ERISA Archives - Page 2 of 50 - McKennon Law Group

Life Insurance Contestability and Its Impact on Your Life Insurance Policy and Claim

When you buy life insurance, you almost certainly expect that the policy will pay benefits when the insured person passes away. Life insurance can be a valuable way for people to give themselves and their loved ones’ peace of mind, knowing that there will be a death benefit to cover the costs associated with burial or to provide for dependents.

Many people who purchase life insurance do not expect the insurance company to deny a death benefit claim in bad faith. The reality is that life insurers will go to great lengths to avoid paying benefits. Assuming the policy requirements have been met, i.e., the premiums have been paid and the insured has passed away, the insurance company will need to find another way to avoid paying benefits. One of the most important ways life insurers can do this is to contest the policy in an attempt to rescind it, effectively treating it like it never existed in the first place.

Life Insurance Contestability

Contestability refers to an insurance company’s ability to invalidate, or rescind, a life insurance policy and refuse to pay the death benefit. The law provides a window during which life insurance companies can choose to rescind a policy under certain circumstances.

Note that rescinding a policy under this provision is not the same as canceling a policy for lack of premium payment. There is no set timeline for policy cancellations due to missed premium payments. If your life insurance is set up so that you pay a monthly premium for it, the insurance company may cancel your policy if you miss paying premiums, regardless of how long you have had the policy.

Why Insurance Companies Are Able to Contest Policies

It may seem surprising that an insurance company can rescind a policy if someone has paid all their premium payments on time. However, the contestability period is necessary for insurance companies to protect themselves against potential fraud.

Typically, when you buy life insurance, you must answer several questions about yourself, including about your age, lifestyle, and overall health and medical history. For example, you will likely be asked whether you smoke or not or if you have had any major health issues in the last five or ten years. Depending on the type and amount of life insurance you are seeking, you may even be required to undergo a basic medical exam.

Insurance companies use this information to calculate the risk you present, so the insurer can decide whether to insure you, what type of policy and benefit to offer, and how much to charge for premiums. The insurance company relies on the information you provide being accurate to properly calculate this risk.

If you misrepresent information on your application, purposefully or even by mistake, the insurance company may have based its assumptions on your risk on incorrect information. The contestability period allows insurance companies to investigate a policy claim after a death has occurred to ensure that all information provided is accurate before they pay out a claim. Insurers are looking for any misrepresentations on the policy application that may be material to the risk they insured so they can deny your life insurance claim and rescind your policy.

How Long Can Insurers Contest Life Insurance Policies in California?

Under California law (California Insurance Code section 10113.5), all life insurance policies delivered or issued in California must contain a provision that states the contestability period is no more than two years. While you might find a policy that states a shorter period, most insurance companies will want to include the maximum two-year contestability period.

What Happens if Someone Passes Away Within the Contestability Period?

Suppose someone purchases a life insurance policy and passes away within the two-year contestability period. In that case, the insurance company has a right to investigate the matter further to determine if there was a material misrepresentation in the application.

This does not mean that the insurer will not ultimately pay out death benefits. If there are no problems with the application information and the death occurred as a result of a covered event, the insurance policy should pay out as expected. There simply might be a delay before the benefits are received.

If the insurance company decides to rescind the policy due to an investigation for any matter during the contestability period—whether or not the policyholder has passed away—it must explain why it is attempting to rescind the policy. The insurance company typically also refunds the premium payments.

Can You Fight the Insurance Company If It Attempts to Rescind Your Life Insurance Policy or Deny Your Claim?

Yes, you can sue an insurance company if it refuses to pay out benefits and does not provide a valid reason for rescinding a policy or denying your life insurance claim. If, for example, an insurance company claims that you or the insured committed fraud by lying on the application, you may be able to argue that there was no fraud on the application and everything was true at the time.

Consider a hypothetical case where someone completes a life insurance application because they are not feeling well or have orthopoedic problems and this has made them think about the importance of planning for the future by buying life insurance. However, other than feeling sick or having orthopoedic problems, the person has not seen a medical provider for these conditions and has not been diagnosed at the time they complete the insurance application. Is the insured expected to provide this information on the application?

What happens if the person goes to the doctor a few weeks or months later completing an application and discovers they have cancer? If the insurance company reviews the case and sees how close all these events were to the application date, they might attempt to rescind the policy and claim the person knew they had cancer and did not include it on the application.

In these types of cases—and many others—the insurance company might be acting in bad faith. There are many defenses under California law to an attempt by a life insurer to rescind a policy. Only a very experience claim denial life insurance attorney can give you guidance as to whether an insurer has properly denied your claim and if that insurer committed the tort of insurance bad faith.

To find out if you have a case against an insurance company for bad faith life insurance practices, call the McKennon Law Group PC at 949-504-5381 for a free consultation.

Ninth Circuit Clarifies Standing of Medical Providers in ERISA Lawsuits

The Ninth Circuit Court of Appeals in S. Coast Specialty Surgery Ctr. v. Blue Cross of Cal., __ F. 4th __, 2024 WL 105317 (9th Cir. Jan. 10, 2024) (Before Circuit Judges Graber, Mendoza, Jr., and Desai), recently clarified a longtime standing issue in the law that a healthcare provider may sue an insurance company under ERISA to recover from the insurance company benefits that otherwise might otherwise be recoverable only by the patient. South Coast Specialty Surgery Center, Inc. (“South Coast”) brought an ERISA action against Blue Cross of California dba Anthem Blue Cross (“Blue Cross”) to recover benefits on behalf of patients who had been treated by South Coast and who had assigned their benefits to South Coast. The district court dismissed South Coast’s lawsuit on the basis that South Coast lacked authority to bring an ERISA action, as South Coast was neither a beneficiary nor a plan participant. The district court construed this assignment as giving South Coast the right to receive direct payment from Blue Cross but not the right to sue for nonpayment of benefits.

South Coast appealed the dismissal of its suit and argued to the Ninth Circuit that because each of its patients, who were beneficiaries, had signed an Assignment of Benefits agreeing to allow South Coast to receive benefits from Blue Cross, the patients had effectively assigned their right to sue under ERISA to South Coast. The Ninth Circuit had little trouble holding that South Coast’s patients had validly assigned their right to benefits to South Coast, and that such an assignment included the right to sue for nonpayment of benefits.

The Ninth Circuit’s reasoning was based partly on ERISA’s stated purpose of effectuating “a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans.” Concluding that South Coast had no authority to sue despite its patients having assigned it their rights to receive benefits would leave South Coast with no legal recourse after essentially “fronting” the costs of its patients’ care. The court noted that not allowing South Coast to sue “stymies Congress’s purpose in enacting ERISA.” The court concluded that: “[c]onstruing an assignment of benefits as including the right to sue for non-payment thus increases patient access to healthcare and transfers any responsibility of litigating unpaid claims to the provider-an entity that is much better positioned to pursue those claims in the first place.” A nice place to end the decision and begin the year. Therefore, so long as an ERISA beneficiary has validly assigned his right to receive benefits, the provider to which he assigned that right also has the right to bring an ERISA action against the insurer for nonpayment of benefits.

What Is ERISA?

ERISA is an acronym for the Employee Retirement Income Security Act of 1974. It is federal legislation that originally became law in 1974. The main goal of ERISA is to provide protection for individuals who receive employer-sponsored insurance and retirement employee benefits.

One specific goal is to help ensure that employees of private employers will have the insurance benefits when they need them and the retirement income they expect when they retire. Such benefits typically include disability insurance, life insurance, health insurance, accidental death insurance, and pension benefits. To that end, ERISA sets forth numerous fiduciary duties owed by ERISA plan fiduciaries.

What Are Fiduciary Duties and Who Is Responsible for Them?

The fiduciary responsibilities under ERISA include managing plans with the interests of beneficiaries and participants first and foremost. Trustees, plan administrators, insurance companies and other fiduciaries involved in making claim decisions or managing assets under an ERISA plan cannot make decisions that place the interests of the employer or themselves before the plan participants or their beneficiaries. Some examples of specific requirements include:

Acting prudently. Fiduciaries would breach their fiduciary duties by managing investments or asset pools recklessly and/or unreasonably.
Diversifying. It is typically considered in the best interest of participants and beneficiaries if the value of the assets is stable, and stable investments tend to be diversified in nature.
Following plan documents. Employers and other plan fiduciaries must in most cases follow the documents that detail how the plan works and what benefits should be paid out. They cannot change their mind about benefits later and simply pay at a different rate that is not defined by the plan. There are exceptions to this rule that include making sure that they act consistently with their representations made to plan participants even if later they determine the representations were false.
Avoiding conflicts of interest. Fiduciaries cannot engage in activities concerning the plan in an attempt to benefit the employer or other fiduciaries or partners.
Acting on the direction of plan participants. In cases where plan participants have a say in how their own retirement assets are invested, they have the final word on the matter. If they instruct a fiduciary to invest their assets in a certain manner, the fiduciary must typically follow through on that request.
Do not misrepresent the plan terms. Plan fiduciaries must communicate honestly and accurately about the plan and the plan benefits.

Anyone who is involved in managing the funds or who makes claims decisions with respect to the plan benefits related to employer-sponsored benefits plans will act in a fiduciary role. Under ERISA, individuals are fiduciaries if any of the following are true:

They have a certain level of control in managing the assets of the plan
They can buy or sell assets on behalf of the plan at their own discretion
They provide any type of investment advice related to the assets within the plan
They decide claims by exercising discretion in making claims decisions

Signs That Fiduciary Duties Under ERISA May Have Been Breached

Sometimes there are signs of a fiduciary breach, such as someone refusing to follow through on your requests or your benefits payments not being paid. However, that is not always the case, so it is important to review your retirement account statements regularly and look for any potential irregularities and it is important to critically review claim denials for benefits payable under a plan.

Some examples of signs that fiduciary duty might have been breached include:

Inconsistencies with pension or other retirement account reporting, or statements arriving late or not at all.
Contributions being withheld from your paycheck are not transferred to your retirement accounts promptly.
Your statements reflect investments that you did not authorize.
You notice new, excessive, or confusing fees and other withdrawals.
You receive a denial of a claim for benefits you have made under an insurance policy covered by your plan.
You receive a denial of a claim for benefits you have made under your pension or retirement plan.
You are told that the amount of benefits you are to receive from your pension plan is inconsistent with representations that plan fiduciaries have previously made to you.

Understanding Your Options if Fiduciary Duties Are Breached

The term fiduciary means to involve a high level of trust. Often, fiduciary relationships exist when there are financial matters at stake and there are parties that manage the finances on behalf of and for the benefit of others. For example, if you create a conservatorship and have a trustee manage it on behalf of a disabled individual, the trustee has a fiduciary duty to manage the assets for the benefit of that person.

ERISA creates a fiduciary relationship between pensioned employees and others with employer-sponsored benefits and the entities that operate those plans and make discretionary decisions regarding those plans. If the insurance companies or plan administrators involved act in bad faith or otherwise breach their fiduciary duties, employees and plan participants may have options for seeking compensation for any related losses. Working with an experienced ERISA lawyer can help you understand your rights and what options you have for enforcing them.

Steps to Take if You Believe Fiduciary Duties Have Been Breached

If you believe that you are the victim of a fiduciary breach of duty related to an ERISA-covered plan, there may be remedies available to you. You can pursue an ERISA appeal and/or file an ERISA lawsuit that may help you recover any losses related to the breach. Fiduciaries who breach their duties can be required to make good on any losses contemplated by the ERISA plan.

Start by reaching out to an experienced ERISA legal team. Provide them with as many details as possible so they can evaluate your case and help you understand if you have cause for a lawsuit. You may want to begin collecting documentation and information as soon as you believe a breach of duty is possible. Some information you might want to gather includes copies of investment and benefits statements related to your plan, claim denial letters, your claim forms and appeal letters, your plan documents, your claim file/administrative record, all communications between you and the insurer/ERISA fiduciary and any notes you can make about the signs you have noticed.

For help fighting for your ERISA benefits, call McKennon Law Group PC. Call us at 949-504-5381 to find out more about how we can help with your ERISA claims, including your breach of fiduciary duty claim.

The California Court of Appeal recently decided Bennett v. Ohio National Life Assurance Corporation, __ Cal.Rptr.3d. __ 2023 WL 4069794 (2023) that will allow disability claimants with the ability to bring claims in California state courts that disability insurers have asserted to be barred by statutes of limitations. Plaintiff Bennett’s disability policy would pay benefits until he reached age 65 if he became disabled due to a “sickness” after age 55 and would pay benefits for life if he became disabled due to an “injury.” Bennett was thrown from a horse in 2006 at age 53. He sustained significant injuries. He continued to work, with accommodations, until he was 61 in 2014 when he was no longer able to work due to the injuries.

Ohio National approved Bennett’s claim and paid his benefits. Ohio National then sent Bennett a letter in June 2015 informing him that it had determined that his disabling condition was due to degenerative disc disease and was therefore caused by sickness rather than injury. As such, his benefits would not be paid for life, but would cease when he reached age 65 in September 2018. Several times between June 2015 and September 2018, Ohio National requested that Bennett complete statements and provide physician’s statements certifying his disability. In April 2019, Ohio National informed Bennett that its decision was unchanged and he would not receive benefits beyond September 2018.

On August 13, 2019, Bennett sued for breach of contract and breach of the implied covenant of good faith and fair dealing. The trial court granted summary judgment to Ohio National after concluding the claims were barred by the statutes of limitation — four years for breach of contract and two years for breach of the implied covenant of good faith and fair dealing. Both causes of action, the court concluded, accrued when Ohio National issued an unconditional denial of liability on June 8, 2015, not when benefits ceased on September 3, 2018.

Bennett appealed to the Court of Appeal and argued that the trial court erred because the elements of his claims were not complete until he suffered actual damages when his benefits ceased in September 2018.

The Court of Appeals reversed and concluded that the elements of Bennett’s causes of action were not complete until September 2018 when Ohio National ceased making its monthly disability payments. The court relied on Thompson v. Canyon, 198 Cal.App.4th 594, 604 (2011) (“ ‘when the wrongful act does not result in immediate damage, “the cause of action does not accrue prior to the maturation of perceptible harm” ‘ “). For Bennett, the difference between his benefits ending at age 65 on one hand and continuing for life on the other hand was substantial and surely made a significant difference for him.

The takeaway from Bennett is to understand that a cause of action does not accrue until all the elements are satisfied. Therefore, damages are an element in a cause of action, the statute of limitations does not begin to run until actual damages are sustained. Had Ohio National informed Bennett that his benefits were going to cease at age 65, then continued paying his benefits beyond age 65, Bennett would not have a ripe cause of action because he would not have yet sustained actual damages.

If you have a disability claim and have been told that your benefits will end at a given time, it is important to understand that if you intend to bring a cause of action against the insurer, your cause of action for breach of contract will not accrue until you suffer damages, typically when the insurer ceases paying benefits. Understanding the disability policy’s internal contractual limitations clause and the applicable statute of limitations is important to make sure you maintain a viable claim. One way to ensure that you understand whether you have a valid California cause of action against an insurance company is to have your matter reviewed by knowledgeable and experienced disability insurance attorneys, like the lawyers at McKennon Law Group PC.

The Importance of Understanding Long-Term Care Insurance

Most people are familiar with various types of insurance, such as auto, life, and homeowners or renters insurance. However, many are not familiar with long-term care insurance. Long-term care insurance can be very beneficial for you as you age and may need additional care.

It is important to understand what this type of coverage is, what it covers, and how to hold your plan responsible for covering care as agreed, as with any insurance coverage. These things may be especially important to understand in the context of long-term care insurance given the manner in which insurance companies issued long-term care policies in the 1990s and 2000s that they are now struggling with, as explained here [LINK TO

What Is Long-Term Care Insurance?

Long-term care insurance pays for long-term care, typically in health care facilities, not covered by your other insurance policies. Traditional disability and health insurance policies have limits and do not always cover the care you may need, for example, if you have a chronic condition or serious injury that prevents you from performing your activities of daily living. Long-term care insurance can cover things such as in-home care or staying in an assisted living facility.

Why People Buy Long-Term Care Coverage

One reason people buy long-term care coverage, as with other types of insurance, is for peace of mind. Purchasing long-term care coverage will likely instill a sense of confidence that you will have access to care in the future, if and when you need it. This can be especially helpful for those in or approaching old age, as the aging process makes long-term care needs more likely.

Another reason people buy long-term care insurance is to protect their future assets. The type of care you might require as you age, especially if you have a chronic health condition and need regular care, will likely be costly. For example, without long-term care coverage, you may pay out-of-pocket costs of $100,000 – $200,000 or more in a year for long-term care that you need.

If you unexpectedly have to pay for in-home care, assisted living facility services, or other long-term care options, you may have to dip into your retirement funds, which can require you to completely alter your finances and retirement plan. These expenses can also decimate other savings or cause you to have to sell off assets to pay for care — all of which reduce your quality of life and your ability to pass assets to loved ones in the future. Long-term care insurance that reduces your out-of-pocket costs for care can mitigate these concerns.

Types of Long-Term Care Insurance

As with almost any type of insurance, there are different types of long-term care insurance. Some policies only cover care in a specific place, such as your home or a qualified nursing home or assisted living facility. Others limit coverage by care, type of service, or by the length of time it pays benefits.

You may be able to purchase a long-term care policy that offers a per diem amount to cover whatever care you need or, you might opt for a policy that only covers certain services based on what you think will be the most likely solutions you may need later in life.

One popular option is comprehensive coverage, which provides a daily benefit that you can use in multiple settings, so you have the flexibility to meet changing care needs.

What Does Long-Term Care Insurance Cover?

A comprehensive long-term care policy may help pay for medical and care services provided in your home, an adult day care center, an assisted living facility, a hospice or respite facility; and in a nursing home. The services covered will partially depend on where the coverage is being used. For example, you might have a plan that covers skilled nursing services, help with personal care, and a variety of therapies, but only as long as they are provided in your home. This is because these in-home services may not be covered by other insurance types. However, the same plan may only cover personal care services in a nursing home setting because skilled nursing services and options like physical therapy are typically covered by Medicare, Medicaid, and other payers when they occur in a nursing home setting.

Aside from medical, clinical, and wellness services, long-term care policies may also cover other assistance such as housekeeping and cooking. However, it is important to understand that such services likely need to be provided in coordination with other services covered by your policy.

Under most policies, to be covered, you must be unable to perform certain activities of daily living. A common insuring provision provides coverage if the insured is “unable to perform, without substantial assistance, at least two activities of daily living.” Substantial assistance means “the physical assistance of another person without which you would not be able to perform an activity of daily living.” Policies often then list the relevant activities of daily living as:

Bathing – washing oneself by sponge bath, or in either a tub or shower, including the task of getting into or out of the tub or shower;
Continence – the ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel and bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag);
Dressing – putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs;
Eating – feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by feeding tube or intravenously;
Toileting – getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene;
Transferring – sufficient mobility to move into or out of a bed, chair or wheelchair or to move from place to place, either by walking, using a wheelchair or by other means.

How Much Does Long-Term Care Coverage Cost?

The cost of long-term care insurance depends on a variety of factors, including your age and health when you purchase it. As with many other insurance types, buying a plan early when you do not need it often saves you money.

Other factors in the cost of long-term care insurance relate to the benefits you select, such as how much your daily benefit for in-home care will be or how much you will receive while in an assisted living facility, and how long you may receive such benefits. For instance, a policy that pays a high daily amount for up to five total years will be more expensive than a policy that pays a lower daily amount for up to two total years.

What If Your Plan Has Denied Your Long-Term Care Claim?

The insurance companies that provide long-term care policies are for-profit businesses, so they have profit margins to attend to, stakeholders to satisfy, and many other concerns that have little to do with approving or paying your claims. Therefore, monetary issues that have nothing to do with coverage under a policy often come into play to influence claims decision making. For example, your insurer might pay benefits that are less than you expected or it may outright deny a claim for coverage, or your benefits might be cut off before the maximum period listed in your policy.

If you are facing any of these types of issues or feel that your long-term care insurance company is not acting in good faith, you should contact a knowledgeable attorney with expertise in the area of long-term care insurance. The attorneys at the McKennon Law Group PC have the knowledge and experience to help you get the benefits to which you are entitled under your long-term care policy. Reach out to the McKennon Law Group PC for a free consultation now.

McKennon Law Group PC has successfully defended its client against a Motion to Dismiss (the “Motion”) filed by Northrop Grumman Corporation and its associated pension plan (collectively “NG”) in Sheets v. Administrative Committee of the Northrop Grumman Space & Mission Systems Salaried Pension Plan, No. 2:22-cv-07607, slip op., at 1 (C.D. Cal. Nov. 22, 2023). The Motion argued that our client, Michael Sheets, had failed to properly allege claims for relief when he sued NG in federal court in the Central District of California. (In addition to addressing insurance matters, McKennon Law Group PC also attempts to compel pension plans and employers to pay pension benefits that are improperly withheld). In this matter, we were hired to address NG’s refusal to pay our client, Mr. Sheets, pension benefits that were promised to him. To compel our client to leave his former employer, Boeing, NG promised him pension benefits. The promised benefits related to his having previously worked for a company that NG had acquired, TRW, Inc. Mr. Sheets already possessed a vested pension under TRW’s pension plan. NG had promised him that if he left his current employer and began working for NG, his time working for NG would “bridge” with his time spent working for TRW. This would result in a significantly greater pension benefit. He left his former employer and worked for NG for five years. He diligently sought and received confirmation, in writing, that he would be entitled to a particular level of pension benefits if he began working for NG. After working for NG for five years, he retired. Before retiring, he wisely made personal copies of many of the communications related to his pension benefits. After receiving the promised level of benefits for seven years, NG unilaterally decided that it had erred, and it reduced his benefits by over one-half. Mr. Sheets appealed, and when his appeal was denied, he hired us to assist him. We promptly sued NG to compel it to resume paying Mr. Sheets the promised level of benefits, and for attorneys’ fees, costs, and interest. The complaint asserted claims for improper denial of benefits and breach of fiduciary duty under ERISA. Out of an abundance of caution and in the alternative, we also brought state law claims for negligent misrepresentations, fraudulent misrepresentations, and unjust enrichment. NG, in turn, filed the Motion. After extensive briefing, the Court ruled in Mr. Sheets’ favor on the ERISA claims.

As for the claim for improper denial of benefits, the Court ruled that the applicable plan documents potentially supported such a claim. The parties first argued before the Court as to which version of the Plan controlled the dispute: the version in effect when Mr. Sheets was hired, or the one in effect when he retired. Without providing a definitive ruling, the Court stated that at this stage in the litigation, the version Mr. Sheets alleged controlled, in fact controls. The Court then provided a thorough analysis of the plan documents and concluded that they could potentially support Mr. Sheet’s claim for improper denial of benefits.

The Court then addressed Mr. Sheet’s claim for breach of fiduciary duty. NG argued that the claim was improper for two reasons: (1) the applicable statute of limitations rendered it untimely and (2) the alleged breaches were ministerial actions and, therefore, could not be subject to a breach of fiduciary duty claim. The Court rejected both arguments.

As for the argument that Mr. Sheet’s complaint was barred by the statute of limitations, NG argued that the complaint had to be filed by no later than 2014, before NG had reduced Mr. Sheets’ pension benefits. This was based on a draconian analysis of the applicable statute of limitations, 29 U.S.C. Section 1113. The Court rejected this interpretation. As the Court explained, “The Ninth Circuit has adopted a two-step process in considering the ERISA statute of limitations: first, courts ask when the ‘breach or violation’ occurred, and second, courts ask when the plaintiff had ‘actual knowledge’ of the breach or violation. Ziegler v. Conn. Gen. Life Ins. Co., 916 F.2d 548, 550 (9th Cir. 1990).” Sheets, No. 2:22-cv-07607-MEMF at 13. The Court explained that, pursuant to the operative complaint, the misrepresentations that formed the basis of the breach of fiduciary duty claim arose in 2008. All other alleged breaches occurred in 2021. The Court then addressed the second stage in the analysis: when Mr. Sheets learned of the breaches. This occurred in 2021. The Court completed its analysis by explaining that:

Accordingly, the statute of limitations does not begin to run on these until 2021. See Ziegler, 916 F.2d at 552 (“We stress that an ERISA plaintiff’s cause of action cannot accrue[,] and the statute of limitations cannot begin to run until the plaintiff has actual knowledge of the breach, regardless of when the breach actually occurred. The ERISA statute of limitations, 29 U.S.C. § 1113, requires satisfaction of this second prerequisite, the plaintiff’s actual knowledge of the breach, before the statute can begin to run.”).

The six-year statute of limitations would apply to these allegations (which allege fraud) pursuant to the closing portion of the provision. 29 U.S.C. §§ 1113 (“[I]n the case of fraud or concealment, such action may be commenced not later than six years after the date of discovery of such breach or violation.”). These are therefore not barred.

With respect to the other violations, it appears that the six-year statute of limitations would apply. Regardless, however, of whether the three-year or six-year statute of limitations applies, these are not barred, and the Court declines the dismiss the FAC on this basis.

Id. at 14-15.

Having concluded that the complaint was timely filed, the Court addressed the sufficiency of the allegations. As the Court explained, “‘To state a claim for breach of fiduciary under ERISA, a plaintiff must allege that (1) the defendant was a fiduciary; (2) the defendant breached a fiduciary duty; and (3) the plaintiff suffered damages.’ Bafford v. Northrop Grumman Corp., 994 F.3d 1020, 1026 (9th Cir. 2021).” Id. at 15. NG argued at length that Bafford, a pension dispute previously decided by the Ninth Circuit Court of Appeals, barred Mr. Sheets’ claims. The Court ruled that NG’s analysis was in error. It explained that:

The Northrop Defendants argue that Sheets cannot maintain a claim for breach of fiduciary duty based on the alleged misrepresentation that his benefits would “bridge” if he came back to work at Northrop. The Northrop Defendants cite extensively to Bafford, arguing that any statements concerning “bridging” were merely “ministerial” in nature and fall within Bafford’s holding excluding such conduct as the basis for a breach of fiduciary duty. Mot. at 15-16. However, Bafford makes clear that the miscalculation of benefits at issue in that case was ministerial in nature because under the facts of that case, it did not involve discretion. Bafford, 994 F.3d at 1028 (“[D]iscretion is one of the central touchstones of a fiduciary role.”). Bafford explains that, in contrast, conduct such as communicating with plan beneficiaries about plan benefits—as Sheets alleges Davis and Solis did here—is a fiduciary function, no matter who performs it, and is actionable as a breach of fiduciary duty. Id. at 1027-28. Northrup’s arguments to the contrary fail. Mot. at 15-17; Reply at 7. The Court therefore declines to dismiss the FAC on this ground.

Id. The Court then proceeded to address the various breaches of fiduciary duty that Mr. Sheets had alleged. The Court found that all but one had been properly alleged. As for the improperly alleged breach, it noted that, “Because it appears that Sheets may be able to adduce additional facts in support of these purported violations, the dismissal is with leave to amend.” Id. at 16.

The Court then proceeded to dismiss Mr. Sheets’s state law claims. It ruled that they were preempted by ERISA. Whereas this was disappointing, these claims were always pled in the alternative. Given that the Court ruled that the ERISA claims were properly alleged, this dismissal does not meaningfully diminish our client’s case.

The Court’s denial of NG’s motion was significant. It allows Mr. Sheets to pursue his claims in in the litigation and is a good roadmap for the parties. It also serves as additional precedent that employers and pension plans cannot deceive would-be employees with false promises of benefits. When people receive information from their pension plans, they often make life-altering decisions in reliance thereon. Employers and plans cannot be permitted to change their position after it is too late for employees to protect themselves.

What Is Life Insurance Contestability Under California Law and Why Is It Important to You?