In Glastein v. Aetna, Inc., et al., the U.S. District Court for the District of New Jersey, departing from several recent decisions in the District, denied Defendant Aetna, Inc.’s motion to dismiss a medical provider’s claim for reimbursement of insurance benefits on the ground that such claim was preempted by ERISA. Glastein, an out-of-network orthopedic surgeon, allegedly performed a medically necessary surgery for an Aetna-insured patient. Prior to the surgery, Glastein secured a written authorization for the service from Aetna. Glastein later billed Aetna $209,000, allegedly the “normal and reasonable” charges for the procedure. Aetna did not pay any portion of the charged amount. Glastein sued Aetna, alleging several state common law claims, including breach of contract, promissory estoppel, accounting, and fraudulent inducement. After removing the action from the Superior Court of New Jersey to the District of New Jersey, Aetna moved to dismiss Glastein’s complaint under Federal Rule of Civil Procedure 12(b)(6). Defendant’s sole argument for dismissal was that Plaintiff’s state-law causes of action were expressly preempted by ERISA’s “express preemption” provision, under which ERISA preempts state laws where the state law refers to an ERISA plan or has an impermissible connection with an ERISA plan. In support of its preemption argument, Aetna cited to several recent decisions where the District dismissed complaints alleging...
The Third Circuit, in a decision that may limit the remedies available to medical providers in the event of non-payment, recently clarified that “anti-assignment clauses in ERISA-governed health insurance plans as a general matter are enforceable.” In so holding, the Third Circuit joins all other circuit courts that have addressed the issue. On the basis of that clause, the Court held that the plaintiff out-of-network health care provider seeking reimbursement for a participant’s medical claims lacked standing to pursue the claim against the insurers on the participant’s behalf. In October 2015, the plaintiff provider performed shoulder surgery on a patient who was covered by an ERISA-governed health-insurance plan. In billing the individual for the procedure, the provider – because it was not part of the plan’s provider network – charged amounts that far exceeded the plan’s reimbursement limits for the surgery. The plan’s insurers applied its out-of-network limit in processing the claim and reimbursed only a fraction of the total amount charged. The provider appealed the claim on the patient’s behalf. At the same time, the provider had the patient sign an assignment-of-benefits form which assigned to the provider the patient’s right to pursue claims under his health-insurance plan for the surgery. The insurers denied the appeal, and the provider sued alleging ERISA violations. The insurers...
In Mathias v. Caterpillar, Inc., the United States Court of Appeals for the Seventh Circuit upheld a forum selection clause requiring a participant in a benefits plan governed by the Employee Retirement Income Security Act (“ERISA”) to bring suit in the Central District of Illinois. The plaintiff had brought suit in federal court in Pennsylvania, invoking ERISA’s venue provision, which, inter alia, allows suit to be brought in any district in which the defendant is found. The Court, however, ruled that ERISA’s venue provision was subject to the benefits plan’s forum selection clause. The decision is of obvious significance to employers who would prefer to avoid being subject to ERISA-based suits in multiple jurisdictions. Background Mathias, who had been employed at a Caterpillar facility in York, Pennsylvania, began receiving health insurance benefits in 1997 under the company’s long term disability plan. When he chose to retire in 2012 retroactive to 2009 his change in status mandated an increase in his insurance premiums, which Caterpillar mistakenly failed to implement. In 2013, the company realized its mistake and notified Mathias that he owed more than $9,500 in past-due premiums. When Mathias did not pay that amount, Caterpillar terminated his benefits. Mathias sued Caterpillar and the relevant health plans in federal court in the Eastern District of Pennsylvania....
With the close of the United States Supreme Court’s 2015-16 term, we offer this wrap up of the Court’s term, focusing on decisions of special interest from the business and commercial perspective (excluding patent cases): Upon being granted a discharge from a Bankruptcy Court, a bankrupt’s debts are discharged unless a particular debt falls within one of the Bankruptcy Code’s statutory exclusions. One of those exclusions is for debts arising from “false pretenses, a false representation, or actual fraud.” Husky Int’l Elecs., Inc. v. Ritz asked whether a debt arising from a fraudulent transfer made for the purpose of frustrating a creditor, but accomplished without making a false representation, is subject to this exclusion.
With the close of the United States Supreme Court’s 2014-15 term, we offer this wrap up of the Court’s term, focusing on the Court’s most important business and commercial cases (excluding patent cases). Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund: It is widely known that if the registration statement an issuer files with the SEC contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading, then a purchaser of securities sold pursuant to the registration statement may sue the issuer for damages.
Supreme Court Rules ERISA Statute of Limitations Does Not Bar Breach of Fiduciary Duty Claim Challenging 401(k) Plan Investments Made More Than 6 Years Before Filing of the Claim
The statute of limitations governing breach of fiduciary duty claims brought under the Employee Retirement Income Security Act (“ERISA”) provides that such claims are untimely if not brought within 6 years after “the date of the last action which constituted the breach or violation” or “in the case of an omission, the latest date on which the fiduciary could have cured the breach or violation” (29 U.S.C. § 1113). In Tibble v. Edison International, the U.S. Supreme Court ruled that ERISA’s statute of limitations did not bar plaintiffs from pursuing their breach of fiduciary duty claim arising out of investments made by their employer’s 401(k) plan, although the investments were made more than 6 years before plaintiffs filed their claim. The Court held that ERISA plan fiduciaries have an ongoing duty to monitor plan investments and to remove imprudent investments. As long as the alleged breach of this continuing duty occurred within 6 years of suit, a claim challenging a fiduciary’s failure to act will be timely. The Court rejected the argument that only “a significant change in circumstances” triggers the duty to remove imprudent investments.
U.S. Supreme Court Ruling in Windsor Striking Down DOMA Will Expand Workplace Protections for Employees in Legally Recognized Same-Sex Marriages
The U.S. Supreme Court issued a critical decision on June 26, 2013, striking down a provision of the Defense of Marriage Act (“DOMA”) that limited the definition of marriage for federal purposes to unions of opposite-sex couples. The Court’s ruling in United States v. Windsor will have far-reaching implications for employers, at least in those states that recognize same-sex marriages, in terms of leave administration, benefits eligibility and workplace protections. In another case decided the same day, Hollingsworth v. Perry, the Court let stand a Federal District Court ruling in California that an amendment to the California Constitution limiting marriage to opposite sex couples was unconstitutional. In neither case did the Court require all states to recognize same-sex marriages.
In US Airways, Inc. v .McCutchen, decided on April 16, 2013, the U.S. Supreme Court once again emphasized that in disputes involving employee benefits plans governed by the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (“ERISA”), it is the unambiguous language of the plan in question that controls the rights of the parties and that general equitable principles cannot be used to supersede the terms of the plan. In areas where the plan is silent, however, courts may employ appropriate equitable principles to construe the plan. At issue in US Airways was the reimbursement provision of an employer’s health benefits plan that purported to give the employer the right to recoup medical benefits paid to an employee injured in an automobile accident who thereafter recovered funds from third parties as a result of the accident, although the amount the employee actually recovered after paying his attorney was less than the amount he owed his employer. The Supreme Court rejected the employee’s attempt to apply equitable principles of unjust enrichment to limit the application of the reimbursement provision. Holding, however, that the plan was silent as to the allocation of the costs, including attorneys fees, incurred by the employee in his efforts to recover from third parties, the Court further held the equitable principle known as “the common fund rule” should apply, entitling the employee to reasonable attorneys fees from the funds recovered. The decision makes clear the importance to employers of accomplishing the objectives of their benefits plans with clear-cut language.