This month’s Friday Five explores decisions regarding the transfer of an ERISA action that was filed in a state where an insurer did not maintain sufficient minimum contacts, an award of attorneys’ fees, costs, and prejudgment interest, deference to an insurer’s interpretation of a plan’s provisions and ability to recoup overpaid money, and an insurer’s wrongful denial of benefits in light of powerful and compelling evidence submitted by a plaintiff-participant employed as an attorney.

1. Will a court grant a motion to transfer venue when an ERISA action is filed in a state other than the insurer-defendant’s place of incorporation, principal place of business, and no other extraordinary circumstances exist to support general, personal jurisdiction? Yes. The United States District Court for the Southern District of Ohio granted Guardian Life Insurance Company of America’s motion to transfer venue after a plaintiff – who lived and worked in West Virginia and applied for and was denied benefits in West Virginia – filed suit in Ohio following the denial of long-term disability benefits under ERISA. The court began its analysis by setting forth the three possible places for an ERISA action to be brought: (1) where the plan was administered, (2) where the breach took place, or (3) where a defendant resides or may be found. The parties only disputed whether the third venue option – where Guardian resided or may be found – existed in Ohio to support general, personal jurisdiction there. For ERISA venue purposes, a defendant resides or may be found in a state in which it has “minimum contacts” to support personal jurisdiction. Finding that such contacts did not exist in Ohio, the court explained that the forums in which a corporate defendant, like Guardian, will find itself “at home” are limited to (1) the place of incorporation, (2) the principal place of business, or (3) a place outside of the state of incorporation but only in “extraordinary circumstances” (such as relocating during a world war). Given that Guardian is incorporated and has its principal place of business in New York, and no other extraordinary circumstances existed to warrant general jurisdiction in Ohio, there was no basis for personal jurisdiction in this case. The court specifically rejected the plaintiff’s argument that Guardian’s registration to do business in Ohio amounted to an ”exceptional circumstance” to support general jurisdiction in that state because Ohio does not require business registrants to consent to general jurisdiction. Therefore, the court transferred the case to the Northern District of West Virginia where the plaintiff resided and was denied benefits. Walton v. Guardian Life Ins. Co. of Am., No. 2:23-CV-1693, 2024 WL 47700 (S.D. Ohio Jan. 4, 2024).
2. Will a court award attorneys’ fees when those fees fall below the “presumptive” reasonable rate? The United States District Court for the Southern District of New York awarded attorneys’ fees, costs, and prejudgment interest to a plaintiff after a finding that the plaintiff had been totally disabled within the meaning of a supplemental ERISA plan for a period of roughly three years. Following trial, the plaintiff moved for attorneys’ fees and costs under ERISA § 502(g)(1), which permits a court to award “reasonable attorney’s fees and costs of action to either party.” First, the court awarded the plaintiff the full amount of attorney’s fees requested ($374,754.13) because those fees were “significantly lower than the presumptive reasonable rate” ($408,752.25). The presumptive reasonable rate was calculated by multiplying a reasonable hourly rate by the number of hours expended. In this case, the plaintiff’s requested fees fell roughly $30,000 below the presumptive reasonable rate, which reflected discounts for billing inefficiencies, as well as changes in attorneys’ rates over time. The court found the requested rates to be reasonable. Second, the court awarded $681.63 in costs for filing fees, service and process, and printing materials for trial given the “limited scope” of such costs as well as their necessity to litigating the case. Third, the court awarded the plaintiff nine percent in prejudgment interest, starting from the date the disability benefits should have been granted through the date of judgment for a total of $114,332.90 given that such rate was commensurate with the New York statutory interest rate. Finding that the requested attorneys’ fees, costs, and prejudgment interest were all reasonable, the court granted the plaintiff’s motion. Chung v. Provident Life & Cas. Ins. Co., No. 21 CIV. 9344 (AKH), 2024 WL 78366 (S.D.N.Y. Jan. 4, 2024).
3. Will a court defer to an insurer-defendants’ interpretation and application of an ERISA plan under the abuse of discretion standard while also permitting the insurer to recoup overpaid funds for a claim? Yes. The United States District Court for the Eastern District of Missouri found an insurer-defendant’s denial of accidental benefits to be reasonable and imposed an equitable lien on overpaid funds. The ERISA plan participant in this case, Mrs. Hanley, suffered from peripheral vascular disease and was being treated with aspirin and Plavix. Mrs. Hanley fell and hit her head on concrete and five days and two surgeries later, passed away. As the beneficiary under an ERISA plan, Mrs. Hanley’s husband sought life-insurance, supplemental-life-insurance, and accidental-death-and-dismemberment benefits. Unum granted plaintiff’s claim for life and supplemental-life benefits but denied the accidental benefits.  Due to an error in claim processing (the deceased’s social security number and name were misspelled by Unum), Unum accidently paid additional sums to plaintiff totaling $137,800.  Following the denial, Mr. Hanley initiated this action, and Unum filed a counterclaim seeking reimbursement for its overpayment of benefits. The plan at issue contained a medical-treatment and drug-use exclusion, which Unum relied on in denying the accidental benefits. The plan also provided Unum the right to recover any overpayment due to any error Unum made in processing a claim, which Unum relied on in order to recoup its overpayment of life-insurance benefits. The question for the court was whether Unum abused its discretion in denying Mr. Hanley’s claim. Both parties filed cross motions for summary judgment. The court first analyzed Unum’s denial of accidental benefits and held that (1) Unum reasonably found no accidental bodily injury given that a reasonable person could have reached the same decision, and (2) Unum’s interpretation that the medical-treatment exclusion, not the drug-use exclusion, applied was also reasonable despite the possibility of competing interpretations. As a result, the court denied Mr. Hanley’s motion for summary judgment. Next, the court considered Unum’s motion for summary judgment as to its overpayment for life-insurance benefits. Unum’s claim was brought under Section 502(a)(3) of ERISA, which permits a fiduciary to bring an action to obtain appropriate equitable relief. Mr. Hanley argued that the overpaid funds could not be identified because they were commingled with his other assets, but Unum argued that “equitable tracing rules” allowed it to identify the funds regardless of commingling. The court agreed with Unum and held that it could utilize the “lowest-intermediate-balance rule” (where it is assumed that the traced proceeds are the last funds withdrawn from a contested account) to trace the overpaid funds. Therefore, the court imposed an equitable lien on Hanley’s investment account of $137,800. Hanley v. Unum Life Ins. Co. of Am., No. 4:22-CV-01094-SRC, 2023 WL 8803034 (E.D. Mo. Dec. 20, 2023), appeal filed (8th Cir. Jan. 5, 2024).
4. Will a court determine that an insurer-defendant abused its discretion in denying long-term disability benefits when, even though the claim was filed later, the alleged disability arose when a plan was still in effect and the insurer did not produce independent medical evidence or an assessment to rebut a plaintiff’s medical records that supported a disability existed? Yes. The plaintiff, who was a neuro-ophthalmologist and surgeon, developed a progressive neurological condition that led to uncontrollable tremors such that he believed he could not safely perform ophthalmic surgeries. The first mention of a tremor was in medical records from March 15, 2021, but the plaintiff submitted a claim to Guardian explaining that, as a physician, he had self-diagnosed himself and self-treated the tremor since it first appeared in 2015. He stopped performing surgeries and claimed he was fully disabled as of December 31, 2021. When applying for long-term benefits under a plan managed by Guardian Life Insurance Company of America, the plaintiff provided a doctor’s report dated March 10, 2022 that described the plaintiff’s condition. After approving the plaintiff for a period of short-term disability, Guardian denied the plaintiff long-term disability, noting the lack of medical evidence that he was under regular care, lack of treatment intensity and frequency, a lack of medication or referrals under the treatment plan, and a lack of any medical evidence that the plaintiff had been diagnosed by a doctor with a condition that precluded him from performing the major duties of his employment. The plaintiff filed suit, alleging that Guardian wrongfully denied his claim for long-term disability under a group ERISA plan and both parties filed cross-motions for summary judgment. The court held that Guardian abused its discretion in denying the long-term benefits because (1) the plaintiff was eligible to apply for benefits despite the termination of his employment and the plan because the evidence showed he was disabled when the plan was still in effect, (2) the plaintiff satisfied the “regular care” requirement under the plan because the plaintiff’s evidence (which Guardian did not rebut) showed that the plaintiff followed the appropriate course of treatment for his disability, (3) there was sufficient evidence to show that the plaintiff was disabled as of December 31, 2021, despite him not being evaluated until months after that date, and (4) although Guardian’s grant of short-term benefits did not, per se, require the grant of long-term benefits, that fact did undermine the rationale for denying long-term benefits. Therefore, the court granted the plaintiff’s motion for summary judgment, denied Guardian’s motion for summary judgment, reversed Guardian’s final decision, and directed Guardian to award the plaintiff all benefits he was entitled to from January 1, 2022. Weisman v. Guardian Life Ins. Co. of Am., No. 7:22-CV-00595, 2024 WL 65427 (W.D. Va. Jan. 5, 2024).
5. Will a court order reinstatement and payment of past-due ERISA benefits when a plaintiff submits “powerful” medical evidence showing an inability to perform both cognitive and physical job duties as an attorney? Yes. The United States District Court for the Northern District of Illinois granted a participant’s motion for summary judgment and denied an insurer’s motion for summary judgment following a thorough analysis of the parties’ respective evidence relating to the plaintiff’s disability. The plaintiff, an attorney, had long-term disability benefits through a plan issued by Unum. The plaintiff had a history of back and lower-leg pain problems beginning in 2008 resulting from a herniated disc. In April, 2018, the plaintiff took a three-month medical leave of absence from his job because of his condition. During this time, he sought medical treatment, including physical therapy. He returned to work on or about July 9, 2018, but continued to get steroid injections and was eventually referred for a neurological consultation. The plaintiff took a second leave of absence on February 19, 2019 and did not return to work. He continued to seek out a variety of medical opinions and eventually filed a claim for disability benefits. Unum initially approved the plaintiff’s claim and began disbursing monthly benefits, but on July 17, 2020, Unum informed the plaintiff that Unum had determined that he was able to perform the duties of his occupation and that he was no longer considered disabled within the meaning of the plan, thereby terminating his long-term benefits. After an unsuccessful internal appeal, the plaintiff filed suit against Unum. Both parties moved for summary judgment, and the court ruled in favor of the plaintiff. In a lengthy opinion that thoroughly considered the evidence submitted by both parties, the court determined that the plaintiff’s evidence and medical records proved, by a preponderance of evidence, that he was disabled from performing the functions (both cognitive and physical) of practicing law and he was, therefore, disabled as defined by the plan. Notably, the court pointed out that Unum made “no attempt” to dispute the plaintiff’s cognitive impairments or his inability to perform the tasks in the plaintiff’s job description, and that the plaintiff had shown that he was unable to perform at least some of the basic physical duties, such as sitting, standing, and walking, that were required. The court described the plaintiff’s evidence as “powerful evidence” that he was disabled within the meaning of the plan. As a result, the plaintiff was entitled to reinstatement and an award of past-due benefits from the date of his termination until present. Snapper v. Unum Life Ins. Co. of Am., 662 F. Supp. 3d 804 (N.D. Ill. 2023).