Your ERISA Watch – Week of April 16, 2025
After the flood of end-of-reporting-period decisions issued over the past several weeks, the tide has turned. This week we report on only eight cases. So relax and enjoy reading this week’s short but interesting selection of ERISA decisions, including one holding that 401(k) plan participants have adequately stated excessive fee claims, another reluctantly holding that an insurance company acted within its discretion in concluding that a plaintiff did not offer sufficient objective proof of disability from long COVID, and one holding that ERISA does not preempt a local government’s state law nuisance claims against Optum and related entities for their role in the opioid crisis.
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Breach of Fiduciary Duty
Ninth Circuit
Meyer v. United Healthcare Ins. Co., No. 21–148–M–DLC, 2025 WL 1042809 (D. Mont. Apr. 8, 2025) (Judge Dana L. Christensen). In December 2015, plaintiff John Meyer was injured in a serious skiing accident. After the accident, Mr. Meyer spent a month receiving treatment at two facilities owned by defendants Billings Clinic and Regional Care Hospital Partners. Mr. Meyer was charged out-of-network rates for his care by his insurance provider, defendant United Healthcare Insurance Company, despite the fact that the two facilities were in-network providers. Also, due to the timing of his accident, Mr. Meyer had to pay his $6,000 deductible twice, once in December 2015 and again in January 2016, despite only acquiring his healthcare coverage shortly before the accident. In 2021, Mr. Meyer sued United, Billings Clinic, and Regional Care Hospital Partner over these healthcare costs. Mr. Meyer has amended his complaint twice. In his second amended complaint, styled as a putative class action, Mr. Meyer alleges that United Healthcare breached its fiduciary duties under ERISA and that the providers knowingly participated in United’s fiduciary breach. He argues that his ERISA claims arise under the federal “No Surprises Act,” a bill passed in 2022 to restrict surprise out-of-network charges from in-network healthcare facilities. Defendants collectively moved to dismiss Mr. Meyer’s action pursuant to Federal Rule of Civil Procedure 12(b)(6). They argued that his complaint could not be sustained for a number of reasons, and the court agreed. First, the court dismissed the individual ERISA fiduciary breach claims against United because it agreed with United it could not have breached its fiduciary duties in 2015 and 2016 by violating a law that was not in effect at the time. “Meyer makes no argument that the No Surprises Act is retroactive under ERISA, nor has Congress unambiguously instructed as much. It is not apparent from the facts pled that United failed to use the prevailing standard of care, skill, and diligence as existed in 2015 and 2016, nor is it apparent exactly what duty United breached.” Accordingly, the court agreed with defendants that the complaint failed to plead a cognizable claim of breach of fiduciary duty under ERISA. The court also held that Mr. Meyer could not sustain a claim for knowing participation against the providers as they were not fiduciaries, and, moreover, as stated above, there was no underlying breach of fiduciary duty. Even putting these issues aside, the court also concurred with defendants that it was clear from the complaint Mr. Meyer had actual knowledge of the underlying transactions in 2016 sufficient to trigger ERISA’s three-year statute of limitations. Thus, the court found his claims were time-barred. Finally, the court concluded that it was appropriate to dismiss the class claims at the pleading stage as they are premised on the same allegations as the individual claims, and there is no factual support for them. The court therefore granted defendants’ motion to dismiss, and because Mr. Meyer has twice amended his complaint, the court determined that further amendment would be futile, and thus dismissed the action with prejudice.
Schuster v. Swinerton Inc., No. 3:24-cv-04970-JSC, 2025 WL 1069887 (N.D. Cal. Apr. 8, 2025) (Judge Jacqueline Scott Corley). Plaintiffs Michael S. Schuster and Juan C. Del Barco are former employees of Swinerton Incorporated and participants in its 401(k) Plan. They bring this action on behalf of a putative class of plan participants against Swinerton, its board of directors, and the plan’s committee alleging defendants breached their duties of prudence and monitoring by incurring excessive recordkeeping and administrative fees charged by the plan’s two recordkeepers, John Hancock and Principal Life Insurance Company. The fiduciaries moved to dismiss the complaint for failure to state a claim. In their motion to dismiss, defendants requested that the court take judicial notice of 20 documents, including the plan’s Form 5500s, the Form 5500s of the ten comparator plans, several Department of Labor publications, and a blog post. Because these documents are public and plaintiffs did not question their authenticity, the court took judicial notice of them. However, it stipulated that it could not, and would not, take judicial notice or infer, as the defendants requested, that based on the contents of the Form 5500s the comparator plans did not receive the same recordkeeping and administrative services or that plaintiffs incorrectly calculated fees. Doing so, the court stated, would improperly require the court to draw inferences in defendants’ favor, rather than plaintiffs’ favor. When the court drew inferences in plaintiffs’ favor, it determined that their complaint plausibly alleges what services were being provided, what the cost of those services were, and that defendants failed to administer the fees in a prudent manner. Plaintiffs allege from the years 2018 through 2023 the plan paid, on average, $124 per participant annually in recordkeeping fees. Plaintiffs maintain that reasonable fees should have been $43 per participant. They offered ten plans of comparable size, receiving a materially similar level and quality of recordkeeping and administrative services as that offered by the Swinerton plan. The court held that in the Ninth Circuit no more is required of plaintiffs: “Plaintiffs need not provide even more granular, micro-level ‘apples to apples’ comparisons, based on data to which they may not yet have access, in order to survive a motion to dismiss.” Accordingly, the court denied defendants’ motion to dismiss.
Disability Benefit Claims
Fifth Circuit
Stout v. Smith Intl., No. 24-30571, __ F. App’x __, 2025 WL 1029503 (5th Cir. Apr. 7, 2025) (Before Circuit Judges Dennis, Haynes, and Engelhardt). Plaintiff-appellant Charles Stout worked as an offshore drilling engineer for Smith International for ten years. Then, in 2011, Mr. Stout was diagnosed with several heart conditions and other comorbidities. His cardiologist advised him that he should not lift more than 25 pounds. Mr. Stout’s work at Smith required him to lift nearly twice as much weight. His diagnoses ultimately qualified him for benefits under Smith’s disability benefit plan offered through MetLife. In 2021, MetLife obtained updated medical records on Mr. Stout. These records showed improvement and indicated his valvular heart disease was stable. MetLife then retained a doctor to review Mr. Stout’s records. That doctor concluded that Mr. Stout’s conditions did not indicate any restrictions or limitations. After reviewing this report, Mr. Stout’s own cardiologist changed his opinions regarding Mr. Stout’s abilities and expressed that he absolutely agreed with the report, including its conclusion that Mr. Stout could return to full-time work. Mr. Stout did not agree. He appealed MetLife’s adverse decision. On appeal, MetLife hired a second specialist to review Mr. Stout’s records and he too concluded that the underlying cardiac impairments were not so severe as to impair Mr. Stout’s functions, and therefore no restrictions or limitations were indicated. Mr. Stout challenged MetLife’s decision to terminate his benefits in court, suing Smith International and MetLife under ERISA. The district court granted summary judgment for Smith International and MetLife. Mr. Stout appealed that ruling to the Fifth Circuit. In this brief, unpublished per curiam decision the Fifth Circuit affirmed. It declined to even discuss the relevant standard of review as it concluded the standard of review “is not dispositive in this case.” Even if de novo review applied, the Fifth Circuit stated that it could not see how any reasonable fact finder could conclude Mr. Stout is entitled to continued benefits. “There is no evidence in the administrative record that Stout is still disabled. All three doctors who examined Stout or reviewed his medical records concluded that there are no restrictions or limitations on his activity. With no evidence of restrictions or limitations on his activity, no reasonable fact finder could conclude that, due to sickness or accidental injury, Stout is unable to earn 60% of his predisability earnings. Stout therefore is not entitled to disability benefits under the plan.” Accordingly, the court of appeals affirmed the judgment of the district court.
Seventh Circuit
Schwingle v. Hartford Life & Accident Ins. Co., No. 24-cv-125-jdp, 2025 WL 1019986 (W.D. Wis. Apr. 4, 2025) (Judge James D. Peterson). Plaintiff Stephanie Schwingle worked as a spiritual and grief counselor for a hospice care company where she provided counseling and care for the bereaved. In the fall of 2021, Ms. Schwingle went to the emergency room and was diagnosed with COVID-19. Symptoms which affected her stamina, lung function, and cognitive abilities did not go away and in early 2022 Ms. Schwingle became one of the millions of Americans to be diagnosed with long COVID. She applied for short-term, and later, long-term disability benefits with Hartford Life and Accident Insurance Company, the administrator of her employer’s group policy. Hartford approved the long-term disability benefit claim through early 2023. Hartford’s decision to terminate Ms. Schwingle’s benefits is the subject of this litigation. Ms. Schwingle challenges that decision, arguing that Hartford placed too much emphasis on objective evidence and failed to adequately consider why it did not find the evidence she did submit to be persuasive. Hartford responded that it has the discretionary authority to conclude that “satisfactory proof” under the plan requires some corroboration of subjective reports of symptoms with objective medical and diagnostic testing. The parties each moved for summary judgment in their favor. The court sided with Hartford. It stated, “Hartford was entitled to require Schwingle to come forward with objective evidence of functional limitations.” The court noted that the Seventh Circuit Court of Appeals has long ago weighed in on this debate and concluded that “even when symptoms are subjective, functional limitations caused by those symptoms can be objectively measured, so it is not arbitrary and capricious to ask for objective evidence.” Here, the only significant objective medical evidence was cognitive testing which showed normal functioning and no impairment. During the internal appeals process Hartford suggested that Ms. Schwingle could perfect her claim by providing additional testing, including undergoing a formal neuropsychological evaluation, but Ms. Schwingle took no such action. Moreover, the court said that Hartford had the authority to reject the opinions of Ms. Schwingle’s treating providers for much the same reason – they too relied only on her subjective complaints to support their opinions regarding her functional limitations. The court added that an administrator is not required to separately explain why it finds each opinion offered by each doctor to be persuasive or unpersuasive, but is only required to more generally engage with those opinions and consider whether to credit them or not. The court found that Hartford did so here. That is not to say there was no evidence in the administrative record which supported Ms. Schwingle’s claim. To the contrary, there were pulmonary tests, psychiatric questionnaires, her affect during doctors’ appointments, her testimony of her own limitations, as well as her “extensive and rigorous treatment” and medical history. The court expressed it “would have been reasonable for Hartford to credit those statements and award benefits. And if the court were acting as the factfinder, it would be inclined to find for Schwingle.” Nevertheless, when pressed to decide whether Hartford’s decision to terminate benefits was reasonable and supported by the evidence before it, the court concluded that it was. As such, the court found that Hartford’s decision was not arbitrary and capricious. The court therefore denied Ms. Schwingle’s motion for summary judgment and granted Hartford’s summary judgment motion.
ERISA Preemption
Ninth Circuit
King County v. Express Scripts Inc., No. 24-cv-49-BJR, 2025 WL 1082130 (W.D. Wash. Apr. 10, 2025) (Judge Barbara J. Rothstein). In the past 25 years, over a million Americans have died as a result of opioid overdoses. King County in the State of Washington filed this action against the country’s largest pharmacy benefit managers (“PBMs”) and related entities alleging they violated the state’s public nuisance law due to the central role they played creating and perpetuating the opioid epidemic through the over-prescription, misuse, diversion, and abuse of opioids. The County alleges that defendants “worked directly with the Opioid Manufacturers to convince patients, prescribers, payors and the public that long term opioid use was appropriate chronic pain treatment and that opioids were not addictive.” Plaintiff further alleges that defendants lobbied state governments to promote its opioid programs by collaborating with Purdue Pharma on studies and presentations that promoted and normalized opioid use. In particular, King County maintains that the PBMs set their formulary lists, and then incentivized patients to use certain opioids through utilization management techniques including: “(1) formulary tiering; (2) step therapy, where a consumer is required to try a cheaper drug first before a restricted drug; (3) quantity limits, which limit the dosage or days’ supply that a consumer may receive for a prescription; (4) prior authorizations, which are rules that require a physician to confirm that a prescription is therapeutically appropriate before the drug is dispensed; and (5) formulary exclusion.” According to the complaint, the PBM defendants engaged in this conduct for their own financial reasons despite knowing opioids were highly addictive and carried a serious risk of injury and death. Defendants moved to dismiss the complaint for failure to state a claim. They argued that the public nuisance claim is barred under a two-year statute of limitations. They also argued that the County failed to adequately allege the elements of a public nuisance claim. Additionally, defendants argued that the state law claim was preempted by both ERISA and Medicare Part D. Finally, Optum, Inc. argued that it should be dismissed because the allegations in the complaint focus on its various subsidiaries. The court went through each of defendants’ arguments in turn and rejected them all. First, the court found that presented facts, when viewed most favorably to the County, support its position that in 2023 it discovered new, previously unavailable information relevant to its public nuisance claim and defendants’ actionable conduct. Accordingly, the court disagreed with defendants that the claim was time barred. Next, the court concluded that plaintiff plausibly pleaded a nuisance claim under Washington law as the complaint alleges the “purposeful actions Defendants took to promote opioid use,” there is a sufficiently strong and close connection between the County’s harms and defendants’ alleged misconduct, and the complaint adequately alleges interference with a public right to safety, peace, and public comfort. As most relevant to our readers, the court then addressed ERISA preemption. It concluded that plaintiff’s public nuisance claim does not implicate ERISA preemption under either the “reference to” or “connection with” categories. The court stated that the existence of ERISA-covered plans is not essential to the County’s state law claim. “[W]ith or without ERISA-covered plans, the County’s claim would proceed with respect to Defendants’ formularies and [utilization management] techniques adopted by plans offered by government or religious entities and individual plans offered by insurers.” Moreover, the court stated that the County’s success on its claim wouldn’t dictate any particular scheme of coverage like requiring defendants “to cover alternative, non-medication treatments, cover treatments considered less addictive, or otherwise structure benefit plans in any particular manner.” In fact, defendants could retain the exact same formulary structures and utilization management techniques as they had before “provided that doing so is not part of a greater scheme to collude with opioid manufacturers to maximize profits derived from opioid prescriptions.” Accordingly, the court found there is no ERISA preemption. And for much the same reason, it also found there is no Medicare Part D preemption. Finally, the court disagreed with Optum, Inc. that the complaint solely focuses on the actions of its subsidiaries. To the contrary, the complaint explicitly alleges that “Optum, Inc. was actively involved in promoting opioid programs to its clients and the media and coordinating the efforts of its subsidiary entities.” Taking these allegations as true, the court denied the motion to dismiss the claim against Optum, Inc. Thus, the court denied defendants’ motion to dismiss pursuant to Rule 12(b)(6).
Life Insurance & AD&D Benefit Claims
Sixth Circuit
McGill v. Prudential Ins. Co. of Am., No. 1:24 CV 916, 2025 WL 1079315 (N.D. Ohio Apr. 10, 2025) (Judge Donald C. Nugent). Plaintiffs Megan and Shannon McGill were the named beneficiaries of their father Joseph McGill’s life insurance policies before a change in beneficiaries was executed after Joseph became ill with pancreatic cancer. According to the daughters, Joseph’s health rapidly declined and he suffered from diminished mental capacity, was heavily medicated, and was not capable of fully understanding his financial affairs. Plaintiffs allege that their uncle, defendant Gerald McGill, exercised undue influence over their father during this time and either changed the beneficiary of the life insurance policies to himself without Joseph’s knowledge and consent or convinced Joseph to name him as the beneficiary. In addition to Gerald, plaintiffs have also sued their father’s former employer, Amazon, as well as the Prudential Insurance Company of America. Before the court here was Gerald’s motion for summary judgment. He argued that the claim for declaratory relief against him is preempted by ERISA. The court did not agree. It held that ERISA does not contain any provisions regarding regulating the problem of beneficiary designations that are the result of undue influence or forged. Moreover, whether an individual exercised undue influence over another, it said, is a highly fact-intensive inquiry, inappropriate for resolution before the completion of discovery. The court therefore ruled that genuine issues of material fact persist regarding Joseph’s mental capacity at the time the beneficiary designation of his life insurance policies was changed and whether Gerald exercised undue influence over him or otherwise improperly procured the change in designation. Accordingly, the court denied Gerald’s motion for summary judgment and ordered the parties to continue with discovery.
Pleading Issues & Procedure
Fifth Circuit
Humana Inc. v. Deliver My Meds Corp., No. 3:24-CV-2568-B, 2025 WL 1071429 (N.D. Tex. Apr. 9, 2025) (Judge Jane J Boyle). Plaintiff Humana Inc. is one of the country’s largest health benefit companies. It administers healthcare plans and policies governed by ERISA, Medicare, and state law. This case arises from allegations of healthcare fraud. Humana alleges that defendants Deliver My Meds Corporation and CGM Monitors Corp. have engaged in false billing practices. Humana asserts that it has paid nearly $3 million to defendants for claims it has reason to believe are fraudulent. In this lawsuit Humana seeks monetary relief for its harms. It asserts five claims against the providers: (1) fraud and fraudulent concealment; (2) negligent misrepresentation; money had and received/unjust enrichment; (4) violations of the Texas theft liability act; and (5) a claim under ERISA Section 502(a)(3). Defendants moved to dismiss the action pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The court granted in part and denied in part the motion to dismiss. Specifically, the court granted the motion to dismiss the ERISA claim, without prejudice. Before it got there, the court considered defendants’ standing arguments. The providers argued that Humana did not adequately allege an injury to itself but instead focused on how its members were allegedly harmed by their actions. The court did not agree. Rather, it concluded that while Humana’s complaint references injuries its members suffered because of defendants’ alleged conduct, it does not seek to recover or sue on behalf of the patients. Instead, it seeks to recover economic damages that it sustained itself due to the alleged fraudulent billing practices of the defendants. “Therefore, Humana alleged an injury that is fairly traceable to Defendants’ conduct and likely to be redressed by awarding monetary damages.” Furthermore, the court determined that Humana’s claims are ripe regardless of the fact that the defendants have not yet exhausted their ability to appeal the decisions of their claims under Humana’s internal review policies. “Whether Humana is conducting an internal prepayment review investigation is irrelevant to the question of whether this case is ripe for legal review.” The court then assessed whether Humana stated viable claims upon which relief may be granted. It concluded that Humana did state viable claims except for the ERISA claim. The court held that Humana failed to state a claim under ERISA Section 502(a)(3) because it failed to allege that it seeks appropriate equitable relief. In particular, the court noted that Humana fails to allege facts to indicate that it seeks funds that can be clearly traced to particular funds or property in defendants’ possession. Not only did Humana fail to allege that the funds are traceable, but it also fails to allege that there was an equitable lien by agreement. “As such, Humana has not plausibly alleged that the basis of its claim or the basis of the underlying remedies it seeks are equitable.” The court therefore granted the motion to dismiss the ERISA claim. However, because Humana requested leave to amend its complaint and the defects in its complaint were not necessarily incurable, the court dismissed the claim without prejudice to file a first amended complaint. In all other respects, the court denied the motion to dismiss because the court concluded that Humana pleaded the remainder of its claims, including its fraud claims, with particularity and specificity.
Ninth Circuit
Vidal v. Verizon Pension Plan for Assocs., No. 2:22-cv-00274-ART-BNW, 2025 WL 1068591 (D. Nev. Apr. 9, 2025) (Magistrate Judge Brenda Weksler). This ERISA case was filed in early 2022. The parties were given until the end of September 2025 to conduct and complete discovery. The parties agree that, for the sake of efficiency, plaintiffs’ pending motion to amend should be resolved before setting any internal deadlines that could potentially change or affect the scope of discovery. Nevertheless, plaintiffs’ counsel filed 15 motions relating to the pending motion to amend. In this decision the court granted certain of those motions, denied many others, struck plaintiffs’ reply in support of the motion to amend, and denied, without prejudice, the motion to amend itself. Overall, the court concluded that many of the problems plaintiffs complained of were ones of their counsel’s own making. The court denied motions to extend deadlines on this basis, as it determined that plaintiffs’ struggles with the deadlines were the result of counsel putting things off to the last minute and then rushing to get things done. Similarly, the court denied plaintiffs’ motion to exceed page limits, stating that a “verbose writing style does not constitute good cause.” The court did grant the parties’ requests to shorten time, as it concluded there was good cause to grant these requests given that the court must resolve the above motions before deciding the motion to amend. Because plaintiffs’ reply brief in support of their motion to amend was well over the page limit set by the court, and because the court denied plaintiffs’ motion to exceed the page limits, the court struck the brief for failure to comply with its orders and the district’s local rules. The court then denied the motion to amend. It stated that plaintiffs’ motion was “largely incomprehensible,” “difficult to decipher,” and “unclear” about what amendments it sought. Given these issues and the stricken reply, the court denied the motion to amend without prejudice. Plaintiffs were given until April 30, 2025 to amend pleadings and/or add parties. However, the court first outlined its expectations about conduct going forward. “Plaintiffs have filed numerous rushed and difficult-to-understand motions, which this Court has been forced to resolve.” In the future, the court said it was unlikely to tolerate this type of behavior. It warned counsel to not file repeated or redundant motions, to file any time extension requests “as soon as practicable,” and to shorten briefs by removing excess language and “lengthy and repetitive sentences.” Finally, the court stressed that it has limited resources and that it would not take kindly to exhausting those resources “deciphering a party’s arguments or requests for relief.” The court instructed counsel to file motions going forward that are easy to understand and which comport with local rules.
