Blog - Page 30 of 112 - McKennon Law Group

On October 14, 2020, Judge Janis L. Sammartino of the Southern District of California ruled in favor of McKennon Law Group PC’s client in her motion for attorneys’ fees and costs arising out of an ERISA disability lawsuit against Aetna Life Insurance Company. Our client, a former senior vice president at a major retailer, became disabled as a result of her numerous medical conditions which include chronic pain syndromes, neurological deficits, spinal problems, deterioration of high-level cognitive functioning and gastrointestinal issues. She has a long-term disability policy with Aetna. After paying two years’ worth of benefits, Aetna terminated our client’s claim for disability benefits. After pursuing her administrative appeals, our client sued Aetna to obtain the benefits she was owed. We convinced Aetna to reinstate our client’s benefits. When it was discovered that Aetna had improperly deducted our client’s worker’s compensation benefits from her payments of disability benefits, we convinced Aetna that it had erred and to pay our client the withheld funds. However, Aetna still refused to pay our client’s attorneys’ fees and costs. We filed a motion for the fees and costs.

In ruling on the motion, Judge Sammartino rejected a variety of Aetna’s arguments as to why it should not pay our client’s attorneys’ fees and costs. For example, Judge Sammartino explained that, even though she had not ruled on the merits of the claim, our client’s lawsuit prompted Aetna to reinstate our client’s benefits and, under a “catalyst theory of success,” our client had demonstrated success on the merits of the case, a key factor in establishing entitlement to an award of attorneys’ fees. Judge Sammartino also rejected Aetna’s arguments that our client’s attempts to augment the administrative record before suing Aetna were not compensable as part of the litigation. As Judge Sammartino explained, the attempts to augment the record served as a demand letter related to litigation and were not part of the administrative appeals process. The awarding of fees for this additional time significantly increased the value of the award of fees.

We had several strategic victories along the way that contributed to this favorable result. Not only did we convince Aetna to reinstate our client’s benefits, but we also successfully rebutted several attempts by Aetna to acquire a copy of our fee agreement with our client. Whereas fee agreements are discoverable under certain circumstances, they are completely irrelevant to an award of fees under ERISA. See Van Gerwen v. Guarantee Mut. Life Co., 214 F.3d 1041, 1048 (9th Cir. 2000); Welch v. Metropolitan Life Insurance Co., 480 F.3d 942, 946 (9th Cir. 2007). Not only did successfully denying Aetna access to the fee agreement deny Aetna access to additional arguments as to why the fees should be reduced, but the time arguing that issue was compensable when we filed our motion for fees.

The Court ordered Aetna to pay our client 80% of her requested fees and costs, $182,869.82. This was the final piece of a very successful case.

Health insurance plans frequently deny claims by plan members on the basis that the claimed services are not medically necessary. This limitation is applied even more so in the context of claims for mental health and substance abuse services where plans often seek to limit what type of coverage they provide or how long they will cover such treatment. The recently-enacted California SB 855 expands the coverage obligations for fully-insured health plans in California for mental health and substance abuse treatment. Self-insured plans are not impacted. The law applies to all California health plans and disability insurance policies issued, amended or renewed on or after January 1, 2021. It requires that health plans provide coverage for all medically necessary services for mental health issues under the same terms and conditions applied to other medical conditions. The bill also prohibits a health care plan from limiting benefits or coverage for mental health and substance abuse disorders to short-term or acute treatment and defines covered benefits to include basic health care services, intermediate services and prescription drugs.

The law defines “medically necessary treatment of a mental health or substance abuse disorder” as a service or product addressing the specific needs of a patient for the purpose of preventing, diagnosing, or treating an illness, injury, condition, or its symptoms, including minimizing the progression of such, in a manner that meets all of the following:

Is in accordance with generally accepted standards of mental health and substance use disorder care;
Is clinically appropriate in terms of type, frequency, extent, site, and duration; and
Is not primarily for the economic benefit of the health care service plan and subscribers or for the convenience of the patient, treating physician, or other health care provider.

The law prohibits health plans from applying different, additional or conflicting criteria when making medical necessity determinations. The law also requires that health plans base medical necessity determinations on current generally accepted standards of mental health and substance abuse disorder care and that they apply specified clinical criteria and guidelines in conducting utilization reviews.

The bill also makes any provision in a health plan that reserves discretionary authority to the plan to determine benefit eligibility, interpret the terms of the plan or provides standards for interpretation that are inconsistent with California law, void and unenforceable. In addition, the law expands coverage to include medically necessary treatment of all mental health and substance abuse disorders described in the most-recent edition of the International Classification of Diseases or the Diagnostic and Statistical Manual of Mental Disorders. Lastly, the law provides that if medically necessary treatment of mental health and substance abuse disorders is not available in-network within the geographic and timely access standards, the plan must arrange coverage to ensure medically necessary out-of-network services at the same cost-sharing level that the member would pay for in-network services.

Health plans and insurers that provide coverage in California are already subject to the 1999 California Mental Health Parity Act and the federal Mental Health Parity and Addiction Equity Act of 2008, which, combined, require coverage of medically necessary treatment of severe mental illnesses, serious emotional disturbances of a child, and substance use disorders under the same terms and conditions applied to other medical/surgical conditions. The California Mental Health Parity Act required mental health parity to nine enumerated severe mental illnesses but did not require parity in the treatment of substance abuse, anxiety, opioid use, alcohol use, and post-traumatic stress disorders.

The overall impact of SB 855 is to expand healthcare plans’ obligations for covered mental health services. Claimants faced with denied health insurance claims for these services should contact an experienced insurance attorney such as the McKennon Law Group PC who can help guide claimants through these new requirements and ensure that their health plans are providing appropriate coverage.

National Football League (“NFL”) players are covered by an employer-sponsored long-term disability (“LTD”) policy called the Bert Bell/Pete Rozelle NFL Player Retirement Plan (“Plan”). This NFL Plan, like most employer long-term disability plans, is governed by ERISA. Therefore, disabled NFL players face many of the same evidential challenges as company-bound employees when filing a claim for disability. These similarities are evidenced in the recent decision, Dimry v. Bert Bell/Pete Rozelle NFL Player Retirement Plan, 2020 WL 5526607 (N.D. Cal. Sept. 15, 2020)(“Dimry”). The court held in Dimry that Plan administrator (“Bert Bell”) abused its discretion when denying Mr. Dimry’s disability claim primarily for the following reasons: (1) Bert Bell did not provide Dimry with a “full and fair” review; (2) Bert Bell demanded “objective evidence” which was not required by the Plan; and (3) Bert Bell failed to consider Mr. Dimry’s Social Security award.

Dimry originally filed a complaint against Bert Bell to recover LTD benefits in 2016. Shortly after, the Social Security Administration (“SSA”) found that Dimry had been disabled since 2012. The district court found that Bert Bell had abused its discretion when it denied Mr. Dimry’s LTD claim because it ignored two reports from Mr. Dimry’s treating physicians in favor of two so-called “neutral physicians” who were paid almost $300,000 by Bert Bell to review claims. The district judge found in favor of Dimry finding Bert Bell had abused its discretion since the denial of Mr. Dimry’s benefits claim was “based upon an unreasonable bias in favor of Plan-selected physicians” and remanded the matter to Bert Bell to re-evaluate Mr. Dimry’s disability claim. On remand, Bert Bell relied on the Plan’s medical director, Dr. Jackson, who opined that Mr. Dimry’s primary impairment appeared to be pain and subjective complaints that were not supported by objective evidence. Relying on Dr. Jackson’s report, Bert Bell again denied Mr. Dimry’s claim. Another lawsuit followed.

Dimry first argued that there was a conflict of interest because the three physicians who had reviewed his claim were biased since the first two physician reviewers had been paid almost $300,000 and Dr. Jackson had been paid $223,000 by the Plan. The court explained that “Even apart from any issue preclusion that may apply given the Dimry I court’s findings, under Demer ‘[t]he magnitudes of these numbers, particularly when combined, raise a fair inference that there is a financial conflict which influenced the [the physicians’] assessments.’ Demer, 835 F.3d at 902.”

Dimry next argued that he was excluded from Bert Bell’s “review of his claim following the remand in violation of the requirement that there be ‘a meaningful dialogue between ERISA plan administrators and their beneficiaries’ and that the Plan give a ‘full and fair review’ to an appeal of an adverse benefits determination.” A full and final review requires giving the claimant an opportunity “to submit written comments, documents, records, and other information relating to the claim for benefits” and provide the claimant with any new or additional evidence, as soon as possible, to give the claimant an opportunity to respond. In Dimry, not only did Bert Bell not provide Dr. Jackson’s report to Mr. Dimry, Bert Bell never informed Dimry that it was consulting Dr. Jackson or that he was issuing a report which it intended to rely on. The Court held that by excluding Dimry from the renewed review, Bert Bell was in violation of “the rule that there be a meaningful dialogue between ERISA plan administrators and their beneficiaries.”

Next, Dimry challenged Bert Bell’s finding that the objective medical evidence did not support his claims of neck and back pain. Although Dr. Jackson opined “that Mr. Dimry’s pain complaints could be accurate despite not being fully supported by the objective medical evidence given the nature of his impairment,” Bert Bell made no attempt to follow up with Mr. Dimry’s complaints of pain. The Court agreed with Dimry that requiring objective evidence to support his pain complaints was “illogical and without support in inferences that may be drawn from the facts in the record.” First, the Plan did not contain language limiting benefits to claimants that can provide objective evidence to support subjective complaints of pain. Second, the Court found that while Bert Bell “may consider the lack of objective medical evidence in making a benefits determination, ‘reliance on objective evidence can be problematic for medical conditions that are not amenable to objective verification.’”

Lastly, Dimry insisted Bert Bell abused its discretion when it failed to acknowledge Mr. Dimry’s social security award. In response, Bert Bell attempted to assert the following justifications for disregarding the SSA’s award decision: First, the SSA was somehow incomplete as it did not have and/or consider the Plan’s physician’s reports when it made its determination. However, the court did not find this argument convincing. Instead the court found Bert Bell “acted as an adversary, not a fiduciary,” and stated Bert Bell’s rejection of the SSA “is particularly striking where, as here, [Bert Bell’s] non-disability finding was based on the absence of objective evidence, and the [SSA] discussed the objective evidence in Mr. Dimry’s Social Security file at length – none of which Dr. Jackson reviewed.” Second, Bert Bell contended that since Mr. Dimry’s social security was rejected twice before it was granted, this constitutes evidence that reasonable minds could differ as to whether Dimry was disabled and precludes a finding that Bert Bell’s finding of no disability was arbitrary. The court again disagreed and explained, “[w]hile [Bert Bell] was not required to accept the [SSA’s] opinion, it had to consider it and explain why it was not persuasive.” Third, Bert Bell claimed that “[t]he Social Security decision turned on factors that are irrelevant to a finding of total and permanent disability under the Plan, such as [Mr. Dimry’s] education and work experience.” The court also rejected this argument stating that based on the relevant medical evidence, Mr. Dimry’s education and/or work experience had “nothing to do [with] whether the medical evidence fully supported Mr. Dimry’s pain complaints.” Finally, Bert Bell argued that it, unlike the SSA, was not required to give substantial weight to Mr. Dimry’s treating physician. While the court agreed that Bert Bell was not bound by the SSA’s treating physician rule, Bert Bell was also not allowed to simply discount the SSA’s ruling.

The lawsuit eventually resulted with the Court’s finding that Bert Bell had abused its discretion and remanded Mr. Dimry’s case back to Bert Bell for a renewed evaluation of his claim. The Court also stated that it “expects that once [Bert Bell] gives Dimry the full and final review ERISA requires, and eliminates the mandate of objective evidence – a mandate not in the Plan and not in Dr. Jackson’s reports – that Dimry will be found disabled under the Plan.

We often see LTD claims denied without a full and fair review provided to our clients. We often see plan administrators/insurers who use biased physicians who conduct cursory paper reviews, who wrongfully rely on the lack of objective evidence to deny LTD claims and who do not meaningfully address favorable SSA determinations. If you believe your LTD claim was denied without a full and fair review for any of the reasons discussed above, please contact us for a free consultation by calling our office at 949-387-9595 or completing the contact form on our website.

Many people acquire life insurance in order to guarantee that their loved ones are provided for in the event of their death. For most people, the policy is acquired, and it just becomes another monthly bill they rarely think about. However, on occasion, life takes a tragic turn and the insured who just applied for a life insurance policy but before the policy is issued, dies. Such a scenario calls into question when a temporary life insurance policy can be created which would cover an insured applicant’s beneficiaries. Paying death benefits under these types of temporary policies can be complicated and insurers love to fight paying beneficiaries in the situations. One of our clients had this very situation occur.

In State Farm Insurance Co. v. Landfried, No. 5:19-cv-01845, (C.D. Cal. June 25, 2020) (Slip op.), our client’s uncle applied for life insurance. He completed the insurance application over the phone with an insurance agent. When completing the application, he designated his nephew, our client, as the beneficiary. The insurance agent offered the uncle the opportunity to “bind” the policy. This meant that our client’s uncle could pay the initial month’s premium while he was still undergoing the application process and, should he die before the insurance company had completed the underwriting process, his family would still be entitled to the death benefits he was applying for. Insurance companies in California offer the opportunity to bind a policy because California law, both by California statute and case law, provides for the creation of a temporary policy under certain circumstances. The insurance agent informed the uncle that he needed to provide a payment of $217 to bind the policy. The uncle placed the money in his bank account and gave the agent his debit card information to pay the premium. The agent did not immediately process the payment. In fact, she waited three days before even attempting to process the payment. During the intervening three days, the uncle died.

State Farm denied the claim and filed a declaratory relief action against our client in federal court, seeking a court order declaring that the insurer did not owe our client the death benefits under the life insurance policy. Our client brought a counterclaim, seeking the death benefits as well as bad-faith damages above and beyond the face value of the policy. The insurer was sufficiently confident that it did not owe our client the death benefits that it brought a motion to dismiss the claims under Federal Rule of Civil Procedure 12(b)(6). The motion argued that, even if everything our client asserted was true, the insurer still would not owe our client any death benefits. After requesting additional briefing on the matter, the court denied the motion.

Whereas under California Insurance Code Section 11015 two parties can create a temporary insurance policy under certain enumerated circumstances, the court focused on a different manner of creating a temporary policy that covers the insured during the application process. The court stated in an order dated June 25, 2020 that:

The Court previously raised this issue with the parties at the February 10, 2020 hearing on these motions, and requested additional briefing on the application of State Farm Mut. Auto. Ins. Co. v. Khoe, 884 F.2d 401, 405 (9th Cir. 1989) and Metro. Life Ins. Co. v. Wood, 302 F.2d 802, 802–03 (9th Cir. 1962). Dkt. 28. As the Court stated at the hearing, these cases focus their inquiry on the possibility that a temporary insurance contract may be formed if a party completes an application, makes a payment of a first premium, and “the language of the application would lead an ordinary layperson to conclude that coverage was immediate.” State Farm Mut. Auto. Ins. Co. v. Khoe, 884 F.2d 401, 405 (9th Cir. 1989). This possibility for coverage exists entirely outside of the statutory conditions which create temporary insurance coverage under Cal. Ins. Code § 11015. See, e.g. Hodgson v. Banner Life Ins. Co., 124 Cal. App. 4th 1358, 1372-73 (Ct. App. 2004) (distinguishing between Section 11015’s statutory obligations and formation of a temporary insurance contract under California law based on the reasonable expectation of the parties and relevant language in any conditional receipt provided).
[. . .]
The Court finds that the Counterclaim’s factual allegations regarding (1) [the uncle’s] submission of a written application for life insurance, and (2) his express attempt to bind the policy by having a payment processed, as State Farm’s agent Jones allegedly told him he was able to, may plausibly have resulted in the creation of a temporary insurance contract under California law, dependent upon the language of the application itself, which is not before this Court. See State Farm v. Khoe, 884 F.2d at 405.

Id. The district court’s ruling relied heavily on State Farm Mutual Automobile Insurance Co. v. Khoe, 884 F.2d 401 (9th Cir. 1989) and Metropolitan Life Insurance Co. v. Wood, 302 F.2d 802 (9th Cir. 1962). These cases address the creation of temporary insurance policies via avenues that are different from those listed in the California Insurance Code. Given the significance of these cases, they each warrant at least a brief discussion.

In Wood, the insurance applicant delivered an application and a check for the first premium to the insurer’s agent. The applicant was examined by the insurer’s physician, but he died later that same day. The court held that an insurer’s obligation to pay had matured before the applicant died. See Wood, 302 F.2d at 803. The court relied upon jurisprudence that established that, when the application is ambiguous, the receipt of the application and initial premium payment results in the creation of a temporary insurance policy. The Wood court also explained that the insurability of the applicant did not matter. If the insurance company determines that the applicant is uninsurable, then it can merely refund the premiums and inform the applicant that it is not interested in providing insurance. It loses that right the moment the applicant dies.

The other case, Khoe, addressed a separate important issue relevant to the creation of temporary insurance policies: the insurance agent’s obligation to address limitations on temporary insurance during the application process. In Khoe, the Khoes applied for health insurance, and the application contained a conditional receipt “which stated that no insurance would be effective unless a policy was issued. The clause also stated that if a policy was issued, coverage would date back to the day the application was signed.” Khoe, 884 F.2d at 403. The parties disputed whether the insurance agent had explained the clause to the applicant. The applicant also contended that he was informed by the agent that, if he paid right away, he would receive immediate coverage. Subsequent to signing the application and submitting the required premium, the applicant was hospitalized, and the insurer attempted to avoid paying the medical bills. See id. at 404. It claimed that the parties never entered into an insurance contract. Litigation ensued.

The Khoe court first concluded that the application clause that limited temporary insurance was not ambiguous and, therefore, a contract for temporary insurance could not have arisen under the clause. See id. at 405-07. However, the Khoe court then addressed whether the clause had been explained to the insured. As the Khoe court stated, “In Young v. Metropolitan Life Ins. Co., 272 Cal.App.2d 453 (1969), a California Court of Appeal imposed an obligation on the insurer to call an unambiguous conditional receipt clause to the insured’s attention and explain it to the insured.” Id. Applying this principle, the Khoe court held that “the conditional receipt clause is unambiguous and thus the language of the clause would not give rise to a contract of temporary insurance. Triable issues of fact exist, however, as to whether the clause adequately was read and explained to the Khoes. If the clause was not explained adequately to Nena Khoe, a contract for temporary insurance did arise on April 21, 1986.” Id. at 408‑09.

Temporary insurance contracts in California are very complicated. There are multiple avenues to create one. Temporary insurance policies are also often the policies that are most intensely contested by insurance companies because the insurers are now obligated to pay a significant sum of money even though they barely collected any premiums. However, one thing that the case law makes clear is: even if a policy has not been issued, if the application was completed and the initial premium was paid, then there is a chance that a temporary insurance contract was created.

If you have a life insurance question, our firm specializes in handling these types of insurance claims and we can help you. Call us for a free consultation today or complete the contact form on our website.

The McKennon Law Group PC periodically publishes articles on its California Insurance Litigation Blog that deal with frequently asked questions in the insurance bad faith, life insurance, long term disability insurance, annuities, accidental death insurance, ERISA and other areas of the law. To speak with a highly skilled Los Angeles long-term disability insurance lawyer at the McKennon Law Group PC, call (949) 387-9595 for a free consultation or go to our website at mslawllp.com and complete the free consultation form.

Professionals such as insurance agents, attorneys, physicians and accountants often contact our firm regarding professional liability insurance, or errors-and-omissions insurance. This is a form of liability insurance that indemnifies individuals who provide professional advice and services from claims of negligence or errors resulting from a civil lawsuit brought by clients or third parties. These professionals carry professional liability insurance as protection against claims arising out of business or professional practices.Indeed, a professional liability policy may be written for almost any occupation or profession. For example, doctors, dentists, engineers, real estate agents, and hospitals carry errors & omissions insurance commonly referred to as malpractice insurance, while attorneys and accountants carry professional liability insurance.

Coverage typically includes the costs of defense and indemnity of any damage awards up to the policy limits, and they exclude criminal acts, breach-of-contract claims or personal injury claims. Although “professional services” is generally liberally construed, coverage may be denied where the claim arises out of activities not associated with the professional duties being insured. Damages under a typical coverage provision provide that the insurer is obligated to pay “damages as a result of claims.” Most policies define “damages” as monetary compensation under a judgment, award or settlement.

We specialize in litigating and resolving professional liability insurance claim disputes for individual and business policyholders. We have decades of experience in litigating and negotiating these types of professional liability cases.

Professional liability policy forms vary from insurer to insurer and from industry to industry, and often contain pages of exclusions for specific losses. Disputes may arise regarding whethera claim was made and reported in the relevant policy period. In such cases, the issue may be whether a “claim” was made, of which the insured had knowledge within the policy period. Insurers may also typically deny claims that are not reported within a reasonable period of time, as specified in the professional liability policy. In addition, whether and when a professional liability insurer must defend an insured against malpractice claims is often in dispute.

We also see disputes arise as to when an insurer should have consented to and paid for settlement. An insurance company will often take advantage of the complexity and length of its own policies and issue improper denials, often based on ambiguous policy exclusions.Professional liability insurers often delay or withhold crucial defense payments to an insured while “investigating” these issues, which can be a tremendous source of stress and worry.

California law imposes an implied duty of good faith and fair dealing (more commonly known as “insurance bad faith”) in every insurance policy, based on fundamental principles of fairness. Additionally, most professional liability policies require that an allocation be made with respect to covered or potentially covered claims and those that are not. If an insurer unreasonably and without proper cause denies an insurance claim, refuses to cover an insured’s defense or refuses to conduct a reasonable investigation, a professional liability policyholder may sue for policy benefits due under the policy, “consequential damages” (damages that are caused by the bad faith conduct), emotional distress damages, punitive damages, and attorneys’ fees. We have seen an increase in professional liability insurance policy denials, as companies seek to avoid losses.

We can overcome these unnecessary obstacles made by insurers. Our attorneys have a deep legal understanding of insurance companies and professional liability policies. And we are more than prepared to fight insurance companies’ bad faith claims denials. We typically represent businesses with this type of insurance coverage on an hourly basis and provide coverage opinions to them.

Please Call us For a Free Consultation Regarding Your Professional Liability Matter

McKennon Law Group PC in Newport Beach, California, consistently and successfully represents clients in professional liability cases. If your claim has been denied, we are prepared to advocate on your behalf. For a free initial consultation, please fill out this free consultation form or call 1-949-570-5431.

On May 28, 2019, Bloomberg Law published an article involving one of McKennon Law Group PC’s cases in Bloomberg Law’s Benefits & Executive Compensation News section. For a full view of the article, read here. The article addresses forum selection provisions in employee benefits plans which can limit where plan participants can file a lawsuit. It discusses the firm’s client Theodore Rapp and his pension case that McKennon Law Group PC litigated and in which our client obtained a very favorable result. As the article explains, these provisions can drive up the cost of litigation, discourage people from suing for benefits they are owed and also violate the law Congress passed to protect the millions of people who participate in employee benefit plans. The article discusses the enforceability and legality of these provisions as well as the Supreme Court’s review of the issue.

Pension Lawsuit Puts Court Choice Test Back Before High Court

By Lydia Wheeler

Theodore Rapp lives and works in California, but the legal fight to recoup his pension benefits is playing out in a courtroom across the country in Connecticut.

The lawsuit, originally filed in the U.S. District Court for the Central District of California, was moved to the District of Connecticut because the company that acquired Rapp’s former employer has a provision in its pension plan that only allows disputes to be litigated in the federal court in Hartford, said Robert McKennon, Rapp’s Newport Beach, Calif.-based attorney.

These forum selection provisions—tucked into employee benefits plans—limit where plan participants can file a lawsuit. Attorneys say they not only drive up the cost of litigation and discourage people from suing for benefits they’re owed, they violate the law Congress passed to protect the millions of people who participate in employee benefit plans, which include retirement, pension, 401(k), health-care, disability and life insurance plans.

Rapp, who earned a middle-class income in sales, alleges the new company failed to keep records of his pension, which as of June 29, 2018, amounted to $46,843. McKennon, managing shareholder of McKennon Law Group PC, said he was forced to hire a local lawyer to help him fight Rapp’s case after it was transferred to Connecticut. Luckily for Rapp, the judge in Connecticut has allowed McKennon to participate by phone in a number of hearings, but he said the change of venue is still going to cost Rapp thousands of dollars more in attorneys’ fees and costs.

The Supreme Court, in a separate case, is now being asked for the fourth time whether forum selection provisions are enforceable under the Employee Retirement Income Security Act. The court previously has refused to weigh in on the issue.

Enforceable?

The case pending the Supreme Court’s review stems from a lawsuit Jeffrey Robertson, a former Pfizer executive, brought against the Pfizer Retirement Committee and the company it contracted with to provide retirement information services.

Robertson alleges the committee and the Fidelity Employer Services Company LLC failed to inform him that the $715,507 he had racked up under the Pfizer Pension Plan couldn’t be rolled over to another qualified plan. As a result, he was forced to cash out his benefits and pay federal and state taxes.

Robertson sued for breach of fiduciary duty in the U.S. District Court for the Eastern District of Pennsylvania, where both the committee and Fidelity resided and where the claimed ERISA breach occurred.

But Pfizer, citing the plan’s forum selection clause, got the Pennsylvania court to transfer the case to the Southern District of New York. The court in Pennsylvania stayed the transfer until the Supreme Court decides whether or not to take Robertson’s case.

Attorneys say forum selection provisions shouldn’t be enforceable under ERISA because the law specifically allows participants and their beneficiaries to file a lawsuit against employee benefit plans in any one of three venues: where the plan is administered, where the breach occurred, or where the defendant plan resides or may be found.

“ERISA was enacted to protect plan participants and their beneficiaries, and it goes on to expressly give the participant the right to pick the venue,” said Eva Cantarella, a partner at Hertz Schram PC in Michigan.

Cantarella said her callers often comment on how hard is to find an attorney who will litigate their claims. She said forum selection clauses can it make it even more difficult.

“They may effectively be deprived of representation if they can’t find an attorney who will handle their claim for them,” she said.

A spokeswoman for Pfizer said, “We believe that this matter was correctly decided by the lower courts and will file our opposition to the petition later this summer.”

Letting the Issue Percolate

Appeal courts for the Sixth and Seventh circuits have ruled in favor of employers who say forum selection provisions are enforceable under ERISA.

The Sixth Circuit in 2016 said it had previously upheld the validity of mandatory arbitration clauses in ERISA plans, “which are, in effect, a specialized kind of forum-selection clause.” The ruling came despite the friend-of-the-court brief the labor secretary filed calling the provision unenforceable.

In a dissenting opinion, Judge Eric Clay said Congress expressly sought to eliminate “jurisdictional and procedural obstacles which in the past appear to have hampered effective enforcement of fiduciary responsibilities.”

When that case was appealed to the Supreme Court, the justices asked Solicitor General Donald Verrilli Jr. for his view. He told the court the Sixth Circuit was wrong to enforce the venue selection clause, but asked the justices not to weigh in and instead let the issue percolate in the lower federal courts for a little longer.

Neither the Department of Justice nor the Labor Department responded to requests for comment as to whether the current administration maintains that opinion. The court has not received any briefs from the government. It is still waiting for the committee and Fidelity to respond.

Ripe for Review

Robertson, in his petition to the Supreme Court, said the case is now ripe for review, but not everyone agrees.

“There is no split yet in the circuits on this issue, and therefore it seems unlikely the Court would agree to accept the case,” said Charles Dyke, an attorney in the San Francisco Office of Nixon Peabody who leads the firm’s ERISA litigation practice. “The Sixth and Seventh Circuits have both held that forum selection clauses in plans are enforceable.”

Under ERISA, plaintiffs can recoup only their reasonable attorney’s fees if they achieve some degree of success on the merits. Dyke said a plaintiff who challenges a forum selection clause and loses on that issue may not be able to recover fees incurred litigating it. The defendant, he said, has to consider whether it’s worth the risk to try to enforce its forum selection clause if the plaintiff sues in a jurisdiction other than the one specified in the plan.

“The law is not yet settled, and that means each side has to think carefully about this issue when it comes up,” Dyke said.

Robertson’s case has not been scheduled for the court’s consideration.

A circuit split is typically a criteria for the justices to grant review of a case. Without differing opinions from the regional appeals courts on this issue, attorneys say it’s unlikely the court will agree to take the case.

But if they do, it may not go the way some plaintiff’s attorneys are hoping.

“Given their position on arbitration clauses and the current makeup of the court, they might land with the employers here,” said Chris Lockman, an attorney at Verrill Dana in Portland, Maine. He thinks they should.

“One of the major goals of ERISA is to advance uniformity and predictability in plan administration,” he said.

The case is Robertson vs. U.S. District Court for the Eastern District of Pa., U.S., No. 18-1341.

To contact the reporter on this story: Lydia Wheeler in Washington at lwheeler@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Bernie Kohn at bkohn@bloomberglaw.com

McKennon Law Group’s Client Wins Large Award of Attorneys’ Fees in ERISA Disability Lawsuit Against Aetna Life Insurance Company

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