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

Central States is multiemployer pension fund. Bulk Transport is a Fund member and made contributions to the pension account of its employee, Loniewski. Bulk had certified that Loniewski was entitled by a collective bargaining agreement to participate in the Fund although the agreement was limited to Bulk’s drivers. Loniewski was a Bulk mechanic for 40 years. Bulk now denies that he was covered and has demanded that Central States refund $49,000 that Bulk had contributed to Loniewski’s pension account between 2002 and 2012. The Fund denied the request and sought a declaratory judgment. The district judge rejected Bulk’s claim. The Multiemployer Pension Plan Amendments Act of 1980 amends ERISA by imposing liabilty on employers who withdraw, partially or completely, from participation in an underfunded multiemployer pension fund, 29 U.S.C. 1381. Central States also assessed Bulk with withdrawal liability of $740,000 for the years 2010 through 2012, which Bulk challenged as excessive. At Bulk’s request, the court barred the Fund from enforcing its rules, which require arbitration of such a dispute by and conforming to the procedures of the American Arbitration Association. The Seventh Circuit affirmed with respect to the refund, but reversed with respect to the arbitration rules. View "Cent. States, SE & SW Areas Pension Funds v. Bulk Transp. Corp." on Justia Law

The Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, sets minimum funding and vesting requirements, insures benefits through the Pension Benefit Guarantee Corporation and includes reporting, disclosures, and fiduciary responsibilities, but exempts church plans from its requirements. The plaintiffs, former and current employees, have vested claims to benefits under the Advocate retirement plan. Advocate operates Illinois healthcare locations, employing 33,000 people. Advocate maintains a non-contributory, defined-benefit pension plan that covers substantially all of its employees. Advocate is not a church. Its predecessor formed as a 501(c)(3) non-profit corporation from a merger between two health systems—Lutheran General and Evangelical. Advocate is affiliated with the Evangelical Lutheran Church and the United Church of Christ, but it is not owned or financially supported by either church. In contracts, the parties “affirm their ministry in health care and the covenantal relationship they share.” There is no requirement that Advocate employees or patients belong to any particular religious denomination, or uphold any particular beliefs. The Seventh Circuit affirmed that the plan “is not entitled to ERISA’s church plan exemption as a matter of law” because the statutory definition requires a church plan to be established by a church. The court rejected Advocate’s First Amendment arguments. View "Stapleton v. Advocate Health Care Network" on Justia Law

Plaintiff took early retirement from Union Pacific in 2006 and began receiving his monthly benefit (1,022.94) in 2009. In 2010 he retired from Terminal Railroad. Terminal’s retirement plan, governed by ERISA, provides that “the retirement income benefit payable under this Plan shall be offset by the amount of retirement income payable under any other defined benefit plan … to the extent that the benefit under such other plan or plans is based on Benefit Service taken into account in determining benefits under this Plan.” The Terminal Plan administrator calculated the monthly benefit owed plaintiff for his combined years of service to Terminal and Union Pacific to be $3,725.02, from which it would deduct the monthly benefits payable under the Union Pacific Plan, which it calculated as $2,311.73. The Seventh Circuit reversed the district court’s ruling (under 29 U.S.C. § 1132(a)(1)(B)) in favor of plaintiff. The maximum amount payable under the Union Pacific plan was $2,311.73; plaintiff lost nothing by choosing to receive only $1,022.94, because the expected value of a stream of the monthly receipts was equal to the expected value of a stream of monthly receipts of $2,311.73 received for many fewer months. View "Cocker v. Terminal R.R. Ass'n of St. Louis Pension Plan" on Justia Law

Several multi-employer health and welfare funds filed this suit under the Employee Retirement Income Security Act seeking approximately $70,000 in alleged delinquent contributions. The assertedly delinquent employer, Con-Tech Carpentry, did not file an answer within the statutory period and was found in default. The district court subsequently entered a judgment in the funds’ favor and awarded damages. Con-Tech subsequently filed a Fed. R. Civ. P. 60(b) motion, which also invoked Fed. R. Civ. P. 55(c). The judge denied the Rule 60(b) motion. The Seventh Circuit affirmed, holding that because Con-Tech made a deliberate decision to disregard the pending suit, there was no reason for the district judge to excuse Con-Tech’s conduct in retrospect. View "Mid-Central Illinois Reg’l v. Con-Tech Carpentry, LLC" on Justia Law

The insurer operates a preferred-provider system that offers patients better benefits, or lower co-payments, for patronizing medical providers who have agreed with the insurer to accept lower reimbursements (per procedure) in exchange for a better flow of business. The chiropractor plaintiffs signed such “participating provider” or “network” agreements. Providers bill the insurer directly regardless of whether a patient obtained coverage as part of an Employee Retirement Income Security Act (ERISA) welfare-benefit plan or through some other means, such as an affinity-group policy or an insurance exchange under the Affordable Care Act. Chiropractors sued, contending that, when determining how much to pay for services rendered to patients, the insurer failed to use the procedures required by ERISA, 29 U.S.C. 1133. The district court concluded that plaintiffs are beneficiaries under ERISA and awarded damages and injunctions requiring the insurer to follow section 1133 and Department of Labor regulations. The Seventh Circuit reversed, noting that plaintiffs concede that they are not participants under the ERISA definition and that a network contract between a medical provider and an insurer does not make that provider a “beneficiary” under ERISA. View "Pa. Chiropractic Ass'n v. Independence Hosp. Indem., Inc." on Justia Law

In 1989, the Supreme Court held that courts should apply de novo review in suits challenging denials of employee benefits governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1), but if the benefit plan provided expressly for a different, more deferential standard of review, that specific provision would control over the default rule of de novo review. Insurance companies and plan sponsors began including such provisions in most benefit plans, typically saying the insurer or plan administrator would exercise discretionary judgment in interpreting a plan or deciding whether to pay benefits. Courts would then apply a deferential standard of review under which a denial would stand unless it was “arbitrary and capricious.” Later, state laws were adopted to protect employees and plan beneficiaries from abuse of such discretion. An Illinois insurance law, prohibited provisions “purporting to reserve discretion” to insurers to interpret health and disability insurance policies. The Seventh Circuit rejected a preemption challenge and applied the state law in a case involving a challenge to an insurance provider’s definition of “disability,” The court did not address whether the denial of benefits was arbitrary and capricious. View "Fontaine v. Metropolitan Life Ins. Co" on Justia Law

Michels is a member of the Pipe Line Contractors Association (PLCA), a trade association that negotiates collective bargaining agreements (CBAs) on behalf of its employer members with unions. In 2006, the PLCA and the Union entered into a CBA in “effect until January 31, 2011, and thereafter from year to year unless terminated at the option of either party after sixty (60) days’ notice.” The CBA required contributions to the Central States multiemployer pension plan, 29 U.S.C. 1000(2), (3), (37). In August 2010, the PLCA informed the Union that it intended to terminate the 2006 CBA on January 31, 2011, and begin negotiations for a new agreement; the parties signed eight extensions, the last ending November 15, 2011. Michels contributed to the pension plan throughout those extensions. The parties agreed that the employers would cease making contributions to the plan as of November 15, 2011; that they would make comparable payments to an escrow fund until a “mutually acceptable” fund was designated; and that they would otherwise extend the terms of the 2006 CBA until December 31, 2011. The fund claimed that the obligation to make contributions had not ended. The Seventh Circuit reversed the district court holding that this was not sufficient to end the duty to contribute. View "Michels Corp. v. Cent. States, SE & SW Areas Pension Fund" on Justia Law

Orr died in a motorcycle accident. His daughters sought benefits under a group life insurance policy governed by the Employment Retirement Income Security Act and issued by USIC to Orr’s former employer. The policy provided accidental death, subject to exclusions, including one for loss resulting “directly or indirectly from … intoxication[.]” USIC asserted that Orr’s death resulted from his intoxication. The letter explained that autopsy and toxicology reports revealed that Orr’s blood alcohol level at the time of the accident exceeded the legal limit and that USIC’s medical consultant opined that Orr “would have been impaired in attention, coordination, and balance,” as a result. The letter advised the Orrs of their right to seek review and included a copy of USIC’s Life Claims Denial Review Procedure, stating, in boldfaced, all-caps print, that a request for review must be submitted in writing within 60 days and warning: “If … you do not complete both the first and second review before filing a lawsuit, a court can dismiss your lawsuit.“ The document encourages claimants to call with any questions. The Orrs filed suit before completing the review process. The Seventh Circuit affirmed summary judgment in favor of USIC on grounds of failure to exhaust administrative remedies. View "Orr v. Assurant Emp. Benefits" on Justia Law

Reilly participated in a pension plan offered by Continental, which administers its own defined-benefit plan. The pension depends on the highest average compensation in any 60-month period of employment. “Compensation” includes regular salary, incentive compensation, and deferred compensation deposited in 401(k) plans. Educational bonuses, referral bonuses, overseas allowances, and some other items are not included. When Reilly left Continental’s employ in 1999, he received a statement of qualifying compensation that implied a monthly benefit of about $5,400 starting in 2012, when he would turn 65. In 2012, Continental sent Reilly a different calculation, showing lower compensation and entitlement to $4,200 a month. After internal appeals, Reilly filed suit under the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B). The district judge concluded that Continental’s decision was arbitrary and capricious and ordered it to pay monthly benefits of $5,400. The Seventh Circuit reversed. Reilly did not show that $5,400 is the only possible outcome of proper calculation, only that the calculation was improper. By working through the original compensation numbers, the parties may agree what the right pension is. If not, the district court must remand to Continental so that the administrator can make a fresh calculation, which then could be subjected to judicial review. View "Reilly v. Continental Cas. Co." on Justia Law

National Retirement Fund sought to hold Mezz Lender and Oaktree Capital responsible for multiemployer pension fund withdrawal liability under the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. 1381. Oaktree, through Mezz Lender, provided financing for the acquisition of a hotel by Chicago H&S. When H&S defaulted, it was taken into bankruptcy and the hotel was liquidated. NRF contends that the sale of the hotel triggered withdrawal liability on the part of H&S and any other “trade or business” under common control with it, including bot Oaktree and Mezz Lender. Oaktree and Mezz Lender, argued that the claim of withdrawal liability was barred by the bankruptcy reorganization plan pursuant to which the hotel was sold. On motions for summary judgment, the court stated that having decided that Oaktree and Mezz were not jointly and severally liable for H&S’s withdrawal liability, "the Court need not address the parties’ arguments as to [the Oaktree parties’] motion" concerning the bankruptcy. The Seventh Circuit vacated. The court decided in the absence of a cross-motion for summary judgment on the issue that it found to be dispositive, and without first giving the unsuccessful movant notice that it was entertaining the possibility of entering summary judgment against it or the opportunity to respond. View "Hotel 71 Mezz Lender LLC v. National Retirement Fund" on Justia Law