This month’s Friday Five covers cases relating to interpretation of ambiguous policy terms, evaluation of claimant’s expert witness, inclusion of law firms as appropriate parties from whom plan administrators may seek equitable relief, transfer of cases from the claimant’s choice of venue, and determination of a plan’s ERISA coverage to thwart a claimant’s request for a jury trial.
The Saul Ewing Employee Benefits/ERISA Litigation Team
- Circuit Court Highlights “Poster Child” Case for Construing Policy Ambiguities Against the Insurer. In this case, the First Circuit considered whether an employee lost life insurance coverage under his employer’s group policy after he developed a brain tumor that disrupted his usual work. The insurance company denied coverage on the ground that the employee no longer met the eligibility criteria of being an “Active . . . Part-time Corporate Vice President.” The terms “Active” and Corporate Vice President” were not defined in the policy, but “Part-time” was defined as working a minimum of 20 hours during the person’s “regularly scheduled work week.” “Regularly scheduled work week” was not defined in the policy. The insurance company argued that the employee lost eligibility when the claimant began working from home and was beset with medical appointments because (1) he was not performing the kind of work expected of an “Active . . . Corporate Vice President” and (2) the employee was not doing enough work to qualify as “Part-time.” The Court rejected both arguments. It held that, applying the rule that ambiguous terms in an insurance policy should be read—within reason—in favor of coverage, the employee was eligible for coverage, and affirmed the district court’s decision in favor of the employee’s widow. Ministeri v. Reliance Standard Life Ins. Co., 42 F.4th 14, 19 (1st Cir. 2022).
- Court Excludes Certified Vocational Evaluator as Expert. An insurance company filed a motion to exclude the testimony of the plaintiff’s expert, a Certified Vocational Evaluator, who provided deposition testimony and an expert report challenging the transferable skills analyses obtained by the insurance company. The Court found the expert’s opinions were “conclusory objections unsupported by analysis or specific citations to facts” and the plaintiff failed to establish the reliability and admissibility of the same. Moreover, the expert’s opinions were confusing, purported to opine on the insurance company’s subjective intent, and speculated on the plaintiff’s medical conditions although the expert lacked qualifications to render a medical opinion. Accordingly, the Court concluded that the expert’s testimony and report suffered from “several, independent fatal flaws” and as such, would not be considered in this case. Barnett v. Sun Life Assurance Co. of Canada, No. 3:20-CV-01879-LCB, 2022 WL 2762710 (N.D. Ala. June 21, 2022).
- "Court Finds “No Limit” on Which Defendants a Plaintiff Plan Administrator May Seek Equitable Relief. Following a motor vehicle accident, Plaintiff, a Plan Administrator, paid the claimant’s medical expenses under the plan’s express condition that the claimant would reimburse the plan for any benefits paid if she received a recovery from any third party. The claimant retained a law firm and received settlement funds relating to the accident. When the claimant and her law firm failed to fully reimburse the Plan Administrator for the benefits she received, the Plan Administrator filed a complaint against both the claimant and the law firm. The law firm moved to dismiss claiming attorneys and law firms are not subject to suit under ERISA § 502(a)(3). The Court turned to the U.S. Supreme Court’s reasoning in Harris Tr. & Savs. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238 (2000), finding that “in interpreting § 502(a)(3), the Supreme Court made clear that Congress knew how to, but did not, limit the ‘universe of possible defendants’ when drafting § 502(a)(3).” Accordingly, the Court concluded “there is no limit on the defendants from which plaintiffs may seek appropriate equitable relief” and denied the law firm’s motion to dismiss. Synchrony Fin. Welfare Benfits Comm. v. DeMayo L. Offs., LLP, No. 3:21-CV-00376-RJC-DSC, 2022 WL 2600165 (W.D.N.C. July 8, 2022).
- SDNY Departs From Claimant’s Choice of Forum and Grants Insurance Company’s Request to Transfer Venue. A plaintiff sued an insurance company in the Southern District of New York claiming the insurance company breached its obligations under ERISA by limiting the benefits she received and failing to provide her with information she requested. The insurance company filed a motion to transfer the case to the Eastern District of Virginia. In weighing the various factors for determining whether a transfer was appropriate, the Court acknowledged that “[i]n an ERISA case, courts must give great weight to a plaintiff’s choice of forum because when enacting ERISA, Congress purposefully made the venue provision broad.” However, the only ties to New York were the insurance company’s headquarters and the claimant’s counsel’s place of business. Because the claimant resided in Virginia and none of the facts giving rise to the case occurred in New York, the Court found transfer to Virginia was appropriate. The Court was not persuaded by the claimant’s argument that the Southern District of New York has greater familiarity with ERISA because ERISA is a federal statute and, as such, “all federal courts are presumed to be equally familiar” with the statute. Paulson v. Guardian Life Ins. Co. of Am., --- F. Supp. 3d ----, No. 22-CV-2172-GHW-JLC, 2022 WL 2693632 (S.D.N.Y. July 12, 2022).
- Court Strikes Plaintiff’s Request for Jury Trial, Thereby Rejecting Plaintiff’s Non-ERISA Policy Argument. In a case involving a claim for long-term disability benefits, the plaintiff asserted the LTD policy was independent of his employer’s group benefits plan and thus, was not governed by ERISA. Plaintiff requested a jury trial, but the insurance company argued that the policy was subject to ERISA preemption and thus, covered by the general prohibition of jury trials in appeals from ERISA claim denials. To determine whether the policy was part of an ERISA plan, the Court focused on the first part of a three-part inquiry: “First, the court must apply the so-called ‘safe harbor’ regulations established by the Department of Labor to determine whether the program was exempt from ERISA.” The “safe harbor” provision requires that, to be exempt from ERISA, a plan must meet four criteria: (1) the employer makes no contribution to the program; (2) the employee’s participation in the program is completely voluntary; (3) the employer’s only functions in connection with the program are, without endorsing the program, to permit the insurer to publicize the program to employees, collect premiums through payroll deductions, and remit those premiums to the insurer; and (4) the employer receives no consideration in connection with the program aside from reasonable compensation for administrative services provided through payroll deductions. The Court found the plaintiff failed to meet the first and third elements. Accordingly, the policy was subject to ERISA and the plaintiff was not entitled to a jury trial. Duncan v. Unum Life Ins. Co. of Am., No. 3:20-0600, 2022 WL 2812659 (M.D. Tenn. July 18, 2022).
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