in a distinct injury, and therefore supports a distinct remedy. Op. at 27.

KEY TAKE AWAY: With a deep split in the opinions, and vigorous argument on both sides, one should expect to see the disgorgement theory asserted in other cases. The better argument is the one presented by the majority, but there are arguments to make, as shown by the dissent.

ERISA: Sometimes A Government Employee’s Benefits Could Be Governed By ERISA?

Posted in ERISA

You already know that employee benefit plans established by governmental entities are exempt from ERISA.

But ERISA might apply if the employee benefit for the government employee is established through an association. Moreover, you need to make sure the “governmental entity” is actually a “governmental entity” under ERISA. For example, plans that involve both public and private employers may result in ERISA application. See, e.g., South Cent. Indiana Sch. Trust v. Poyner, No. 1:06-cv-1053-RLY-WTL, 2007 U.S. Dist. LEXIS 78804, 2007 WL 3102149, at *5 (S.D. Ind. Oct. 19, 2007) [*5] (”[T]he Plan at issue involves both public and private employers for the benefit of their respective employees. It is therefore subject to ERISA regulation.”)

This issue is highlighted by the recent case of Raible v. Union Security Insurance Co., 2015 WL 746213 (W.D. Pa. February 20, 2015)(PDF) (Court applies very broad definition of “a plan established by government” to conclude government exemption from ERISA applies).

FACTS: Raible was employed as a school nurse in a school district, a government entity in Pennsylvania. Plaintiff also was a member of the Pennsylvania School Board Association (PSBA). PSBA is not a governmental entity. It provided disability benefits, insured by Union Security Insurance Company, to its members.

After her disability benefits were denied, Raible brought a breach of contract action.

Union removed to federal court, contending the claim was governed by ERISA. Union contended the governmental plan exemption did not apply because: (1) PSBA is the policyholder and is not a governmental entity, and (2) the school district did not sponsor the plan.

ISSUE: Is this government employee’s disability benefit governed by ERISA?

HELD: Claim is NOT governed by ERISA.

  1.  “ERISA broadly applies to ‘any employee benefit plan if it is established or maintained by an employer…or by an employee organization…representing employees engaged in commerce.’” Op. at 4.
  2.  “‘[G]overnmental plans’ are expressly exempted under ERISA[.] The term ‘governmental plan’ means a plan established or maintained for its employees by the Government ….” Op. at 4 (Emph. added).
  3.  “[O]ther circuits have constructed [the term] ‘established’ broadly…. Op. at 5.
  4. The court holds that this plan was “established” by the government because: (a) the school district purchased the plan for the exclusive benefit of its employees through the PSBA Insurance Trust; and (b) The school district is listed as a “participating employer” under the policy. Op. at 6.