This month’s Friday Five explores two decisions concerning claims for breach of fiduciary duty arising from subrogation, exhaustion of administrative remedies, a challenge to the calculation of benefits and alleged violation of 29 C.F.R. § 2560.503-1, and the propriety of relying on video surveillance to terminate a long-term disability benefits.
1. Third Circuit rejects claimant’s breach of fiduciary duty claims arising from repayment of funds claimant paid to plan pursuant to subrogation. In Minerley, the Third Circuit Court of Appeals affirmed the entry of summary judgment on claims for benefits due and for breaches of fiduciary duties pursuant to ERISA. The plaintiff was involved in a motorcycle accident and recovered money from the tortfeasor which, pursuant to the policy, was paid to the plan. The plaintiff sued for repayment of the funds, contending that seeking reimbursement of the funds constituted a breach of the duty of loyalty. The court rejected this argument, reasoning that the position amounted to an assertion that the defendants violated ERISA by enforcing the plain terms of the reimbursement requirement in the subject insurance policy. The court also rejected the plaintiff’s contention that because the terms of the insurance policies the employer offered to employees varied depending on the employees’ states of residence, the defendants breached a duty owed under ERISA. The plaintiff relied on the Supreme Court’s reasoning in Conkright v. Frommert that it would be problematic under ERISA if “employees could be entitled to different benefits depending on where they live.” 559 U.S. 506, 520 (2010). In Conkright, the Court reasoned that the decision pertained to affording judicial deference to an administrator’s plan interpretation to avoid conflicting judicial interpretations of a single ERISA plan, which was not the case in this matter. Minerley v. Aetna, Inc., No. 19-2730, 2020 WL 734448 (3d Cir. Feb. 13, 2020).
2. Pennsylvania federal court permits claimant to pursue breach of fiduciary duty claim that administrator and employer improperly demanded subrogation. In Wolff, the U.S. District Court for the Middle District of Pennsylvania held that a claimant could pursue her ERISA claim against the plan administrator and her employer in a purported class action alleging that the defendants improperly demanded subrogation from a tort settlement she received. In 2015, the claimant was temporarily disabled in a motor vehicle accident, and later settled her action against the alleged tortfeasor. Thereafter, the defendants sought reimbursement from the settlement in the amount of approximately $50,000 in long-term disability benefits they had previously paid the claimant. The judge dismissed various state law claims, but allowed the individual’s ERISA claim against the administrator for failure to disclose and failure to avoid materially misleading beneficiaries. That claim, the court said, was not redundant of the claimant’s other claims for breach of fiduciary duty. Further, the judge dismissed the employer from the claim seeking amounts due under ERISA and acknowledged that the proper defendant in an ERISA § 502(a)(1)(B) claim was the plan or a person who controlled the administration of benefits. Wolff v. Aetna Life Ins. Co., 4:19-CV-01596, 2020 WL...
