Gordon & Rees New York and Los Angeles Team Wins Full Dismissal in ERISA Lawsuit

July 2016

Gordon & Rees partner Jay Blumenkopf of New York and associate Hilary Feybush of Los Angeles successfully obtained summary judgment/dismissal in favor of a firm Health Insurance client.  The plaintiff, a shareholder in a law firm that specializes in insurance law, enrolled for health coverage from Gordon & Rees’s client for herself and her family.  During a three year period, several health care claims submitted by the plaintiff were denied.  The firm’s client ultimately covered the claims for the amounts that were still owed as some of the claims relating to services provided to the plaintiff’s husband were discharged by the providers due to his death. 
 In September 2012, the plaintiff filed a civil complaint against the firm’s client in Iowa State Court asserting breach of contract and bad faith claims.  The case was removed to the U.S. District Court for the Southern District of Iowa.  Summary judgment was obtained on behalf of the firm’s client based on ERISA preemption.  The Eighth Circuit affirmed and Plaintiff sought certiorari from the United States Supreme Court.  Certiorari was denied and plaintiff filed a second amended complaint alleging two claims for violations of ERISA, a claim for attorney’s fees, and a claim for breach of contract.In February and April 2016, the parties filed cross-motions for summary judgment and Gordon & Rees also filed a motion to dismiss the plaintiff’s claim for breach of contract.  As to Count I, Gordon & Rees argued that the relief sought by the plaintiff was not available under 29 U.S.C. § 1132(a)(1)(B) and 1132(a)(3)(B) as the firm’s client had already paid the claims and the remaining claims were charged off by the providers.  Gordon & Rees argued that the plaintiff was improperly trying to seek extra-contractual damages as well as the amount of premiums paid.  While 29 U.S.C. § 1132(a)(3) allows classic equitable remedies such as injunctive, restitutionary or mandamus relief, Gordon & Rees argued it does not extend to extra-contractual or compensatory damages.  As to Count II, Gordon & Rees argued that the plaintiff was not entitled to recover ERISA penalties under 29 U.S.C. § 1024(b)(4) as the firm’s client was not the plan administrator and the Eighth Circuit does not recognize a de facto plan administrator.  As to Count III, Gordon & Rees argued that the plaintiff could not obtain an award of attorney’s fees and costs pursuant to 29 U.S.C. § 1132(g) as she had not obtained any relief from the court related to the case. Finally, as to Count IV, Gordon & Rees argued that the breach of contract claim was preempted by ERISA.
 In granting summary judgment in defendant’s favor, Chief Judge John A. Jarvey held that 29 U.S.C. § 1132(a)(1)(B) does not enable the plaintiff to recover extra-contractual damages nor does it enable her to recover compensatory damages as the Eighth Circuit has previously found there was nothing to disgorge from the firm’s client as any benefit it received from the providers writing off of medical bills after the death of plaintiff’s husband was not a benefit conferred by the plaintiff but rather was conferred by the providers.  The court also agreed with Gordon & Rees that the firm’s client was not the plan administrator.  Since the claim for attorney’s fees was dependent on the ERISA claims, the court declined to award the plaintiff any attorney’s fees or costs. In addition, the court granted defendant’s motion to dismiss, holding that plaintiff’s breach of contract claim was preempted by ERISA.