Latest Employee Benefits Cases for April 27, 2018

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

The following are summaries of recent Employee Retirement Income Security Act and other decisions, prepared by Bloomberg Law legal editors.

RETIREMENT PLANS

Beneficiary

The second wife of a retired Goodyear employee isn’t entitled to any survivor benefits should the retiree die before her because they weren’t married when his pension payments started in 1991, the court said in affirming the decision of the Goodyear Pension Plan. The board reasonably interpreted the plan language to mean that only the spouse who is married to the employee at the time his pension begins will be entitled to the survivor benefit, the court said (Watkins v. Goodyear Pension Plan, 2018 BL 148050, N.D. Ala., No. 4:17-CV-461-VEH, 4/26/18).

Delinquent Contributions

Candy manufacturer Just Born II Inc. must pay $255,000 in union pension contributions for new employees even after its collective-bargaining agreement had expired and the company started using 401(k) plans for new employees, a federal court of appeals said in affirming the trial court. At the time the controlling CBA coverage ended, the plan was still a “bargaining party” to a rehabilitation plan that was adopted in 2012 to address the severe underfunding of the plan, and the Peeps maker must make the contributions in accordance with that plan (Bakery & Confectionary Union & Indus. Int’l Pension Fund v. Just Born II, Inc., 2018 BL 147667, 4th Cir., 17-1369, 4/26/18).

Fiduciary Duties

A 401(k) plan that invested in a New Mexico real estate company can proceed to trial to determine if an institutional lender and real estate company manager associated with the entities acted as fiduciaries and violated any fiduciary duties under ERISA, the court said. Additionally, the real estate entity isn’t entitled to the ERISA real estate operating company exception because it failed to show the court it was actively involved in a substantial “ongoing commitment” to managing and developing real estate (Hart Interior Design LLC 401k Profit Sharing Plan v. Recorp Invs. Inc., 2018 BL 147891, D. Ariz., CV-16-02347-PHX-GMS, 4/26/18).

Public Employees

The New York firefighters retirement board properly denied the application of a firefighter for performance of duty disability retirement benefits who said his bladder cancer was caused by exposure to hazardous materials and toxic fumes during the course of his employment, the state appellate court said. The firefighter failed to show he was permanently incapacitated and unable to work since he is now in remission while additionally failing to present objective medical evidence indicating his condition was in any way caused by the duties of his employment (Matter of Maldari v. DiNapoli, 2018 BL 147563, N.Y. App. Div., No. 525416, 4/26/18).

Public Employees

A former Kentucky public schools staff member isn’t entitled to disability retirement benefits after she was involved in a car accident that led to neck pain and tremors, because the medical evidence didn’t show a disabling condition that would prevent her from working. The Kentucky Retirement System board properly denied the application based on the evidence, and the state trial court erred when it reinterpreted the evidence instead of evaluating if the decision of the board was reasonable, the appellate court noted (Ky. Ret. Sys. v. Nikolovski, 2018 BL 149247, Ky. Ct. App., 2016-CA-000855-MR, unpublished 4/27/18).

HEALTH CARE & BENEFITS

Claim Administration

A South Carolina woman can’t continue with her lawsuit against Prudential Insurance of American alleging they failed to issue a decision on her long-term disability application in a timely matter because she failed to exhaust all of the available administrative remedies first, the court said. The woman says she properly followed the administrative protocol of the plan but she failed to plead those facts initially, and so she must re-file the case to properly introduce those allegations because her complaint can’t be amended at this stage under the procedural rules (Deas v. Prudential Ins. of Am., D.S.C., 2:17-cv-03016-DCN, 4/26/18).

Claim Administration

Blue Cross Blue Shield of Michigan reasonably denied the long-term disability benefits claim of a former customer service representative suffering from back pain and fibromyalgia, the court said. Although the voluminous record contained a large amount of medical information, there wasn’t enough objective medical evidence to show the man, who worked for Blue Cross Blue Shield of Michigan itself, was physically disabled or that he couldn’t continue to work a sedentary job (Jackson v. Blue Cross Blue Shield of Mich. Long Term Disability Program, 2018 BL 148030, E.D. Mich., No. 17-12537, 4/26/18).

Remedies

The court won’t find a New Jersey construction company and its president in civil contempt, even though the entity has failed to pay the arbitration awards for delinquent employee benefit fund contributions that have been confirmed by the court. Although there is a valid court order that the entity has been made aware of, to impose a “drastic penalty” of civil contempt when there are other means of collecting on a money judgment is not available at this point, the court noted (Operating Engineers v. J.T. Cleary, Inc., 2018 BL 147598, D.N.J., No. 17-5962 (ES) (MAH), unpublished 4/26/18).

Standing

A California surgical center can’t sue a claims administrator for alleged misrepresentations made about a reimbursement rate, because the underlying policy has a valid anti-assignment clause, a federal court of appeals said. The anti-assignment clause wasn’t cited as a reason for denying the benefits—instead it was only raised by insurer once the lawsuit was filed—and any reliance the surgical center placed on verbal representations about there not being an anti-assignment clause was unreasonable given they didn’t obtain a copy of the plan documents until after they filed suit, the court noted (Eden Surgical Ctr. v. Cognizant Tech. Sols. Corp., 2018 BL 148027, 9th Cir., 16-56422, unpublished 4/26/18).

Try Benefits & Executive Compensation News