This month’s Friday Five covers recent cases addressing: (1) a fiduciary’s right to bring an ERISA § 502(a)(3) equitable relief claim against a beneficiary; (2) when a life insurer may avail itself of Florida’s “facility of payment” statute to support a satisfaction defense; (3) timeliness requirements under a disability policy; (4) the scope of ERISA’s preemption of common law claims; and (5) extra-record discovery in ERISA disability cases involving de novo review.
- Seventh Circuit broadly interprets fiduciaries’ right to bring ERISA § 502(a)(3) equitable relief claims against beneficiaries. The defendant, who was injured due to complications arising from a surgery, received over $300,000 in medical expenses from her father’s medical benefits plan because the defendant was a covered dependent. The defendant subsequently received a settlement in a tort suit against the hospital that performed the surgery, and the plan filed suit to recover the funds it paid to the defendant by asserting a claim under ERISA § 502(a)(3). The district court entered summary judgment in favor of the plan. The defendant argued on appeal that she never agreed to the terms of the plan, and her lack of assent removed the action from § 502(a)(3)’s ambit. The Seventh Circuit disagreed and affirmed the district court’s decision, holding that “[h]aving accepted the plan’s benefits, Haynes must accept the obligations too.” The court explained that fiduciaries may bring actions against beneficiaries under § 502(a)(3), and that the plan did not require that beneficiaries assent to the plan’s terms. Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Haynes, No. 19-2589, ___ F.3d ___, 2020 WL 4047436 (7th Cir. July 20, 2020).
- Court rejects life insurer’s satisfaction defense based on state “facility of payment” statute. In Murray, the Middle District of Florida denied a life insurer’s motion for summary judgment which argued that the insurer had satisfied its obligation to pay the appropriate beneficiary under a contested life insurance policy. The plaintiff, the insured decedent’s second wife, claimed that the decedent designated her the beneficiary under the policy before he died, such that the insurer’s payment to the decedent’s first wife – the original named beneficiary – was improper. The insurer argued that it acted appropriately under Florida’s “facility of payment statute,” Fla. Stat. § 627.423, which discharges an insurer from any action when it pays on a policy if: (1) payment is made in accordance with the policy; and (2) the insurer did not receive written notice that another person claims to be entitled to the payment. According to the policy, the decedent could change the beneficiary by sending the appropriate form to his employer or the insurer. The court determined that while there was no record evidence that the decedent sent the change form directly to the insurer, there was a factual dispute as to whether the decedent mailed the form to his employer and whether the insurer ultimately received it before paying the claim. Murray v. Aetna Life Ins. Co., No. 2:20-CV-209, 2020 WL 4207376 (M.D. Fla. July 22, 2020).
- Eleventh Circuit holds that policy contractual limitations period was “unambiguous” and dismisses disability benefits claim as untimely. In Kuber, the plaintiff ceased working due to a disability in September 2012. The defendant insurer approved his claim and paid benefits until January 2015, when it terminated the claim. After exhausting his administrative appeals, the plaintiff filed suit on December 28, 2018 for breach of contract and breach of the duty of good faith. The operative policy stated that “[Kuber] can start legal action regarding his claim 60 days after proof of claim has been given and up to 3 years from the time proof of claim is required.” The policy also required him to provide proof of claim “no later than 90 days after [his] elimination period ends.” The Eleventh Circuit affirmed the district court’s dismissal of the case, holding that the elimination period ended on March 17, 2013, 180 days after the plaintiff stopped working, so he was obligated to provide proof of claim by June 15, 2013 (90 days later). Thus, the plaintiff’s deadline to file suit was June 15, 2018. The court also held that because the plaintiff purchased the policy, it was not employer-sponsored and was not covered by ERISA. Kuber v. Prudential Ins. Co. of America, No. 19-13487, ___ F. App’x ___, 2020 WL 3542308 (11th Cir. June 30, 2020).
- Third Circuit delineates boundaries of ERISA preemption. An out-of-network provider filed suit against a health insurer asserting claims for breach of contract, promissory estoppel, and unjust enrichment. The provider claimed that the insurer acted unlawfully in refusing to reimburse the provider for services rendered when there was no in-network provider available to perform the services and where the insurer allegedly agreed to provide reimbursement. The insurer moved to dismiss, arguing that ERISA preempted all of the claims and the district court granted the motion. The Third Circuit affirmed in part and reversed in part, holding that ERISA only preempts common law claims that “relate to” ERISA plans. The Third Circuit determined that, as pled, the provider’s breach of contract and promissory estoppel claims were not for benefits due under the plan, were not predicated on the plan, and did not require interpretation of the plan. The Third Circuit, however, affirmed the district court’s preemption determination as to the unjust enrichment claim, concluding that the benefit allegedly conferred to the insurer – the discharge of the obligation the insurer owed to the insured – was premised on the existence of the plan. Plastic Surgery Ctr., P.A. v. Aetna Life Ins. Co., No. 18-3381, ___ F.3d ___, 2020 WL 4033125 (3d Cir. July 17, 2020).
- Eastern District of Pennsylvania allows plaintiff insured extra-record discovery in de novo review case. Opining that it was “not clear . . . why there should be a presumption against discovery when review is de novo,” the court sustained in part and overruled in part the defendant insurer’s objections to various extra-record discovery requests. The court ordered the insurer to provide information as to whether other plan participants had shared the plaintiff’s experience (specifically, approval of an STD claim, then denial of an LTD claim due to failure to satisfy an elimination period). The court also ordered the defendant to produce documents relating to a 2004 Regulatory Settlement Agreement that the defendant entered into with governmental agencies. Finally, the court permitted the plaintiff to take depositions of both medical consultants involved in denying her claim, along with a corporate designee. The court, however, sustained the insurer’s objections to other discovery requests, including requests for the medical consultants’ personnel files, concluding that these documents “would mostly go to questions of bias” and thus were foreclosed from discovery under the Third Circuit’s decision in Viera v. Life Ins. Co. of North America, 642 F.3d 407 (3d Cir. 2011). Dwyer v. Unum Life Ins. Co. of America, No. 19-4751, ___ F. Supp. 3d ___, 2020 WL 3605283 (E.D. Pa. July 2, 2020).