Friday Five: Five Highlights from the Ongoing ERISA Litigation – June 2021 | Saul Ewing Arnstein & Lehr LLP
This month’s one Friday five highlights the views of circuit and district courts on the scope of ERISA preemption, discretionary review and exhaustion of administrative remedies.
- The ninth circuit confirms that ERISA does not anticipate the state-run IRA savings program. In a dispute over a California law that creates a state-administered individual retirement program (“IRA”) for employees who do not have access to a qualifying retirement savings plan through their employer, the Ninth Circuit upheld the district court’s conclusion that the program was not a de facto ERISA plan and, therefore, was not preempted. The state IRA program automatically enrolls eligible employees of certain private employers that do not provide employees with a tax-eligible retirement savings plan and requires those employers to make certain payroll deductions into the program. to fund employee IRA. The case was brought by a taxpayer association, which challenged the state IRA program as an employer that did not offer the required retirement savings plan, and not as an organization. of public interest promoting the rights of taxpayers. Thus, the court ruled that the group had standing to challenge California law. The court ruled that the ERISA preemption challenge had failed, concluding that the state’s IRA program was not an ERISA plan because it was maintained by the state of California, not employers; did not require employers to implement separate ERISA plans and did not relate to ERISA. Thus, ERISA did not exclude the California IRA program, forcing employers who did not otherwise offer a tax plan to participate in the program. Howard Jarvis Taxpayers Ass’n v. California Secure Choice Ret. sav. Program, n ° 20-15591, 2021 WL 1805758 (9th Cir. 6 May 2021).
- Second circuit rejections From Novo Standard of review despite lack of clearly delegated authority to determine administrator benefit. The claimant contested the denial of benefits, arguing that the district court should have reviewed the determination of eligibility by the plan administrator under a de novo examination standard. The Second Circuit dismissed the claimant’s challenge on four grounds: (1) the plan gave the administrator the authority to determine the eligibility and amount of any benefit and to assess all claims and appeals; (2) the Plan required that claims be determined in accordance with “reasonable complaints procedures ”, which indicates a subjective standard; (3) the administrator created the process by which the administrator himself determined eligibility; and (4) the Plan’s delegation language “fits comfortably” with the wording of precedent-seeking discretion. The court then concluded that the administrator had not abused his discretion. He noted, however, that the Claimant alleged that the Administrator violated ERISA’s Complaints Procedure Rules by withholding certain documents from the Claims Process, but the Claimant failed to raise the argument in due time. timely. Thus, the court confirmed the denial of benefits. Tyll v. Stanley Black & Decker Life Ins. Program, n ° 20-1060, 2021 WL 1748474 (2d Cir. 4 May 2021).
- The tribunal concludes that the failure to exhaust ERISA administrative remedies constitutes an affirmative defense sufficient to dismiss the complainant’s complaint. The claimant applied for dental benefits after a bicycle accident resulting in extensive dental work. She was denied benefits under a scheme governed by ERISA. After a first level call, she received a letter confirming the denial, explaining that she had not provided sufficient information to determine if the services were covered, and advising her that she “may request a review of second level ”within 60 days. . The plaintiff filed a second appeal 66 days after the first instance denial. The first level denial was confirmed due to the inappropriateness of his second level appeal. The plaintiff brought an action, seeking pecuniary damages for the dental bills and fair relief for the alleged breach of fiduciary duties. The court upheld the denial, finding that the complainant had been sufficiently informed of the second-level appeal requirement through unambiguous mandatory language stating that she “must send a letter requesting an appeal.” . . Moreover, his failure to exhaust administrative remedies was not absolved by any exceptions, including fair toll or futility. Finally, the court dismissed his claim for breach of fiduciary duty, noting that a claim 502 (a) (3) “cannot exist only as a second route to the damages sought under 502 (a) (1) (b).” Because the plaintiff claimed pecuniary damages, such damages were not available as a fair remedy. Benson v. Tiffany & Co., No. 20 CIV. 1289 (KPF), 2021 WL 1864035 (SDNY May 10, 2021).
- A decision period is imposed if the party requesting benefits fails to provide the necessary information to the administrator to determine eligibility. The plaintiff challenged her denial of long term disability benefits after a diagnosis of Parkinson’s disease. Usually, an administrator is required to render a decision within 45 days of receiving the complaint. However, the administrator rendered his decision 59 days after receiving the plaintiff’s claim. The claimant argued that the delay in the decision required a dismissal of the administrator’s denial of benefits. The court noted, however, that the administrator had twice requested additional information from the complainant in order to determine her claim. The requester never provided such information and the administrator issued the refusal only 12 days after the second request for information. The deadline for making a decision was therefore reduced, and the delay was not a ground for challenging the denial of benefits. Stewart v. Hartford Life & Accident Ins. Co., n ° 2: 17-CV-01423-KOB, 2021 WL 1816961 (ND Ala. May 6, 2021).
- The removal of state law claims related to an ERISA plan was appropriate although the complaint does not invoke an ERISA cause of action. A pro plaintiff made tort claims after being denied long term disability benefits. The defendant withdrew and the plaintiff argued that the case was not governed by ERISA, that it was a tort case and that she had not received information about his plan. The court rejected this argument, explaining that the plaintiff’s claim fell within the scope of ERISA because it was an employee social protection scheme that did not fall under a regulatory safe harbor. Specifically, the employer’s name and logo were prominently displayed and the employer was identified as both the sponsor and the administrator of the plan. In addition, the court examined the documents of the ERISA plan, which were not attached to the complaint but whose authenticity the complainant did not contest. The court therefore concluded that the plan was covered by ERISA, that the revocation was appropriate, and that the defendant’s motion to dismiss in Federal Court would be granted with leave to re-argue as an ERISA claim. Patterson v. Hartford Life & Accident Ins. Co., n ° 21-CV-21255, 2021 WL 1945829 (SD Fla. 14 May 2021).