This month’s Friday Five covers recent cases addressing class certification, pre-existing condition limitations, consideration of extrinsic evidence on a motion to dismiss a purported ERISA action, fee awards, and what level of factual detail is sufficient to sustain an ERISA 502(a)(1)(B) claim.

1. When is class certification permissible in an ERISA-governed suit? The Southern District of New York partially granted a motion for class certification in a suit alleging that the administrator of a health plan wrongfully refused to pay for outpatient surgeries. The court determined that class certification was appropriate under Fed. R. Civ. P.  23(b)(1) and 23(b)(2) for the purposes of the plaintiffs' claims seeking declaratory and injunctive relief. The court reasoned that; (1) separate actions could put the administrator in a position where its claims practices were deemed permissible by some courts but held to violate the requirements of ERISA by others; and (2) in adopting its policy concerning the claims at issue and its process for rejecting such claims, the administrator acted on grounds that apply generally to the class and the relief sought would inure to the benefit of each member of the class. The court, however, rejected class certification under Fed. R. Civ. P. 23(b)(3) on the plaintiffs’ claims for payment of plan benefits, because adjudication of class benefits claims would require individualized inquiry due to the variants in plan language applicable to each individual plaintiff’s claims. Medical Society of the State of New York v. UnitedHealth Group, Inc., 2019 WL 4291811, S.D.N.Y. (Sep. 11, 2019).
2. Can a condition be pre-existing if not diagnosed or treated during the look-back period? In Lavery, the plaintiff challenged the plan administrator’s denial of his claim for long-term disability benefits after he was diagnosed with malignant melanoma. The administrator relied on one office visit in which the plaintiff’s primary care physician referred him to a dermatologist as sufficient support that his malignant melanoma was a pre-existing condition during the plan’s three-month look-back period and was excluded. The First Circuit agreed with the District of Massachusetts Court that the denial was arbitrary and capricious. The court reasoned that two clinical technicians, as well as one disability benefits manager who twice reviewed the claim, found the pre-existing exclusion inapplicable, yet superiors overruled these consistent judgments without explanation. Moreover, the court held that the plaintiff did not have the burden of proving that he was free from melanoma during the look-back period, where the plan provided that a disease was a pre-existing condition only if, during the look-back period, the disease was diagnosed or treated, or the applicant received services, or took prescribed or recommended drugs for the condition. Here, the plaintiff’s physician merely referred him to another doctor for a second opinion. Lavery v. Restoration Hardware Long Term Disability Benefits Plan, Nos. 18-1885, 18-2027, 2019 WL 4155038, 1st Cir. (Sep. 3, 2019).
3. Can a court rely on extrinsic evidence in determining whether ERISA governs an action? A pro se plaintiff filed suit alleging discrepancies between the beneficiaries of a decedent’s life insurance policies and a flexible retirement annuity. The complaint alleged that the Northern District of Ohio had jurisdiction over his claims because they were brought pursuant to ERISA, and therefore, presented a federal question. The court granted the defendant’s Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction because the policies at issue were individually-purchased policies, not employer-maintained policies, rendering ERISA inapplicable. Employing its “wide discretion to consider extrinsic evidence when determining whether subject matter jurisdiction exists,” the court relied upon copies of the subject life insurance policy and annuity appended to the defendant’s motion. Parker v. Metropolitan Life Insurance Company, No. 5:17-cv-01066, 2019 WL 4600630, N.D. Ohio (Sep. 23, 2019).
4. When should a plaintiff be denied attorneys’ fees although he prevailed on a claim for benefits? In Bustetter, the Eastern District of Kentucky held that the plaintiff was not entitled to recover his attorneys’ fees, even though the plan administrator’s termination of the plaintiff’s long-term disability and life waiver of premium benefits was arbitrary and capricious. The district court considered the factors enumerated by the Sixth Circuit in Secretary of Dep’t of Labor v. King, 775 F.2d 666, 669 (6th Cir. 1985). In denying fees, the court reasoned that; (1) the administrator’s conduct did not evince a high degree of culpability or bad faith; (2) a fee award in this case would not have a deterrent effect; (3) the plaintiff failed to make a showing that he sought to confer a common benefit on all participants; and (4) the relative merits of the parties’ positions did not support an award of fees. While the court ultimately decided in the plaintiff’s favor on the merits, the decision was a close one. In these circumstances, a finding for the plaintiff would be inappropriate according to the court, “as it would lead to a result that would essentially require a presumption in favor of attorney’s fees to the party that achieves some success.” (internal quotations omitted). Bustetter v. Standard Ins. Co., 2019 WL 4645568, E.D. Ky. (Sep. 24, 2019).
5. What level of detail is required to sufficiently allege an ERISA 502(a)(1)(B) cause of action? In Emami, the District of New Jersey granted the administrator’s Fed. R. Civ. P. 12(b)(6) motion and dismissed the plaintiff’s ERISA 502(a)(1)(B) claim for greater payment of health benefits. The court found that the amended complaint was replete with conclusory allegations. According to the court, it was insufficient that the plaintiff referred to a single, specific provision in the plan where he merely set forth allegations for how the administrator violated the plan in a conclusory fashion. Emami v. Empire Health Choice Assurance, Inc., No. 18-679, 2019 WL 4597521, D.N.J. (Sep. 20, 2019).