ERISA

June 10, 2019

The Supreme Court to Decide the Nature of Knowledge

The Supreme Court agreed Monday, June 10, 2019, to resolve a conflict between the Ninth Circuit and the Sixth Circuit on when ERISA’s three-year statute of limitations begins to run. The statute provides that a fiduciary breach claim may be brought within six years of a breach unless the plaintiff had “actual knowledge” of the breach, in which case a three-year statute of limitations applies. The Ninth Circuit found in Sulyma v. Intel Corporation Investment Policy Committee, 909 F.3d 1069 (9^th Cir., 2018), that the actual knowledge requirement that triggers the running of the three-year statute of limitations does not begin until the participant actually knew about the breach, rather than when the participant can be charged with implied knowledge based on distribution of plan documents or other notices. The Ninth Circuit recognized that its ruling about the actual acknowledgement requirement conflicts with the Sixth Circuit’s decision in Brown v. Owens Corning Investment Review Committee, 622 F.3d 564 (6^th Cir. 2010). The Brown case sets a much lower bar, holding that the statute begins to run once the participants are given instructions on how to access plan documents. The Brown court stated Congress did not intend “the actual knowledge requirement to excuse willful blindness.” The Ninth Circuit said that the Sixth Circuit standard is not good enough.

The Sulyma case stems from allegations the investment committee selected investments for participant accounts that were unduly risky and that Intel acted imprudently by either disregarding the risks or failing to investigate the risks. Specifically, it was alleged the funds were invested heavily in hedge funds and private equity. The Ninth Circuit determines when the three-year statute of limitations begins to run is performed using a two-prong approach. The Court first isolates and defines the alleged breach and then determines when the plaintiff had actual knowledge of the alleged breach. In a lengthy decision the Court analyzed what it means to have actual knowledge.

The Court reasoned that actual knowledge must be something more than simply knowledge of the underlying transaction, at least in cases where such knowledge does not obviously disclose the breach. Furthermore, the Court concluded that the exact nature and quantum of knowledge required to trigger the limitations period will vary depending on the nature or the claim. Thus, although the Ninth Circuit acknowledged that participants had been given investment information in several different formats, because Sulyma testified and argued he did not know his retirement was so heavily invested in hedge funds or private equity the Court determined that whether plaintiff had actual knowledge was a question of fact and should not have been decided on summary judgment.

June 7, 2019

Insurance Companies Certainly Do Not Make It Easy: Be On the Lookout for Some of Their Tactics

by Andrew M. Kantor

Yahoo Finance published an article about how insurers try to prevent individuals from obtaining disability benefits. While the article discusses Canadian insurers, our experience is that the tactics described in that article also happen in the United States.

This blog elaborates on some of the points raised in the article, especially as they relate to ERISA insureds. The Yahoo article observed:

“Surveillance is a common tactic. Insurers will hire private investigators to try to catch you in the act of doing something a disabled or injured person couldn’t, like moving a ladder or other heavy objects.

June 6, 2019

The Importance of Being Timely

by Beth A. Davis

Missing a deadline in your ERISA claim is deadly to your claim.

Accordingly, it is extremely important that any and all deadlines are met. One deadline of particular importance is the 180-day deadline by which to submit an appeal of a denial of benefits covered by ERISA. The federal regulations that govern ERISA require insurance companies to allow claimants 180 days to submit an appeal of a denial of benefits. While the regulations state that the claimant is to be allowed 180 days from the date of receipt of the denial, the safest course of action is to calculate the deadline from the date of the letter denying the benefits. This is one of many good reasons to come to Kantor & Kantor with your claim.

Six Months Will Fly By

June 6, 2019

UnitedHealth Group Asks the Supreme Court to Allow Cross-Plan Offsetting

by Elizabeth Hopkins

In recent years, UnitedHealth Group has ramped up its practice of recovering supposed overpayments to medical providers on claims of plan participants in one healthcare plan by offsetting these “overpayments” against (and therefore often totally disallowing) payments on the claims of participants in an unrelated plan. Keep in mind that the participants in the plans normally are still on the hook for any medical bills that the United refuses to pay. I like to refer to this practice of cross-plan offsetting as robbing Peter to pay Paul’s plan. Or perhaps given the petition for certiorari filed last week by United in a case brought as a class action by Dr. Louis Peterson seeking to end this practice, I should say robbing Peterson (and his patients) to pay Paul.

In the Peterson case, the Eighth Circuit Court of Appeals issued a decision earlier this year agreeing with a trial court that this practice was not allowed under the terms of the governing plans, which expressly allowed such offsetting for provider claims based on patients within the same plan, but said nothing about cross-plan offsets. Without deciding whether the practice necessarily violates ERISA, as the Department of Labor argued it does in a brief it filed as amicus curiae in the case, the Eighth Circuit noted that, at a minimum, the practice was “in some tension with the requirements of ERISA,” and “pushed the boundaries of what ERISA permits.” Accordingly, the court concluded that, despite the broad grant of interpretive authority granted to United in the plans, its interpretation of the plan as allowing cross-plan offsets was unreasonable.

United has asked the Supreme Court to review (and reverse) the decision. In its cert. petition, United asks the Court to resolve two issues (1) whether the Eighth Circuit incorrectly held that its interpretation was “necessarily unreasonable merely because the plan is silent on the matter”; and (2) whether a court is required by established ERISA case law to defer to “an otherwise reasonable plan construction that is lawful under ERISA but, in the court’s view, pushes ERISA’s boundaries.”

June 5, 2019

Why It’s Important To Seek Assistance Early During Your Long Term Disability Claim Process with a Condition Like Rheumatoid Arthritis

by Beth A. Davis

We represent a number of clients who suffer from Rheumatoid Arthritis. This often misunderstood and “invisible” disease causes extreme pain for its sufferers. On top of the pain, many also deal with the disbelief of friends, family and employers as to the disabling nature of their illness.

Rheumatoid Arthritis (“RA”) is a chronic disorder in which the body’s immune system attacks joint tissue and causes inflammation that can spread throughout the body. It can also cause excruciating pain. Because there are very few visible symptoms during most stages of this disease, its sufferers appear to be fine when in reality, they are in extreme pain.

Another difficult aspect of RA, from a disability standpoint, is that there is no single test for diagnosing the condition. Rather, it is diagnosed by clinical evaluation, lab tests and imaging. This makes meeting your long term disability plan’s definition of disabled more difficult as insurers are often looking for “objective evidence” of disability.

June 5, 2019

DOL Set to Release Association Retirement Plan Rule

by Elizabeth Hopkins

Undeterred by a federal court’s recent ruling striking down most of a Department of Labor regulation that allowed small employers and sole proprietors to band together to form association healthcare plans (AHP), DOL is giving top priority to finalizing a rule that will do much the same thing on the pension side. The proposed pension rule, which was published last October, is aimed at increasing the abysmally low retirement savings by employees of small businesses, whose employers more often than not do not offer pension plans, a laudable goal. As proposed, the rule expands the definition of “employer” in ERISA to allow unrelated employers and sole proprietors that are in the same general line of business, or in the same State or geographic area, to participate in a pension plan sponsored by an employer group, association or professional employer organization. DOL has said that it is aiming to release the final rule in June.

If the final rule looks mostly like the proposal, it is hard to say whether it would be a good thing or a bad thing for employees overall. Unlike the AHP regulation, which was seen by many as a fairly blatant attempt to undermine key consumer protections of the ACA, the pension proposal seems genuinely aimed at increasing the availability of such plans for more small businesses and not at undermining any of the protections of federal law. In fact, in its proposed form, the rule does not go as far as some industry professionals had wanted in expanding who may sponsor such plans, and it expressly prohibits financial services professionals – banks, insurance companies, broker-dealers, third-party administrators and the like – from sponsoring these plans. And it remains to be seen if, in issuing the final rule, DOL tightens the requirements for the sponsoring organizations by, for instance, mandating a minimum number of years of experience, staffing qualifications and capital reserves, as some commenters have urged. But, however well-intentioned the approach, by allowing unrelated employers and business owners with no employees to join association retirement plans, the rule cannot be easily squared with the employment-based context of ERISA. It takes precisely the approach that DOL took in its AHP regulation, and it is likely to be challenged in the same court and to suffer the same fate. Stay tuned for updates.

The attorneys at Kantor & Kantor keep up to date on issues such as these so we can better protect our clients. For more information, please contact an attorney at at 800-446-7529 or use our online contact form.

June 5, 2019

The Continued Litigation of ESOP Indemnification Agreements

by Susan L. Meter

In an intensely litigated ESOP case involving 14 counts of ERISA violations, on April 22, 2019, Judge Staton, District Judge, Central District of California, certified a class of ESOP participants. The certification came after the court denied Defendants’ motions to dismiss all 14 counts. The case, as a whole, has many interesting legal issues, however, most interesting is the continued litigation of whether indemnification agreements for breaches of fiduciary duty are void.

As background, ERISA § 410 categorically voids indemnification agreements and states, in part “any provision in an agreement…which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty…shall be void as against public policy.” However, Department of Labor regulations have interpreted this to permit employer indemnification but not plan indemnification. (29 CFR 2509.75-4). The regulations also permit indemnification agreements so long as it does not relieve a fiduciary of responsibility or liability.

In 2009, we heard the first case in the 9^th circuit that interpreted ERISA § 410 and its regulations, giving some clarity on the validity of indemnification agreements. In Johnson v. Couturier, 52 F.3d 1067 (9th Cir. July 27, 2009) the ESOP participants alleged defendants breached their fiduciary duties by allowing the company to pay excessive compensation to an officer who was a fiduciary to the plan. The company in Johnson was 100% ESOP owned and was in the process of liquidation. The indemnity agreement between officer-fiduciary and plan sponsor (company) provided indemnity unless due to gross negligence or deliberate wrongful acts. Despite the indemnity being paid from corporate assets, which would typically be permitted under DOL regulations, here, because the company was liquidating, the Court held that payment of indemnification by the company would reduce, dollar-for-dollar, the liquidating distribution from the plan – essentially paid by ESOP.

May 15, 2019

If You Suffer from Chronic Pain, We Hope You Are Aware of this Organization

by Kantor & Kantor LLP

Many of our clients suffer from chronic pain. For some chronic pain is a symptom of an underlying condition and for others it is the main condition; in either case, chronic pain can be and often is disabling. Because so many of our clients are affected by chronic pain, we thought a discussion of the organization that provides information, support and education for those who suffer from chronic pain conditions might be helpful.

The American Chronic Pain Association’s mission:

to facilitate peer support and education for individuals with chronic pain and their families so that these individuals may live more fully in spite of their pain; and

May 15, 2019

Is Cigna Living Up To Its Commitments?

by Kantor & Kantor LLP

Long term disability policies frequently have two different definitions for disability. The first provides benefits if one is unable to perform their “own occupation.” To determine benefits under these criteria, the carrier often looks at the “material and substantial duties” of the insured’s occupation and whether the insured can perform those duties with his or her restrictions and limitations.

After 24 months, the criteria often change to whether the insured can perform “any occupation” for which he or she is suited by education, training and experience. Most, but not all policies, also expressly include “station in life” criteria. This means the carrier must also consider the insured’s prior earnings and any alternate occupation identified by the carrier must pay earnings commensurate to the insured’s prior occupation.

We frequently see carriers terminate benefits at the “any occupation” phase of the Plan based on mythical occupations. For example, Hartford has terminated benefits for our clients, stating that the insured can be a “Lens Inserter” or a “Jacket Preparer.” The carriers take the position that it does not matter if the job actually exists in the national economy. Since the occupations are identified by the outdated Dictionary of Occupational Titles, the carriers believe that they are suitable alternative occupations.

May 14, 2019

The Lupus Foundation Can Be a Priceless Resource

by Kantor & Kantor LLP

It seems we are handling an increasing number of Lupus cases, so we thought we would write about the illness and the organization that provides information, support and education for those who suffer from Lupus.

The Lupus Foundation works to find a cure, to advance research, to increase knowledge, to empower the community and to ensure that those living with the disease enjoy the best quality of life possible. http://www.lupus.org/about

This organization can provide valuable information for our clients with Lupus and their families on topics that include: understanding the illness, coping with a recent diagnosis, managing Lupus and support for care partners and family. These are just a few examples of the many resources available on the Lupus Foundations’ website.