Your ERISA Watch – Week of March 19, 2025
Although we celebrated St. Patrick’s Day this week, no one case had the luck of the Irish to be crowned our Notable Decision. Nevertheless, we should all raise a pint to the federal courts, who were busy this week issuing plenty of interesting decisions, all of which you can read about below.
They include a case applying the Supreme Court’s recent decision in Badgerow v. Walters regarding federal jurisdiction over arbitration awards (Gupta v. Louisiana Health Serv. & Indem. Co.), a dismissal of a putative breach of fiduciary duty class action against Cisco Systems (Bracalente v. Cisco Sys.), a decision addressing whether documentation generated in an external medical review is part of the administrative record (Noelle E. v. Cigna Health & Life Ins. Co.), yet another in a line of cases challenging Occidental’s interpretation of its Change of Control Severance Plan after acquiring Anadarko Petroleum (Miller v. Anadarko Petroleum Corp. Change of Control Severance Plan), two attorney’s fee awards (Thomas R. v. Hartford Life & Accident Ins. Co. and DeMarinis v. Anthem Ins. Cos.), a ruling denying fees to prevailing defendants (Raya v. Barka), and of course, no Your ERISA Watch would be complete without several preemption decisions.
With any luck one of these rulings will be your proverbial pot of gold at the end of the ERISA rainbow. If not, we’ll be back next week with more cases.
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Arbitration
Fifth Circuit
Gupta v. Louisiana Health Serv. & Indem. Co., No. 24-404-JWD-SDJ, 2025 WL 817989 (M.D. La. Mar. 13, 2025) (Judge John W. deGravelles). In Badgerow v. Walters, 142 S. Ct. 1310 (2022), the Supreme Court upended the way federal district courts assessed whether they had jurisdiction over challenges to arbitration decisions. Before Badgerow, most courts used a “look-through” approach, similar to the way they assessed whether arbitration could be compelled. Under that approach, district courts examined the arbitration award to determine whether it resolved a federal claim, and if so, they would then exercise federal question jurisdiction over a petition regarding that award. But in Badgerow the Supreme Court rejected the look-through approach, ruling instead that federal jurisdiction exists over a post-arbitration petition only if the face of the application shows federal law entitles the applicant to the relief they seek. The Badgerow decision played a decisive role in this decision dismissing a lawsuit brought by a physician seeking to vacate an arbitration award against him. The arbitrator awarded Blue Cross and Blue Shield of Louisiana a total of $129,223.35 against Dr. Gupta for breaching his physician agreement. Dr. Gupta sought to vacate that award. He argued that the arbitrator “so imperfectly executed her arbitral powers that ‘a mutual final and definite award upon the subject matter submitted was not made’ pursuant to 9 U.S.C. § 10(a)(4),” and he asserted a Section 502(a)(3) claim for breach of fiduciary duty against Blue Cross for violating ERISA. This claim sought to hold Blue Cross responsible for failing “to give notice to the patients whose claims the insurers are in essence denying, months after the payment of benefits, by seeking to recoup those payments made previously on the patients’ behalf.” The complaint alleged that the insurer defrauded the arbitrator and violated ERISA in certain assertions it made during the arbitration proceeding. Blue Cross responded that “Badgerow prevents a federal court from looking through to the underlying controversy to find a basis of jurisdiction, and Plaintiffs have failed to show an independent basis for this Court’s subject matter jurisdiction,” and accordingly moved to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). The court agreed: “Plaintiffs’ claim is clearly meant to vacate the arbitration award, which only raises state law issues of enforceability.” It stressed that Dr. Gupta’s jurisdictional argument was essentially that ERISA preempted the insurance company’s underlying claim at issue in the arbitration. Additionally, the court emphasized that the doctor’s challenge to the arbitration rested on arguments asserting the failings of the arbitrator and misconduct during arbitration, not truly on claims that Blue Cross breached a fiduciary duty it owed to him. In sum, the court concluded that the asserted ERISA claim had no bearing on the jurisdiction of the district court to assess the validity of the arbitral award or to vacate it. Therefore, the court agreed with defendant that it lacked subject matter jurisdiction over the litigation. Accordingly, the court granted the motion to dismiss.
Attorneys’ Fees
Second Circuit
Thomas R. v. Hartford Life & Accident Ins. Co., No. 21-cv-1388 (JGK), 2025 WL 754123 (S.D.N.Y. Mar. 10, 2025) (Judge John G. Koeltl). This action arose after a son was denied life insurance benefits by Hartford Life and Accident Insurance Company. On July 19, 2022, the court denied the parties’ cross-motions for summary judgment. It concluded that the contractual terms at issue, including whether the deceased mother was a “Full-time Active Employee,” and the date on which she was “hired,” were ambiguous and that both parties offered reasonable constructions of them. Accordingly, the court held that issues of fact precluded summary judgment and advised the parties to settle the case. They did so on November 6, 2024. However, the issue of attorneys’ fees for plaintiffs’ counsel remained unresolved, and this motion for attorneys’ fees under Section 502(g)(1) followed. Hartford did not dispute that plaintiffs obtained some degree of success on the merits. Nevertheless, it argued that the court should consider the Second Circuit’s Chambless factors, which it contended did not support an award of fees. The court found it unnecessary to evaluate the Chambless factors, and instead exercised its discretion to award plaintiffs reasonable attorneys’ fees. Plaintiffs moved for $245,134.12 in attorneys’ fees and $518.44 in costs. The attorneys at Riemer Hess LLC requested the following hourly rates: $925 per hour for Scott M. Riemer; $750 per hour for Jennifer Hess; $600 per hour for Ryan McIntyre; $600 per hour for Matthew Maddox; $500 per hour for Samatha Wladich; $450 per hour for Jacob Reichman; and $300-$385 per hour for the three paralegals who worked on the case. Plaintiffs attest that counsel spent 451.2 hours of work on the case. However, in anticipation of the court potentially finding the number of hours excessive, they voluntarily reduced their hours across the board by 10% “to offset any possible inefficiency, duplication of efforts, or failure to delegate certain tasks.” Hartford argued that the fees requested were unreasonable. It complained that the requested fee amount was higher than the $125,000 value of the life insurance benefits at issue. It also claimed that the hourly rates charged by the attorneys were excessive and that the number of hours spent on the relatively simple life insurance action was unreasonable. To begin, the court rejected defendant’s position that any award of attorneys’ fees should not exceed the benefit amount and is per se unreasonable. In the ERISA context, the court said the entire purpose of the fee-shifting provision is to enable plaintiffs to pursue in court benefits to which they are entitled, even when the amount is relatively low. Adopting Hartford’s position of capping fee awards at the benefit amount sought would obviously frustrate that statutory goal. The court was thus unwilling to reduce the requested fee award simply because it was greater than the amount in controversy. Next, the court assessed whether it found the requested hourly rates reasonable. Although it noted that over 150 of the law firm’s clients have agreed to pay these hourly rates and two recent ERISA cases in the district found similar rates for the same team of lawyers and paralegals reasonable, it nevertheless concluded that a 10% reduction was fair as it was closer to the prevailing market rate in the relevant community. Taking a look at the billed hours next, the court agreed with Hartford that they were excessive in many instances. For example, the court could not understand why experienced ERISA practitioners would spend over ten full business days, nearly 130 hours, preparing a response to defendant’s trial brief and proposed findings of fact and conclusions of law. The court therefore decided that it would add an additional 10% reduction on top of the voluntary 10% reduction offered by plaintiffs. Applying these reductions, the court was left with its final total award of $194,756.58. Finally, the court approved the $518.44 in costs comprised of the filing fee, serving costs, transcript fees, and mailing charges.
Third Circuit
DeMarinis v. Anthem Ins. Cos., No. 3:20-CV-713, 2025 WL 745604 (M.D. Pa. Mar. 7, 2025) (Judge Robert D. Mariani). Plaintiff Chris DeMarinis filed this action against Anthem Insurance Companies, Inc. claiming it improperly denied healthcare benefits and breached its fiduciary duties in connection with claims for coverage of his sixteen-year-old son’s care at the Kennedy Krieger Institute inpatient neurobehavioral unit to treat seizures, macrocephaly, hypokinetic syndrome, autism, disruptive behavior disorder, OCD, and a severe intellectual disability. On April 10, 2024, the court issued an order partially granting summary judgment in favor of Mr. DeMarinis and against Anthem. In that decision the court concluded Anthem’s denials were arbitrary and capricious, and riddled with errors and procedural anomalies. Based on these findings, the court concluded that the proper remedy was an award of benefits, but remanded to Anthem to determine the amount. (Your ERISA Watch covered the court’s summary judgment decision in our April 17, 2024 issue.) Mr. DeMarinis subsequently moved for attorneys’ fees and costs under Section 502(g)(1), seeking fees on a contingency basis, with a pending amount of $51,704.60. He also requested costs in the amount of $2,056.52. Anthem objected to a fee award. Although it did not dispute that Mr. DeMarinis achieved some degree of success on the merits, it nevertheless maintained that the Third Circuit’s Ursic factors – (1) the offending party’s culpability or bad faith; (2) its ability to satisfy an award of fees; (3) the deterrent effect of any fee award; (4) benefit conferred upon the members of the plan as a whole; and (5) the relative merits of each parties’ positions – demonstrated that he is not entitled to fees and costs under ERISA. The court explained why it disagreed with Anthem. First, it said that Anthem was culpable of wrongfully deciding that the child’s treatment at the neurobehavioral unit was not medically necessary without providing any valid support for that position. Second, the court rejected Anthem’s argument that it is the plaintiff’s burden to prove that a nationwide insurance company has the ability to satisfy an award of fees. Third, the court agreed with Mr. DeMarinis that an award of attorneys’ fees will serve a valuable deterrent effect and that in the absence of an award a non-prevailing insurance company would lose nothing but the amount it would have had to pay without litigation. Fourth, the court found that Mr. DeMarinis clearly had the more meritorious legal position as judgment was entered in his favor under a deferential review standard. Although the court could not necessarily see what benefit its summary judgment decision conferred on other members of the plan, it stated that this neutral factor did not weigh against a fee award. Accordingly, the court concluded that the Ursic factors supported an award of fees in this case. The court then discussed the fee award calculation. As a preliminary matter, it declined to award contingent attorneys’ fees because it had no substantive update regarding the contingent fee amount in this case. Instead, the court decided to consider an award of attorneys’ fees under the lodestar method. Anthem did not argue, and the court did not find, that the requested hourly rates of plaintiff’s attorneys Alan C. Millstein and Leily Schoenhaus were unreasonable. Perhaps because of this, the decision did not specify what the requested hourly rates were. Anthem argued that if the court awarded fees, the requested award should be reduced. The court agreed with Anthem that certain deductions were appropriate on vagueness grounds and for block billing. The court applied a total of $9,900 in reductions to the requested award and concluded that Mr. DeMarinis was entitled to an award of $41,804.60 for his counsels’ time. It also awarded him his full requested amount of $2,056.52 in taxable costs. Thus, plaintiff’s motion for fees and costs was granted with these alterations.
Ninth Circuit
Raya v. Barka, No. 19-cv-2295-WQH-AHG, 2025 WL 755939 (S.D. Cal. Mar. 10, 2025) (Judge William Q. Hayes). Pro se plaintiff Robert Raya sued his former employer, Calbiotech, Inc., the company’s 401(k) and pension plans, and three individual defendants alleging they violated several provisions of ERISA in administering the plans and that he was terminated in retaliation for requesting plan documents, seeking benefit information, and speaking with the Department of Labor. Defendants brought counterclaims against Mr. Raya, arguing that he knowingly and voluntarily waived his claims against them after signing a release agreement and accepting payment of $12,500 as consideration for his release of claims. Following a bench trial, the court issued its findings of fact and conclusions of law on August 13, 2024. In that order the court found that Mr. Raya knowingly and voluntarily waived his ERISA claims against defendants, that defendants were entitled to judgment in their favor as to their counterclaim for breach of contract and were entitled to damages in the amount of $12,500, and that defendants were also entitled to judgment on Mr. Raya’s ERISA claims, including for breach of fiduciary duty and retaliatory discharge/interference. In response to that decision, Mr. Raya moved to amend findings and alter or amend judgment. Meanwhile, the Calbiotech defendants moved for an award of $50,000 in attorneys’ fees and $4,321 in costs under ERISA Section 502(g)(1). The court tackled the motion to alter or amend first. The decision painstakingly addressed each of Mr. Raya’s points of contention with the August 13 order and discussed why, even if some of them were mistakes, not one amounted to evidence that the court made a clear error in its findings and conclusions such that it would influence or alter the end results reached by the court in any of its dispositive orders. Accordingly, court denied Mr. Raya’s motion to amend. The court then addressed defendants’ motion for fees. To do so, it considered the Ninth Circuit’s five Hummell factors. First, the court found that Mr. Raya had not brought his litigation in bad faith, and that factor one weighed against an award of fees. Second, the court stated that the record was silent as to Mr. Raya’s ability to satisfy a $50,000 fee award and that this point was neutral. Third, the court said it did not wish to deter others from acting under similar circumstances given the purposes of ERISA and the lack of evidence of bad faith on Mr. Raya’s part. It therefore found this factor too weighed strongly against an award of fees to defendants. Fourth, the court expressed that to the extent the next Hummell factor (whether a fee award would benefit other participants and beneficiaries of an ERISA plan or resolved a significant legal question regarding ERISA) was at all relevant to the present matter, it weighed against an award of fees. Finally, the court found that defendants achieved success as judgment was entered in their favor on all claims and that this factor supported an award of fees. However, after considering all five factors, the court determined that most weighed against a fee award and therefore denied defendants’ motion for fees.
Breach of Fiduciary Duty
Ninth Circuit
Bracalente v. Cisco Sys., No. 22-cv-04417-EJD, 2025 WL 770350 (N.D. Cal. Mar. 11, 2025) (Judge Edward J. Davila). Participants of the Cisco Systems, Inc. 401(k) Plan allege that its fiduciaries breached their duties under ERISA by offering and maintaining a suite of underperforming BlackRock LifePath Index Funds in the plan in this putative ERISA class action. Twice before the court has dismissed plaintiffs’ complaint without prejudice for failure to state a claim. (Your ERISA Watch covered the most recent of these decisions in our May 29, 2024 newsletter.) Broadly, the court held that neither plaintiffs’ allegations of a flawed process or underperformance could be read to plausibly infer that Cisco breached its fiduciary duties under ERISA. Cisco again moved to dismiss. In this decision the court granted the motion, this time with prejudice. In their third amended complaint plaintiffs offered new comparators, called “Dynamic Target Date Funds (TDFs).” They further explained why they believed it was insufficient for Cisco to solely assess the BlackRock Funds by comparing them to their custom benchmark. Finally, plaintiffs added details outlining why the plan’s investment policy statement (“IPS”) “was deficient for lacking any standard by which to evaluate the BlackRock TDFs relative to any alternative investment.” As before, the court found the amendments to the complaint simply didn’t ameliorate its concerns. Beginning with the Dynamic TDFs that the plaintiffs offered as a comparator, the court found that, even though they shared the same investment manager, glidepath, and strategic asset allocation, these fund could not serve as a suitable comparator for the challenged BlackRock funds for three reasons. First, these funds were brand new at the beginning of the relevant period. The court therefore said it was not plausible that prudent fiduciaries subject to the plan’s IPS would have considered them over the BlackRock funds before they had any performance history. Second, plaintiffs failed to plausibly allege the Committee should have known about the availability of the Dynamic TDFs during the relevant timeframe. Third, the total assets under management in the Dynamic TDFs were approximately half of what the Cisco Plan had invested in the BlackRock TDFs. Plaintiffs’ remaining renewed arguments were no more successful. The court expressed that they did not cure the deficiencies identified in the prior order, but instead repeated the same arguments in slightly revised ways. Because plaintiffs tried the same thing again, they achieved the same result. “Nothing in the amended allegations warrant a reconsideration of the Court’s ruling on these issues.” As a result, the court granted Cisco’s motion to dismiss and dismissed the third amended complaint with prejudice.
Disability Benefit Claims
Fourth Circuit
Routten v. Life Ins. Co. of N. Am., No. 5:22-CV-467-FL, 2025 WL 818559 (E.D.N.C. Mar. 13, 2025) (Judge Louise W. Flanagan). This action was originally filed by Kelly Routten under ERISA Section 502(a)(1)(B) against Life Insurance Company of North America (“LINA”) seeking judicial review of defendant’s denial of her claim for long-term disability benefits. LINA denied the claim under the policy’s pre-existing conditions provision, concluding that Ms. Routten received treatment for the same condition, multiple sclerosis, within the pre-existing time frame. Additionally, when Ms. Routten appealed LINA’s denial to dispute its application of the pre-existing conditions provision, LINA included a second independent basis for denial – the claimant cooperation provision – because Ms. Routten failed to provide documents upon request as she was required under the plan. While the litigation was ongoing Ms. Routten died. The court then substituted the administrator of her estate as plaintiff. Two motions came before the court. Plaintiff moved for a bench trial, and LINA moved for summary judgment. Given these two motions, the court was tasked with addressing whether summary judgment or a bench trial was the proper method of adjudication in this case. The Fourth Circuit has held that a bench trial, rather than summary judgment, is the required method of resolving ERISA denial of benefit cases reviewed under a de novo standard. However, the Circuit has not addressed the issue under the abuse of discretion standard, which was relevant here as the plan grants LINA discretionary authority. The court concluded that because the arbitrary and capricious standard of review requires a court to assess a fiduciary’s decision for reasonableness, summary judgment was appropriate to dispose of the benefit decision. Indeed, it said, courts across the country, including in the Fourth Circuit, have adopted the same approach, declining to conduct bench trials when an ERISA denial of benefits is to be reviewed for abuse of discretion. The court therefore denied plaintiff’s motion for a bench trial under Rule 52. The court then turned to LINA’s motion for summary judgment. In its motion LINA argued that its denial “passes muster under the applicable standard of review.” The court agreed. Although it said there may be genuine issues of material fact with regard to LINA’s application of the pre-existing condition provision, there was no dispute about the claimant cooperation provision. Ms. Routten violated it by not cooperating with LINA’s investigation of her claim. “Put simply, perhaps plaintiff was correct about the preexisting condition issue, and perhaps not. But when defendant attempted to resolve that question, plaintiff violated another portion of the plan, which established an independent basis for claim denial. Because defendant’s decision to deny benefits under the claimant cooperation provision was reasonable as a matter of law, defendant’s motion for summary judgment is granted.”
Seventh Circuit
Krueger v. Reliance Standard Life Ins. Co., No. 23-cv-02493, 2025 WL 755252 (N.D. Ill. Mar. 10, 2025) (Judge Andrea R. Wood). Plaintiff Jessica Krueger was employed as a senior HR manager when she began experiencing lightheadedness, dizziness, brain fog, and fatigue. These symptoms were ultimately found to be caused by an excessive heart rate while standing when Ms. Krueger was diagnosed with the autoimmune disorder POTS (postural orthostatic tachycardia syndrome). Ms. Krueger felt unable to continue working. She applied for disability benefits under her employer-sponsored long-term disability plan underwritten by defendant Reliance Standard Life Insurance Company. Reliance denied the claim. It determined that Ms. Krueger’s POTS was a pre-existing condition given that she had a history of tachycardia and migraine headache, and took medications for the rapid heart rate. Reliance therefore determined that Ms. Krueger’s disability was excluded from coverage. Following an unsuccessful administrative appeal, Ms. Krueger initiated this action against Reliance under ERISA Section 502(a)(1)(B), seeking the court’s review of Reliance’s denial of benefits. Ms. Krueger moved for judgment under Federal Rule of Civil Procedure 52, and the court granted her motion in this decision. The majority of the decision focused on whether Ms. Krueger’s POTS was a pre-existing condition excluded from coverage under the policy. The court concluded that it was not because Ms. Krueger’s doctors originally diagnosed her with sinus tachycardia and migraine headaches, not POTS. The court found Reliance “failed to prove by a preponderance of the evidence that Kruger’s tachycardia and migraines were early manifestations of POTS.” For that reason alone, the court stated that it rejected Reliance’s invocation of the policy’s pre-existing condition exclusion. However, it added that even if these separate conditions were in fact misdiagnoses of what turned out to be POTS, that fact alone would still preclude Reliance from denying her benefits under the pre-existing conditions exclusion. “Ultimately,” the court said, “however characterized, the treatment and consultation Krueger received during the lookback period for her diagnoses of inappropriate sinus tachycardia and chronic migraines do not establish that Krueger’s POTS was an excludable pre-existing condition.” This finding did not wholly end the court’s discussion though, as Reliance provided a second, alternative, basis upon which to deny the benefits – that Ms. Krueger failed to prove she met the policy’s definition of total disability. In particular, Reliance argued that Ms. Krueger offered little “objective proof” of her functional limitations. Under de novo review the court disagreed. “Construing ‘satisfactory proof of Total Disability’ in Krueger’s favor, the Court will not privilege objective proof over subjective proof because the Policy does not distinguish between the two. Certainly, the Court cannot reject Krueger’s claim of Total Disability simply because her proof is predominantly or entirely subjective, especially given that her POTS symptoms are largely experienced subjectively.” The court was convinced there was ample evidence that Ms. Krueger’s symptoms left her unable “manage the level of focus needed to think and communicate effectively” in order to perform the material duties of her cognitively demanding job. The court was also of the opinion that Reliance “may have failed to take Krueger’s POTS seriously,” and that it “seemed to be searching for a reason to deny her claim.” The court was thus satisfied from its review of the record that Ms. Krueger was totally disabled under the policy and entitled to the benefits she sought. It thus reversed Reliance’s decision and entered judgment in her favor. Finally, although it signaled its openness to awarding Ms. Krueger prejudgment interest and attorneys’ fees, the court reserved its determination of those matters until after the parties brief these issues.
ERISA Preemption
Second Circuit
Manalapan Surgery Ctr. P.A. v. 1199 SEIU Nat’l Benefit Fund, No. 23-CV-03525 (DG) (JAM), 2025 WL 813610 (E.D.N.Y. Mar. 12, 2025) (Judge Diane Gujarati). Plaintiffs are out-of-network health care facilities that provide outpatient surgery and preventive care services, and have sued the 1199 SEIU National Benefit Fund for breach of contract, unjust enrichment, promissory estoppel, and fraudulent inducement in connection with a series of underpaid claims for services to SEIU members. Defendant moved to dismiss the complaint pursuant to Rule 12(b)(6). It argued that plaintiffs’ state law claims are preempted by ERISA, and that even if they are not, plaintiffs fail to state claims upon which relief may be granted. The court agreed in part and granted the motion to dismiss. Before considering whether the providers stated their claims, the court addressed the threshold issue of ERISA preemption. “Although lacking in detail, the allegations in the Complaint, accepted as true for purposes of the instant Motion, take Plaintiffs’ claims outside the scope of ERISA’s express preemption provision.” The court found that the state law claims, as alleged in the complaint, did not arise from the terms of any ERISA plan. Rather, it found they stem from communications with representatives of the defendant during which it allegedly promised to make usual and customary payments. Resolution of plaintiffs’ claims, moreover, would not affect the terms of any ERISA plan, the administration of any plan, or the relationships among the core entities of ERISA. Thus, the court agreed with plaintiffs that their claims neither relate to or have an impermissible connection with ERISA plans, and therefore that they do not trigger ERISA preemption. Regardless, the court agreed with the Fund that plaintiffs failed to state their claims for various reasons. Specifically, the court: (1) dismissed the breach of contract claim because the complaint failed to plausibly allege the existence of an agreement between the parties; (2) dismissed the unjust enrichment claim because the claim failed to state that defendant was enriched at the providers’ expense; (3) dismissed the promissory estoppel claim for failing to establish a clear an unambiguous promise; and (4) dismissed the fraudulent inducement claim for failure to identify any specific misrepresentation or omission of material fact. Thus, the court granted the motion to dismiss, but did so without prejudice.
Fourth Circuit
Keffer v. Metropolitan Life Ins. Co., No. 5:24-cv-00131-BO-KS, 2025 WL 790916 (E.D.N.C. Mar. 12, 2025) (Judge Terrence W. Boyle). Plaintiff Victor Keffer was employed by Kroger from 1974 to 2013, when he stopped working to undergo the intensive treatments required to treat his colon and liver cancer diagnoses. Mr. Keffer sought to continue the life insurance coverage provided to him by MetLife. He provided the insurer with the necessary information to support his claim of total disability and completed the necessary steps to port his insurance coverage. MetLife approved his request for continuation and the insurance was scheduled to reduce coverage on May 22, 2022. As the date of reduction approached, Mr. Keffer again sought to either continue or convert his life insurance coverage. Unfortunately, he learned, for the first time, that MetLife had never extended his coverage, and it had actually expired on May 2, 2014 – twelve months after the date of his total disability. Mr. Keffer sued, alleging that MetLife’s actions, whether intentional or negligent, violated the North Carolina Unfair and Deceptive Trade Practices Act and the North Carolina Debt Collection Act. MetLife moved to dismiss. It argued that the state law causes of action were preempted by ERISA. The court agreed and granted the motion to dismiss in this decision. Although Mr. Keffer argued against preemption, the court found that his complaint seeks to recover damages from alleged actions taken during the administration and subsequent porting of an ERISA-governed life insurance policy and that these claims emerging from payment obligations and plan terms “are exceedingly similar to ones that have previously been found to be preempted by ERISA.” Accordingly, the court found it would be impossible to resolve the state law claims without interpretation of or reference to the plan and as a result they are completely and expressly preempted by ERISA and governed exclusively by federal law. However, the court is allowing Mr. Keffer to replead his complaint under ERISA’s civil enforcement scheme, and so dismissed the complaint without prejudice.
Fifth Circuit
Broussard v. Exxon Mobil Corp., No. 24-30664, __ F. App’x __, 2025 WL 754536 (5th Cir. Mar. 10, 2025) (Before Circuit Judges Davis, Smith, and Higginson). Plaintiff-appellant Jason Broussard was employed at ExxonMobil for twenty-two years. He sued his former employer following his resignation in 2022, asserting claims for breach of contract and failure to pay vacation and “shift-differential” pay under Louisiana state law. Mr. Broussard participated in ExxonMobil’s ERISA-governed pension plan. After his employment at ExxonMobil ended, Mr. Broussard elected to receive his pension in the form of a lump sum. The statement he was provided when making the election calculated his benefit entitlement to be $60,000 higher than the amount he eventually received. Though the calculation form did expressly warn that lump sum payment will vary as interest rates change, and that it did not constitute the “final payout.” Mr. Broussard argued in his lawsuit that the difference between his expected and received lump sum payment constituted a violation of the Louisiana Wage Payment Act. ExxonMobil, however, believed the claim was preempted by ERISA and accordingly removed the action to federal court. It then moved for summary judgment on Mr. Broussard’s breach of contract and state wage law claims. The district court granted ExxonMobil’s motion. It held that ERISA preempted the breach of contract claim seeking additional pension funds, and that Mr. Broussard failed to present evidence of legal entitlement to additional wages. (Your ERISA Watch reported on the court’s summary judgment decision in our September 25, 2024 edition.) This appeal followed. With no fuss, no muss, the Fifth Circuit affirmed. It agreed with the lower court that the pension-related claim encroaches on an area of exclusive federal concern as it is a claim seeking to recover additional benefits from an ERISA-regulated plan brought by a plan participant. Regardless of how Mr. Broussard styled his claim, the court of appeals stated it was clear “the precise damages and benefits [he] seeks are created by the [] employee benefit plan.” Thus, the Fifth Circuit held the state law claim seeking $60,000 in addition to the amount already distributed from the pension plan was properly dismissed on summary judgment. The appeals court further concluded that the district court properly entered summary judgment to ExxonMobil on the claim for additional wages, as the record supported that ExxonMobil appropriately paid Mr. Broussard his agreed-upon wages.
Exhaustion of Administrative Remedies
Second Circuit
Murphy Med. Assocs. v. 1199SEIU Nat’l Benefit Fund, No. 24-1880-cv, __ F. App’x __, 2025 WL 763392 (2d Cir. Mar. 11, 2025) (Before Circuit Judges Walker, Jr., Leval, and Park). Plaintiffs-Appellants Murphy Medical Associates, LLC, Diagnostic and Medical Specialists of Greenwich, LLC, and Steven A.R. Murphy, M.D. sued the 1199SEIU National Benefit Fund seeking to recover denied reimbursements for diagnostic tests, including COVID-19 tests, administered to members of the Fund. On June 12, 2024, the district court granted the Fund’s motion to dismiss the providers’ amended complaint for failure to plead exhaustion of its mandatory administrative process. The district court found it clear from the face of the complaint that the medical practices did not exhaust the internal appeals process or plead facts to support a futility exception. (You can read our summary of that decision in Your ERISA Watch’s June 19, 2024 edition.) The providers appealed. They argued that the dismissal was improper and that their amended complaint “contains detailed allegations establishing that exhaustion would have been futile.” In addition, plaintiffs argued that because exhaustion is an affirmative defense they are not required to plead that they exhausted administrative remedies. At the outset, the Second Circuit noted that it has long recognized the “firmly established federal policy favoring exhaustion of administrative remedies in ERISA cases,” and that a plaintiff must make a “clear and positive showing that pursuing available administrative remedies would be futile” to be released from the requirement. As an initial matter, the court of appeals held that a district court has the authority to dismiss an ERISA claim at the pleading stage when the affirmative defense appears on the face of the complaint, the plaintiff does not allege exhaustion or concedes failure to exhaust, and the well-pleaded facts in the complaint do not sufficiently allege the futility of exhausting the administrative remedies. Applied to the present circumstances, the appeals court agreed with the lower court that these conditions were satisfied. “The Murphy Practice fails to allege that it took any of the steps required by the Fund’s appeals process,” and failed to offer “a single supporting fact relating to the alleged 324 denied or partially reimbursed claims.” The Second Circuit therefore concluded the district court properly dismissed the complaint based on plaintiffs’ failure to plead exhaustion. Moreover, the Second Circuit noted that plaintiffs did not allege that their appeals were “so routinely and uniformly denied that it is simply a waste of time and money to pursue them.” Instead, its primary futility argument was that the explanations of payment provided by the Fund did not provide information regarding the administrative exhaustion processes. “This pleading,” the Second Circuit wrote, “does not support a futility exception.” Additionally, the relative weakness of this argument was coupled with the fact that the Fund members received notices that detailed the appeals procedure. As a result, the court of appeals concluded that plaintiffs were at fault for failing to affirmatively request these documents from their patients or otherwise inquire how to appeal the denials. The remainder of the providers’ futility arguments fared no better, as the Second Circuit said it considered them and found them without merit. Based on the foregoing, the appeals court affirmed the district court’s dismissal.
Medical Benefit Claims
Tenth Circuit
H.A. v. Tufts Health Plan, No. 2:22-cv-00476-RJS-DBP, 2025 WL 754143 (D. Utah Mar. 10, 2025) (Judge Robert J. Shelby). This case involves the Tufts Health Plan’s denial of coverage for residential mental health treatment that plaintiff M.A. received from August 5, 2020 to May 22, 2021 at the Fulshear Ranch Academy in Texas. M.A. and her mother, plaintiff H.A., allege the Plan and its administrator, defendant Cigna Behavioral Health, breached their fiduciary obligations under ERISA by failing to provide coverage and failing to provide a full and fair review of their claim. Plaintiffs further assert that defendants violated the Mental Health Parity and Addiction Equity Act by evaluating the claims using incorrect medical necessity criteria which resulted in a disparity between coverage for mental health benefits and analogous medical benefits. The parties cross-moved for summary judgment. In this decision the court reversed the denial of benefits, remanded to defendants for reconsideration, and entered summary judgment in favor of the family. Several of plaintiffs’ arguments were ineffective with the court, but there was one that struck a chord. First, the court disagreed with the family about the appropriate standard of review. They argued that the plan did not specifically grant Cigna discretionary authority or put them on notice that Cigna enjoyed such discretion to construe eligibility. However, relying on the Tenth Circuit’s comparatively liberal precedent, the court agreed with defendants that it doesn’t take much to read a plan as granting discretion. Here, because the Plan includes a review mechanism giving the claims administrator the authority to determine medical necessity, the court concluded the language at least implicitly granted Cigna discretion to make coverage determinations, thus triggering arbitrary and capricious review. The court also rejected plaintiffs’ assertion that Cigna failed to engage with the medical opinions submitted by them. To the contrary, the court said there was no “blatant discrepancy between M.A.’s medical history and Cigna’s denial letter sufficient to conclude Cigna did not consider the opinions of M.A.’s treating physicians,” particularly as Cigna itself attested in the letters that “had considered all the materials submitted with the appeal.” The court stressed that Cigna was not required to affirmatively respond to the materials submitted but to take them into account. In the present context, the court held that plaintiffs did not demonstrate that defendants openly disregarded the medical opinions of the treating physicians. However, plaintiffs effectively persuaded the court that the denials were based on unreasonable, inconsistent interpretations of the plan which wrongly imposed acute care medical necessity requirements for subacute care. First, the court agreed with plaintiffs that residential treatment is “transitional in nature” and it clearly qualifies as subacute care under the Plan. The court similarly agreed that defendants applied acute medical necessity criteria in order to deny the claims with language that closely tracks the Plan’s medical criteria required for acute inpatient mental health treatment. It added that the acute inpatient medical necessity criteria in the denial letters had no overlap with any residential treatment criteria. This failure to utilize the proper plan criteria in evaluating whether M.A. qualified for coverage was deemed by the court to be unreasonably arbitrary and capricious, as no discretionary authority permits an administrator to ignore or contradict the language of the Plan itself. The court accordingly granted plaintiffs’ motion for summary judgment on this basis, and declined to reach the Parity Act issue. This left only the issue of remedies. The court held that the record does not clearly establish M.A. was eligible for coverage “under any reasonable interpretation,” and therefore determined that remand was the proper remedy. Finally, because the court found that defendants were responsible for erroneously assessing M.A.’s eligibility for benefits, that they can satisfy a fee award, and such an award may have an important deterrent effect on other improper benefit denials, it concluded that a reasonable award of attorney’s fees and costs is appropriate under Section 502(g)(1).
Noelle E. v. Cigna Health & Life Ins. Co., No. 2:23-cv-00686, 2025 WL 754031 (D. Utah Mar. 10, 2025) (Magistrate Judge Daphne A. Oberg). Plaintiffs Noelle E. and her son, H.E., bring this action against Cigna Health and Life Insurance Company seeking full coverage for health care H.E. received which was denied by the insurance company. After Cigna initially denied coverage for H.E.’s medical care, the family appealed the denial through the plan’s internal appeals procedures. Cigna upheld its denial, at which time the family appealed to an external reviewer. This was permitted by the insurance plan. During the external review appeal, plaintiffs submitted an appeal letter and several exhibits, again as permitted by the plan. The external reviewer partially overturned Cigna’s decision, finding coverage warranted for some of the care. Under the plan, the external reviewer’s decision was binding on Cigna. This is all relevant to the present matter because the parties currently dispute whether the documents the family sent to the external reviewer are part of the administrative record. Cigna argues they are not, because it did not receive or review them itself directly during the administrative claim process. Plaintiffs, on the other hand, argue that they are undoubtedly relevant documents and part of the administrative record and thus moved to complete the administrative record to include them. The court agreed with plaintiffs and granted their motion in this decision. The court rejected Cigna’s contention that documents cannot be part of the administrative record unless the plan administrator actually relies on them in making the benefits decision. It found this position flawed for several interrelated reasons. First, the court stressed that under ERISA the administrative record consists of all relevant documents, meaning those “submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination.” Here, the challenged exhibits and documents were submitted and generated during the external appeal, expressly permitted by the plan and binding for Cigna. Thus, the court agreed that ERISA requires Cigna to include these documents in the administrative record. To hold otherwise, the court stated, would be to permit Cigna to “stack the deck by unilaterally choosing not to compile documents generated in the course of the benefits decision.” In the present matter, Cigna could not have made its final decision on the claim until after the external review concluded and its results therefore necessarily informed Cigna’s ultimate decision to deny benefits. More to the point, “judicial review of Cigna’s benefits decision would be impracticable without access to the record of the external appeal,” both “as a matter of fairness and reasonable expectations.” For these reasons, the court was persuaded that the documents plaintiffs sought to submit were properly part of the administrative record, whether Cigna chose to review them or not.
Pleading Issues & Procedure
Third Circuit
DiGregorio v. Trivium Packaging Co., No. 23cv2167, 2025 WL 782091 (W.D. Pa. Mar. 12, 2025) (Judge Arthur J. Schwab). Plaintiff Cheri DiGregorio brings this action seeking life insurance proceeds after the death of her husband against the Trivium Packaging Company and Unum Life Insurance Company of America for violation of ERISA Sections 502(a)(1)(B) and (a)(3). Defendant Trivium moved to dismiss Ms. DiGregorio’s action. The court referred the matter to Magistrate Judge Maureen P. Kelly, who issued a report and recommendation recommending the court deny the motion to dismiss. Trivium then timely objected to the Magistrate’s report. In this decision the court overruled defendant’s objections and adopted the Magistrate’s report and recommendation as the opinion of the court. First, the court found that Magistrate Judge Kelly correctly concluded that Ms. Digregorio set forth a clear and positive showing that exhausting administrative remedies would have been futile for her. Accepting the allegations of the complaint as true, Trivium failed to send required correspondence related to the premium waiver, termination notice, and conversion or portability coverage. Without this information it is plausible that the DiGregorios were not in the position to timely challenge the denial, especially as Unum made clear in their correspondence with Ms. DiGregorio that administrative remedies would result in an adverse decision. Similarly, the court agreed with the Magistrate that whether Trivium is a proper defendant cannot be resolved until after a full factual record has been developed through discovery. For now, the court said it’s simply unclear whether the employer was responsible for the administration of certain benefits under the policy at issue. On the present record, the court said it couldn’t readily determine the identity of the plan administrator or rule out the possibility that Trivium was responsible in that role. The court also agreed with the Magistrate that Ms. DiGregorio should be permitted to maintain claims under both Sections 502(a)(1)(B) and (a)(3). Keeping to a theme, the court wrote, “[w]hether the claims set forth in Counts 1 and 2 of the Amended Complaint are ‘truly duplicative,’ and relief actually is available to Plaintiff under § 1132(a)(1)(B), must be subject to further discovery and is best be resolved upon a motion for summary judgment.” Finally, the court held that Magistrate Judge Kelly did not err by failing to address Trivium’s arguments that Ms. DiGregorio’s demand for a jury trial should be stricken because it only offered these arguments for the first time in its reply brief. For these reasons, the court found all of Trivium’s objections without merit and therefore denied its motion to dismiss the amended complaint.
Severance Benefit Claims
Fifth Circuit
Miller v. Anadarko Petroleum Corp. Change of Control Severance Plan, No. 23-3034, 2025 WL 744480 (S.D. Tex. Mar. 7, 2025) (Judge Lee H. Rosenthal). In 2019 Occidental Petroleum acquired plaintiff Brad Miller’s employer, Anadarko Petroleum Corporation. Mr. Miller is just one of several former Anadarko employees who have sued the Anadarko Petroleum Corporation’s Change of Control Severance Plan following Occidental’s acquisition of the company. Under the Plan, Mr. Miller had 90 days following the acquisition to resign for “good cause” in order to apply for severance benefits. Mr. Miller did resign within this time period, but the Plan’s Committee denied his claim. In this action, Mr. Miller challenges that denial and asserts claims for benefits under Section 502(a)(1)(B) and breach of fiduciary duty under Section 404(a). The parties filed cross-motions for summary judgment. The Plan’s definition of “good reason” includes a material change in job duties or compensation. Mr. Miller contends that when Occidental took over, his duties and responsibilities shrank constituting good reason to resign and receive severance benefits. Mr. Miller argued that “nearly every facet of his working life changed following the Acquisition” and “his case is exactly why the change of control Plan was implemented.” By way of example, Mr. Miller noted that Occidental removed him from his leadership position, there was a substantial reduction in his ability to participate in strategy and personnel decisions, he could no longer oversee or approve projects as he had before, the company drastically reduced his expense authority post-acquisition, and his team size was considerably reduced. In addition, Occidental reduced the compensation of all legacy Anadarko Petroleum employees by 4.9%, which Mr. Miller argued constituted a material reduction in base pay under the plan as it was a substantial loss of income. This was especially important, Mr. Miller added, when coupled with Occidental’s reductions in his 401(k) contributions and bonus targets. Thus, he asserted throughout his complaint and in his motion for summary judgment that the Committee acted arbitrarily in determining that the salary reduction was not “material.” Occidental broadly responded that these reductions in Mr. Miller’s duties and responsibilities were temporary, due largely to the COVID-19 pandemic, and did not trigger a good reason under its interpretation of the plan language. Occidental relied on its own “plan interpretation” document, which stated that its decision to reduce salaries by 4.9% was not a material reduction in compensation and any diminution in job duties must be permanent, not temporary, to qualify as a “good reason” event. The actions brought by other former Anadarko employees challenging Occidental’s denials have reached different results on similar claims. The Fifth Circuit and the Tenth Circuit have read the same language in the Plan differently. Although the Fifth Circuit’s decision was unpublished, the court was nevertheless influenced by it. Mr. Miller argued that the Fifth Circuit’s decision was distinguishable because the changes in job responsibilities alleged in that case were not as drastic or permanent as those he experienced. The court was not persuaded. Employing the arbitrary and capricious standard of review, it held instead Mr. Miller failed to show a factual dispute material to the reasonableness of the denial, and concluded that the “record supports the conclusion that the Committee acted within its discretion in finding that Miller’s job duties were not materially and adversely reduced.” At best, the court stated, Mr. Miller demonstrated that reasonable minds could differ and that the evidence presented was disputable. Nevertheless, under Fifth Circuit precedent this is insufficient to invalidate a plan administrator’s decision as “the evidence ‘need only assure that the administrator’s decision fall somewhere on the continuum of reasonableness – even if on the low end.’” The court also specified that the Committee was permitted to rely on its plan interpretation document in interpreting plan terms. It further concluded that the Committee provided Mr. Miller with a full and fair review of his claim and his appeal, because it thoroughly considered all of the evidence before it. For these reasons, the court determined that the Committee did not abuse its discretion when it denied Mr. Miller’s claim for benefits. The court therefore affirmed the denial of Mr. Miller’s claim, and entered summary judgement in favor of Occidental.
Standard of Review
Sixth Circuit
Dougharty v. Metropolitan Life Ins. Co. of Am., No. 3:24-CV-83-TAV-DCP, 2025 WL 747505 (E.D. Tenn. Mar. 7, 2025) (Judge Thomas A. Varlan). Plaintiff Randy Dougharty brought this action alleging Metropolitan Life Insurance Company of America (“MetLife”) miscalculated his monthly long-term disability benefits. In his complaint Mr. Dougharty seeks damages for unpaid benefits and an order requiring MetLife to pay the recalculated benefits as long as he remains disabled, pursuant to ERISA Section 502(a)(1)(B). Before the onset of his disabling back pain, Mr. Dougharty worked as a truck driver. As a driver, his pre-disability wages were calculated based on a mileage rate, not a base pay. The long-term disability policy defines “Predisability Earnings” as “gross salary or wages You were earning from the Policyholder in effect on the first of the year prior to the date Your Disability began. We calculate this amount on a monthly basis.” In this action, Mr. Dougharty contends that this language is unambiguous and requires his predisability earnings to be calculated based on what he was earning at the first of the year prior to his date of disability by multiplying his mileage pay rate of $0.24 per hour by the number of hours he drove throughout January 2020. Alternatively, should the court disagree that the plan term is unambiguous, he argued that the doctrine of contra proferentem favors construing the plan against the drafter. MetLife saw things differently. It argued that it followed its standard procedure of requesting a predisability earnings figure from the employer and adopting that figure. In addition, MetLife argued that Mr. Dougharty’s method of calculation was unsupported by the plain language of the plan, and, moreover, that he selectively chose two weeks in January to calculate his average number of miles driven per week in January 2020. Each of the parties maintained their arguments in their cross-motions for summary judgment. However, before the court could address them it needed to lay some procedural groundwork. Specifically, the parties disputed the applicable standard of review. Mr. Dougharty argued that he appealed his benefit calculation alongside MetLife’s denial of his claim for benefits. He maintained that although MetLife issued a decision reversing its denial, it failed to respond or render a decision in writing of his appeal disputing the monthly benefits amount before the applicable deadline of August 24, 2023. Mr. Dougharty further argued that under an amendment to ERISA regulations that took effect in 2017, he is entitled to de novo review because MetLife failed to strictly comply with 29 C.F.R. § 2560.503-1(i)(3)(i). The court was persuaded. It not only agreed that MetLife failed to make a determination or offer an explanation as to his benefit calculation, but also that Mr. Dougharty was right about the effect of the 2017 amendment to the claims regulation. The court thus deemed Mr. Dougharty’s appeal denied without the exercise of discretion by MetLife and therefore concluded that de novo review applies to the plan administrator’s factual and legal conclusions notwithstanding the plan language granting it discretionary authority. The decision then proceeded to analyze whether the “Predisability Earnings” provision of the plan was ambiguous. The court ultimately concluded that “the calculation of wages set forth in the ‘Predisability Earnings’ provision is susceptible to more than one reasonable interpretation and is therefore ambiguous.” It then agreed with Mr. Dougharty that because the plan language is susceptible to more than one interpretation, the doctrine of contra proferentem applies and the language must be construed in his favor. However, the court stated that this construction did not require it to agree with Mr. Dougharty’s actual calculated benefit amount. “After carefully reviewing plaintiff’s earning statements contained in the record, the Court agrees with defendant that critical information is missing, and the present record is therefore incomplete.” The court thus found that there remains a genuine dispute of material fact as to Mr. Dougharty’s wages during the relevant period of time and that summary judgment was therefore inappropriate. Accordingly, the court denied both parties’ motions for summary judgment in the end, leaving the dispute regarding the proper calculation of benefits unresolved for now.
