Firm News Archives - Page 35 of 76

Robert J. McKennon Recognized as 2015 “Super Lawyer”

McKennon Law Group PC is proud to announce that its founding shareholder Robert J. McKennon has been recognized as one of Southern California’s “Super Lawyers” and appears in the 2015 edition of Southern California Super Lawyers magazine published today. Mr. McKennon has received this designation every year since 2011.

Each year, Super Lawyers magazine, which is published in all 50 states and reaches more than 14 million readers, names attorneys in each state who attain a high degree of peer recognition and professional achievement. The Super Lawyer designation is given to less than 5% of lawyers nationally after being nominated and voted on by their peers.

In addition, the American Society of Legal Advocates has recognized Mr. McKennon as one of the top 100 Insurance lawyers in the State of California for 2015. The American Society of Legal Advocates is an invitation-only, nationwide organization of top lawyers in practice today who combine excellent legal credentials with a proven commitment to community engagement and the highest professional standards.

Mr. McKennon was also awarded the designation of 2015 “Top Rated Lawyer in Insurance Law and Coverage” by American Lawyer Media and Martindale Hubbell, leading providers of news and rating information to the legal industry.

Standing Spine(dex) Adjustment – Ninth Circuit Finds Healthcare Providers Have Article III Standing in Denial of Benefit Claims Under ERISA

A universal part of the American medical experience is paperwork. Everyone is familiar with visiting a healthcare provider for the first time, filling out history forms and signing pages of documents that they either do not understand or do not care about. The Ninth Circuit recently grappled with a minimally explored legal issue surrounding one such document: whether a non-participant healthcare provider, as assignee of health plan beneficiaries under an assignment form, has Article III standing to bring a denial of benefits claim under ERISA.

Plaintiff Spinedex was a physical therapy clinic that had a number of patients covered by the defendant health plans although plaintiff was not a provider for plan participants. United Healthcare served as claims administrator for the defendant health plans and also insured many of those plans. New Spinedex patients were required to sign, among other things, an assignment of benefits form, an authorization of representation form, an enrollment form, and a financial policy form. The enrollment form included an acknowledgment that patients were liable for all costs of services provided; similarly, the financial policy explained patients would be responsible for any treatment costs not covered by their health plans.

The assignment form and authorization form, respectively, assigned Spinedex its patients “rights and benefits” under their respective health plans and authorized Spinedex to represent patients in administrative or civil proceedings that may arise in pursuit of benefits under their health plans. Most of the defendant health plans allowed written assignment of claims by their subscribers. Spinedex submitted claims to United after treating patients covered by the plans and United denied a number of such claims in whole or in part. Spinedex did not seek payment from its patients. These denials ultimately resulted in litigation when Spinedex sued United Healthcare and 44 health plans governed by ERISA for which United Healthcare was the claims administrator of the Plans. Under the Plans, for out-of-network care, Plan beneficiaries were required to request payment from their respective Plans. After defendants filed summary judgment based on lack of standing, the District Court granted summary judgment, holding, inter alia, that Spinedex lacked Article III standing to bring its denial of benefits and breach of fiduciary duty claims. Spinedex appealed.

The Ninth Circuit began by recognizing that, under ERISA’s civil enforcement provision, only participants, beneficiaries, fiduciaries, and the secretary of labor are empowered to bring a civil action. Spinedex was none of the above, thereby requiring it to “[bring a civil claim] derivatively, relying on its patients’ assignments of their benefits claims.” The defendants’ argument hinged on the first element of Article III standing: “[A] plaintiff must show (1) it has suffered an “injury in fact” that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Spinedex PT v. United Healthcare, citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180–81 (2000).

Specifically, the defendants argued that the assigning patients have not suffered an “injury in fact” because Spinedex had not sought payment from its assigning patients for any shortfall. Therefore, defendants argued that since Spinedex stands in the shoes of, and can have no greater injury than, its assignors, Spinedex did not suffer injury in fact.

The court thoroughly dismantled this argument. It relied on at least one case from the Eleventh Circuit directly on point (the only other federal court to directly address this issue): HCA Health Services of Georgia, Inc. v. Employers Health Insurance Co., 240 F.3d 982 (11th Cir. 2001) (“HCA”). In that case, the defendant argued that the plaintiff lacked Article III standing because it failed to bill its patient-assignor for the denied benefits and thus lacked standing. The court in HCA disagreed and held that an assignee healthcare provider had standing to sue for recovery of benefits.

The Ninth Circuit also compared the present case to the Supreme Court’s decision in Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269 (2008). In that case, payphone operators had assigned third party aggregator companies their right to sue long-distance carriers for money owed, with an agreement that the aggregators would pay the proceeds of the suits back to the operators, minus a small fee. Sprint Communications was decided in a five-four split, with the dissent raising concern that the assignee had no stake in the outcome of the litigation beyond their fee. Here, Spinedex had an interest because its “patients assigned the entirety of their claims against the Plans, and Spinedex, as assignee, is permitted to keep all amounts recovered in suits brought on those claims.”

The defendants in Spinedex insisted that the plaintiff’s choice to not seek payment from the patients meant that those patients, as assignors, suffered no injury in fact after they assigned their rights. The court disagreed, stating “the patients’ injury in fact after the assignment is irrelevant.” Spinedex only took the rights the assignors had at the time, which included the right to seek payment directly from the health plans for charges by non-participant health care providers. Spinedex’s decision to not pursue its legal rights against its patients for payment did not affect it’s right to recover from the defendants.

The Ninth Circuit did not agree with all of Spinedex’s arguments, however. The court affirmed that the anti-assignment clause in one of the health plans precluded an assignment of benefits from the plan’s beneficiaries to Spinedex. The court also rejected Spinedex’s argument that the “assignment of rights and benefits” included the right to bring claims for breach of fiduciary duty, citing that the context of the agreement appears limited to issues of payment.

This decision is well reasoned and allows providers who have performed valuable services for plan participants to be paid directly from the ERISA plans that insure their patients and does not force the often needless action of actually seeking payment from them. Limiting physicians’ first recourse to their patients would have chilling effects both on providers and plan participants. Participants may forgo or delay vital healthcare because they cannot finance or they cannot pay for their care, and providers may limit their care to those participants whose health plans have previously paid properly assigned healthcare claims or participants who are able to first to pay for the care. But, these providers must first check the plans’ terms to assure themselves that they do not contain anti-assignment clauses

Robert McKennon and Scott Calvert Publish Article: “Expanding Equitable Remedies in ERISA Cases”

The January 8, 2015 edition of the Los Angeles Daily Journal featured Robert McKennon and Scott Calvert’s article entitled: “Expanding Equitable Remedies in ERISA Cases.” In it, Mr. McKennon and Mr. Calvert discuss a new case, Gabriel v. Alaska Electrical Pension Fund, 2014 DJDAR 16590 (9th Cir. 2014) and also discuss equitable remedies generally in ERISA cases and, in particular, how the Ninth Circuit Court of Appeals has joined other circuits in allowing certain equitable remedies, most especially the surcharge remedy. Mr. McKennon and Mr. Calvert also explain how insurance claimants should go about proving equitable remedies. The article is posted below with the permission of the Daily Journal.

Case highlights importance of agent-broker distinction

Expanding equitable remedies in ERISA cases

One of the biggest changes in the ever-fluid law that is the Employee Retirement Income Security Act of 1974 was the expansion in the availability of claims for equitable remedies. In 2011, the U.S. Supreme Court, in Cigna Corp. v. Amara, opened the door to allowing claimants to seek monetary relief through equitable remedies in ERISA cases. With a recent ruling, the 9th U.S. Circuit Court of Appeals has expanded the available equitable remedies and set forth a road map for claimants when asserting the equitable remedies of reformation, equitable estoppel and surcharge.

Following the Supreme Court’s 1985 decision in Massachusetts Mutual Life Insurance Co. v. Russell, courts across the country grappled with the extent to which equitable remedies are available under ERISA. While equitable remedies were always technically available to ERISA claimants through Section 502(a)(3)(B), which allows an ERISA claimant “to obtain other appropriate equitable relief,” such relief was only available in some circuits, and even then only under “extraordinary circumstances.” Prior to Amara, the lower courts interpreted the Supreme Court’s 1993 ruling in Mertens v. Hewitt Assocs. as precluding the recovery of any monetary relief under Section 502(a)(3) because monetary relief was not considered to be equitable relief.

However, following Amara, courts expanded the availability of equitable remedies. Consistent with that trend, recently, the 9th Circuit withdrew an earlier decision denying the availability of the equitable remedy of surcharge in ERISA cases, and issued a new ruling consistent with the holdings of other circuit courts. The new ruling, Gabriel v. Alaska Electrical Pension Fund, 2014 DJDAR 16590 (9th Cir. 2014), is much more favorable to ERISA claimants and clarifies that surcharge, a form of equitable relief, is available to claimants under ERISA Section 502(a)(3).

While the 9th Circuit ruled that the district court was correct in holding that the plaintiff was not entitled to the payment of the pension funds he sought because his rights to those funds never vested, it also remanded one aspect of the case to the district court, but virtually instructed the lower court to deny that claim. However, the ruling is important because, by providing the equitable remedy of surcharge to ERISA claimants, the 9th Circuit aligned itself with the 4th, 5th, 7th and 8th Circuits in expanding the rights of ERISA claimants.

In the ruling, the 9th Circuit explained that Amara clarified that because ERISA Section 502(a)(3) allows a claimant to seek “appropriate equitable relief,” those remedies traditionally viewed as equitable were available.

For example, a claim of “appropriate equitable relief” may include “the reformation of the terms of the plan, in order to remedy the false or misleading information” provided by a plan fiduciary. The court explained:

“A plaintiff may obtain reformation based on mistake in two circumstances: ‘if there is evidence that a mistake of fact or law affected the terms of [a trust] instrument and if there is evidence of the settlor’s true intent’; or (2) ‘if both parties [to a contract] were mistaken about the content or effect of the contract’ and the contract must be reformed ‘to capture the terms upon which the parties had a meeting of the minds.’ Under a fraud theory, a plaintiff may obtain reformation when either (1) ‘[a trust] was procured by wrongful conduct, such as undue influence, duress, or fraud,’ or (2) a ‘party’s assent [to a contract] was induced by the other party’s misrepresentations as to the terms or effect of the contract’ and he “was justified in relying on the other party’s misrepresentations.” (Internal citations omitted).

However, while the Gabriel court reiterated the availability of the equitable remedy of reformation in ERISA cases, the court also clarified that the plan documents themselves must actually contain an error for reformation to be properly applied. It is not enough that the administrative record contains misinformation about the plan. The mistake must be in the plan itself, not in its administration. Absent an actual mistake in the plan documents, reformation is likely not available.

Next, the 9th Circuit held that equitable estoppel is another form of equitable relief available under ERISA. With respect to equitable estoppel, a fiduciary is held to what it promised and the claimant is entitled to the benefit consistent with that promise. However, in ERISA cases, enforcing equitable estoppel is not as simple as demonstrating that a promise for certain benefits was made; other conditions apply. As with a claim for reformation, the 9th Circuit explained that “a federal equitable estoppel claim in the ERISA context [cannot] contradict written plan provisions.”

This principle is consistent with the primacy that plan documents hold in ERISA cases. Given the important role that plan documents play in ERISA, the Court stated:

“Accordingly, a plaintiff may not bring an equitable estoppel claim that ‘would result in a payment of benefits that would be inconsistent with the written plan,’ or would, as a practical matter, result in an amendment or modification of a plan, because such a result ‘would contradict the writing and amendment requirements of 29 U.S.C. [Sections] 1102(a)(1) and (b)(3).’ … For the same reason, ‘oral agreements or modifications cannot be used to contradict or supersede the written terms of an ERISA plan.’” (Internal citations omitted).

However, the court did explain there was a difference “between oral statements that contradict or supersede the terms of an ERISA plan,” which are not enforceable, and “oral interpretations of a plan’s provisions that are not contrary to the plan’s written provisions,” and could be enforced if they offer interpretations of ambiguous plan provisions.

In addition, the court explained that to meet traditional equitable estoppel requirements, an ERISA claimant must demonstrate: “(1) extraordinary circumstances; (2) that the provisions of the plan at issue were ambiguous such that reasonable persons could disagree as to their meaning or effect; and (3) that the representations made about the plan were an interpretation of the plan, not an amendment or modification of the plan.” (Internal quotations and citations omitted.)

Finally, regarding the equitable remedy of surcharge, in which the claimant is placed in the position he or she would have been in but for the fiduciary’s breach of duty, the 9th Circuit reversed its previous, now-withdrawn, decision and noted that Amara allows a claimant to obtain surcharge relief. The 9th Circuit explained that to prevail on a surcharge claim, consistent with Amara, the claimant must establish a breach of fiduciary duty that caused his harm and is not necessarily required to show detrimental reliance. The court held:

“‘[A] plan participant or beneficiary must show that the violation injured him or her,’ but ‘need only show harm and causation,’ not detrimental reliance … [S]urcharge may be an appropriate form of equitable relief to redress losses of value or lost profits to the trust estate and to require a fiduciary to disgorge profits from unjust enrichment.”

The court then remanded the case to the district court to determine whether the surcharge remedy is “appropriate equitable relief” as it pertained to the plaintiff.

As Gabriel demonstrates, courts are using Amara to expand the ability of plan participants and beneficiaries to bring claims for equitable relief under ERISA, even to obtain monetary relief, not previously available to them.By confirming that surcharge is an available equitable remedy in ERISA cases, and providing a road map for obtaining monetary relief through reformation, equitable estoppel, and most especially surcharge, the 9th Circuit issued another plaintiff-friendly ruling.

Nine consumer protection bills sponsored by insurance commissioner signed into law in 2014

Insurance Commissioner Dave Jones announced that during the 2014 legislative session that Governor Jerry Brown signed nine bills sponsored by the California Department of Insurance (“CDI”). A bill that adds protections for small businesses that took effect in 2014 and five other consumer protection bills that were implemented January 1, 2015. Here is a list of them (taken from a CDI bulletin):

SB 1273, authored by Senator Ricardo Lara (D-Bell Gardens) – Low Cost Auto Insurance Expansion

The signing of SB 1273 was the single most important action taken this year to reduce the number of uninsured vehicles on our roads. The law enhances the California Low Cost Auto program by allowing more low-income individuals the opportunity to purchase low cost auto insurance, most importantly the estimated 1.4 million newly-licensed undocumented individuals who may apply for licenses starting January 2015.

AB 1804, authored by Assembly Member Henry Perea (D-Fresno) – Back-up contact

Requires insurers to provide consumers the option to designate a third party as a back-up contact and receive notification from their insurance carrier if their policy is in danger of lapsing, expiring, being terminated or canceled due to nonpayment of premium. This new law benefits both insurers and consumers by promoting continual insurance among automobile, homeowners and disability income insurance policyholders, especially seniors and members of the military who move often or are deployed, and may unintentionally have their policies terminated due to nonpayment. This will take effect January 1, 2016.

SB 1446, authored by Senator Mark DeSaulnier (D-Concord) – Small business protections

This small employer health coverage urgency bill is a victory for all California small businesses. The new law provides small employers who need time to transition to Affordable Care Act compliant policies additional time to make the transition. Small employers with non-grandfathered health insurance coverage purchased by December 31, 2013 have the option to renew their existing coverage for one year, rather than be required to move to new coverage by December 2014.

AB 2056, authored by Assembly Member Matthew Dababneh (D-Encino) – Pet insurance

Under AB 2056 pet insurers are required to disclose important information regarding their policies, standardize definitions and provide consumers with a 30-day free look period. As of July 1, 2015, pet insurers will be required to disclose baseline information regarding their policies such as reimbursement benefits, pre-existing condition limitations and a clear explanation of limitations of coverage including coinsurance, waiting periods, deductibles and annual or lifetime policy limits.

AB 2347, authored by Assembly Member Lorena Gonzalez (D-San Diego) – Annuity disclosures

Consumer protection and helping seniors avoid possible financial hardship is paramount to the mission of the Department of Insurance. Seniors now have more protection with the new annuity disclosure requirements provided by AB 2347. The new law requires disclosure language on the front of the policy jacket or on the cover sheet for an immediate annuity that aligns with the disclosure language already required for the more common deferred annuity products. This bill will go into effect July 1, 2015.

AB 2128, authored by Assembly Member Richard Gordon (D-Menlo Park) – Community development investments

Reforms the California Organized Investment Network (COIN) Program to better focus on finding and facilitating insurance industry investments that provide economic and social benefits to California’s underserved communities. The new law requires insurers who write $100 million or more in California premium to provide information to the commissioner, by July 1, 2016, on all of its community development investments, including infrastructure and green investments, as well as streamlining reporting requirements. This bill also clarifies an important element of the law authorizing the insurance commissioner to survey insurers’ supplier diversity efforts, which is part of Commissioner Jones’ Insurance Diversity Initiative.

AB 2734, authored by the Assembly Committee on Insurance – Omnibus provisions

This omnibus bill clarifies and improves various sections of the Insurance Code, the body of law that provides for consumer protections and regulation of insurance companies. Specifically it provides the Locomotive Engineers and Conductors Mutual Protection Association (LECMPA) the authority to offer an accidental death benefit in addition to job protection insurance to their members. Railroad workers will gain an important insurance protection benefitting them and their families.

SB 1142, authored by Senate Insurance Chair Bill Monning (D-Carmel) – Insurance fraud

The law clarifies the annual fraud health and disability assessment to ensure CDI is able to continue its mission in ensuring a healthy and vibrant insurance marketplace by reducing fraud and working with local district attorneys.

AB 1234, authored by Assembly Member Marc Levine (D-San Rafael) – Confidentiality

Maintains the confidentiality of state investigations and examinations that monitor the financial health of insurance companies. The new law protects insurer solvency by precluding the Department of Insurance from being forced to provide sensitive financial data. This bill also clarifies an important element of the law authorizing the insurance commissioner to survey the supplier diversity efforts of insurance companies which is part of Commissioner Jones’ Insurance Diversity Initiative.

Ruling Limits Insurance Company’s Ability to Collect SSDI Overpayments

When and under what circumstances an insurer paying long-term disability benefits may collect retroactive benefits paid to an ERISA plan participant under the Social Security Act has been the source of conflicting opinions over the years. The most recent pronouncement: a long-term disability plan administrators must “specifically identify a particular fund” from which it will be reimbursed in order to seek to recover of alleged overpayment of disability benefits. So held the Southern District of California in its recent plaintiff-friendly decision in Wong v. Aetna Life Insurance Company, 2014 U.S. Dist. LEXIS 135661 (S.D. Cal. 2014). Through its decision in Wong, the district court reaffirmed that simply because an ERISA governed long-term disability plan’s language provides for recovery of an award of back-dated SSDI benefits does not mean that an insurance company may seek reimbursement from an insured’s general assets. Instead, the onus is on the insurer to specifically identify specific funds, separate from a plan participant’s general assets, on which it may place an attachment.

In Wong, the plan a participant was initially granted benefits under her ERISA governed long-term disability plan. However, the plan administrator, Aetna, repeatedly denied and then reinstated her benefits. After the third denial, the plan participant filed an appeal with Aetna, which was subsequently denied. However, while she was still on claim, Aetna had advised her to apply for Social Security benefits, which was eventually approved and the Social Security Administration also agreed to back-date her award for over a year. However, very soon after being approved for the award, Aetna contacted the plan participant and asserted that it was entitled to reimbursement of the retroactive SSDI benefits she received.

Following Aetna’s demand for reimbursement, the plan participant filed an ERISA action seeking benefits owed to her. Aetna in turn filed a counterclaim seeking recovery for the retroactive social security benefits received by the plan participant. First, as to the plan participant’s claim, the court concluded that it was unreasonable and an abuse of discretion for Aetna to terminate the plan participant’s benefits. Second, and more significantly, the court held that Aetna may not retroactively attach the plan participant’s social security benefits because it failed to meet the necessary criteria for seeking overpayment. In reaching its holding, the court explained that there are “at least three criteria” that a plan administrator must satisfy in order to recover the overpayment:

First, there must be a promise by the beneficiary to reimburse the fiduciary for benefits paid under the plan in the event of a recovery from a third party. Second, the reimbursement agreement must specifically identify a particular fund, distinct from the beneficiary’s general assets, from which the fiduciary will be reimbursed. Third, the funds specifically identified by the fiduciary must be within the possession and control of the [beneficiary]. (internal quotations omitted).

Here, as in most plans, the first criteria is satisfied because, as the plan participant did not dispute that she contracted to reimburse overpayment of benefits to Aetna. However, the court held that Aetna did not satisfy second criteria. The court focused on the fact that the Social Security Act provides that “none of the moneys paid or payable or rights existing under this [Social Security] subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process.” As such, although Aetna attempted to do so, the court found that Aetna could not identify the SSDI benefits as themselves a particular fund because they had already been paid. Furthermore, Aetna did not dispute that the long-term disability benefits had already been spent by the plan participant. As such, the court held that Aetna is not permitted to attach the plan participant’s SSDI benefits because it could not identify a fund distinct from her general assets that permits such an attachment.

This decision demonstrates that simply because a plan participant contracted to reimburse an insurer for an overpayment does not mean that the plan has an unfettered ability to seek recovery of overpaid benefits. Indeed, especially in the case of retroactive social security benefits, the insurance company may well be unable to meet its burden of identifying particular fund from which it can properly be reimbursed. Plan participants and beneficiaries can take some solace from this decision.

Ninth Circuit Expands the Availability of Equitable Remedies in ERISA Cases, Approving Surcharge as a Viable Remedy

Since the Supreme Court’s decision in Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985), the courts have grappled with the issue of the extent to which equitable remedies are available under the Employee Retirement Income Security Act (“ERISA”). One of the most interesting and beneficial for plan participants is the issue of the equitable remedy of surcharge under ERISA. Recently, the Ninth Circuit withdrew an earlier decision regarding the availability of the equitable remedy of surcharge in ERISA, and issued a new ruling consistent with the holdings of other Circuit courts. The new ruling, Gabriel v. Alaska Electrical Pension Fund, 2014 DJDAR 16590 (9th Cir. 2014), is much more favorable to ERISA claimants and makes clear that surcharge, a form of equitable relief, is available to ERISA claimants under 29 U.S.C. section 1132(a)(3). Further, the Court also set forth the requirements that a claimant must meet to qualify for other forms of equitable relief, including equitable estoppel and reformation.

The specific facts of the Gabriel matter are unimportant, and ultimately the Ninth Circuit ruled that the district court was correct in holding that the plaintiff was not entitled to the payment of the pension funds that he sought because his rights to those funds never vested. The Ninth Circuit also remanded one aspect of the case to the District Court, but virtually instructed the lower court to deny that claim as well. However, the ruling is important because, by making the equitable remedy of surcharge available to ERISA claimants, the Ninth Circuit aligned itself with the Fourth, Fifth, Seventh and Eighth Circuits in expanding the rights of ERISA claimants.

In the ruling, the Ninth Circuit explained that in Cigna Corp. v. Amara, 131 S. Ct. 1866 (2011), the United States Supreme Court made it clear that because ERISA section 1132(a)(3) allows a claimant to seek “appropriate equitable relief,” those remedies traditionally viewed as equitable were available.

Thus, for example, a claim of “appropriate equitable relief” may include “the reformation of the terms of the plan, in order to remedy the false or misleading information” provided by a plan fiduciary. The Ninth Circuit then explained:

A plaintiff may obtain reformation based on mistake in two circumstances: “if there is evidence that a mistake of fact or law affected the terms of [a trust] instrument and if there is evidence of the settlor’s true intent”; or (2) “if both parties [to a contract] were mistaken about the content or effect of the contract” and the contract must be reformed “to capture the terms upon which the parties had a meeting of the minds.” Skinner, 673 F.3d at 1166. Under a fraud theory, a plaintiff may obtain reformation when either (1) “[a trust] was procured by wrongful conduct, such as undue influence, duress, or fraud,” or (2) a “party’s assent [to a contract] was induced by the other party’s misrepresentations as to the terms or effect of the contract” and he “was justified in relying on the other party’s misrepresentations.” Id.

Next, the Ninth Circuit explained that equitable estoppel is another form of equitable relief available to ERISA claimants. Under the remedy of equitable estoppel, a fiduciary is held to what it promised and the claimant is entitled to the benefit consistent with that promise. However, in ERISA cases, enforcing equitable estoppel is not as simple as demonstrating that a promise for certain benefits were made; other conditions apply. For example, “a federal equitable estoppel claim in the ERISA context [cannot] contradict written plan provisions.”

Accordingly, a plaintiff may not bring an equitable estoppel claim that “would result in a payment of benefits that would be inconsistent with the written plan,” or would, as a practical matter, result in an amendment or modification of a plan, because such a result “would contradict the writing and amendment requirements of 29 U.S.C. §§ 1102(a)(1) and (b)(3).”

…

For the same reason, “oral agreements or modifications cannot be used to contradict or supersede the written terms of an ERISA plan.” (Citations omitted.)

In addition, the court explained that in order to meet the traditional equitable estoppel requirements, the ERISA claimant must also demonstrate “(1) extraordinary circumstances; (2) that the provisions of the plan at issue were ambiguous such that reasonable persons could disagree as to their meaning or effect; and (3) that the representations made about the plan were an interpretation of the plan, not an amendment or modification of the plan.” (Internal quotations and citations omitted.)

Finally, with respect to the equitable remedy of surcharge, an equitable remedy in which the claimant is placed in the position he or she would have been in but for the fiduciary’s breach of duty, the Ninth Court reversed its previous, now-withdrawn, decision and noted that Amara allows a claimant to obtain relief by surcharge. The Ninth Circuit explained that in order to prevail on a claim surcharge remedy, after Amara, the claimant is not required to show detrimental reliance, only that the plan or claim fiduciary breached its fiduciary duty owed to the injured claimant. In other words, all that is needed is harm and causation.

While the plaintiff in Gabriel may not ultimately obtain the benefits he was seeking, this was another plaintiff-friendly ruling from the Ninth Circuit.

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