ERISA Litigation Update By: - PowerPoint Presentation

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ERISA Litigation Update

By: Al Holifield and Dan janich

Holifield ∙ Janich & Associates, PLLC11907 Kingston PikeSuite 201Knoxville, TN 37934aholifield@holifieldlaw.comdjanich@holifieldlaw.com

Phone: (865) 566-0115Fax: (865) 566-0119

www.holifieldlaw.comSlide2

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Montanile v. Board of Trustees, Nat’l Elevator Indus. Health Benefit Plan – Equitable remedies and plan recoupment Gobeille v. Liberty Mutual Ins.

– ERISA preemption and state reporting requirements Little Sisters of the Poor et al v. Burwell – ACA contraceptive requirements and Religious Freedom Restoration Act (RFRA) Smith v. Aegon Companies – enforceability of plan venue provisions (petition denied)

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3Montanile

 Health plan paid $120,000 of participant’s medical expenses and had a provision entitling it to reimbursement out of any tort recovery.  After notice to the plan that the funds were being distributed, the participant spent all or most of the money recovered from the Defendant before the plan filed its §502(a)(3) action to recover the money.

 Issue presented to the Court: For a fiduciary to obtain an equitable lien by agreement, must the participant possess the funds when plan asserts its claim? ERISA Litigation UpdateSlide4

4Montanile

 Although the “equitable lien by agreement” made the basis of the claim equitable, the remedy sought was not equitable in nature. Under the standard treatises, the equitable lien is on the property – the res – and thus if the defendant dissipates the funds in a way that cannot be traced, the equitable lien is destroyed.

 “Typically available” limitation precludes reading equitable remedies broadly to include ancillary relief for money judgments.  Left open whether commingling funds opened the commingled funds to equitable relief. Noted that plans have been aware of these risks since Great-West and have developed practices to safeguard their reimbursement rights. Ginsburg – Court went down the wrong path in Great-West and this is just a continuation of that wrong path.

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5Gobeille

 Vermont adopted an “all payers” medical claims database that seeks to acquire medical claims data from all payers, including self-insured ERISA health plans. Around 18 states have adopted similar databases, with many adopting an “all payers” approach. Self-funded plans are a significant part (around 60%) of the market for employer provided healthcare.  In a 2-1 decision, in

Liberty Mutual Co. v. Donegan, 746 F.3d 497 (2d Cir. 2014), the Second Circuit found the statute was preempted. The Court of Appeals found this type of reporting was a core ERISA function and that Vermont (and, by extension, other states’) reporting requirements imposed a substantial burden on the self-insured plans. ERISA Litigation UpdateSlide6

6Gobeille

The Supreme Court, in a 6-2 opinion, held that the Vermont statute, as applied to Employee Retirement Income Security Act plans, was preempted because it requires certain entities, including health insurers, to report payments relating to health care claims and other information relating to health care services to a state agency for compilation in an all-inclusive health care database.

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7Little Sisters of the Poor

– Background  The ACA provides that preventive care is to be provided at no cost and deferred to the HHS the determination of what preventive care services to provide for women. HHS determined that contraceptive coverage should be included in preventive care.  HHS provided an exemption for religious employers (churches and integrated auxiliaries) and created an accommodation for religiously-affiliated non-profits. Accommodation requires filing a form with the government that then excludes contraceptive coverage from the plan, and triggers the insurer or TPA providing this coverage.

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8Little Sisters of the Poor

– Background  In Burwell v. Hobby Lobby, 134 S. Ct. 2751 (2014), the Court held that for-profit corporations, at least closely-held ones, are “persons” under the RFRA that can exercise religion. Providing this insurance coverage imposes a “substantial burden” on the corporate owners’ religious beliefs. The

Supreme Court unanimously overturned the lower court rulings against the Little Sisters, ordered the government not to fine the Little Sisters, and said the lower courts should provide the government an opportunity “to arrive at an approach going forward that accommodates the petitioner’s religious beliefs.”ERISA Litigation UpdateSlide9

9Smith v.

Aegon Companies Pension PlanThe issue is whether ERISA’s venue provision giving plaintiffs broad options on where to file suit (including, typically, where the plaintiff lives) is mandatory, or may be trumped by a plan’s venue provision, which often limits venue to where the plan is administered.  In Smith v.

Aegon Cos. Pension Plan the Sixth Circuit found the statutory venue provision was permissive, and enforced the plan’s venue provision.  ERISA Litigation UpdateSlide10

10Smith v.

Aegon Companies Pension Plan Although the U.S. DOL’s views were rejected by the Sixth Circuit, in response to the Court’s request, the Solicitor recommended denying cert. because other circuit courts have not ruled on the issue yet. Supremes apparently agreed and denied certiorari. Since this is an issue of significant practical import to both plans and participants, the DOL’s “let it percolate” position is interesting. If other circuits follow

Aegon there will be no split to rely on later. ERISA Litigation UpdateSlide11

11Marin v. Dave & Buster’s Inc., S.D.N.Y., No. 1:15-cv-03608

 In Dave & Buster’s, plaintiffs’ filed a complaint alleging that the company impermissibly reduced workers’ hours to avoid its obligations under the Affordable Care Act’s employer mandate.  The ACA’s employer mandate generally requires large employers to offer affordable and minimum value health coverage to its full-time employees (defined as employees who regularly work an average of at least 30 hours per week).  Employers are generally not required to offer coverage to employees working an average of less than 30 hours per week.  

Section 510 prohibits employers and plan sponsors from interfering with an employee’s attainment of benefits.  Maria De Lourdes Parra Marin, the named plaintiff, alleged that she regularly worked over 30 hours at Dave & Buster’s Times Square location until mid-2013, when her hours (and those of hundreds of other employees) were reduced, allegedly to prevent her from maintaining full-time status, thereby causing her to lose health coverage eligibility under the company’s group health plan. ERISA Litigation UpdateSlide12

12Marin v. Dave & Buster’s Inc., S.D.N.Y., No. 1:15-cv-03608

 In its ruling against Dave & Buster’s motion to dismiss the lawsuit, the court ruled that the plaintiffs had sufficiently pleaded that the company had acted with an “unlawful purpose” in its adverse action against them, as is required to support a claim under ERISA Section 510.  The court cited to numerous statements from the company’s management regarding the need to reduce full-time staffing to limit financial exposure under the ACA.  In support of its motion to dismiss, Dave & Buster’s argued that an employee has no entitlement to “benefits not yet accrued,” and must show more than a “lost opportunity to accrue additional benefits” to sustain a claim under ERISA Section 510; it was not possible to violate Section 510, the company argued, by preventing employees from becoming eligible for future benefits.  The court rejected this argument, ruling that the company’s actions had affected the plaintiffs’ current benefits, as well as their attainment of future benefits.      

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13Other Litigation Trends

 Health Care Provider LitigationFee LitigationBenefits “after” Termination

 ERISA Litigation Update