This month's Friday Five covers cases relating to preemption, anti-assignment provisions, discretionary clause bans and the "de facto" administrator theory. We also examine a case upholding a denial of accidental death benefits.
- The Sixth Circuit upholds dismissal of fraud claim on the basis of preemption. The plaintiff asserted a cause of action for fraud against her former employer based on allegations that her former employer destroyed documents in her personnel file relating to her disability benefits and termination. The Sixth Circuit affirmed the Eastern District of Michigan Court’s decision to grant the defendant’s motion to dismiss on the basis that ERISA preempted the plaintiff’s fraud claim. The court reasoned that Michigan imposed no legal duty independent of the benefits plan relationship that would allow the claim to escape preemption. Arora v. Henry Ford Health Sys., No. 17-2252, 2018 U.S. App. LEXIS 18712 (6th Cir. July 9, 2018)
- Are anti-assignment provisions enforceable in New Jersey? Relying on the Third Circuit's recent decision in Am. Orthopedic & Sports Med. v. Indep. Blue Cross Blue Shield, 890 F.3d 445, 453 (3d Cir. 2018), the court denied the plaintiff’s medical provider’s claim for reimbursement for medical services and enforced the anti-assignment provision in the insured’s ERISA-governed health plan. The court further rejected the plaintiff’s argument that the plan waived the anti-assignment clause by dealing directly with the medical provider in the claim review process and by remitting payment directly to the medical provider. Shah v. Horizon Blue Cross Blue Shield of N.J., Civ. A. 1:17-cv-1662018 (D.N.J. July 13, 2018)
- Is the Illinois discretionary clause ban applicable to policies insuring Illinois residents but not issued in the state? The policy at issue provided the administrator with discretionary authority. However, the plaintiff, a resident of Illinois, sought application of the de novo standard of review to her ERISA-governed benefits claim, arguing that Section 2001.3 of Illinois’ Administrative Code banning discretionary clauses in policies “offered or issued” in Illinois applied to her claim. The plaintiff’s employer, who was headquartered in Missouri, was the policyholder and the policy was delivered in Missouri. Ruling that Section 2001.3 was not applicable and that the “arbitrary and capricious” standard applied to the plaintiff’s claim, the court reasoned that (1) there was nothing in the...
