In Florida’s federal courts, there has been an epidemic of class actions alleging that employers failed to provide technically proper notice of the right to continued healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act. A dozen such lawsuits have been filed (each by the same law firm) with mirror image allegations. These cases illustrate why it is necessary to sweat the details in issuing COBRA notices, which McDermott’s Megan Mardy and Julie McConnell walk through in a recent analysis for Law360. Access the full article. Originally published by Law360, October 2019
A federal district court denied class certification to health plan participants who claimed the plan promised them lifetime benefits. The court found too many individualized questions about what the plan told each participant, and the claims could not be resolved on a class-wide basis. Fitzwater, et al. v. Consol Energy, Inc., et al., No. 2:16-cv-09849 and 1:17-cv-03861 (S.D.W.Va., October 15, 2019). Access the full article.
The Ninth Circuit signaled that it might rehear Dorman v. The Charles Schwab Corp., where earlier this year it held that a mandatory arbitration provision required arbitration of an ERISA fiduciary-breach claim. Access the full article.
In the string of pension-plan related, actuarial equivalence lawsuits, the court in DeBuske, et al. v. PepsiCo, Inc., et al. recently handed down the first decision favorable to plan sponsors. The DeBuske court’s narrow decision may, however, have limited impact going forward. Access the full article.
As presidential hopefuls bemoan the high cost of healthcare, McDermott’s Ted Becker imagines a stack of lawsuits pushed toward corporations and insurance companies. If workers can use the Employee Retirement Income Security Act to challenge 401(k) plans' fees and investments, why can't they use it to sue over how their health insurance plans are managed? In a Q&A recently published on Law360, Becker discusses his prediction that health and welfare plan management suits will be the next frontier for ERISA plaintiffs, and how McDermott is preparing clients. Access the full article.
A US Supreme Court case pitting pensioners against US Bank could have a wide-ranging impact on who can bring suit under ERISA, whether they participate in a defined benefit pension plan or a 401(k) plan. Recently, on Law360, McDermott’s Richard J. Pearl weighed in on the impact of Thole v. US Bank, one of three ERISA cases that the US Supreme Court will decide this term. The case, discussed in greater detail in our On the Subject, will address whether defined benefit pension plan participants have standing to bring suit under ERISA if their plan is fully funded. Although the case focuses on participants’ ability to bring suit on behalf of defined benefit pension plans, according to Pearl, the case seems to ask the high court to answer a question that often crops up in defined contribution plan litigation, as well: Whose injury matters, the plan’s or the person’s? As a result, the court’s decision could impact not only litigation involving defined benefit...
An employer learned the full cost of ambiguity when a Connecticut federal district court agreed with an employee’s widow that the word “maximum” was ambiguous in the company’s life insurance plan, thus making the widow entitled to an additional $4 million in benefits. This decision serves as a warning for employers sponsoring insured benefits. Access the full article.
Federal Court Certifies Class in Multiple-Plan ERISA Challenge to Health-Plan and Retirement-Plan Fees
A Texas federal court certified a class in case brought by participants in one plan, and allowed those participants to represent participants in unaffiliated plans. The claims alleged that the defendants, who marketed and provided services to all of the plans, breached fiduciary duties by imposing excessive fees. See Chavez, et al. v. Plan Benefits Services, Inc., et al., No. AU-17-CA-00659-SS, United States District Court for Western District of Texas (Aug. 30, 2019). Access the full article.
In two opinions—one published and one unpublished—the Ninth Circuit overturned prior precedent and held that a Plan amendment requiring arbitration meant that an individual had to arbitrate, on an individual basis, purported class claims alleging imprudent and disloyal management of 401(k) investments. This decision, although unpublished, provides support for plans wishing to add binding arbitration provisions that apply to ERISA 502(a)(2) claims. Access the full article.
A Third Circuit appeals panel upheld the lower court ruling in Commonwealth of Pennsylvania v. President United States of America et al. No. 17-3752. This ruling grants a nationwide preliminary injunction against the religious and moral exemptions for employers to the ACA's birth control mandate, so employers may want to take a cautious approach toward limiting contraceptive coverage. Access the full article. Teal Trujillo, a summer associate in our Chicago office, also contributed to this article.