What happens in Washington when your employee fails to take a meal break?

Is the employer “strictly liable” for a statutory wage/hour violation?  NO.

This new Washington Supreme Court gives helpful guidance on avoiding wage/hour liability for missed meal breaks. Brady v. Autozone Stores, Inc., _ Wn. 2d _ (June 29, 2017).

FACTS: This class action in federal court sought unpaid wages (under Washington law) for meal breaks allegedly “withheld from employees.” The Washington Court accepted review of certified questions.

Washington Supreme Court HELD/RATIONALE:

  1. Is an employer automatically liable if an employee misses a meal break? NO.
  • “Employees shall be allowed a meal period of at least thirty minutes which commences no less than two hours nor more than five hours from the beginning of the shift….No employee shall be required to work more than five consecutive hours without a meal period.” Op. at 3-4. (WAC 296-126-092).
  • “[E]mployees may choose to waive the meal period requirements….The Department ‘recommends,’ but does not require, obtaining a ‘written request’ from an employee who chooses to waive the meal period.” Op. at 4.
  • But “[e]mployees may not waive their right to a rest period.” Op. at 4 (Emphasis in original). (Admin Policy ES.C.6, Section 9).
  1. Does an employer have an affirmative duty to ensure employees take their meal breaks? YES.
  • Washington law “imposes a mandatory obligation on the employer…to provide meal periods and rest breaks and to ensure the breaks comply with [Washington law].” Op. at 5.
  • The Court rejected California’s more employer-friendly standard (of a similar provision) that an employer merely has to provide a  reasonable opportunity to take the meal break, without impeding or discouraging the employee from doing so. Op at 7.
  • Instead, under Washington law, an employee establishes a prima facie case of a meal break violation if the employee “did not receive a timely meal break.” Op. at 7.
  • Then, the employer has the burden to prove that “no violation occurred or a valid waiver exists.” Op. at 7.

KEY TAKE AWAY: Washington is tougher than California on meal breaks. Employers should continue to ensure that employees take required meal breaks. If an employee elects to waive that right, then the best practice is to obtain a written waiver signed by the employee.

In a significant victory for insurers, the Washington Supreme Court interpreted the Insurance Fair Conduct Act (IFCA), RCW 48.30.015, for the first time and held that IFCA does not authorize an independent cause of action for policyholders to sue their insurers for mere procedural violations of insurance claims-handling regulations. The decision in Perez-Crisantos v. State Farm Fire & Casualty Co., – P.3d –, 2017 WL 448991 (Feb. 2, 2017), finally resolves a longstanding debate in Washington insurance law and narrows the types of claims available under IFCA.

In 2007, the Washington Legislature enacted and the voters ratified IFCA. The purpose of IFCA was to provide insureds with another legal resource against their insurer for wrongful denials. By its terms, IFCA allows a policyholder “who is unreasonably denied a claim for coverage or payment of benefits” to sue for his or her “actual damages.”  Unlike traditional bad faith claims, IFCA claims also offer the extra incentive of enhanced damages by allowing the court to award up to triple damages, as well as attorney’s fees and costs. An award of triple damages is conditioned on a finding that either the insurer acted unreasonably in denying a claim or benefits, or the insurer violated one or more of several listed insurance regulations. The risk of a triple damages award can dramatically expand an insurer’s exposure and gives policyholders leverage in coverage disputes.

The “vexing” question resolved in Perez-Crisantos asked whether IFCA permitted insureds to sue their insurers for violations of the listed insurance regulations even in the absence of an unreasonable denial of coverage or benefits. Since IFCA’s enactment, the Washington Supreme Court had never interpreted the statute, and the statutory language is not a model of clarity. Without guidance from the state’s highest court, Washington’s federal courts split on this question. On one side of the debate, the federal courts in Western Washington held that no cause of action existed for regulatory violations alone. See Cardenas v. Navigators Ins. Co., 2011 WL 6300253, at *6 (W.D. Wash. 2011). On the other side of the debate, several federal courts in Eastern Washington held that IFCA provides an implied cause of action for regulatory violations to serve the underlying intent of the statute. See Langley v. GEICO Gen. Ins. Co., 89 F. Supp. 3d 1083 (E.D. Wash. 2015).

This question had serious implications for insurers because it potentially opened the door to awards of triple damages and attorney’s fees for procedural regulatory violations, even in the absence of coverage. For example, one of the regulations listed in IFCA requires insurers to respond to pertinent communications within 10 days. Under the approach followed by Langley, an insurer who responded on Day 11 could potentially be exposed to liability under IFCA, regardless of the substantive coverage issues.

The Washington Supreme Court settled this debate in Perez-Crisantos.  In an opinion by Justice Steven C. González, the court reviewed IFCA’s statutory text and recognized that while it creates a cause of action for insureds who were unreasonably denied coverage or benefits, the text plainly did not state that it was creating an independent cause of action for regulatory violations. Next, the court turned to the legislative history to search for clues about the underlying intent. In particular, Justice González found that the voters pamphlet strongly suggested that IFCA exposure would arise only for unreasonable denials of coverage, and that voters would not have known they were authorizing a second type of claim. Finally, the court noted it was doubtful the legislature would have intended to create an independent claim for violations of certain of the listed regulations, many of which impose minor, technical requirements that one would not expect to give rise to litigation if an insured was not also unreasonably denied coverage or payment of benefits. Therefore, Perez-Crisantos concluded: “IFCA does not create an independent cause of action for regulatory violations.”

Perez-Crisantos provides important clarity to Washington insurance law and restricts the grounds upon which policyholders can attempt to assert claims under IFCA.

For more information about IFCA and insurance matters, please contact the Insurance Practice Group and London Insurance Group at Lane Powell.

Alaska’s prompt pay statute—which requires insurers to pay benefit claims within 30 days of submission—is preempted by federal laws governing employer-provided benefits and benefits for government workers, a federal judge ruled.

The case is Zipperer v. Premera Blue Cross & Blue Shield of Alaska, 2016 BL 265226, D. Alaska, No. 3:15-CV-00208 JWS, 8/16/16. (Kudos to my partner, Gwendolyn Payton, on this big win).

The judge’s Aug. 16 decision is the latest in a string of decisions striking down or scaling back state prompt pay laws as preempted by the Employee Retirement Income Security Act and the Federal Employees Health Benefits Act.

Earlier this year, a federal appeals court partly struck down Texas’s prompt pay law under the FEHBA and found it inapplicable to self-funded ERISA plans. Georgia’s prompt pay law was partly struck down as ERISA-preempted by a different appeals court in 2014. A district judge in Illinois reached a similar conclusion with respect to that state’s law in 2014.

The Employee Benefits Security Administration (EBSA) announced plans to publish, on November 18, 2015, new proposed claims procedures for handling ERISA-governed disability benefits.  The pdf can be accessed HERE.

Comments are encouraged and must be submitted within 60 days of publication of the proposed new claims procedures.

The proposed new claims procedures apparently will address the following:

(1) claims and appeals procedure;

(2) benefit denial notices, requiring a “full discussion” why the plan denied the claim and the standards behind the decision;

(3) claimants access to their “entire claim file” and how claimants can present evidence and testimony during the review process;

(4) how claimants should be notified of an appeal decision, detailing an opportunity to respond to any new evidence reasonably in advance of an appeal decision;

(5) details related to final denials at the appeals stage. The rules will prohibit decisions be based on new or additional rationales, unless claimants first are given notice and a fair opportunity to respond;

(6) what happens when plans fail to follow claims processing rules: the claimant will be deemed to have exhausted administrative remedies available under the plan, unless the violation was the result of a “minor error” and other specified conditions are met;

(7) certain rescissions of coverage are treated as adverse benefit determinations, thereby triggering the plan’s appeals procedures; and

(8) how notices should be written in a “culturally and linguistically appropriate” manner.


You know that patients typically assign rights under a health insurance plan to the provider of medical services. This is accomplished by signing an assignment form upon intake/admission. Then, the healthcare provider sends the claim directly to, and receives reimbursement directly from, the patient’s health insurance company for services rendered to the patient.

But what happens when the ERISA-governed health insurance plan has an anti-assignment provision?

Anti-assignment provisions are enforceable. As a result, health care providers lack standing to bring a claim for reimbursement.

The recent case of University of Wisconsin Hospitals v. Aetna Health & Life Ins. Co., 2015 WL 6736983 (W. D. Wis., November 3, 2015) highlights the point.

FACTS: Chandra Aschenbrener, an insured under an ERISA-governed Aetna health insurance policy, incurred $16,893 in hospital expenses. The plan specified that benefits may not be assigned to another party, including the right to bring legal action. The University of Wisconsin Hospital sued Aetna, seeking reimbursement for medical expenses.

COURT HELD: Anti-Assignment Provisions Enforceable.

  1.  “Courts are to strictly enforce the terms of ERISA plans where possible.” Op. at 5.
  2.  “[I]n order for a beneficiary to collect a plan’s benefits, the assignment by a participant to the beneficiary must comport with the insurance plan.” Op. at 5.
  3. “[C]ircuits have overwhelmingly held that anti-assignment clauses in ERISA employee welfare benefit plans are enforceable, and therefore medical provider plaintiffs lack standing to pursue payment as ‘beneficiaries.’” Op. at 8.
  4.  “In order for [the hospital] to become a beneficiary, Aschenbrener must designate it as such. The plan, however, specifies unambiguously that the benefit rights may not be assigned….The plan also expressly states that a direction to pay a provider, directly or otherwise, is not an assignment of any right and that a direction to pay does not extend to a provider any legal right to initiate court proceedings.” Op. at 8 (emphasis in original).

KEY TAKE AWAY: Anti-assignment clauses in ERISA employee welfare benefit plans are enforceable. As a result, medical providers lack standing to pursue payment as “beneficiaries.” See, e.g., Physicians Multispecialty Grp. v. Health Care Plan of Horton Homes, Inc., 371 F.3d 1291, 1295 (11th Cir. 2004) (“an assignment is ineffectual if the plan contains an unambiguous anti-assignment”) (citing cases from the First, Ninth and Tenth Circuits); Letourneau Lifelike Orthotics & Prosthetics, Inc. v. Wal–Mart Stores, Inc., 298 F.3d 348, 353 (5th Cir. 2002) (plaintiff lacked standing under ERISA because anti assignment clause was enforceable).

You already know that in March 2015, the 6th Circuit issued an en banc decision rejecting disgorgement of profits claims. Rochow v. Life Ins. Co. of N. Am., 780 F.3d 364, 372 (6th Cir. 2015)(en banc) (rejecting $3.8 million disgorgement claim against Life Insurance Company of North America  as “an impermissible duplicative recovery”).

But the reality is that plaintiffs in ERISA cases keep trying to assert breach of fiduciary duty/disgorgement claims.  We are seeing an influx of these claims being asserted in the Ninth Circuit.

Here’s a strategic early play in these cases:  move to dismiss the breach of fiduciary duty/disgorgement claim early on.

This recent case highlights the point.  Gluc v. Prudential Insurance Co., 2015 WL 6394522 (W. D. Ky. October 22, 2015)(PDF).

FACTS: Judith Gluc sought ERISA-governed long term disability benefits. Prudential paid long term disability benefits for two years, and then discontinued benefits. Gluc then brought suit  to recover benefits. She also alleged breach of fiduciary duty and sought disgorgement of “earnings Prudential accumulated as a result of its delay in paying her benefits.”

Gluc alleged a laundry list of purported acts which breached fiduciary duty. She claimed that Prudential’s claims process: (a) was designed to “systematically delay claim decisions”; (b) encouraged personnel to “automatically accept the opinions of Prudential’s paid medical reviewers”; (c) placed Prudential’s financial interests “ahead of its participants”; and, (d) improperly offset Social Security benefits.

TRIAL COURT HELD:  Rule 12(c) Motion to Dismiss Breach of Fiduciary Duty/Disgorgement Claim GRANTED.

  1. “[W]here 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 would normally not be ‘appropriate.’” Op. at 4.
  2. “[I]f Section 1132 provides a remedy for Gluc’s alleged injury, her claims for equitable relief are not viable.”  Op. at 5.
  3. “Gluc alleges numerous flaws in Prudential’s claims process, but ultimately, the only injury she purports to have suffered is loss of benefits—an injury Section 1132(a)(1)(B) is designed to address.”  Op. at 5.
  4. “[T]he ‘accumulated earnings’ Gluc seeks in her disgorgement claim may be recovered through an award of prejudgment interest, which the Court has discretion to make.”  Op. at 5.
  5. As to Gluc’s “systemic flaws” allegations, “this is not a class action…[and] she does not allege facts to support a claim of plan-wide wrongdoing.  Rather the facts alleged indicate a problem with Prudential’s processing of a single claim.”  Op. at 5-6.

Moving to dismiss these claims early can help posture the claim for early, reasonable resolution.

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

But what happens when the ERISA plan and the insurer are defendants, and the plan disagrees with the insurer’s denial of ERISA-governed disability benefits?

Can the ERISA plan, a nominal defendant, recover attorney fees against the insurer? YES.

This new case illustrates the point: Micha v. Sun Life and Group Disability Benefits Plan for Gynecologic Oncology Associates Partners, LLC, 2015 WL 5732124 (S. D. Cal., September 30, 2015).

FACTS. Group Disability Benefits Plan is an ERISA plan and purchased a disability policy from Sun Life. When Sun Life denied a disability claim brought by John Micha, he brought suit against Group Disability and Sun Life. Group Disability filed an answer admitting Micha’s disability allegations, and then sought indemnification from Sun Life.

After the matter was settled, Group Disability brought a motion for $101,000 in attorney fees against Sun Life.

ISSUE: Whether the ERISA plan can recover attorney fees as a “prevailing party” when the insurer settles a claim by a beneficiary?

HELD: Yes for fees incurred during the litigation on the merits; NO for fees incurred on the appeal.

  1. Under 29 U.S.C. 1132(g), the court in its discretion may allow reasonable attorney fees. “To qualify for an award of attorney’s fees, a party must have “some success on the merits.'” Op. at 4.
  2. The Ninth Circuit had previously determined that Group Benefits, an ERISA plan and a nominal defendant, can be eligible for an award of attorney’s fees under ERISA. Op. at 4.
  3. “If a party has met the burden of showing some success on the merits, the court must examine five factors set forth in Hummell…. None of the Hummell factors is ‘necessarily decisive.’” Op. at 4.
  4. Although Sun Life was required to pay Group Disability’s attorney’s fees for the underlying lawsuit, Sun Life was not required to pay attorney fees arising out of the appeal of that ruling because the appeal presented a novel legal issue. Op. at 6.

KEY TAKE AWAY: This developing line of cases should be considered early on in the case. A proactive approach with the Plan is advised, to avoid the risk of paying for the Plan’s attorney fees.

You already know that when a Summary Plan Description conflicts with ERISA plan language, the ERISA plan language controls.

But what happens when all you have is a Summary Plan Description (SPD), and… no ERISA Plan? Can the SPD become the Plan, and authorize subrogation reimbursement? YES.

Here’s the case of Board of Trustees/National Elevator Health Plan Benefit v. Moore, _ F.3d _ (6th Cir. August 25, 2015) (PDF) (Subrogation: Language in Summary Plan Description authorized required reimbursement of medical expenses paid by Plan).

FACTS: The ERISA plan paid $34,204 in medical expenses for injuries Kyle Moore sustained in an accident. After Moore settled his tort claim for $500,000, the ERISA plan sought reimbursement. Moore claimed, however, that there was no ERISA plan language requiring reimbursement. The only document submitted in the record was the Summary Plan Description (SPD), which did provide require reimbursement.

ISSUE: Is the Summary Plan Description a Controlling Plan Document Requiring Subrogration Reimbursement?


  1. “[I]f the language in a SPD conflicts with the language in an ERISA plan, a district court is required to enforce ‘the terms of the plan.’” Op. at 6.
  2. “Nothing in Amara prevents a document from functioning both as the ERISA plan and an SPD, if the terms of the plan so provide.” Op. at 7 (Emphasis in original).
  3. “[A]n SPD describing employee benefits that anticipate the existence of a Plan, but is issued long in advance of the Plan, constitutes the actual plan, as well as a summary of a plan ‘that is nowhere else in writing.’” Op. at 8.
  4. The 3rd Circuit and the 11th Circuit (in unpublished decisions) have also recognized that a SPD can function as the controlling ERISA plan “in the absence of a separate plan document.” Op. at 7-8.

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.

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.