Fifth Circuit Vacates Denial of Benefits for Failure to Employ Appropriate Claim Review Process.

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After suffering a heart attack, the plaintiff was placed in a nursing home. Initially, Blue Cross agreed to pay the costs, but then later changed its mind. The plaintiff’s claim for continued benefits turned on whether his care at a nursing home qualifies as Skilled Nursing Care, which is covered, or Custodial Care, which is not. Addressing the plaintiff’s Substantial …

Second Circuit Court of Appeals Refines Abuse of Discretion Standard in Light of Glenn.

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The Second Circuit had the opportunity to clarify and apply the Glenn standard in a denial of benefits case. In determining that the defendant’s decision was arbitrary and capricious, the Court noted that the insurance company not only operated under an inherent conflict of interest, but also (i) clung unreasonably to a single piece of evidence despite the availability of …

Third Circuit Allows Employee to Maintain Equitable Estoppel Action for Restitution of Promised Benefits under Section 502(a)(3).

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Plaintiff was asked to permanently transfer from Consol to DuPont, which had merged. Plaintiff was concerned that his salary would decrease, but believed that DuPont’s more generous pension plan would offset the lower salary. Pell’s DuPont manager and supervisor both assured him that his Consol service time would be counted under the DuPont pension plan. Similar representations regarding the service …

Seventh Circuit Affirms Trial Court’s Rejection of Breach of Fiduciary Claims by Trust Against Third-Party Administrator.

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The Trust presented no evidence on summary judgment “that Benefit Actuaries, despite its name, promised to act as an actuary for the Trust. Instead, the evidence showed that Benefit Actuaries undertook to act as the third-party administrator, insurance broker, and advisor for the Trust, and nothing suggests that these services required actuarial expertise. At most, the Trust’s evidence established that …

U.S. Supreme Court Addresses the Role of Inherent Conflict in Level of Deference to be Accorded Plan Administrator.

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The answer is clear “where it is the employer that both funds the plan and evaluates the claims. In such a circumstance, every dollar provided in benefits is a dollar spent by the employer; and every dollar saved is a dollar in the employer’s pocket. The employer’s fiduciary interest may counsel in favor of granting a borderline claim while its …

U.S. Fourth Circuit Affirms Both Statutory and Article III Standing of Former Cashed Out Employees Who Remain “Participants” in Defined Contribution Benefit Plans.

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Former employees who maintained accounts in defined contribution 401(k) retirement plans voluntarily sought and obtained full distribution of the vested benefits in their respective accounts brought suit against the fiduciaries of their respective retirement plans based on the fiduciaries’ knowing investment in mutual funds that allowed investors to practice market timing, an abusive form of arbitrage activity that favored the …

U.S. Supreme Court Allows 502(a)(2) Action for Fiduciary Breach to Recover Losses to Participant’s Portion of 401(k) Plan.

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A participant brought suit to recover losses to his 401(k) plan due to the employer?s failure to implement his investment directives. Contrasting the action with Russell, the U.S. Supreme Court observed that the misconduct alleged relates ?to the proper management, administration, and investment of fund assets, with an eye toward ensuring that the benefits authorized by the plan are ultimately …

Sixth Circuit Holds that Participants in Defined Contribution Plan Have Standing to Sue under Section 502(a)(2) for Losses to the Plan.

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“While ERISA may have reflected Congress’s attempt to define available remedies, the overarching goal of the statute was to ensure that such relief was available in cases of fiduciary breaches…. As the United States’ brief in support of the plaintiff in Larue states, a decision denying standing could negatively-and unjustifiably-impact plan selections involving more than $3.3 trillion in retirement assets …

Ninth Circuit Rules that Article III Prevents Participants and Beneficiaries from Suing for Relief on Behalf of their Plans under ERISA Section 502(a)(2) and/or (a)(3).

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Health plan participants sued their Pharmacy Benefits Manager (or “PBM”), AdvancePCS, for converting hidden rebates and other drug payments under Section 502(a)(2), and alternatively (a)(3), of ERISA.  After the Harley decision came down from the Eighth Circuit, the defendant moved to dismiss on Article III grounds.  The district court, in a somewhat cryptic decision, seemed to suggest that a participant …

Sixth Circuit Rejects Participant Standing Under Section 502(a)(2) for Article III Purposes, But Confirms Standing under Section 502(a)(3) for Injunctive and Equitable Relief.

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In suit by plan participants for breach of fiduciary duty, the injury-in-fact requirement under Article III was not met in the context of claims on behalf of the Plan as a whole under Section 502(a)(2). The court found, in this regard, that: “Even having determined that Plaintiffs were each part of one ERISA plan, individual injury would only be possible …