You know that claimants seeking ERISA-governed benefits sometimes assert “breach of fiduciary” duty claims under ERISA Section 502(a)(3)(b).

This case highlights some arguments that can be used to defeat breach of fiduciary duty claims. Staropoli v. Metro. Life Ins. Co., 465 F. Supp. 3d 501 (E.D. Pa., June 8, 2020).

Key takeaways:

  • To be a proper defendant in a breach of fiduciary duty claim the entity must do more than merely “ministerially apply[] the unambiguous neutral rules of the plan.”
  • “‘[A] fiduciary has a legal duty to disclose to the beneficiary only those material facts known to the fiduciary but unknown to the beneficiary, which the beneficiary must know for its own protection.’”
  •  A claims administrator owes no fiduciary duty to an insured when it “was not a fiduciary at the time of a triggering event and had no knowledge of the triggering event.”

FACTS: Staropoli sought ERISA-governed supplemental death benefits after her former husband (they divorced in 2013) passed away in 2018. Staropoli alleged her two children had been designated as beneficiaries of Mr. Staropoli’s $300,000 in death benefits. MetLife denied the claim because ex-spouses were not eligible for coverage under the policy. Staropoli then sued the plan sponsor, JPMorgan Chase Bank, and MetLife (claims administrator) alleging breach of fiduciary duty, and detrimental reliance claims.

DISTRICT COURT HELD: Breach of Fiduciary Duty Claims Dismissed

  1. JPMorgan Chase Bank was not a proper defendant.  “The proper defendant in an ERISA claim for wrongful denial of benefits is ‘the plan itself or the person who controls administration of benefits under the plan…. Exercising control over the administration of benefits is the defining feature of the proper defendant….’” “[T]he plan documents explicitly limit this authority to the JPMorgan Chase U.S. Benefits Executive as the plan administrator and to MetLife as the claims administrator.” Op. at 6-7.
  2. At best “JP Morgan would have simply been ministerially applying the unambiguous neutral rules of the plan regarding eligibility of spouses,” which is insufficient control to be deemed a fiduciary. Op. at 7.
  3. “…[ERISA] Section 502(a)(1)(b) does not create a private cause of action for breach of fiduciary duty.”  Op. at 9.
  4.  Breach of fiduciary duty claim under ERISA Section 502(a)(3)(b) dismissed.
    • The Court rejected the agency argument. Plaintiff alleged MetLife breached its fiduciary duty in part by virtue of conduct of the “agent” employer, JPMorgan Chase Bank, by misleading Ms. Staropoli that Mr. Staropoli was covered under the policy and accepting premiums for that coverage. Op. at 12.
    • “[S]tate agency law allowing an employer to be deemed agent of an insurer in administering group insurance policies [is] preempted by ERISA because ‘it relates’ to employee benefit plans.” Op. at 13.
    • Applying federal common law governing agency, Ms. Staropoli “failed to explain how the facts alleged demonstrate a relationship between JP Morgan and MetLife that satisfies the elements of federal common law agency.”  Op. at 15.
    • The Court concluded Plaintiff’s amended complaint failed to give the defendants proper notice of the misrepresentation claims. Plaintiffs’ amended complaint also violated Rule 8(a) because it used “a pleading style” in which Plaintiffs’ allegations “jump from alleging conduct of one defendant to allegations that both defendants are liable…. This…prevents necessary deconstruction to discern which allegations [apply to which defendant]…. [Plaintiffs’ misrepresentation allegations] ‘fail to provide Defendants with the requisite notice of their alleged improper conduct, in contravention of Rule 8(a).’” Op. at 18.
    • The Court rejected Plaintiffs’ allegation that MetLife breached its fiduciary duties by failing to disclose post-divorce ineligibility. “[A] fiduciary has a legal duty to disclose to the beneficiary only those material facts known to the fiduciary but unknown to the beneficiary, which the beneficiary must know for its own protection.’” Op. at 20 (Emph. in original).
    • MetLife did not become the claims administrator until three years after the divorce.  “MetLife could not have breached a supposed fiduciary duty to notify Plaintiffs that they no longer qualified for life insurance following the divorce [because] MetLife was not a fiduciary at the time Ms. Staropoli provided notice of her divorce and [because] MetLife had no knowledge of the triggering event that rendered Mr. Staropoli ineligible….”  Op. at 20.
    • “[A]n insurer does not have an independent duty to monitor every insured’s marital status.  Such a system would be entirely unworkable….”  Op. at 22 (Emph. added).
    • The Court rejected Plaintiffs’ allegation that MetLife breached fiduciary duty by failing to notify Plaintiff of the right to convert the group policy to an individual life policy.  MetLife did not know about the divorce.  Op. at 25.
    • The Court rejected Plaintiff’s argument that MetLife should be equitably estopped from denying the claim because MetLife continued to accept premiums. “MetLife can hardly be said to have acted in bad faith or conducted itself insidiously where it was never aware of the triggering event that rendered Mr. Staropoli ineligible for coverage.”  Op. at 26-27.

You know the Ninth Circuit has taken the position that an “employee who cannot sit for more than four hours in an eight hour workday cannot perform ‘sedentary work that requires ‘sitting most of the time.’” Armani v. NW Mut. Life Ins. Co., 840 F.3d 1159, 1163 (9th Cir. 2016) (Emp. added.)

But what if there is evidence in the record (like a job analysis) that the claimant’s job “could be performed by alternating sitting and standing”?

This evidence may be sufficient for the court to sustain a conclusion that the job was not sedentary.  And if the job is not sedentary, then—the claimant could perform her job even though she could not sit for more than four hours in an eight hour workday.

This new case shows that an effective job analysis can help work around the Armani decision…

Perez v. Lincoln National Life Ins. Co., __ Fed. Appx. __ , 2021 WL 195022 (9th Cir. January 20, 2021) (claimant’s payroll specialist position was not sedentary because job analysis showed position “could be performed by alternating sitting and standing.”)

FACTS: Perez was a payroll analyst and sought ERISA-governed disability benefits. She apparently was unable to sit for more than four hours in an eight hour workday. But a job analysis showed she could perform her position by “alternating sitting and standing.”

Lincoln National argued her position was not sedentary and discontinued payment of benefits concluding she could perform this job. Perez sought judicial review contending the district court erred in concluding her payroll analyst job was “not [a] sedentary occupation” and that (2) the court improperly considered credibility evidence in the social security decision.

NINTH CIRCUIT HELD: District Court’s decision denying claim for disability benefits AFFIRMED.

  1. “Where…the district court reviews de novo the denial of benefits, that review must be limited to the administrative record unless ‘circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision.’”  Op. at 4.
  2. A district court’s decision to admit evidence that was not before the administrator is reviewed for abuse of discretion.  Op. at 4.
  3. The Court did not abuse its discretion when it admitted adverse credibility determinations from Perez’s social security decision because…such a decision ‘could not have [been] presented in the administrative process’ and could be ‘particularly important in ERISA cases.’”.  Op. at 4.
  4. “‘Factual findings in one case ordinarily are not admissible for their truth in another case through judicial notice.’” Op. at 5, citing Nagy v. Group Long Term Disability Plan for Employees of Oracle Am., Inc., 739 F. Appx. 366, 367 (7th Cir. 2018).
  5. “Perez’s failure to oppose admission of the social security decision before the district court amounts to waiver of the argument on appeal.” Op. at 5.

Some of the more challenging disability claims involve impairment resulting from Chronic Fatigue Syndrome.  There are no tests for Chronic Fatigue Syndrome, and the impairment assessment often relies heavily on self-reported symptoms and…the credibility of the claimant and the treating physician.

But there are distinct ways to help the court assess these claims. This new case provides a helpful playbook of arguments to make in assessing chronic fatigue, or self-reported, disability types of cases. Lukianczyk v. Unum Life Ins. Company of America, 2020 WL 7122007 (E. D. Cal. December 4, 2020)(chronic fatigue syndrome case: “While there can be little doubt that plaintiff suffers from medical conditions that impair her to some degree, there is insufficient evidence to persuade the court that plaintiff was disabled…”)

FACTS: Lukianczyk, an accountant, sought ERISA-governed disability benefits primarily due to “fatigue” related to rheumatoid arthritis, chronic fatigue syndrome, sleep apnea and generalized anxiety disorder. Treating physicians initially stated Plaintiff was disabled because she “was unable to stay awake more than two hours at a time” and could not operate a computer. Plaintiff was able, however, to attend a wedding in Las Vegas, take long driving trips, and a cruise to Mexico, but she claimed she “slept a lot.”

During the review process, Plaintiff’s treating physician later agreed with a Unum peer review that Plaintiff could work in her own occupation. After Unum denied the claim, Lukianczyk appealed, submitting revised opinions by her treating physician, a Functional Capacity Exam, and reports from other rheumatologists indicating she was unable to perform her occupation.

ISSUE: Whether Plaintiff established her fatigue rendered her disabled?

DISTRICT COURT HELD: NO. “While there can be little doubt that plaintiff suffers from medical conditions that impair her to some degree, there is insufficient evidence to persuade the court that plaintiff was disabled…” Op. at 12

  1. “While there are no test[s] for chronic fatigue syndrome, ‘there are a variety of tests and evaluations designed to measure an individual’s cognitive, psychological, and physical functioning.’” Op. at 20.
  2. “While…evidence supports plaintiff’s diagnoses of rheumatoid arthritis and chronic fatigue syndrome during the relevant time frame, it does little to confirm her contention that it was disabling.”  Op. at 21-22.
  3. “Courts ‘have held it unreasonable to reject Plaintiff’s treating/examining physician’s notes of Plaintiff’s self-reporting and subjective observations…where, as here…the applicable Plan does not restrict the type of evidence that may be used to demonstrate disability.’”  Op. at 23.
  4. “The credibility of the opinions of physicians and the weight to be accorded to those opinions ‘turns not only on whether they report subjective complaints or objective evidence of disability but on (1) the extent of patient’s treatment history, (2) the doctor’s specialization or lack thereof, and (3) how much detail the doctor provides supporting his or her conclusions.’”  Op. at 25.
  5. “‘[T]he prospect of receiving disability benefits based on an ailment whose extent is objectively unverifiable provides a strong incentive to falsify or exaggerate…assessment of the claimant’s credibility thus becomes exceptionally important in such cases.’”  Op. at 26.
  6. Lukianczyk’s activities were incongruous with the reported severity of her symptoms. She drove 12 hours to Utah, traveled to Grand Teton National Park, and took lengthy road trips to San Diego and Las Vegas.  Op. at 26-27.
  7. “‘Courts discredit a plaintiff’s subjective belief that she is disabled if she refuses treatment or is not diligent in following a treatment plan that could alleviate her symptoms.’”  Op. at 27.  The court found she was not compliant with treatment plans.
  8. A claimant’s credibility will be viewed as negative when the claimant’s alleged symptoms around the time of the elimination period are “not entirely consistent” with complaints during the appeals process. “[V]acillating explanations cast a negative light on plaintiff’s credibility….”  Op. at 30.
  9. “The fact that plaintiff did not take large amounts of sick leave casts doubt upon her reports to both Unum and [her treating physician] where she stated she needed  to be on long term disability because ‘she has to call in [sick] so often….’”  Op. at 30-31.
  10. The court did not find narrative statements (provided by claimant and her husband) persuasive because “plaintiff’s narrative…at times directly contradict contemporaneous statements [she] made to her physicians.” Op. at 32.
  11. “‘[T]he mere existence of an impairment is insufficient proof of disability.’” Op. at 35.

Best holiday wishes!

You know that typically claimants seeking ERISA-governed benefits make claims for recovery under Section 1132(a)(1)(B).

Now you are likely seeing more simultaneous assertions of equitable claims for breach of fiduciary duty and disgorgement under Section 1132(a)(3). A successful claimant asserting this theory may recover additional forms of monetary relief, and may get broader discovery.

But the availability of relief under Section 1132(a)(3) claims is narrow: a claimant may pursue a Section 1132(a)(3) claim “only where the [equitable] claim is based on an injury separate and distinct from the denial of benefits or where the remedy afforded by Congress…is otherwise shown to be inadequate.”

So, how do you defend Section 1132 (a)(3) equitable claims? This new case highlights the point: Davis v. Hartford Life & Accident Insurance Company, __F. 3d__, 2020 WL 6789448 (6th Circuit November 19, 2020)(attached) Section 1132(a)(3) claims dismissed).

FACTS: Davis sought ERISA governed short and long term disability benefits due to back pain, neuropathy and fatigue due to multiple myeloma. Hartford approved short term and long term disability.

The treating physician (Dr. Reddy) then reported in September 2012 that Davis had continued restrictions; but also stated that Davis was clinically stable and able to perform sedentary work. Hartford conducted surveillance, interviewed Davis, and had an orthopedist conduct an independent medical exam (IME). The IME report, which concluded Davis could perform sedentary work, was also sent to Dr. Reddy for comment. Dr. Reddy did not respond to the request for comment on the IME report.

After Hartford discontinued benefits, Davis appealed. Hartford then obtained a review by a pain management specialist and an internist. Both concluded Davis could perform sedentary work. An employability analysis also identified five occupations that aligned with the “Any Occupation” definition. Hartford denied the appeal and Davis sued, alleging among other claims, “breach of fiduciary duty and disgorgement” claims.

ISSUE: Whether claims for breach of fiduciary duty and disgorgement should be dismissed?


  1. “Section 1132(a)(3) permits a plan participant to file suit ‘to enjoin any act or practice which violates [ERISA] or the terms of the plan’, or ‘to obtain other appropriate relief (i) to redress such violations or (ii) to enforce any provisions of [ERISA] or the terms of the plan.’” Op. at 12.
  2. “[T]he availability of relief under Section 1132(a)(3) claims is narrow: a claimant may pursue a Section 1132(a)(3) claim ‘only where the [equitable] claim is based on an injury separate and distinct from the denial of benefits or where the remedy afforded by Congress…is otherwise shown to be inadequate.’” Op. at 12.
  3. “The upshot is that Davis fails to show that his fiduciary duty claim is based on an injury distinct from his contract claim.” Op. at 12.
  4. Purported examples to support the fiduciary duty claim included allegations that Hartford personnel “‘systematically delay[ed] claim decisions”, “automatically accepted[ed] the opinions of Hartford’s paid medical reviewers”, and “did not seek to reach an accurate decision.” Op. at 12.
  5. “As these are conclusory allegations without factual support we need not accept them as true.” Op. at 12.
  6. The Court also rejected the disgorgement claim. Davis alleged that Hartford “accumulated earnings on the plan benefits otherwise payable to Davis.” “But this too is not a distinct injury from the termination of Davis’s benefits.” Op. at 12-13.
  7. “’[I]n an action for wrongful denial of benefits, like this one, the denial of benefits necessarily results in a continued withholding of benefits until the denial is either finalized or rectified.’…As a result, ‘[t]he denial is the injury and the withholding is simply ancillary thereto…Together they comprise a single injury.’” Op. at 13.
  8. The Court also concluded Davis failed to show that remedies under Section 1132(a)(1)(B) were inadequate. Davis failed to show a separate injury for his breach of fiduciary duty claim. And Section 1132(a)(1)(B) “provides an adequate remedy for Davis’s disgorgement claim.” Op. at 13.
  9. “[W]here an avenue of relief for the injury [is] unavailable under Section 1132(a)(1)(B), ‘irrespective of the degree of success obtained,’ a breach-of-fiduciary-duty claim cannot be brought.’” Op. at 13. “As Davis plainly was able to avail himself of such a remedy, his equitable claims under Section 1132(a)(3) were properly dismissed.” Op. at 13.
  10. While the U.S. Supreme Court Amara case allowed participants to seek equitable relief under Section 1132(a)(3), the case is distinguishable from this case because the claimants in Amara were not otherwise authorized to seek relief under Section 1132(a)(1)(B) for “CIGNA’S misrepresentations about its ERISA plan.” Op. at 13-14.


Section 1132(a)(3) permits a plan participant to file suit ‘to enjoin any act or practice which violates [ERISA] or the terms of the plan’, or “to obtain other appropriate relief (i) to redress such violations or (ii) to enforce any provisions of [ERISA] or the terms of the plan.”

  1. Be strategic on when to seek dismissal of the Section 1132(a)(3) claim. While it may be satisfying to file an early motion to dismiss, some courts are reluctant to grant motions at this stage because it is difficult to discern whether the claims are duplicative rather than alternative. It may be more strategic to seek dismissal at the dispositive motion stage. For additional thoughts, read this article.

    ERISA: Winning Early Motions to Dismiss Breach of Fiduciary Claims — the Ministerial Defense

  2. Stress the available remedies under Section 1132(a)(1(B). Plaintiff must prove that remedies under Section 1132(a)(1)(B) are:
    -inadequate and
    -the injury asserted is “separate and distinct from the denial of benefits.” As the Davis v Hartford case above shows, courts are receptive to these arguments.
  3. Consider seeking to limit remedies to the plan terms. U.S. Airways v. McCutchen, 133 S. Ct. 1537, 1548 (2013). Language in the McCutchen may support an argument that a participant who loses the benefits claim cannot recover, through equitable relief, a benefit never authorized under the plan terms.

You already know that ERISA plans frequently delegate discretionary authority to an administrator or fiduciary to make benefit decisions.

When reviewing the claim decision, courts may examine whether the ERISA Plan administrator properly designated authority to a claims administrator to make benefit decisions for the Plan.

If the delegation of authority is not done according to a process set forth in the ERISA Plan for designating administrators, the Court will apply the de novo standard of review, even if the Plan called for an abuse of discretion standard of review.

So, how can you be sure the Plan correctly designated fiduciary authority in claims decisions? This new case shows how to confirm when the Plan has properly delegated fiduciary duties.

Key Takeaways: (1) Follow the fiduciary designation process set out in the Plan; (2) know that a general delegation of fiduciary duties is not enough; (3) be able to establish that the delegation applies to the specific claim at issue.

Here’s the case of Hampton v. National Union, 2020 WL 5946967 (N.D. Ill. October 7, 2020)(The court applied de novo review, rather than the abuse of discretion standard of review, because “[t]he Plan Administrator did not properly delegate fiduciary duty to National Union… “[I]t is not enough to find that the insurer acted as a plan fiduciary generally; the Court must determine if it acted as a fiduciary regarding the claim at issue.”.”)

FACTS:  Hampton, a Boeing employee, died following a car accident and his wife sought ERISA-governed accidental death benefits. After the Claims Administrator, AIG Claims, concluded Hampton’s death resulted from natural causes, National Union denied the claim. A lawsuit seeking benefits followed. At issue in this case was what standard of review applied. Hampton argued that the abuse of discretion standard should not apply because Boeing’s Plan Administrator did not properly delegate authority to National Union.

ISSUE: Whether the Boeing ERISA Plan Administrator Properly Delegated Authority to National Union?

DISTRICT COURT HELD:  NO. “The Plan Administrator did not properly delegate fiduciary duty to National Union.”

1. “ERISA benefit determinations are generally fiduciary acts.” Op. at 4.

2. “‘Classifying any entity with discretionary authority over benefits determinations as anything but a plan fiduciary would thus conflict with ERISA’s statutory and regulatory scheme.’” Op. at 4.

3. The Plan and the Summary Plan Description conflicted on whether National Union had authority to make claim determinations. Op. at 6.

  • National Union contended it had been delegated authority because Boeing’s Summary Plan Description (SPD) identified National Union as “the service representative” for both the basic and supplemental accidental death and dismemberment policies….” Op. at 5-6.
  • “The SPD does not explicitly refer to [National Union’s duties of day-to-day administration and insurance coverage decisions] as fiduciary duties in nature. Yet… [the Boeing Plan] plainly purported to delegate fiduciary authority to National Union. Op. at 5.

4. But “it is not enough to find that the insurer acted as a plan fiduciary generally; the Court must determine if it acted as a fiduciary regarding the claim at issue.” Op. at 5.

5. “The problem…is that the Plan provides a specific method for delegating authority to a service representative, whereas the SPD does not.” Op. at 6.

6. The Boeing Plan provides that “When the [Boeing] Plan and the SPD conflict, the SPD stipulates that the [Boeing] Plan trumps the SPD.” This is consistent with Seventh Circuit precedent. Op. at 6.

7. The Plan set for a process for delegation of fiduciary duties. It required that delegation of duties be “in writing, approved by majority vote.” Op. at 7.

8. National Union never “alleged nor offered any evidence indicating that the Plan Administrator conformed with these procedures.” Op. at 6. As a result, National Union lacked requisite authority to deny Hampton’s claim. Op. at 7. The court then applied de novo review, rather than the abuse of discretion standard of review.

You already know that an ERISA plan recipient may recover attorney fees when prevailing in an action to enforce rights under the plan.

But to win attorney fees, the claimant must show:

  • “[success] on [a] significant issue of litigation which achieves some of the benefit…sought in bringing the suit…’”
  • something more than “‘trivial success on the merits’ or a ‘purely procedural victory….’”

SO… what IS “trivial success on the merits” or a “purely procedural victory”?

This new decision explains when courts deny attorney fee motions by claimants, when cases are remanded. Woolsey v. Aetna Life Ins. Co., Cause No. CV-18-00578-PHX-SMB (D. AZ. August 4, 2020)(Court denied plaintiff’s motion for fees after remanding the case for “procedural irregularities.”)

FACTS: Plaintiff Woolsey initially obtained ERISA-governed short term disability benefits. Aetna later discontinued those benefits, and denied long term disability benefits. Plaintiff sued, seeking benefits, and moved for summary judgment.

The District Court, concluding that Aetna’s claim denial was “generally on solid ground,” denied Plaintiff’s motion for summary judgment but “remanded the case to Aetna to remedy” a “few [procedural] irregularities”.

The “procedural irregularities” found by the Court were:

  1. Aetna’s assessment of the claim “was made without a specialist’s initial consultation clinical notes”;
  2. Aetna failed to address Plaintiff’s specific vocational requirements;
  3. Aetna failed to communicate in sufficient detail how Plaintiff could perfect his appeal;
  4. Aetna’s reviewers failed to consider the cumulative effects of his claimed conditions.” Op. at 2.

Plaintiff moved for an award of attorney fees, claiming Woolsey had succeeded on a “significant issue of litigation which achiev[ed] some of the benefit sought in bringing the lawsuit.”

ISSUE: Whether Plaintiff was entitled to attorney fees when the District Court remanded the claim to Aetna to “remedy” a “few procedural irregularities”?


1. “A[n] [ERISA] plan recipient who prevails in an action to enforce rights under the plan is ordinarily entitled to a reasonable attorney’s fee if the participant ‘succeed[s] on any significant issue of litigation which achieves some of the benefit…sought in bringing the suit…’”. Op. at 3.

2. “A claimant does not satisfy that requirement by achieving ‘trivial success on the merits’ or a ‘purely procedural victory….’” Op. at 3. (Emph. added).

3. “[G]iven the particular circumstances here, Plaintiff’s claim constitutes no more than “purely procedural victory” that falls short of what Hardt requires.” Op. at 3.

4. “Plaintiff’s claim here [does] not compel the conclusion that Plaintiff achieved “some success on the merits.” Op. at 4.

Have a great Labor Day Weekend!

You already know that denials of ERISA-governed disability benefits are reviewed under a de novo standard unless the benefit plan gives the administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan.

But courts sometimes override this grant of discretionary review and apply de novo review when there is a conflict of interest (the administrator both decides and funds the benefit) and there were procedural irregularities in the claims process.

So, what is a “procedural irregularity,” and how bad does the procedural irregularity have to be to change the standard of review from discretionary review to de novo review? The circuits are not consistent on this.

This new case highlights the point: McIntyre v. Reliance Standard Life Ins. Co., 2020 WL 4951028 (8th Cir. August 25, 2020)(Even though there was evidence of “conflict of interest”, Reliance Standard’s procedural irregularity of failing to issue the appeal decision within ERISA regulation timelines did not justify applying de novo standard. “[A]n administrator [d]eciding an appeal after a prescribed deadline is obviously not a wholesale failure to act on an appeal.” (Emph. added))(Other circuits recognize “decisional delay” as a factor justifying application of de novo review).

FACTS: McIntyre, a long-time nurse employed by the Mayo Clinic, suffered from a degenerative neurological disorder. From 2011-2016 she received ERISA-governed disability benefits, until Reliance Standard concluded she could perform sedentary jobs, and discontinued benefits under the “Any Occupation” provision. The plan had discretionary language.

McIntyre filed an administrative appeal. Reliance Standard denied the appeal 154 days later, well beyond the 45 day timeframe under the old [pre-2017] ERISA regulations. 29 CFR 2560.503-1(i)(2009).

McIntyre sued and argued the de novo standard should apply due to conflict of interest and procedural irregularities — “decisional delay.”

District Court Held: De novo standard applies because of a “palpable conflict of interest,” and because there were “procedural irregularities.”

8th Circuit Court of Appeals HELD: REVERSED — District Court incorrectly applied the de novo review standard.

  1. “The district court erred in treating a [mere] conflict of interest as a trigger for de novo review rather than simply as a factor in determining whether Reliance abused its discretion.” Op. at 11.
  2. “The district court erred in relying on the [mere] presence of a conflict of interest to justify de novo review.” Op. at 5.
  3. With regard to whether the conflict of interest changes the standard of review, the district court incorrectly relied on Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998) in light of Metro Life Ins. v. Glenn, 554 U.S. 105, 115-6 (2008).
  4. Reliance Standard failed to issue its benefit denial within the prescribed 45-day regulatory timeframe. BUT this “procedural irregularity” of “decisional delay” alone does not justify changing from the abuse of discretion standard to de novo standard. Op. at 13.
  5. An administrator’s wholesale failure to act on an appeal can trigger de novo review….” Op. at 13.  But “an administrator [d]eciding an appeal after a prescribed deadline is obviously not a wholesale failure to act on an appeal.” Op. at 13. (Emph. added).

You know that many states ban discretionary language in ERISA plans.  This issue tees up litigation over what state law will apply –the choice of law issue.

This new case is a good read because it provides helpful analysis when litigating choice of law issues: the structure of the plan may help win choice of law issues.

Choice of law decisions may be more favorable when the employer’s plan is part of a trust with a Master Policy covering participating members over many states.

Earle v. UNUM Life Ins. Co. of America, CV 19-2903-JFW (C.D. CA. July 23, 2020)(Employer was member of trust with thousands of employer/members over 39 states — California resident sought California law to apply; court applied Maine law to make sure decisions (over 39 states) were made uniformly — abuse of discretion standard applied).

Kudos to Nicole Blohm and her team at Meserve for a nice win…

FACTS: In March 2017, Earle, an operating room nurse residing in California, fell and claimed at the time only that she had “cut her finger on the rail.”  Earle later claimed, but did not report until August 2017, that she experienced vision impairment after her fall. Five months after her fall she consulted with doctors who concluded she had cataracts, and macular holes in her eye which impaired her vision. The physician opined the macular hole was caused when her “head violently jerked backwards” during her fall months earlier.  There also were complications during her subsequent retinal surgery.  Earle made an Accidental Bodily Injury claim under the ERISA-governed plan.

UNUM denied her accidental bodily injury claim because: (1) “macular holes can occur spontaneously without any apparent cause”; (2) there was no evidence claimant’s head jerked violently in her fall; (3) it is “very unlikely” one would experience a macular hole from violent head jerking anyway; and (4) Earle’s current impaired vision likely was a result of pre-existing conditions and complications during her retinal surgery.

Earle did not see it that way…. and brought suit, arguing that California’s ban on discretionary language required de novo review. UNUM argued Maine law should apply because (at the time) Maine had no ban on discretionary language in plans.

DISTRICT COURT HELD: Applying Maine law and discretionary review: UNUM correctly denied the accidental bodily injury claim.

  1. Choice of Law—Applying Discretionary Review Standard.
    • “Where a choice of law is made by an ERISA contract, it should be followed, if not ‘unreasonable or fundamentally unfair.”  Op. at 12.
    • The Court applied Maine’s law (which at the time did not ban discretionary language in ERISA plans).  The court did not apply California law which banned discretionary language. “[T]he Court concludes that it would not be ‘unreasonable or unfair’ to enforce the Maine choice of law provision in the Summary of Benefits.”  Op. at 13.
    • The employer subscribed to the Trust, which conferred discretion with Unum. “The purpose of the trust’s structure is to support consistent life and ADD coverage for hundreds of thousands of employees who are employed by tens of thousands of employers across thirty-nine states and Washington D.C….[A]pplying the laws of one governing jurisdiction, Maine, Unum ensures that the… benefits insured by the Master Policy are uniformly administered….”  Op. at 13.
  1. Interpreting ERISA policies in the Ninth Circuit.
    • In the Ninth Circuit, when interpreting ERISA policies, the “doctrine of reasonable expectations” applies.  Op. at 14.
    • In assessing pre-existing conditions, if the language in the policy is conspicuous, then the “substantially caused” standard applies. Op. at 15.
    • That means the pre-existing condition “‘must be more than merely a contributing factor’ and that a relationship of ‘undetermined degree is not enough.’”  Op. at 15.
    • The terms and provisions regarding coverage were conspicuous. (The Court cites helpful cases and provides insightful analysis on this issue.)

3.  Unum did not abuse its discretion when it concluded that Earle’s loss of sight in her right eye was not “substantially caused by her” fall.  Op. at 17.

4.  Even if Earle’s fall contributed to her vision loss, Unum did not abuse its discretion when it concluded that Earle’s preexisting condition and retinal surgery substantially contributed to her loss of sight.  Op. at 18.

ERISA preemption of state law claims is today’s topic…

This issue comes up more frequently now with managed care organizations creating networks of doctors or preferred providers, and the issue that arises is: at what rate should the insurer pay for services provided by out-of-network health care providers.

And what happens when the insurer expressly agrees to pay the out-of-network provider, before services are rendered?

Does ERISA preempt the breach of contract claim brought by the out-of-network provider?  NO

The Third Circuit just addressed this issue of first impression this way:

“What remedies are available to an out-of-network healthcare provider when an insurer agrees to pay for the provision of services that are not otherwise available in-network and then reneges on that promise?”

Plastic Surgery Center v. Aetna Life Insurance Company, __ F.3d __, 2020 WL 4033125 (3rd Circuit July 17, 2020)(Out-of-network health care provider’s breach of contract and promissory estoppel claims not preempted by ERISA, but unjust enrichment claim was preempted by ERISA.)

FACTS: Aetna was the insurer of an ERISA-governed health plan for various employers. JL needed breast reconstruction and DW needed “facial reanimation”—both medical procedures were not available “in-network.” Both patients were referred to Plastic Surgery Center of New Jersey (PSC), an out-of-network provider. During phone calls between Aetna and PSC, Aetna agreed to pay “a reasonable amount” for breast reconstruction services, and the “highest in-network” level pay for facial reanimation.

After PSC performed these services, Aetna refused to pay. Instead of paying $292,742 for the breast reconstruction, Aetna paid $95,534.  Instead of paying $420,750 for facial reanimation, Aetna paid $40,230. PSC then brought suit alleging breach of contract, unjust enrichment and promissory estoppel. Aetna argued those claims were preempted by ERISA.

ISSUE (as phrased by the Court): “What remedies are available to an out-of-network healthcare provider when an insurer agrees to pay for the provision of services that are not otherwise available in-network and then reneges on that promise?”

3rd CIRCUIT HELD: Breach of contract and promissory estoppel claims not preempted by ERISA; unjust enrichment claim preempted by ERISA

  1. Many insurers have inserted anti-assignment provisions in ERISA plans. Anti-assignment provisions place out-of-network providers in the unenviable position of having to “bill[] the beneficiary directly” and, should payment not be forthcoming, of having either to “rely on the beneficiary to maintain an ERISA suit or to sue the beneficiary directly.”  Op. at 16.
  2. Anti-assignment provisions are enforceable. Op. at 16.
  3. “In response [to anti-assignment provisions], out-of-network medical providers like [PSC] have attempted to secure a new foothold—a promise of payment from the insurer in advance of any services. And that, in turn has given rise to a different class of claims for non-payment—common law claims…including breach of contract, unjust enrichment, and promissory estoppel.” Op. at 16.
  4. Common law claims like breach of contract “could not be brought under section 502(a) [by JL or DW] because Aetna’s alleged liability would flow not from the plans, but from an independent agreement reached between [PSC] and Aetna….”  Op. at 17.
  5. PSC’s common law claims for breach of contract and promissory estoppel are not preempted by ERISA because PSC “has plausibly pleaded breach of contract and promissory estoppel claims that do not ‘relate to’ ERISA plans….”  Op. at 18.
  6. PSC’s common law claims for breach of contract and promissory estoppel plausibly seek to enforce obligations independent of the ERISA plan.  Op. at 20.
  7. PSC’s common law claims for breach of contract and promissory estoppel “do not require interpretation or construction of ERISA plans.”  Op. at 26.
  8. PSC’s common law claims for breach of contract and promissory estoppel “do not have a ‘connection’ with ERISA plans.”  Op. at 31.
  9. “As pleaded, [PSC’s common law breach of contract and promissory estoppel] claims do not interfere with the administration of either plan.”  Op. at 35.
  10. “Holding [PSC’s common law claims preempted by ERISA] would undercut ERISA’s purposes.”  Op. at 37.
  11. However, PSC’s unjust enrichment claim IS preempted by ERISA because the benefit conferred “is not the provision of the healthcare service per se, but rather the discharge of the obligation the insurer owes to its insured.”  The benefit conferred is premised on the ERISA plan. Op. at 41-42.


You already know about the contractual limitations provision in disability policies. The provision works to bar untimely lawsuits. 

So, it is no surprise that the interpretation/application of these provisions has been the subject of significant litigation.

Here’s a short new case concluding the contractual limitations provision was “unambiguous,” and dismissing the claim as untimely. Kuber v. Prudential Insurance Company of America, 2020 WL 3542308 (11th Cir. June 30, 2020).

FACTS:  Kuber stopped working due to disability on September 18, 2012. Prudential paid disability benefits until January 2015, when his benefits were exhausted. After various administrative appeals, Kuber filed suit December 28, 2018, asserting a breach of contract claim. (This claim was not governed by ERISA.)

The Prudential policy stated that “[Kuber] can start legal action regarding his claim 60 days after proof of claim has been given and up to 3 years from the time proof of claim is required.”  The policy also required that Kuber provide proof of claim “no later than 90 days after [his] elimination period ends.”

ISSUE: Whether Kuber’s claim was time-barred by the contractual limitations provision?

DISTRICT COURT HELD: Kuber’s claim was time-barred by the contractual limitations provision.


  1. Choice of law: “Sitting in diversity, we apply the forum state’s choice-of-law rules to decide whether a choice of law provision applies…. We see nothing in Florida policy that conflicts with Delaware law here.  So Delaware law governs our analysis of the limitation provision.”  Op. at 4.
  2. Enforcement of the contractual limitations provision: “The policy’s limitation provision is unambiguous….[I]n a normal case (like this one) the three year clock starts running 90 days after his elimination period ends. And that time limitation is reasonable here.”  Op. at 5.
  3. “Applying the limitation provision’s plain meaning, we reach the same conclusion as the district court.  Kuber allegedly stopped working September 18, 2012.  His elimination period ended 180 days later—March 17, 2013.  The policy thus obligated him to provide proof of claim 90 days after that—June 15, 2013.  Skip three years and you land on June 15, 2016.  Kuber filed suit in December 28, 2018—over 30 months late.  His claim is time-barred.”  Op. at 5.