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

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

The class action suit, filed about 19 years ago, claimed that a defined‐contribution ERISA pension plan in which the employer matched contributions made by its employees was partially terminated, requiring vesting. After a previous remand, the district judge granted summary judgment in favor of the defendant and awarded $64,000 in costs. The Seventh Circuit affirmed. When a pension plan is terminated, the rights of the participants in the plan vest in full; none of the money contributed by the employer to the individual employees’ retirement accounts is returned to the employer. Full vesting is required in the case of partial as well as total terminations, 26 U.S.C. 411(d)(3)(A). The district judge had to decide whether the series of reductions in the number of plan participants should be considered a single partial termination. The judge determined that there was no plan; decisions to sell particular subsidiaries were made sequentially, based on economic conditions in the particular market in which each operated. View "Matz v. Household Int'l Tax Reduction Inv. Plan" on Justia Law

South Water Market and Local 703 of the Teamsters Union had a collective bargaining agreement that ran from 2004 through April 30, 2007. On September 12, 2007, they reached a new agreement. Abramson, Market’s bargaining representative, was supposed to draft the agreement. Murdoch, the Union’s president reminded Abramson repeatedly. By February 2008 Murdoch was worried that pension and welfare funds covering the employees would cut off participation or sue. In March, Abramson begged off, stating: “I’m having trouble with my notes.” On April 3 Murdoch sent Abramson a document with terms from Murdoch’s notes. Abramson did not reply, but Market began paying wages, and making pension and welfare contributions specified in Murdoch’s text. Murdoch also sent the document to the pension and welfare funds, which submitted bills calculated according to those terms. In July 2009 Castillo retired. He had been one of two workers in the highly-compensated “driver classification. The Murdoch document stated that Market would employ at least two drivers. After Castillo retired, it refused to provide more than one worker with the wages and benefits of the driver classification. The pension and welfare funds sued under the Employee Retirement Income Security Act, 29 U.S.C. 1145, seeking delinquent contributions for a second driver position. The district judge found that Market had not agreed to the terms. The Seventh Circuit reversed, reasoning that the Labor Management Relations Act makes a written agreement essential to participation in a pension or welfare plan, 29 U.S.C. 186(c)(5)(B), and Market does not contend that it wants to drop out of the plans or that it did withdraw Whatever reservations Abramson had were not conveyed to the funds until August 2009, much too late.View "Russ v. South Water Mkt, Inc." on Justia Law

Hayssen and its employees were parties to a Plant Closing Agreement that promised medical benefits upon retirement. In 1996, Bemis acquired Hayssen and assumed its obligations. Bemis reduced benefits under the Agreement: increasing co-pays and deductibles and eliminating its prescription drug program. Former employees sued under the Employee Retirement Income Security Act, 29 U.S.C. 1132, and the Labor-Management Relations Act, 29 U.S.C. 185(a). The court certified a class, but granted summary judgment to Bemis, reasoning that the Agreement did not establish a lifetime interest in a certain level of benefits. About a month later, Bemis eliminated all medical benefits under the Agreement. The Seventh Circuit reversed, concluding that the parties intended to provide lifetime medical coverage. On remand, the court granted a preliminary injunction forcing Bemis to restore the benefits eliminated in 2009 and provide a basic Medicare Part D drug benefit. The court awarded fees and costs, finding that the company’s position was not substantially justified. The judge struck billing entries that were vague or for time not reasonably expended on the case, concluded that the lawyers’ billing rates were reasonable, and calculated the lodestar amount to reach an award of $403,053.75, for four years of advocacy, including an appeal and trial preparation. The Seventh Circuit affirmed. View "Temme v. Bemis Co., Inc." on Justia Law