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Shapiro v. Reliance Standard Life Ins. Co., 91 F.3d 121 (1st
Cir. 1996) - Plaintiff alleged that she was wrongfully denied benefits under a
long-term disability plan under ERISA [29 U.S.C. §
1132(a)(1)(B). Under the terms of the plan, plaintiff was required to submit
"satisfactory proof of her ... disability." However, the plaintiff
failed to provide a report to the plan administrator to indicate that she was
totally incapacitated, and her physician failed to respond to the
administrator's request to submit medical information as to plaintiff's alleged
disability. Moreover, there was contradicting evidence from her physician.
Although he opined that plaintiff was totally disabled, the administrator found
that he also suggested that plaintiff should" give ... a try" at going
back to work. Finally, the plan administrator had evidence that plaintiff
applied for reemployment with her former employer right before she made her
initial application for disability benefits. In light of this evidence, the
First Circuit held the district court's grant of summary judgment to the
defendant was not clearly erroneous.
Romney
v. Lin, 94 F.3d 74 (2d Cir. 1996) - Download
in RTF -Union originally sued principal shareholder of employer to collect
unpaid contributions owed to four union benefits funds in state court under New
York Statute. The state statute provided that the ten largest shareholders of a
corporation will be jointly and severally for all debts owing to employees,
including amounts owed to benefits funds. The shareholder removed the action to
federal district court based on preemption by ERISA. On appeal, the Second
Circuit upheld the district court's decision to deny the union's motion to
remand to state court and to grant the shareholder's motion to dismiss for
failure to state a claim. The court found preemption was appropriate here where
the state statute referred to welfare plans and pension plans. The statute also
significantly affected ERISA plans insofar as it changed the remedies available
to beneficiaries and altered the employer's incentive to create and maintain
ERISA plans. Because the New York statute provided an alternate enforcement
mechanism to ERISA, the court held that it undermined the basic purpose of ERISA
preemption to avoid multiplicity of regulation and to permit nationally uniform
administration of employee benefits.
Matincheck v. John Alden Life Ins. Co., 93 F.3d 96 (3d Cir. 1996) -
Defendant provided health insurance coverage to the plaintiff, a business owner,
and his immediate family. When plaintiff's claim for benefits was denied, he
brought an action under 29 U.S.C. §
1132(a)(1)(B). The Third Circuit reversed the grant of summary judgment to the
plaintiff because it held that the district court lacked subject matter
jurisdiction over the claim. The court held that ERISA did not govern this plan
where the only beneficiaries were the sole proprietor and his family. Department
of Labor regulations provide that the term "employee benefit plan"
shall not include any plan, fund, or program ... under which no employees are
covered the plan. 29 C.F.R. §
2510.3-3(b). The regulations also provide that "An individual and his or
her spouse shall not be deemed to be employees with respect to a trade or
business,..., which is wholly owned by the individual [.] Since ERISA did not
apply to this insurance policy, the court remanded to the district court to
dismiss without prejudice to allow plaintiff to amend his complaint to include
his state law claims. The court added, however, that plaintiff had little chance
of prevailing on his state law claims because he made misrepresentations in his
enrollment form which gave the insurer the right to rescind the contract.
Faircloth v. Lundy Packing Company, 91 F.3d 648 (4th Cir. 1996) - Download in RTF - Declining value of the employer's stock caused substantial loss to the ESOP plan. The participants then made a request under ERISA §104(b)(4) for a number of documents. When the plan administrator failed to furnish all of the requested documents, the participants brought action to compel production and for statutory penalties. The Fourth Circuit held that ERISA requires plan administrator to produce copies of plan documents, summary plan descriptions, the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or "other instruments under which the plan is established or operated." However, the "other instruments" language is not to be broadly construed to include any and all documents that have only tenuous relations to the plan. Rather, "only formal or legal documents under which a plan is setup or managed" and that provide participants "with information about the plan and the benefits" must be produce. Accordingly, the defendant was not required to honor the participants request for the IRS determination letter (showing that the ESOP was tax qualified), the bonding policy, and the appraisal report because these documents do nothing to set up or manage the plan. With regard to the plaintiff's request for "any" minute meetings "regarding" the ESOP was to broad. Plaintiff was only entitled to the minutes of those meetings in which plan establishment or management was discussed. Therefore, the plan administrator did not violate ERISA for failing to comply with the request. Finally, the plaintiff was not entitled to the trustee expense policy, which did not exist, or the cost sharing policy since the plan administrators did not know what a cost sharing policy was. However, the participants were entitled to the funding and investment policies that set forth the employer's obligations and responsibility regarding investment and the assets of the ESOP. The district court, therefore, was required to consider the participants' claim for statutory penalties. The Fourth Circuit rejected plaintiff's argument that the defendant's duty to provide the documents requested was not limited to those listed in ' 104(b)(4), but that they had an obligation under their general fiduciary duty provision [ERISA ' 404)(a)(1)(A) to administer the plan for the exclusive benefit of the beneficiaries. The court held that because ' 104(b)(4) specifically addresses the disclosure of documents, the general fiduciary duty provision cannot impose a separate duty upon the administrator.
Bedrick v.
Travelers Insurance Company, 93 F.3d 149 (4th Cir. 1996) - Download
in RTF - The minor plaintiff, who suffered from severe cerebral palsy, was a
beneficiary in a health benefit plan for which the defendant provided insurance
coverage. After providing coverage for some time, defendant cut off coverage for
speech therapy and significantly limited his physical and occupational therapy,
and denied his claim for certain prescribed medical equipment, including a bath
chair and an upright stander. The defendant relied on its physician's report
that the therapy and equipment were not medically necessary since it would not
improve his condition. The district court granted summary judgment to the
defendant. However, the Fourth Circuit reversed. The court found that the
defendant acted with a conflict of [financial] interest, and thus abused its
discretion in interpreting the plan. Specifically, the defendant relied
exclusively on its own physicians who without justification determined that the
plaintiff that further therapy was not "medically
necessary" since such treatment would not result in significant progress.
The evidence showed that one of defendant's physician had very little experience
in pediatrics or speech therapy, failed to contact plaintiff's treating
physicians, never examined the plaintiff, and could not "tell…exactly how [she]
developed" her belief. The other company physician admitted that "he views himself as a
'supporter of Travelers' 'legal
department' and 'field
office.' He had not seen patients in seven years, and was not familiar with
textbooks or treatises on cerebral palsy, and his opinion was based on a single
medical journal article. In light of this evidence, the court found that the
defendant did not evaluate plaintiff's physical and occupational therapy claims
consistent with its duty to act "solely in the interest of the
participants" absolutely free of any conflict of interest.
Lynd v. Reliance Standard Life Ins. Co., 94 F.3d 979 (5th Cir. 1996) - The Fifth Circuit held that regardless of the standard of review (de novo or abuse of discretion, the employer properly determined that employee's depression was a mental rather than physical disorder. See detailed analysis.
Jones v. Georgia Pacific Corporation, 90 F.3d 114 (5th Cir. 1996) -
Former employee's widow and two children brought action to recover life
insurance benefits. Under the employer's group life insurance plan, group
coverage terminated when the employee reached age 65, however, the employee had
31 days from his 65th birthday to convert his group insurance to an individual
policy. In this case, the 31st day fell on a Sunday, and the employee died the
following Monday (the 32nd day after his 65 birthday). Plaintiffs argued that
under the legal maxim, dies dominicus no est juridicus (Sunday is not a
day in law), they were entitled to elect coverage on that Monday. The court
viewed this case as one of contract law in which there was a limited period of
accepting an offer, and the power of acceptance may be exercised within the time
stated. Because the employee did not apply for individual life insurance within
the acquisition period, the plaintiff's were not entitled to benefits. The
defendants were not arbitrary in limiting the election period to strictly 31
days.
Helwig v. Kelsey-Hayes Company, 93 F.3d 243 (6th Cir. 1996) - Pursuant to the summary plan description, the employer promised continued health care benefits to retired salaried employees at virtually no cost. When the employer later announce an intent to increase costs, the retirees brought action challenging the amendment. While the case was pending, the district court granted a preliminary injunction reinstating health care coverage. On appeal, the Sixth Circuit held that the injunction was proper since there was a reasonable likelihood that the plaintiffs would prevail on the merits of their claim. The court held that ordinarily, employee welfare benefits (as opposed to pension plans) do not automatically vest and the employer is free to amend the terms of such plan at any time. However, an employer and employee may agree and intend that welfare benefit plans vest irrevocably. If that is the case, then the employer may not unilaterally amend the plan terms. The court first looked for a written instrument for clear manifestations of intent and found a provision in the summary plan description stating, "[w]hen you are retired, your Health Care coverages, ... are continued [for the rest of your life] without cost to you." It held that the employer was held to promises they made in their SPD. Rejecting the employer's argument that the SPD conflicts with formal plan documents and that the plan document should govern, the court held that the employer may not construct the SPD in such a manner that they mislead employees into thinking they have a right to benefits when other documents negate those rights. Finally, the court held that health care benefits were not subject to modification or termination unless the employer reserved the right to modify/terminate in the SPD. It was irrelevant that other plan documents did contain a cancellation clause when the clear unambiguous language of the SPD failed to reserve such a right to the employer.
Bridgewater v. Harper Hospital, 94 F.3d 644 (6th Cir. 1996) - The plaintiff brought action alleging that the defendant wrongfully denied her retirement disability benefits. The plaintiff refused a medical examination scheduled by the defendants, and then failed to attend a meeting at which her claim was being considered. The defendants claimed that the medical evidence did not support a finding that plaintiff had a "permanent and total disability" pursuant to the plan's eligibility requirements. The district court granted summary judgment to the defendant. On appeal, plaintiff claimed held that the district court erred in granting summary judgment to the defendant, and alleged that defendant failed to comply with several elements of 29 U.S.C. § 1133. The Sixth Circuit, however, affirmed summary judgment, rejecting each of plaintiff's arguments in turn. First, the court found that plaintiff received notice of her dismissal which contained the "reasons" for her denial. The plan administrator explained that its decision was based on the physicians' report (which plaintiff submitted to the administrator) which stated that plaintiff was not disabled. This notice was sufficient because it "set forth the specific reasons for the denial" and "was written in a manner calculated to be understood by the plaintiff." Second, the court held that it was irrelevant that plaintiff received a decision on her claim by the Claims Review Committee rather than the Administrative Committee. Under the terms of the plan, a review of claims may be made by the Administrative Committee itself and/or through such persons which it deems Proper to assist it in the performance of such duties...,@ thus the Claims Review Committee could properly make the decision on her claim. Nonetheless, the plaintiff argued that because the appeal committee reviewed and decided on her claim, she was denied "full and fair review." The court found, however, that the committee met twice to consider her claim; the plaintiff and her attorney were given the opportunity to submit comments and were provided copies of the written Plan. Finally, the court concluded that the plan administrator provided plaintiff with the necessary information to understand why her claims were being denied. When her claim was initially denied, the defendant scheduled a medical examination that she refused. The court held that the defendant's request for examination notified plaintiff of the deficiencies in her claim, however, she refused to perfect and submitted no further evidence. Under the terms of the plan, it was plaintiff's burden to demonstrate she was disabled, and failed to do so. The defendant's decision to deny benefits was not arbitrary and capricious.
Sprague v. General Motors Corporation, 92 F.3d 1425 (6th Cir. 1996) - Two groups of retirees (general retirees and early retirees) brought action against GM after GM amended its plan to increase the cost of health insurance to the retirees. The district court granted partial summary judgment to the early retirees because it held that GM promised them lifetime health coverage in exchange for their early retirement, and thus, their benefit had vested. However, as to the general retirees, the district court held found that GM had reserved the right to amend the plan at any time, therefore they had no vested benefit. Accordingly, it refused to certify the class of general retirees and granted summary judgment to GM. The Sixth Circuit affirmed the court's holding as to the early retirees, but reversed its conclusion with regard to the general retirees. There was evidence that GM distributed a number of summary plan descriptions, and in least two years, the SPD did not expressly reserve the right to modify/terminate. Those general retirees who retired under the SPD with no reservation had a vested benefit. The district court did not examined the individual plans and distinguish between the general retirees and their respective retirement dates, but rather broadly concluded that GM reserved the right to modify. Summary judgment was appropriate without examining the evidence.
Pitcher v.
Principal Mutual Life Ins. Co., 93 F.3d 407 (7th Cir. 1996) - Defendant
appealed the district court's order granting summary judgment to plaintiff on
her claim to recover health benefits. The defendant denied plaintiff's claim for
benefits because the policy barred coverage for preexisting conditions. The
court, however, found that although plaintiff was being monitored for her
longstanding fibrocystic breast condition, this was not "treatment or service" for cancer
during the precoverage period. It noted that a mammogram is not
"treatment" for breast cancer, for it is purely a diagnostic
procedure. Treatment "occurs when a health care provider takes steps to
remedy or improve a malady." Although the defendant argued that an
expansive meaning of "preexisting condition" to preclude coverage,
under the rule of contra proferentum, the court must interpret the
contract "in an ordinary and popular sense as
would a person of average intelligence and experience ...and any ambiguities in the contract will be construed in favor of the insured.
Fink v. Union Central Life Ins. Co., 94 F.3d 489 (8th Cir. 1996)-No abuse of discretion in decision to deny benefits; plan administrator properly interpreted plan's provisions; no breach of fiduciary duty shown. See detailed analysis.
Birdsell v. United Parcel Service of America, 94 F.3d 1130 (8th Cir. 1996)-Challenge to grant of summary judgment to employer and its benefit plan. Held: district court properly held that denial of dental coverage by plan was reasonable. Affirmed. See detailed analysis.
Canseco v. Construction Laborers Pension Trust for Southern California, 93 F.3d 600 (9th Cir. 1996) - Under 29 U.S.C. § 1132(a)(1)(B), the terms of the plan entitled Plaintiff to retroactive benefits to the date they became eligible for those benefits. See detailed analysis.
Ayalon v. Atlantastaff, Inc., 95 F.3d 1156 (9th Cir. 1996) - Insurer denied plaintiff's claim for benefits due to a clause excluding coverage for preexisting condition. On his enrollment application, plaintiff denied that his wife had a "sight impairment," however, after her surgery for myasthenia gravis (droopy eyelids), the insured learned that the beneficiary had seen an ophthalmologist several times about these symptoms prior to her husband's enrollment. Before making this discovery, however, the insured had previously approved coverage for two surgery procedures that she underwent. When it learned that she had a preexisting condition, it rescinded the contract and denied her claim for benefits. The Ninth Circuit held that the decision to rescind was not an abuse of discretion since there was a material misrepresentation on the husband's enrollment form. The court believed it was material because the insured would not have specifically asked about "sight impairment" if it was unimportant. Rejecting the district court's suggestion that since the plaintiff did not know or did not appreciate the significance of his wife's vision problems, recision was improper, the Ninth Circuit found that the contract did not distinguish between negligent or intentional misstatements. Rather, once a material misrepresentation was made, the contract was void. In any event, the court found that the administrator had substantial evidence that plaintiff was fully aware of his wife's condition. He must of known that she wore glasses for over ten years, had headaches and trouble with her vision, and had seen a neurologist about her condition. The court further rejected the plaintiff's claim that defendants were equitably estopped from denying coverage since they had made payments in the past. Here, the plan administrators made two investigations and acted reasonably to discover the truth about plaintiff's condition. This was not a case where the administrator blindly paid out benefits without any investigation.
Hall v. Wal-Mart Assoc. Group Health Plan, 99 F.3d 1145 (9th Cir. 1996) - Defendant plan administrator denied health coverage for plaintiff's prostate cancer treatment because of a preexisting condition exclusion in the plan. The plan administrator found medical evidence that plaintiff had "prostate problems" in the past. The district court granted summary judgment to the plaintiff because it found that the administrator abused its discretion in interpreting the plan. The district court found the plain language of the plan excluded charges for any preexisting illness, injury or symptoms, and did not exclude coverage for preexisting "problems." The Ninth Circuit reversed, finding that "[t]he wording of the Plan's preexisting conditions clause ... might have been clearer but the interpretation adopted [by the administrator] does not conflict with the Plan's plain language. There was evidence that the plaintiff already knew from his doctors the specific details of his physical condition. Moreover, the fact that plaintiff needed surgical removal of the prostate only two months after coverage began indicated that the condition existed prior to coverage since cancer is not something that develops overnight. The court was not persuaded that plaintiff's earlier biopsy which erroneously indicated that he did not have cancer precluded the defendants from asserting the preexisting condition clause. Here, the biopsy was done on only selected areas and not the whole prostate itself, therefore cancer in other parts of the prostate could not be ruled out. The court stated that "the mere fact that a diagnosis was missed or incorrectly made prior to coverage does not necessarily preclude later exclusion on the basis of a preexisting clause." Thus, a preexisting condition can exist even if it is undetected.
Piscotta v. Teledyne Industries, Inc., 91 F.3d 1326 (9th Cir. 1996) - The district court granted summary judgment to the defendant because the insurance booklets issued in 1969 and 1972, which promised the lifetime health insurance benefits were not a summary plan description as defined by ERISA [29 U.S.C. § 1022(b)]. The Ninth Circuit agreed with this conclusion. See detailed analysis.
Morstein
v. National Insurance Services, 93 F.3d 715 (11th Cir. 1996) (en banc)-
During discussions about replacing an old health insurance policy, the agent
assured plaintiff that the new policy would not exclude coverage for preexisting
condition. When plaintiff's claim for benefits under the new policy was denied
because of a preexisting condition, she brought a state action against the agent
for his fraudulent inducement to purchase and negligence in processing her
application for an ERISA governed insurance plan. The district court held that
the state claims were preempted by ERISA § 514, however, the Eleventh Circuit
reversed. The court found that her claims did not fall within ERISA's broad
preemptive scope, and did not have sufficient connection with the plan to "relate
to" the plan. The court noted that the insurance agent and the agency were
not ERISA entities, and neither had control over the payment of benefits or a
determination of her rights under the plan. The court distinguished this case
where "the state
law claim involves the reliance on an insurer's promise that a particular
treatment is fully covered," and those cases where the state law claims of
fraud and misrepresentation are based on the failure of a covered plan to pay
benefits. The court concluded that the former situation does not have sufficient
relation to a benefit plan. Even though the remedy plaintiff will recover (if
she prevails) is measured the amount she would have received under the "old
plan," the court found that such "indirect relation between a
beneficiary and the plan is not enough for preemption." Finally, the court
concluded Congress' purpose for ERISA is not served by allowing preemption of
this fraud claim against the individual insurance agent; rather, it served
Congress' purpose to protect employees.
