Articles Posted in ERISA

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NCMC filed suit alleging that Aetna underpaid out-of-network providers like NCMC in violation of the Employee Retirement Income Security Act of 1974 (ERISA) and Texas law. Aetna counterclaimed, alleging that NCMC fraudulently and negligently misrepresented its billing practices by routinely waiving patient responsibilities yet billing Aetna for the total out-of-network cost. The Fifth Circuit held that Aetna's reliance on any alleged misrepresentation by NCMC was not justifiable and Aetna failed to establish a conflict in substantial evidence on this element of its fraud and negligent representation claims; any error in excluding Aetna's damages expert was harmless, and the district court did not abuse its discretion in excluding evidence of physician compensation; the district court abused its discretion by denying Aetna leave to amend without providing reasons; but denial of leave to amend was warranted because Aetna's counterclaims were untimely and unduly prejudicial to NCMC. In regard to NCMC's cross-appeal, the court held that any error in denying NCMC's motion to compel was harmless; the district court therefore did not err in granting Aetna's Rule 52(c) motion for judgment as a matter of law; but the district court's order denying attorney fees must be vacated and remanded for an explanation. Accordingly, the court affirmed in part, reversed in part, and remanded. View "North Cypress Medical Center Operating Co. v. Aetna Life Insurance Co." on Justia Law

Posted in: ERISA

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The Fifth Circuit affirmed the district court's dismissal of plaintiff's third amended complaint for failure to state a claim. Plaintiff, a former employee of Idearc, Inc., alleged that defendants breached their duties of loyalty and prudence as Employee Retirement Income Security Act (ERISA) fiduciaries. The court held that the district court properly dismissed plaintiff's substantive duty-of-prudence claim in light of Fifth Third Bancorp v. Dudenhoeffer; plaintiff's duty-of-prudence claim could not rest solely on defendants' procedural failings; and plaintiff's allegations did not give rise to a plausible inference that defendants' concern about the stock price was self-serving. View "Kopp v. Klein" on Justia Law

Posted in: ERISA

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The Hospital filed suit against insurance companies and third party plan administrators, alleging various claims under the Employee Retirement Income Security Act (ERISA). The Fifth Circuit held that the hospital sufficiently pleaded its claims for ERISA plan benefits and state law breach of contract, and thus reversed the dismissal of these claims. The court remanded for the district court to consider these two claims, as well as the claim for attorneys' fees. The court affirmed the dismissal of the Hospital's ERISA claims under 29 U.S.C. 1132(a)(3) and the denial of leave to amend the complaint out of time. View "Innova Hospital San Antonio LP v. Blue Cross & Blue Shield of Georgia" on Justia Law

Posted in: ERISA

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Business groups challenged the “Fiduciary Rule” promulgated by the Department of Labor (DOL) in April 2016. The Rule is a package of seven different rules that broadly reinterpret the term “investment advice fiduciary” and redefine exemptions to provisions concerning fiduciaries that appear in the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and the Internal Revenue Code, 26 U.S.C. 4975. The business groups alleged the Rule’s inconsistency with the governing statutes; DOL’s overreaching to regulate services and providers beyond its authority; DOL’s imposition of legally unauthorized contract terms to enforce the new regulations; First Amendment violations; and the Rule’s arbitrary and capricious treatment of variable and fixed indexed annuities. The Fifth CIrcuit vacated the district court’s rejection of all of those challenges. DOL’s interpretation of “investment advice fiduciary” relies too narrowly on a purely semantic construction of one isolated statutory provision and wrongly presupposes that the statutory provision is inherently ambiguous. Congress intended to incorporate the well-settled meaning’” of “fiduciary.” In addition, the Fiduciary Rule renders the second prong of ERISA’s fiduciary status definition in tension with its companion subsections. DOL therefore lacked statutory authority to promulgate the Rule with its overreaching definition of “investment advice fiduciary.” View "Chamber of Commerce of the USA v. United States Department of Labor" on Justia Law

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The Fifth Circuit granted en banc review of this case to reconsider Pierre v. Conn. Gen. Life Ins. Co., 932 F.2d 1552, 1562 (5th Cir. 1991), and to determine the default standard of review that applies when a beneficiary challenges a plan denial based on a factual determination of ineligibility. The court held that the Texas insurance code provision only renders discretionary clauses unenforceable, but does not attempt to prescribe the standard of review for federal courts deciding Employee Retirement Income Security Act (ERISA) cases. The court overruled Pierre and held that Firestone Tire & Rubber Co. v. Bruch's, 489 U.S. 101, 115 (1989), default de novo standard applied when the denial was based on a factual determination. The court held that Vega v. National Life Insurance Services, Inc., 188 F.3d 287 (5th Cir. 1999), will continue to provide the guiding principles on the scope of the record for future cases that apply de novo review to fact-based benefit denials. Therefore, the court vacated and remanded for the district court to apply the de novo standard of review. View "Ariana M. v. Humana Health Plan of Texas, Inc." on Justia Law

Posted in: ERISA

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The Fifth Circuit granted en banc review of this case to reconsider Pierre v. Conn. Gen. Life Ins. Co., 932 F.2d 1552, 1562 (5th Cir. 1991), and to determine the default standard of review that applies when a beneficiary challenges a plan denial based on a factual determination of ineligibility. The court held that the Texas insurance code provision only renders discretionary clauses unenforceable, but does not attempt to prescribe the standard of review for federal courts deciding Employee Retirement Income Security Act (ERISA) cases. The court overruled Pierre and held that Firestone Tire & Rubber Co. v. Bruch's, 489 U.S. 101, 115 (1989), default de novo standard applied when the denial was based on a factual determination. The court held that Vega v. National Life Insurance Services, Inc., 188 F.3d 287 (5th Cir. 1999), will continue to provide the guiding principles on the scope of the record for future cases that apply de novo review to fact-based benefit denials. Therefore, the court vacated and remanded for the district court to apply the de novo standard of review. View "Ariana M. v. Humana Health Plan of Texas, Inc." on Justia Law

Posted in: ERISA

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The Fifth Circuit affirmed the district court's dismissal of a putative class action alleging that the RadioShack board of directors and plan administrative committee breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Plaintiffs alleged that defendants violated ERISA by allowing plan participants to invest in RadioShack stock despite the company's descent into bankruptcy. The court held that the complaint did not plausibly state any fiduciary claims with respect to the Plan and that plaintiffs did not have standing to bring claims regarding the Puerto Rico Plan. View "Singh v. RadioShack Corp." on Justia Law

Posted in: ERISA

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Cigna filed suit against Humble seeking overpayments and Humble counterclaimed under the Employee Retirement Income Security Act (ERISA) and Texas state common law. The district court concluded that Cigna's claims and defenses failed as a matter of law, and awarded Humble damages and penalties. The Fifth Circuit held that the district court failed to apply the required abuse of discretion analysis; other courts have upheld Cigna's interpretation of its insurance plans; and there was substantial evidence supporting Cigna's interpretation. Therefore, the court reversed the district court's judgment. The court also held that Cigna was not a named plan administrator and reversed the district court's award of ERISA penalties against Cigna. The court vacated in part the district court's dismissal of Cigna's claims against Humble and vacated the district court's award of attorneys' fees, remanding for further consideration. View "Connecticut General Life Insurance Co. v. Humble Surgical Hospital, LLC" on Justia Law

Posted in: ERISA, Insurance Law

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Babin, employed by Quality, developed carpal tunnel syndrome and had several surgeries. Three months after he returned to work, his employment ended. Babin participated in Quality’s employee benefit plan, which provided short- and long-term disability benefits, governed by the Employee Retirement Income Security Act (ERISA). Babin submitted a short-term disability benefits application to Standard, Quality’s insurer. In February 2013, Standard denied Babin’s claim because it had not received a necessary form from Quality. Babin alleges that he provided that form to Quality, which failed to complete it. In February 2014, Babin’s counsel asked Quality for disability plan documents. Babin claims that Quality did not send those documents before he filed suit, that he believed that the short-term plan provided six months of benefits, and, had he known that the plan only provides three months of benefits, he would have applied for long-term benefits; Quality’s failure to produce the documents caused him to miss the window for long-term benefits. Babin filed suit 20 months after requesting the documents, alleging failure to produce documents and failure to pay benefits. The parties settled the denial-of-benefits claim. The court held that Louisiana’s one-year prescriptive period for delictual claims applies to 29 U.S.C. 1132(c) claims, so Babin’s claim was time-barred. The Fifth Circuit affirmed, rejecting Babin’s argument that Louisiana’s 10-year prescriptive period for personal actions should govern his claim for failure to produce documents. View "Babin v. Quality Energy Services, Inc." on Justia Law

Posted in: Civil Procedure, ERISA

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The Fifth Circuit affirmed the district court's dismissal of plaintiff's claims, holding that the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132, preempted state law claims. The court held that, although the savings clause preserves a role for certain state laws that regulate insurance, state claims that provide a separate vehicle for seeking benefits from an ERISA plan remain preempted as such claims must be brought under ERISA's civil enforcement provision. The court explained that, otherwise, the exclusivity and uniformity of that federal remedy would be undermined. In this case, because plaintiff's claim for benefits must be brought under federal law, the district court correctly dismissed her state law claims seeking the same relief. Furthermore, the availability of that statutory remedy under section 502 of ERISA also defeated plaintiff's claim for equitable relief under federal law. View "Swenson v. United of Omaha Life Insurance Co." on Justia Law

Posted in: ERISA