Justia Class Action Opinion Summaries

Articles Posted in ERISA
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Plaintiffs, each a retiree of PPG Industries, Inc. (“PPG”), or the surviving spouse of such a retiree, initiated a putative class action— following the termination of Plaintiffs’ retiree life insurance coverage under the PPG Employee Life and Other Benefits Plan (the “Benefits Plan” or the “Plan”).   The district court awarded summary judgment to the PPG defendants on all claims, without ruling on the class certification issue. On appeal, Plaintiffs contested the summary judgment award as to three counts of the Complaint, that is, Counts I, VII, and VIII.   The Fourth Circuit identified a genuine dispute of material fact with respect to the Count I claim that retiree life insurance coverage was “vested” in eligible employees working for PPG during the 15-year period from 1969 to 1984 (the “vesting claim”). The court explained that it agrees with Plaintiffs that if their retiree life insurance coverage were ever a vested benefit, PPG could not rely on the later-added reservation of rights clause to terminate that coverage.Accordingly, the court vacated vacate the judgment as to the vesting claim and remanded for consideration of whether the termination of Plaintiffs’ retiree life insurance coverage contravened the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. Section 1001 et seq. View "Charles Bellon v. The PPG Employee Life and Other Benefits Plan" on Justia Law

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The Universal Health Services Retirement Savings Plan is a defined contribution retirement plan. Qualified employees can participate and invest a portion of their paycheck in selected investment options, chosen and ratified by the UHS Retirement Plans Investment Committee, which is appointed and overseen by Universal. Named plaintiffs, on behalf of themselves and all other Plan participants, sued Universal under the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(2)3 and 1109, alleging that Universal breached its fiduciary duty by including the Fidelity Freedom Fund suite in the plan, charging excessive record-keeping and administrative fees, and employing a flawed process for selecting and monitoring the Plan’s investment options, resulting in the selection of expensive investment options instead of readily-available lower-cost alternatives. They also alleged certain Universal defendants breached their fiduciary duty by failing to monitor the Committee.The Third Circuit affirmed class certification, rejecting an argument that the class did not satisfy the typicality requirement of Federal Rule of Civil Procedure 23(a), given that the class representatives did not invest in each of the Plan’s available investment options. Because the class representatives allege actions or a course of conduct by ERISA fiduciaries that affected multiple funds in the same way, their claims are typical of those of the class. View "Boley v. Universal Health Services Inc" on Justia Law

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Plaintiff appealed the district court's grant of summary judgment in favor of Aetna, as well as the denial of her motion for class certification. In this case, Mars operated a self-funded health care plan and hired Aetna as a claims administrator of the plan pursuant to a Master Services Agreement (MSA). Aetna subsequently executed subcontracts with Optum for Optum to provide chiropractic and physical therapy services to the plan participants for more cost-effective prices. From 2013 to 2015, in addition to obtaining other non-Optum medical services, plaintiff received treatment from chiropractors and physical therapists provided by Optum under its contract with Aetna.In 2015, plaintiff filed suit against appellees, alleging violations of the Employee Retirement Income Security Act (ERISA), claiming that appellees breached their fiduciary duties to her and the plan based on Aetna's arrangement to have the plan and its participants pay Optum's administrative fee via the bundled rate. Plaintiff also alleged that appellees engaged in comparable violations in their dealings with similarly situated plans and their participants, requesting to represent two classes of such similarly situated plans and their participants.The Fourth Circuit held that plaintiff experienced no direct financial injury as a result of appellees' use of the bundled rate in the claims process. Therefore, the court affirmed the district court's judgment on plaintiff's personal claim for restitution under section 502(a)(1) and (3). However, because the court is unable to conduct appellate review of plaintiff's restitution claim on behalf of the plan under section 502(a)(2), the court vacated and remanded that claim to the district court for development of the record as necessary and resolution in the first instance under Donovan v. Bierwirth, 754 F.2d 1049 (2d Cir. 1985).In regard to plaintiff's claims for surcharge, disgorgement, and declaratory and injunctive relief, which do not require a showing of direct financial injury, the court is persuaded that she has produced sufficient evidence for a reasonable factfinder to conclude that Aetna was operating as a functional fiduciary under ERISA and breached its fiduciary duties. The court also concluded that there is sufficient evidence in the record upon which a reasonable factfinder could find that Optum was acting as a party in interest engaged in prohibited transactions, but not as a fiduciary. Accordingly, the court reversed the district court's judgment as to plaintiff's claims for surcharge, disgorgement, and declaratory and injunctive relief under section 502(a)(1) and (3), and for her claims on behalf of the plan for surcharge, disgorgement, and declaratory and injunctive relief under section 502(a)(2) and remanded those claims for further proceedings. Finally, the court held that the district court abused its discretion in denying plaintiff's motion for class certification when it failed to properly ascertain the full measure of available remedies. Accordingly, the court vacated and remanded the district court's order denying class certification for a full reevaluation under Federal Rule of Civil Procedure 23. View "Peters v. Aetna Inc." on Justia Law

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A class of employees who participated in Banner Health, Inc.’s 401(k) defined contribution savings plan accused Banner and other plan fiduciaries of breaching duties owed under the Employee Retirement Income Security Act (ERISA). A district court agreed in part, concluding that Banner had breached its fiduciary duty to plan participants by failing to monitor its recordkeeping service agreement with Fidelity Management Trust Company: this failure to monitor resulted in years of overpayment to Fidelity and corresponding losses to plan participants. During the bench trial, the employees’ expert witness testified the plan participants had incurred over $19 million in losses stemming from the breach. But having determined the expert evidence on losses was not reliable, the court fashioned its own measure of damages for the breach. Also, despite finding that Banner breached its fiduciary duty, the district court entered judgment for Banner on several of the class’s other claims: the court found that Banner’s breach of duty did not warrant injunctive relief and that Banner had not engaged in a “prohibited transaction” with Fidelity as defined by ERISA. The class appealed, arguing the district court adopted an improper method for calculating damages and prejudgment interest, abused its discretion by denying injunctive relief, and erred in entering judgment for Banner on the prohibited transaction claim. Finding no abuse of discretion or other reversible error, the Tenth Circuit affirmed the district court in each instance. View "Ramos v. Banner Health" on Justia Law

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Plaintiffs sought to represent a proposed class of 20,000 current and former Penn employees who participated in Penn's Retirement Plan since August 2010. The Plan is a defined contribution plan under 29 U.S.C. 1002(34), tax-qualified under 26 U.S.C. 403(b), offering mutual funds and annuities. The University matches employees’ contributions up to 5% of compensation. As of December 2014, the Plan offered 48 Vanguard mutual funds, and 30 TIAA-CREF mutual funds, fixed and variable annuities, and an insurance company separate account. In 2012, Penn organized its investment fund lineup into four tiers, ranging from lifecycle or target-date funds for the “Do-it-for-me” investor to the option of a brokerage account window for the “self-directed” investor looking for additional options. Plan participants could select a combination of funds from the investment tiers. TIAA-CREF and Vanguard charge investment and administrative fees. The district court dismissed plaintiffs’ suit for breach of fiduciary duty, prohibited transactions, and failure to monitor fiduciaries under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001-1461, which alleged that defendants failed to use prudent and loyal decision-making processes regarding investments and administration, overpaid certain fees by up to 600%, and failed to remove underperforming options from the Plan’s offerings. The Third Circuit reversed and remanded the dismissal of the breach of fiduciary duty claims. While the complaint may not have directly alleged how Penn mismanaged the Plan, there was substantial circumstantial evidence from which the court could “reasonably infer” that a breach had occurred. View "Sweda v. University of Pennsylvania" on Justia Law

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Former employees of Honeywell, who retired before age 65 during the terms of Honeywell's 2007 and 2010 collective bargaining agreements (CBAs), filed a class action alleging that Honeywell's announced plan to terminate early retiree healthcare benefits at the end of 2017 breached the CBAs and violated the Employee Retirement Income Security Act of 1974 (ERISA), because those healthcare benefits vested when each class member retired.The Eighth Circuit agreed with the Sixth Circuit and held that the Supreme Court's decision in CNH Indus. N.V. v. Reese, 138 S. Ct. 761 (2018), was controlling in this case. Under Reese, the court held that plaintiffs' retiree healthcare benefits were not vested as a matter of law. Therefore, the court reversed and remanded for further proceedings. View "Pacheco v. Honeywell International Inc." on Justia Law

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In 1991, Norton merged predecessor retirement plans into one Plan governed by ERISA. As of 1997, the Plan included a traditional defined-benefit formula applicable to members of the predecessor plans and a cash-balance formula applicable to all other plans. In 2004, the Plan was amended to end accruals under the defined-benefit formulas and allow further accruals only under the cash-balance benefit formula. The Plan allows disability retirement, “normal” age 65 retirement, late retirement, and early retirement, for participants at least 55 years old with at least 10 years of service. The Plan allows retirees to take benefits in the “Basic Form” or in one of six alternative forms, including a lump-sum payment on the date of retirement. In 2008, the Retirees brought a putative class action, alleging Norton underpaid retirees who took a lump-sum payment. The court certified a class in 2011 and eventually granted the Retirees summary judgment. Damages were not reduced to a sum certain, but the court adopted the Retirees’ calculation formula, awarded fixed-rate pre-judgment interest, and entered final judgment. The Sixth Circuit vacated, finding the Plan ambiguous, with respect to calculation of benefits, and possibly noncompliant with ERISA, with respect to actuarial calculations. The court vacated class certification under Rule 23(b)(1)(A) and (b)(2). The court held that if the Plan clearly gives the administrator “Firestone” deference, interpretation against the draftsman has no place in reviewing the administrator’s decisions. The arbitrary-and-capricious standard stays intact. View "Clemons v. Norton Healthcare Inc. Retirement Plan" on Justia Law

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HCSC is an Illinois not-for-profit corporation that offers Blue Cross and Blue Shield insurance through licensed affiliates in five states and contracts with outside affiliates for prescription drug services, claim payments, and other administrative work. HCSC owns or controls its affiliates and places its officers on their boards. HCSC does not disclose the extent of these ties to its insureds. Its policies state that the affiliates pay it rebates, but it does not share those rebates with its customers. Alleging that these arrangements violated Illinois law and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, Priddy and others filed a putative class. The district court certified four classes under Federal Rule of Civil Procedure 23(b)(3): employers who purchased HCSC plans for employees in any of the five states served by HCSC; beneficiaries of employer-furnished plans provided by HCSC in any of the five states; individuals who purchased insurance directly from HCSC in any of the five states; and Illinois insureds who were protected by Illinois insurance regulations. The four classes included approximately 10 million people. The Seventh Circuit vacated class certification. It is not clear that HCSC owed many class members any fiduciary duty. Three of the four classes certified include people whom HCSC does not insure and who do not pay it premiums. View "Priddy v. Health Care Service Corp." on Justia Law

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Fleet Owners Fund is a multi-employer “welfare benefit plan” under the Employee Retirement Security Act (ERISA), 29 U.S.C. 1001, and a “group health plan” under the Patient Protection and Affordable Care Act (ACA), 26 U.S.C. 5000A. Superior Dairy contracted with Fleet for employee medical insurance; the Participation Agreement incorporated by reference a 2002 Agreement. In a purported class action, Superior and its employee alleged that, before entering into the Agreement, it received assurances from Fleet Owners and plan trustees, that the plan would comply in all respects with federal law, including ERISA and the ACA. Plaintiffs claim that, notwithstanding the ACA’s statutory requirement that all group health plans eliminate per-participant and per-beneficiary pecuniary caps for both annual and lifetime benefits, the plan maintains such restrictions and that Superior purchased supplemental health insurance benefits to fully cover its employees. Fleet argued that the plan is exempt from such requirements as a “grandfathered” plan. The district court dismissed the seven-count complaint. The Sixth Circuit affirmed, concluding that plaintiffs lacked standing to bring claims under ERISA and ACA, having failed to allege concrete injury, and did not allege specific false statements. View "Soehnlen v. Fleet Owners Insurance Fund" on Justia Law

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In 2007, Durand filed an Employee Retirement Income Security Act, 29 U.S.C. 1001–1461 (ERISA) class action against her former employer and the pension plan it sponsors, challenging the projection rate used by the Plan to calculate the lump-sum payment Durand elected to receive after ending her employment at the Company in 2003. The Plan then used a 401(k)-style investment menu to determine the interest earned by members’ hypothetical accounts. Durand alleged that it impermissibly used the 30-year Treasury bond rate instead of the projected rate of return on her investment selections in the “whipsaw” calculation required under pre-2006 law. The Sixth CIrcuit reversed dismissal for failure to exhaust administrative remedies. Defendants then answered the complaint and raised defenses, including that the claims of putative class members “who received lump-sum distributions after December 31, 2003” were barred due to an amendment to the Plan that took effect after that date. Plaintiffs argued that the 2004 Amendment was an illegal reduction or “cutback” in benefits. The Sixth Circuit affirmed that the “cutback” claims were time-barred and did not relate back to the “whipsaw” claim asserted in the original class complaint. View "Durand v. Hanover Ins. Group, Inc." on Justia Law