Archive for the 'PA – ERISA Preemption' Category

AUGUST 2018 BAD FAITH CASES: ERISA PREEMPTS GOOD FAITH AND FAIR DEALING CLAIM (Philadelphia Federal)

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The court analogized a breach of the implied covenant of good faith and fair dealing to a bad faith claim, in finding such claims preempted by ERISA.

Date of Decision: August 3, 2018

D’Antuono v. Temple University Health System, U.S. District Court Eastern District of Pennsylvania, CIVIL ACTION NO. 18-1518, 2018 U.S. Dist. LEXIS 130492, 2018 WL 3707853 (E.D. Pa. Aug. 3, 2018) (Baylson, J.)

 

DECEMBER 2016 BAD FAITH CASES: ANOTHER EXAMPLE OF ERISA PRE-EMPTION (Philadelphia Federal)

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Once more, a court found that ERISA pre-empted statutory bad faith claims.

Date of Decision:  November 17, 2016

Erica A. Shore, P.C. v. Independence Blue Cross, No. 16-5224, 2016 U.S. Dist. LEXIS 160022 (E.D. Pa. Nov. 17, 2016) (McHugh, J.)

 

 

DECEMBER 2016 BAD FAITH CASES: COURT EXPLAINS BASIS FOR ERISA PRE-EMPTION (Philadelphia Federal)

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The Court went over the Third Circuit’s case law history to explain why ERISA pre-empts section 8371 bad faith claims.

Date of Decision: August 1, 2016

Haase v. Metro. Life Ins. Co., No. 15-2864, 2016 U.S. Dist. LEXIS 100113 (E.D. Pa. Aug. 1, 2016) (Robreno, J.)

 

DECEMBER 2016 BAD FAITH CASES: ERISA PRE-EMPTS BAD FAITH CLAIMS INVOLVING BREACH OF ALLEGED SETTLEMENT AGREEMENT, REACHED TO RESOLVE PRIOR INSURANCE DISPUTE OVER PAYMENTS UNDER ERISA HEALTH PLAN (Philadelphia Federal)

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In this ERISA health plan case, the insurer had offered to freeze premiums for a substantial period of time to settle an earlier dispute over payments under the plan; but then allegedly reneged. The insured brought suit under various state law theories, including bad faith. The action was removed to federal court and a partial motion to dismiss was filed, on the basis that ERISA pre-empted the claims over this alleged settlement agreement. The court found itself “constrained by the ‘extraordinary preemptive power’ of ERISA,” and it refused to remand the action. It dismissed the statutory bad faith claim, among others.

Date of Decision: November 17, 2016

Shore v. Independence Blue Cross & Independence Health Group, No. 16-5224, 2016 U.S. Dist. LEXIS 160022 (E.D. Pa. Nov. 17, 2016) (McHugh, J.)

APRIL 2016 BAD FAITH CASES: ERISA PRE-EMPTS STATUTORY BAD FAITH CLAIM WHERE INSURANCE AT ISSUE WAS AN ERISA PLAN (Philadelphia Federal)

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The court found that ERISA pre-empted the plaintiff’s state law bad faith claims, whether brought under Pennsylvania or Georgia law. The bad faith claim was related to the alleged denial of benefits under the disability policy at issue, which was an ERISA plan. The court cited numerous examples of ERISA pre-empting Pennsylvania statutory bad faith claims.

Dated of Decision:  March 29, 2016

Van Arsdel v. Liberty Life Assur. Co. of Boston, No. 14-2579, 2016 U.S. Dist. LEXIS 40909 (E.D. Pa. Mar. 29, 2016) (Smith, J.)

FEBRUARY 2016 BAD FAITH CASES: ERISA DID NOT PREEMPT BAD FAITH CLAIM, AND THUS REMOVAL WAS IMPROPER (Philadelphia Federal)

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In Fitzsimmons v. Aetna, Inc., the federal court found that ERISA did not preempt the alleged bad faith claims, and thus removal was improper.

Date of Decision:  January 7, 2016

Fitzsimmons v. Aetna, Inc., CIVIL ACTION NO. 15-3297, 2016 U.S. Dist. LEXIS 2115 (E.D. Pa. January 7, 2016) (Surrick, J.)

JANUARY 2016 BAD FAITH CASES: BENEFICIARY’S CLAIMS FOR BAD FAITH AND PUNITIVE DAMAGES PREEMPTED BY ERISA (Third Circuit - Pennsylvania)

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In Malishka v. MetLife, the insured brought suit against the insurer, claiming that the insurer improperly denied the insured’s life insurance benefits claim following her son’s death. The insured’s son was a member of a union, and was accordingly given the opportunity to purchase coverage under an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). The insurer serves as the claims administrator of the plan and has discretionary authority for interpretation and determination of eligibility requirements.

In determining whether the insured’s son was an eligible participant of the plan at the time of his death, the insurer relied on “detail summaries” prepared by the union, and ultimately determined that the insured’s son was not covered. Accordingly, the insurer denied the insured’s claim for life insurance benefits, and the insured brought suit.

Both parties filed motions for summary judgment and the insured moved to amend her complaint to include claims for penalties, attorneys’ fees, and bad faith damages. The court upheld summary judgment in favor of the insurer on appeal, reasoning that the court generally evaluates only the evidence that was before the administrator when it made the decision being reviewed, and the administrator is not bound by the Federal Rules of Evidence. Here, the court found that the insurer reasonably determined from the administrative record that the insured’s son was not eligible for the plan at the time of his death.

The insured’s motion to amend was denied, and on appeal the insured claimed the district court abused its discretion. However, the appeals court noted that only the plan administrator can be liable for statutory penalties for failing to provide plan documents, and ERISA preempts claims for bad faith and punitive damages. Thus, the order denying the insured’s motion for leave to amend her complaint was affirmed.

Date of Decision:  December 23, 2015

Malishka v. MetLife,  No. 14-4195, 2015 U.S. App. LEXIS 22487 (3d Cir. December 23, 2015) (Rendell, J.) (non-precedential)

MAY 2015 BAD FAITH CASES: NO BAD FAITH WHERE NO BREACH OF OBLIGATION TO PAY BENEFITS; FEGLI PRE-EMPTS STATE BAD FAITH LAW (Western District)

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In Hajdu v. Metropolitan Life Insurance Company, the court found: “Since, as a matter of law, [the insurer] did not breach the FEGLI contract by not paying benefits under [the] annuitant policy, no claim for bad faith can be established.”  Further, the court found the FEGLI pre-empted state bad faith law.

Date of Decision:  May 6, 2015

Hajdu v. Metro. Life Ins. Co., Civil Action No. 15-195, 2015 U.S. Dist. LEXIS 59318 (W.D. Pa. May 6, 2015)(Conti, C.J.)

APRIL 2015 BAD FAITH CASES: BAD FAITH CLAIM PREEMPTED BY ERISA AS TO INSURER (Middle District)

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In the court’s first decision in Hayes v. Reliance Standard Life Insurance Company, the insured’s bad faith claim against the insurer was preempted by ERISA.  Six days later, the same argument failed as to a claim against an insurance broker, as insufficiently related to the plan at issue.

Date of Decision:  March 17, 2015 and March 23, 2015

Hayes v. Reliance Std. Life Ins. Co., CIVIL ACTION NO. 3:14-0714, 2015 U.S. Dist. LEXIS 32543 (M.D. Pa. March 17, 2015) (Mannion, J.)

Hayes v. Reliance Std. Life Ins. Co., CIVIL ACTION NO. 3:14-0714, 2015 U.S. Dist. LEXIS 35682 (M.D. Pa. March 23, 2015) (Mannion, J.)

 

MARCH 2015 BAD FAITH CASES: ERISA PREEMPTION DEFENSE SUFFICIENT TO SET ASIDE DEFAULT ON STATE LAW CLAIMS (Middle District)

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In Davis v. Metro. Life Ins. Co., the insured brought claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and bad faith under the Pennsylvania Unfair Insurance Practices Act (“UIPA”), 40 Pa. Cons. Stat. § 1171.1 et seq., pursuant to 42 Pa. Cons. Stat. Ann. § 8371, and, alternatively, for denial of benefits under the Employee Retirement Income Security Act (“ERISA”). The insured alleged that the Medical Center she worked for was a state-controlled entity not subject to ERISA, as the basis for bringing her state law claims. The insured took a default and the insurer moved to set aside the default, while the insured moved for a default judgment. The court granted the motion to set aside the default.

The insured alleged, inter alia, that the carrier improperly denied her longer term disability benefits, failed to conduct a physical examination, used medical opinions from unlicensed physicians, ignored conflicting medical evidence from the SSA and the insured’s physician, and misrepresented that ERISA governed the insured’s claims.

In addressing the meritorious defense element of the insurer’s motion, the insured had stated as an affirmative defense that all of the insured’s state law claims were preempted by ERISA. The court found that “to the extent that [the] employee benefit plan is subject to ERISA, her state law claims are likely preempted.” The insurer “need not conclusively establish that ERISA governs the plan to prevail on its motion to set aside the default, only that its defense is meritorious.” Thus, this was a meritorious defense to the state law claims, including the bad faith claims, and the default was set aside.

Date of Decision:  February 11, 2015

Davis v. Metro. Life Ins. Co., CIVIL ACTION NO. 1:13-CV-2741, 2015 U.S. Dist. LEXIS 16292 (M.D. Pa. February 11, 2015) (Conner, J.)