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

In 2009, ManWeb, an Indianapolis industrial construction company, paid $259,360 for the assets of Frieje, a smaller Indianapolis construction company specializing in cold‐storage facilities. Freije was a party to a collective bargaining agreement (CBA); ManWeb was non‐union. Freije contributed to a multi-employer pension fund and was required to pay withdrawal liability of $661,978 when it ceased operations (Employee Retirement Income Security Act (ERISA); Multiemployer Pension Plan Amendments Act (MPPAA), 29 U.S.C. 1381). ManWeb did not contribute to the Fund after its purchase of Freije nor did it challenge the assessment. The Fund sued Freije and added ManWeb as a defendant based on successor liability. The Seventh Circuit concluded that ManWeb had notice of Freije’s contingent withdrawal liability, which was included in the Asset Purchase Agreement. On remand, the district court again granted ManWeb summary judgment. The Seventh Circuit vacated. MPPAA successor liability can apply when the purchaser had notice of the liability and there is continuity of business operations. In the totality of relevant circumstances, ManWeb’s purchase and use of Freije’s intangible assets (name, goodwill, trademarks, supplier and customer data, trade secrets, telephone numbers and websites) and its retention of Freije’s principals to promote ManWeb to existing and potential customers as carrying on the Freije business, weigh more heavily in favor of successor liability than the district court recognized. View "Indiana Electrical Workers Pension Benefit Fund v. ManWeb Services, Inc." on Justia Law

Dragus, who managed information technology for convention vendors, experienced severe neck pain for several years. He underwent a three-level cervical spine fusion, which failed to resolve his pain. Over the next two years, Dragus underwent physical therapy, steroid injections, and a surgical procedure that severs nerve roots in the spinal cord. Physicians also prescribed a pain medication, which caused memory impairment and hand tremors. Dragus went on short-term disability to participate in a full-time pain management program. Within two months of Dragus’s return to work, the pain returned, resulting in excessive absences. Dragus sought long-term disability benefits through a Reliance group policy and applied for Social Security Disability (SSDI) benefits. Reliance denied Dragus’ application, stating that reports by medical experts did not indicate a physical or mental condition at a level of severity that would make Dragus unable to perform the material duties of his regular occupation. Dragus requested reconsideration. Reliance obtained additional medical opinions and independent review by a psychiatrist and occupational medicine specialist. Dragus was allowed to correspond with the specialists. Reliance affirmed its denial. Dragus filed suit under ERISA, 29 U.S.C. 1132(a)(1)(B)). The court denied Dragus’s motions for discovery outside the claim file record and to supplement the claim record with a fully favorable SSDI decision and granted summary judgment in favor of Reliance. The Seventh Circuit affirmed. The policy grants Reliance discretionary review; Reliance’s decision was not arbitrary. View "Dragus v. Reliance Standard Life Insurance Co." on Justia Law

Anka has a history of serious mental illness, including paranoid delusions, and has received mental health treatment. Anka killed her husband, Zeljko. The couple's child, M., was 13. The trial judge determined that the state established each element of first-degree murder beyond a reasonable doubt but that Anka established by clear and convincing evidence that she was insane at the time of the offense and found Anka not guilty by reason of insanity. Zeljko had worked as a union laborer and earned a vested pension; when a married participant dies before the benefit commences, the participant’s spouse receives a monthly annuity payable for the spouse’s life. Where the deceased does not have a surviving spouse, the individual’s minor child receives a monthly benefit until the child reaches age 21. After Zeljko’s death, both Anka and M. sought to recover Zeljko’s pension benefits. Neither the Fund’s documents nor the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001–1461, address whether a claimant who killed the participant can receive a benefit. The Illinois Probate Act’s “slayer statute,” provides that “[a] person who intentionally and unjustifiably causes the death of another shall not receive any property ... by reason of the death,” 755 ILCS 5/2‐6. The district court granted M.M. judgment on the pleadings. The Seventh Circuit affirmed. ERISA does not preempt the Illinois slayer statute, which bars even those found not guilty by reason of insanity from recovering from the deceased. View "Miscevic v. Estate of M.M." on Justia Law

Anka has a history of serious mental illness, including paranoid delusions, and has received mental health treatment. Anka killed her husband, Zeljko. The couple's child, M., was 13. The trial judge determined that the state established each element of first-degree murder beyond a reasonable doubt but that Anka established by clear and convincing evidence that she was insane at the time of the offense and found Anka not guilty by reason of insanity. Zeljko had worked as a union laborer and earned a vested pension; when a married participant dies before the benefit commences, the participant’s spouse receives a monthly annuity payable for the spouse’s life. Where the deceased does not have a surviving spouse, the individual’s minor child receives a monthly benefit until the child reaches age 21. After Zeljko’s death, both Anka and M. sought to recover Zeljko’s pension benefits. Neither the Fund’s documents nor the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001–1461, address whether a claimant who killed the participant can receive a benefit. The Illinois Probate Act’s “slayer statute,” provides that “[a] person who intentionally and unjustifiably causes the death of another shall not receive any property ... by reason of the death,” 755 ILCS 5/2‐6. The district court granted M.M. judgment on the pleadings. The Seventh Circuit affirmed. ERISA does not preempt the Illinois slayer statute, which bars even those found not guilty by reason of insanity from recovering from the deceased. View "Miscevic v. Estate of M.M." on Justia Law

Weis, a stonework firm, was required by a collective-bargaining agreement (CBA) to contribute to the Laborers’ Pension Fund for each hour worked by Union members. Weis complied for many years, then began using more skilled marble setters and finishers on its jobs, gradually stopped hiring Union members, ceased paying into the Fund, and terminated its CBA with the Union. The Fund, a multiemployer pension plan governed by ERISA and the Multiemployer Pension Plan Amendment Act, served notice that Weis owed more than $600,000 in withdrawal liability. Weis paid but challenged the assessment in arbitration, invoking 29 U.S.C. 1383(b): An employer in the building and construction industry is subject to withdrawal liability only if, after its contribution obligation ceases, it continues to perform work in the jurisdiction of the CBA of the type for which contributions were previously required. The Fund argued that the arbitrator misread the phrase “previously required” to mean “previously collected by the plan.” A district judge confirmed the award but denied Weis attorney’s fees. The Seventh Circuit affirmed. The Fund waived its statutory-interpretation argument by failing to raise it in arbitration and did not meaningfully challenge the arbitrator’s factual determinations. The judge did not abuse his discretion in denying Weis’s motion for attorney’s fees. View "Laborers' Pension Fund v. W.R. Weis Company, Inc." on Justia Law

HCSC is an Illinois not-for-profit corporation that offers Blue Cross and Blue Shield insurance through licensed affiliates in five states and contracts with outside affiliates for prescription drug services, claim payments, and other administrative work. HCSC owns or controls its affiliates and places its officers on their boards. HCSC does not disclose the extent of these ties to its insureds. Its policies state that the affiliates pay it rebates, but it does not share those rebates with its customers. Alleging that these arrangements violated Illinois law and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, Priddy and others filed a putative class. The district court certified four classes under Federal Rule of Civil Procedure 23(b)(3): employers who purchased HCSC plans for employees in any of the five states served by HCSC; beneficiaries of employer-furnished plans provided by HCSC in any of the five states; individuals who purchased insurance directly from HCSC in any of the five states; and Illinois insureds who were protected by Illinois insurance regulations. The four classes included approximately 10 million people. The Seventh Circuit vacated class certification. It is not clear that HCSC owed many class members any fiduciary duty. Three of the four classes certified include people whom HCSC does not insure and who do not pay it premiums. View "Priddy v. Health Care Service Corp." on Justia Law

From 1978-1997, Mathias worked for Caterpillar in York, Pennsylvania. In 1997 he experienced serious health issues; the Social Security Administration declared him disabled. Caterpillar covered his health insurance as an employee on long-term disability, billing him for his portion of the premium. In 2012 Mathias retired retroactively, effective October 2009. Caterpillar failed to change Mathias’s status and did not realize its mistake until 2013 when it notified Mathias that he owed $9,500 in past-due premiums, the difference between the rate for a long-term disabled employee and the rate for a retired employee. When Mathias did not pay, Caterpillar terminated his benefits. Mathias sued in the Eastern District of Pennsylvania. The plan documents require suit in the Central District of Illinois, so Caterpillar moved to transfer the case under 28 U.S.C. 1404(a). Mathias argued that the forum-selection clause was invalid in light of ERISA’s venue provision, 29 U.S.C. 1132(e)(2). The district court rejected that argument, relying primarily on Sixth Circuit precedent, holding that forum-selection clauses in ERISA plans are enforceable and not inconsistent with the text of ERISA’s venue provision. The case was transferred. Mathias petitioned for mandamus relief in the Seventh Circuit, which affirmed, holding that ERISA’s venue provision does not invalidate a forum-selection clause contained in plan documents. View "Mathias v. Mihm" on Justia Law

Studer worked at Katherine Shaw Bethea Hospital, a not‐for‐profit Dixon, Illinois healthcare provider, as an occupational therapist. After she resigned, she filed a small‐claims state court complaint, alleging that the hospital violated the Illinois Wage Payment and Collection Act (IWPCA) by failing to pay her money that she had accrued under the hospital’s Paid Days Leave policy. The hospital removed the suit to federal court, claiming that Studer’s claim was preempted by the Employee Retirement Income Security Act (ERISA). The district court denied Studer’s motion to remand, holding that it had federal‐question jurisdiction because ERISA completely preempted the state‐law claim, and granted the hospital summary judgment, holding that Studer had failed to name the welfare benefit plan as a defendant, which ERISA requires in most instances. Instead of filing an amended complaint, Studer filed a Rule 59(e) motion to amend the judgment, again arguing that ERISA did not preempt her claim. The district court denied that motion. The Seventh Circuit affirmed, noting ERISA’s “expansive” preemptive power, 29 U.S.C. 1144(a). The hospital’s benefit plan was an employee welfare benefit plan under ERISA, in which Studer participated; ERISA section 502(a)(1)(B) empowered Studer to bring a federal court action “to recover benefits due.” Studer’s IWPCA claim was not “entirely independent of” ERISA. View "Studer v. Katherine Shaw Bethea Hospital" on Justia Law

Seventh Circuit affirms award of permanent disability benefits for fibromyalgia.Kennedy was hired by Lilly in 1982 and became an executive director in Lilly’s human resources division, with a monthly salary of $25,011. In 2008, she quit work because of disabling symptoms of fibromyalgia. She was approved for monthly benefits of $18,972 under the company’s Extended Disability Benefits plan. Three and a half years later her benefits were terminated. Kennedy sued under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001. The Seventh Circuit affirmed summary judgment in favor of Kennedy, with an award of $537,843.81 in past benefits and prejudgment interest and reinstatement of benefits. The court characterized Lilly’s evidence as “a hodgepodge” and noted that Lilly did not indicate what kind of work Kennedy would be able to perform. Kennedy’s general internist testified that she is permanently disabled, basing this opinion on his diagnoses of her nonarticular rheumatism (musculoskeletal aches and pains not traceable to joints), fibromyalgia, sleep disorder, depression, irritable bowel syndrome, restless leg syndrome, and her symptoms of pain and fatigue. Her rheumatologist concurred. The court noted the company’s conflict of interest, being both the initial adjudicator of an employee’s benefits claim and the payor of those benefits. View "Kennedy v. Lilly Extended Disability Plan" on Justia Law

Prather, age 31, tore his Achilles tendon. His surgery to repair the injury was uneventful. He returned to work. Four days later he collapsed, went into cardiopulmonary arrest, and died as a result of a blood clot in the injured leg that had traveled to a lung. Prather’s widow applied for benefits under his Sun Life group insurance policy (29 U.S.C. 1132(a)(1)), which limited coverage to “bodily injuries ... that result directly from an accident and independently of all other causes.” Sun Life refused to pay. The Seventh Circuit ruled in favor of Prather’s widow, noting that deep vein thrombosis and pulmonary embolism are risks of surgery, but that even with conservative treatment, such as immobilization of the affected limb, the insured had an enhanced risk of a blood clot. The forensic pathologist who conducted a post-mortem examination of Prather did not attribute his death to the surgery. Prather’s widow then sought attorneys’ fees of $37,170 under ERISA, 29 U.S.C. 1132(g)(1). The Seventh Circuit awarded $30,380, stating that there is no doubt of Sun Life’s culpability or of its ability to pay without jeopardizing its existence; the award of attorneys’ fees is likely to give other insurance companies in comparable cases pause; and a comparison of the relative merits of the contending parties clearly favors the plaintiff. View "Prather v. Sun Life Financial Insurance Co." on Justia Law