Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

Plaintiff left his senior position in 1996, having participated in the Retirement Income Security Plan for Employees (RISPE), a tax-qualified defined benefits plan that guarantees specified retirement benefits, and in the Excess Benefit Plan, a defined unfunded benefits pension plan under which benefits are paid directly by the employer rather than by a trust funded by the employer. Both plans allowed him to choose between an annuity and an actuarial equivalent lump sum distribution. In 2009 he received his RISPE lump sum, $325,054.28 and his Excess Plan lump sum, $218,726.38. The discount rate used to calculate lump sum RISPE benefits was a “segment rate,” 26 U.S.C. 417(e)(3)(C), of 5.24 percent. The discount rate applied to the Excess Plan lump sum was 7.5 percent. The district court rejected his ERISA claim that the discount rate required by both plans was a rate computed by the Pension Benefit Guaranty Corporation on the basis of annuity premiums charged by insurance companies. The Seventh Circuit affirmed. With respect to the RISPE, the accrued benefit, which cannot be reduced retroactively, is the annuity; the lump sum is not the accrued benefit and can be reduced retroactively. The court rejected a conflict-of-interest argument concerning calculation of the Excess Benefit Plan discount rate. View "Dennison v. MONY Life Ret. Income Sec. Plan for Emps." on Justia Law

A new owner informed paper mill employees that it was closing the mill with a likely shut-down date in late April. In March, plaintiffs received letters stating that their employment was being terminated effective May 2 and that, in exchange for a release, they would receive a severance package. Before plaintiffs submitted their executed release forms, the company indicated that it was no longer accepting release agreements and that it had decided to keep the plant open until October. Plaintiffs nonetheless signed and submitted the release and separation agreements they had received two weeks earlier. The company later stated that it would be extending a new severance offer and a bonus as an incentive to stay with the mill until October. Plaintiffs both stopped working at the mill on May 2 and started new jobs. The mill continued to operate. After leaving the mill and not receiving severance, plaintiffs requested it from the company’s severance plan. The plan administrator concluded that the two had voluntarily terminated their employment and denied their requests. Plaintiffs sued under the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B).. The district court granted the plan summary judgment. The Seventh Circuit affirmed. View "Reddinger v. SENA Severance Pay Plan" on Justia Law

When an employer participating in a multi-employer pension plan withdraws from the plan with unpaid liabilities, federal law can pierce corporate veils and impose liability on owners and related businesses. The Fund is a multi-employer pension plan under the Employee Retirement Income Security Act/Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1381-1461. Messina Trucking was subject to a collective bargaining agreement that required it to contribute to the Fund for retirement benefits. Messina Trucking permanently ceased to have an obligation to contribute to the Fund, triggering a “complete withdrawal” and incurring nearly $3.1 million in potential withdrawal liability. The Fund sought a declaratory judgment that defendants were jointly and severally liable for the withdrawal liability as “trades or businesses” under “common control” with Messina Trucking. The district court held that Mr. and Mrs. Messina, who owned and leased several residential properties as well as the property from which Messina Trucking operated, were not engaged in a “trade or business” and could not be held liable for the withdrawal liability, but that Messina Products, as a formal business organization could be held liable for Messina. The Seventh Circuit ruled in favor of the Fund, holding that both can be held liable. View "Cent. States Se & Sw Areas Pension Fund v. Messina" on Justia Law

The district court certified a class consisting of more than 4000 participants in the Meriter pension plan who allegedly were not credited with all benefits to which the plan entitled them. Some members received benefits 23 years ago. Some are current, the rest former, participants. The plan has been amended several times, so claims were divided into 10 groups, each of which was certified as a separate subclass having a different representative under Fed. R. Civ. P. 23(b)(2), which authorizes class action treatment if the defendant “has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” Each subclass in the ERISA action seeks a declaration of the rights of its members under the plan and an injunction directing that the plan’s records be reformed to reflect those rights. Admonishing the attorneys for failing to adequately describe the plan, the Seventh Circuit affirmed. The court rejected arguments concerning conflicts of interest among class members and that class members who are no longer participants in the plan are not entitled to declaratory or injunctive relief because such relief is forward looking. View "Boyd v. Meriter Health Servs. Emp. Ret. Plan" on Justia Law

Raybourne was a quality engineer for 23 years. The employer provided a long-term disability plan that paid benefits for up to 24 months if disability prevented him from performing the duties of his regular job. After 24 months, the plan paid benefits only if he was unable to perform all material duties of any occupation for which he was reasonably qualified. Raybourne suffered degenerative joint disease in his foot, with severe pain. In 2003, he stopped working and underwent the first of the four surgeries. From December 2003 through February 2006, Cigna paid benefits, then determined that he was not disabled under the more stringent standard. Raybourne exhausted administrative remedies, then sued under 29 U.S.C. 1132(a)(1)(B). The district court ruled in favor of Cigna. On remand the court rejected Cigna’s “unconvincing” explanation for how the company determined that Raybourne was not disabled. The court found that Cigna relied on the report of a non-treating physician and on the Social Security Administration’s initial rejections of Raybourne’s claim, failing to consider the SSA’s final determination of disability. The Seventh Circuit affirmed, finding that denial of benefits was based on a conflict of interest rather than on the facts and the terms of the policy. View "Raybourne v. CIGNA Life Ins. Co. of NY" on Justia Law

In 2009, George, a vice president of JA, discovered that money withheld from his pay was not being deposited into his retirement account and health savings account. He complained to JA’s accountants and executives, including Burk. He contacted the Department of Labor but declined to file a complaint. He raised the issue with board members, then received checks for $2,600 for the missed deposits plus interest. His employment agreement ran until June 30, 2010, but he had discussed, with Burk and others, retiring in April 2010. On January 4, 2010, Burk told George not to return to work. Burk later discovered that George had drawn down the account containing his deferred compensation. J A concedes that George was entitled to withdraw the funds, but it did not rescind his discharge. George claimed violation of the Employee Retirement Income Security Act, 29 U.S.C. 1104(a) and retaliation for reporting that violation. The district court granted JA summary judgment. The Seventh Circuit vacated. An employee’s grievance is within ERISA’s scope of protection against retaliation whether or not the employer solicited information. George notified JA of the potential breach of its fiduciary duties and asked what would be done. Those conversations involved an “inquiry.” View "George v. Jr. Achievement of Cent. IN, Inc." on Justia Law

Schorsch enrolled in a long-term disability plan in 1991, but apparently never received a summary plan description or explanation of the Employee Retirement Income Security Act, 29 U.S.C.1132. In 1992 she was in an automobile accident; in 1993 Schorsch began receiving disability benefits. In 2006, at the plan’s request, Schorsch underwent a medical exam, which resulted in a report finding her capable of performing a medium duty job. The plan notified Schorsch that it would terminate her benefits, but did not mention a surveillance report, which was part of the determination. , Schorsch’s counsel sent a letter, but neither Schorsch nor her attorney submitted a request for review. The plan notified Schorsch that the appeals period had passed. Schorsch’s claimed breach of contract and unreasonable denial of benefits under Illinois law and ERISA violations. The plan had lost the administrative record relating to Schorsch’s claim. The district court granted summary judgment on the ground of failure to exhaust administrative remedies. The Seventh Circuit affirmed. There are exceptions that may excuse a failure to exhaust, but Schorsch offered no evidence of reasonable reliance on information missing from the notice or that alleged deficiencies were material. View "Schorsch v. Reliance Standard Life Ins. Co." on Justia Law

Miller, a Fund beneficiary, fell from a ladder and was injured. He hired attorney Darr on a contingent fee basis to sue the person who was supposed to hold the ladder. The Fund advanced $86,709.73 in medical and disability benefits on the condition that Miller repay from any recovery, without deducting attorneys’ fees. Miller and Darr, signed a subrogation agreement. The lawsuit settled for $500,000. Calculating his fee based on $413,290.27, Darr submitted $57,806.48 to the Fund, stating that he was withholding $28,903.25 as a fee. To avoid jeopardizing Miller’s benefits Darr later submitted the $28,903.25. The Fund indicated that if Darr pursued his claim, it would consider Darr and Miller in breach of Plan terms and in repudiation of the subrogation agreement and would consider terminating coverage and seeking relief under ERISA. Darr sued the Fund in Illinois state court under the common fund doctrine, which permits a party who creates a fund in which others have an interest to obtain reimbursement for litigation expenses incurred in creating that fund. The district court enjoined Darr’s lawsuit. The Seventh Circuit vacated. A federal court may not enjoin “proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments,” 28 U.S.C. 2283.View "Trs. of the Carptenters' Health & Welfare Trust v. Darr" on Justia Law

Jeranek, a beneficiary of the Humana Plan, was hospitalized in 2006. Three days later, she was admitted at Nu-Roc Nursing Home. She was 88 years old and suffered from a variety of maladies that required her to use 14 prescription medications. A physician estimated at the time of her admission that Jeranek had a life expectancy of about one year. Jeranek was a resident at Nu-Roc for 702 days. On several occasions she declined medical treatment and her physician understood that she was to receive comfort care only. From November 15 until November 19, 2006, Jeranek’s stay at Nu-Roc was paid for by Medicare. Humana paid $50,097.67 to Nu-Roc for services provided from November 20, 2006, to September 30, 2007, but later determined that its disbursement had been a mistake, reasoning that “custodial” care was not covered by the Plan. Humana sought reimbursement for its previous payments and denied coverage for October 1, 2007 through October 22, 2008, when costs for Jeranek’s care totaled $64,669.74. The district court determined that Humana’s denial of coverage was not arbitrary and granted summary judgment for the Plan. The Seventh Circuit affirmed. View "Becker v. Chrysler LLC Health Care Benefits Plan" on Justia Law

Multiemployer pension plans are created by collective bargaining agreements to provide benefits to employees of different firms. When an employer withdraws from an MPP, the plan remains liable to employees who have vested pension rights, but can no longer look to the employer to cover these obligations. The Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1381-1461, assesses the employer with an exit price equal to its pro rata share of the funding shortfall (difference between present value of fund assets and present value of future obligations). Estimating the shortfall depends on estimating the amount by which current assets can be expected to grow with compound interest. To avoid having an employer new to a plan inherit withdrawal liability where existing members failed to fund the plan adequately in prior years, the statute creates default rules for assigning each employer a share of only so much of the shortfall as occurred while the employer was participating, 29 U.S.C. 1391(b)(2)-(4). Disputes about withdrawal liability are resolved by arbitration. The arbitrator in this case ruled that MMP trustees had over-assessed CPC’s withdrawal liability by $1,093,000. The district judge upheld the ruling. The Seventh Circuit affirmed, noting the “Hideous complexities” involved and its own lack of expertise. View "Chicago Truck Drivers, Helpers, & Warehouse Workers Union (Indep.) Pension Fund v. CPC Logistics, Inc." on Justia Law