EMPLOYEE BENEFITS LAW
by Jayne Elizabeth Zanglein*
I.
II.
INTRODUCTION
A.
B.
III.
IV.
McGann v. H & H Music Co
Vasseur v. Halliburton Co
.
.
STANDARD OF REVIEW FOR CLAIMS APPEALS
.
ORAL MODIFICATION
.
A.
Rodrigue v. Western & Southern Life Insurance
Co
.
Williams v. Bridgestone/Firestone, Inc
.
587
588
588
591
593
597
..
597
598
601
601
602
603
606
.
608
CALCULATION OF BENEFITS •.••••.•.•.•.••••..•••...••..•.......
610
B.
V.
.
REDUCTION OF BENEFITS ••••••••...•.••.••.••....••.•••..•.•....
PREEMPTION ••••••••••••••...•••.•••.•••.••.••••••.•........•.......
A.
B.
Christopher v. Mobil Oil Corp
Heitkamp v. Dyke (In re Dyke)
..
.
VI.
VII.
VIII.
DEFINITION OF EMPLOYEE BENEFIT PLAN ....•...•.•..••....
IX.
ASSIGNMENT OF BENEFITS
614
617
619
620
SUMMARY PLAN DESCRIPTIONS
MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
("MEW As")
X.
XI.
XII.
XIII.
.
RECOVERY OF OVERPAID CONTRIBUTIONS .•................
GOLDEN PARACHUTES
.
EXPERIMENTAL TREATMENT ••••.••.••....••..•••..•.•.•.•.....•
I.
INTRODUCTION
This term, the Fifth Circuit considered several cases of first
impression. In Hicks v. Fleming COS.,1 the court formulated a
standard to determine when a document qualifies as a summary plan
description. In McClure v. Zoecon, Inc.,2 the Fifth Circuit held that
an action under the Employee Retirement Income Security Act ("ERISA") section 5H)3 is subject to a two year statute of limitations. In
• Associate Professor of Law, Texas Tech University School of Law; B.M.E., Berklee
College of Music, 1975; J.D., State University of New York at Buffalo, 1980.
I. 961 F.2d 537 (5th Cir. May 1992).
2. 936 F.2d 777 (5th Cir. July 1991).
3. 29 U .S.C. ~ 1140 (1988).
587
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Pierre v. Connecticut General Life Insurance CO.,4 the court held
that the arbitrary and capricious standard of review applies to factual
determinations made by a plan administrator, even when the plan
does not grant discretionary authority to the administrator. Finally,
in Jamail, Inc. v. Carpenters District Council,s the court held that
an employer has no standing to sue under section 5026 to recover
overpaid contributions to a multi-employer plan, but can recover
based on the common law right of restitution.
Other cases decided this term focused on issues such as oral
modification of ERISA-governed plans, 7 preemption, 8 multiple employer welfare arrangements ("MEWAs"),9 and calculation of benefits. 1O Perhaps the most significant case decided this term is McGann.
v. H & H Music Co., II in which the Fifth Circuit held that an
employer may reduce medical benefits for specific diseases, such as
acquired immune deficiency syndrome ("AIDS"), without violating
ERISA section 510. This survey article will discuss some of the most
significant employee benefits cases decided this term.
II.
A.
REDUCTION OF BENEFITS
McGann v. H & H Music Co.
The most controversial Fifth Circuit decision this term involves
the reduction of lifetime medical benefits for persons with AIDS. In
McGann v. H & H Music Co.,l2 the Fifth Circuit upheld an employer's decision to reduce from $1,000,000 to $5,000 the lifetime
medical benefits for persons with AIDS.13 The amendment was implemented shortly after the employer terminated an insured plan and
4. 932 F.2d 1552 (5th Cir. June 1991), cert. denied, 112 S. Ct. 453 (1992).
5. 954 F.2d 299 (5th Cir. Feb. 1992).
6. 29 U.S.C. § 1132 (1988 & 1990 Supp. II).
7. Williams v. Bridgestone/Firestone, Inc., 954 F.2d 1070 (5th Cir. Mar. 1992); Rodrigue
V. Western & S. Life Ins. Co., 948 F.2d 969 (5th Cir. Dec. 1991).
8. Christopher v. Mobil Oil Corp., 950 F.2d 1209 (5th Cir. Jan. 1992), cert. denied, 113
S. Ct. 64 (1992).
9. MDPhysicians & Assoc. v. Texas Bd. of Ins., 957 F.2d 178 (5th Cir. Apr. 1992),
cert. denied, 113 S. Ct. 179 (1992).
10. Kennedy v. Electricians Pension Plan, IBEW No. 995, 954 F.2d 1116 (5th Cir. Mar.
1992).
11. 946 F.2d 401 (5th Cir. Nov. 1991), cert. denied, 113 S. Ct. 482 (1992).
12. [d.
13. [d. at 403.
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self-funded its medical benefits. 14 At the time the amendment was
adopted, the employer knew that an employee, John McGann, had
been diagnosed with AIDS as he had submitted AIDS-related claims
seven months earlier .I~
Within six months after the amendment was adopted, McGann
reached his lifetime maximum of $5,000. 16 He sued his employer, the
plan insurer, and the plan administrator under section 510 of ERISA.
Section 510 provides in pertinent part:
It shall be unlawful for any person to discharge, fine, suspend,
expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the
provisions of an employee benefit plan, . . . or for the purpose
of interfering with the attainment of any right to which such
participant may become entitled under the terms of the plan . . . .17
McGann alleged that the reduction of lifetime benefits was
"directed specifically at him in retaliation for exercising his rights
under the medical plan and for the purpose of interfering with his
attainment of a right to which he may become entitled under the·
plan. "18 Defendants filed a motion for summary judgment conceding
that they adopted the amendment knowing that McGann was the
only employee at the time who had AIDS,19 The lower court granted
summary judgment, holding that defendants "had an absolute right
to alter the terms of the plan, regardless of their intent in making
the alterations. "20
The Fifth Circuit affirmed the lower court's decision. McGann
asserted that the defendants violated ERISA section 510 by retaliating
against him for exercising rights to which he was entitled under the
terms of the plan and by interfering with the attainment of rights to
14. Other cost-saving provisions were adopted at this time. [d. at 403 n.l. Among other
changes, the deductible was increased, employee premiums for family coverage were increased,
and drug and alcohol dependency treatment was dropped. [d.
IS. [d. at 403.
16.
17.
[d.
[d. (quoting 29 U.S.C. § 1140 (1988». In McClure v. Zoecon, Inc., 936 F.2d 777
(5th Cir. July 1991), also decided this term, the Fifth Circuit held that the applicable statute
of limitations for an action brought under § 510 is two years. [d. at 778. This limitation
period is borrowed from the two year limitation period for a wrongful discharge or employment
discrimination claim brought under state law. See TEX. CIV. PRAC. & REM. CODE ANN. §
16.003 (Vernon 1986).
18. 946 F.2d at 403.
19. [d. at 403-04.
20. [d. at 404.
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which he might become entitled. 21 The court rejected this assertion,
noting that McGann had the burden of proving any such alleged
retaliation or interference. 22
The court assumed there was a connection between the filing of
McGann's AIDS-related medical claims and the employer's decision
to reduce benefits for AIDS-related claims. 23 However, the court
ruled that the employer's motivation was "to avoid the expense of
paying for AIDS treatment ... no more for McGann than for any
other present or future plan beneficiary who might suffer from
AIDS."24 The court held that this was insufficient to prove discriminatory intent directed specifically at McGann. Section 510 does not
prohibit medical plans from discriminating between categories of
diseases:
Section 510 does not mandate that if some, or most, or virtually
all catastrophic illnesses are covered, AIDS (or any other particular
catastrophic illness) must be among them. It does not prohibit an
employer from electing not to cover or continue to cover AIDS,
while covering or continuing to cover other catastrophic illnesses,
even though the employer's decision in this respect may stem from
some "prejudice" against AIDS or its victims generally. The same,
of course, is true of any other disease and its victims. That sort
of "discrimination" is simply not addressed by Section 510. 25
The court further ruled that McGann did not prove that his
employer interfered with any rights to which he might become entitled
under the terms of the plan. The court refused to interpret ERISA
section 510 so as to vest an employee's right to medical benefits:
The right referred to in the second clause of Section 510 is not
simply any right to which an employee may conceivably become
entitl~d, but rather any right to which an employee may become
entitled pursuant to an existing, enforceable obligation assumed
by the employer.... McGann's allegations show no promised
benefit, for there is nothing to indicate that defendants ever
promised that the $1,000,000 coverage limit was permanent. 26
Because the plan expressly gave the employer the right to terminate
or amend the plan at any time, there was no vested benefit and no
"right to which McGann may have become entitled for the purposes
21.
22.
23.
24.
25.
26.
See id.
[d.
[d.
[d.
[d. at 408.
[d. at 405.
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of section 510."27 The court noted that ERISA does not require the
vesting of medical benefits. 28 In Shaw v. Delta Air Lines, Inc. ,29 th~
Supreme Court stated that "ERISA does not mandate that employers
provide any particular benefits, and does not itself proscribe discrimination in the provision of employee benefits. "30 The Fifth Circuit
refused to broadly construe the term "discriminate" as it would
interfere with employers' rights to create medical plans that are
subject to modification. 31 The court quoted Moore v. Metropolitan
Life Insurance Co. :32
With regard to an employer's right to change medical plans,
Congress evidenced its recognition of the need for flexibility in
rejecting the automatic vesting of welfare plans. Automatic vesting
was rejected because the costs of such plans are subject to fluctuating and unpredictable variables. Actuarial decisions concerning
fixed annuities are based on fairly stable data, and vesting is
appropriate. In contrast, medical insurance must take account of
inflation, changes in medical practice and technology, and increases in the costs of treatment independent of inflation. These
unstable variables prevent accurate predictions of future needs
and costS. 33
The Supreme Court denied certiorari in McGann on November
9, 1992. 34 Possibly, the Americans with Disabilities Act ("ADA")35
will be construed to prevent benefit reductions which are targeted at
specific disabilities. The Equal Employment Opportunity Commission
("EEOC") is considering whether the type of benefit reduction
applied to McGann is permissible under the ADA.36
B.
Vasseur v. Halliburton Co.
Similar issues arose in Vasseur v. Halliburton CO. 37 Moise Vasseur, as an active employee of Halliburton, was covered under
27. Id.
28. Id.; see Moore v. Metropolitan Life Ins. Co., 856 F.2d 488, 492 (2d Cir. 1988).
29. 463 U.S. 85 (1983).
30. Id. at 91.
31. 946 F.2d at 407.
32. 856 F.2d 488 (2d Cir. 1988).
33. Id. at 492.
34. 113 S. Ct. 482 (Nov. 9, 1992). Justices B1ackmun and O'Connor would have granted
certiorari. Id.
35. Americans with Disabilities Act of 1990, Pub. L. No. 101-336, 104 Stat. 327 (codified
at 42 U.S.C. §§ 12101-12213 (Supp. II 1990».
36. Evelyn Gilbert, ADA Could Bar AIDS Benefits Cap, (NAT'L UNDERWRITER PROP. &
CAS.lRiSK & BENEFITS MGMT. ADDITION), Mar. 30, 1992, at 15.
37. 950 F.2d 1002 (5th Cir. Jan. 1992).
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Halliburton's medical plan. 38 In February 1983, Vasseur's son, Gregory, was seriously injured in a motorcycle accident.39 After sustaining
serious head injuries, he was no longer able to care for himself. 40
Four months after his son's accident, Vasseur retired and became a
participant in the Halliburton retiree medical plan. 41 Gregory was
transferred to a rehabilitation center that did not fall within the
definition of "hospital" under either the active or retiree medical
plans. 42 A 1980 Halliburton plan under which Vasseur had been
covered did not contain such a restrictive definition of "hospital,"
and presumably would have covered Gregory's hospitalization expenses. 43 A 1987 plan amendment provided that "any amendment
must be without prejudice to any claim arising prior to such action."44
The plan administrator, who had discretionary authority to interpret
the plan,45 denied payment of benefits for services rendered by the
rehabilitation center. 46
Vasseur filed a declaratory action to establish his right to receive
reimbursement from the plan for Gregory's treatment at the rehabilitation center. The district court held that Vasseur was entitled to
reimbursement and lifetime medical benefits and Halliburton appealedY
Relying on McGann v. H & H Music CO.,48 the Fifth Circuit
stated that ERISA does not require welfare plans to vest benefits or
require an employer to permanently maintain a level of benefits. 49
The court noted that an employer can contractually commit itself to
maintain benefits at certain levels; however, "[a]bsent such a contractual assurance, ERISA permits an employer to decrease or increase benefits.' '50
The court held that because an employee's right to medical
benefits are not required to vest, Vasseur was not entitled to retain
38.
39.
40.
[d. at 1005.
[d.
[d.
41.
[d.
42.
43.
44.
45.
46.
47.
48.
49.
50.
[d.
[d.
[d.
[d. at 1006.
[d. at 1005.
[d.
946 F.2d 401, 405 (5th Cir. Nov. 1991), cert. denied, 113 S. Ct 482 (1992).
950 F.2d at 1006.
[d.
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the benefit of any prior, more favorable plan provisions. 51 The court
also held that the 1980 plan, which did not have a restrictive definition
of "hospital," did not apply as it had been amended by a later plan
that was in effect when the accident occurred and contained the
restrictive definition of "hospital. "52 The court further found that
"the 1987 plan requirement that amendments 'shall be without prejudice to any claim arising prior to such action' did not operate
retroactively to create rights which were not provided in earlier
plans. "53
The court next addressed the extent of Gregory's lifetime medical
benefits. The 1987 plan provided that "[t]he medical plan is subject
to amendment or termination as determined to be appropriate by the
Executive Committee of the Halliburton Company. Any such action
shall be without prejudice to any claim arising prior to such action. "54
Because the plan administrator had never been required to determine
whether covered expenses that Gregory might incur were "claims
arising prior to" the amendment, the court held that the request for
declaratory relief was premature. 55 However, the court again cited
McGann: "ERISA does not require that any right ever included in
a plan shall become vested in plan beneficiaries from that time
forward. Plan terms are subject to modification unless the plan itself
provides otherwise. These principles apply to plan changes modifying
the lifetime maximum benefits. "56
III.
STANDARD OF REVIEW FOR CLAIMS APPEALS
In Pierre v. Connecticut General Life Insurance Co., 57 the Fifth
Circuit held that under Firestone Tire & Rubber Co. v. Bruch,58 a
plan administrator's factual determinations are governed by the arbitrary and capricious standard even if the plan does not grant
discretion to the plan administrator: 59 In Firestone, the Supreme
Court held that claim denials should be reviewed under an arbitrary
51.
52.
53.
54.
55.
56.
57.
58.
59.
See id. at 1007.
Id.
Id.
Id. at 1008.
Id. at 1009.
Id. at 1008.
932 F.2d 1552 (5th Cir. June 1991), cert. denied, 112 S. Ct. 453 (1991).
489 U.S. 101 (1989).
See 932· F.2d at 1553.
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and capricious standard if the plan administrator has discretionary
authority to construe the plan. 60 If the plan administrator does not
have discretionary authority, the claims appeal should be decided de
novo. 61 The Fifth Circuit scrutinized Firestone and drew a distinction
between cases in which a plan administrator makes factual determinations and cases in which an administrator interprets the plan. The
court concluded that a plan administrator, when making factual
determinations, necessarily is exercising discretion. 62 Therefore, it is
immaterial whether the plan administrator has discretionary authority
under the terms of the plan: the appropriate standard of review is
the deferential arbitrary and capricious standard. 63 When, however,
the facts are not in dispute, Firestone applies and the administrator's
decision is subject to an arbitrary and capricious standard only if
the administrator has discretionary authority under the terms of the
plan.
The case before the Fifth Circuit required the plan administrator
to make a factual determination. James Pierre was a participant in
"an employee benefit plan insured by Connecticut General. 64 Pierre
was killed by his lover, Antoinette Collins, who admitted killing
Pierre, but claimed it was self-defense. 6s The police did not prosecute
Collins. 66 Later, Pierre's wife, Celestine, filed a claim for benefits
under the group accident insurance policy. 67 After Connecticut General investigated the claim, the plan administrator concluded that
Pierre's death was not "accidental" because he "was the aggressor
and his actions precipitated the shooting that resulted in his death."68
Connecticut General denied the claim. 69 Celestine Pierre sued Connecticut General to recover the death benefits. Although the parties
agreed that the death benefits were not payable if Collins killed
Pierre in self-defense, they disagreed about the accuracy and admissibility of hearsay statements. The district court upheld the plan
60.
6!.
62.
63.
64.
65.
66.
67.
68.
69.
See 489 U.S. at 115.
Id.
See 932 F.2d
1558.
Id. at 1559.
Id. at 1553.
Id.
Id.
Id.
Id. at 1554.
Id.
at
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administrator's reliance on hearsay evidence to deny the benefits. 70
The district court ruled that the plan administrator's decision was
neither arbitrary nor capricious. 71
Originally, the Fifth Circuit affirmed. After the Supreme Court
decided Firestone, the Fifth Circuit vacated and remanded. On rehearing, the district court applied a de novo review because the plan
did not expressly give the administrator discretionary authority.72 The
court excluded the hearsay evidence and entered judgment for Celestine Pierre. 73 Connecticut General appealed.
On the second appeal, the Fifth Circuit noted that the plan did
not contain any express provision which grants discretionary authority
to the plan administrator. 74 Rather than simply applying a de novo
standard, the Fifth Circuit carefully scrutinized the Supreme Court's
decision. First, the court noted that the Supreme Court created a
"point of tension" in Firestone. Initially, the Supreme Court noted:
"The discussion which follows is limited to the appropriate standard
of review in section 1132(a)(l)(B) actions challenging denials of
benefits based on plan interpretations."75 Yet, later in the same
decision, the Supreme Court held "that a denial of benefits challenged
under section 1132(a)(l)(B) is to be reviewed under a de novo standard
unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe
the terms of the plan. "76 The Fifth Circuit stated that this holding
is not expressly limited to decisions based on plan interpretations.
The Fifth Circuit observed that this is a case of first impression. 77
The court recognized that:
70.
71.
72.
73.
[d.
[d.
[d. at 1555.
[d.
74.
75.
See id. at 1556.
Firestone Tire & Rubber Co. v. Bruch. 489 U.S. 101, 108 (1989) (emphasis added).
76. [d. at 115.
77. Pierre v. Connecticut Gen. Life Ins. Co., 932 F.2d 1552, 1556 (5th Cir. June 1991),
cert. denied, 112 S. Ct. 453 (1991). Only the Fourth Circuit has directly addressed this issue.
Reinking v. Philadelphia Am. Life Ins. Co., 910 F.2d 1210 (4th Cir. 1990). District courts
have split on this issue. Compare Guisti v. General Elec. Co., 733 F. Supp. 141, 147-48
(N.D.N.Y. 1990) (applying de novo standard) with Moshin v. John Hancock Mut. Life Ins.
Co., No. 88-CV-60415-AA, 1989 U.S. Dist. LEXIS 17463, at ·7 (E.D. Mich. Nov. 27, 1989)
(applying arbitrary and capricious standard); Petrilli v. Drechsel, No. 88-C-605I, 1989 WL
106639, at ·3-·5 (N.D. Ill. Sept. II, 1989) (applying arbitrary and capricious standard), rev'd
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before benefits are paid or denied, a plan administrator has to
make determinations that may be divided into two general categories. First, he must determine the facts underlying the claim for
benefits. Second, he must then determine whether those facts
constitute a claim to be honored under the terms of the plan. 78
The court explained that Firestone addressed the proper standard of
review to be given to the administrator's second determination. 79 The
Supreme Court did not address the first determination. The Fifth
Circuit ruled that different standards of review apply to the first and
second determinations. 80 The court stated: "It is indisputable that an
ERISA trustee, by its very nature, is granted some inherent discretion."81
Although the Supreme Court ruled that this inherent discretion
does not extend to decisions involving plan interpretation, the Fifth
Circuit stated: "It seems clear to us that decisions made in the
performance of functions that are 'necessary or appropriate' to the
daily and routine administration of plans are inherently discretionary .... [T]his 'necessary or appropriate' discretion includes passing
on issues of fact that determine individual eligibility for benefits. "82
Therefore, the court held that such factual determinations are entitled
to deferential review under the arbitrary and capricious standard. 83
The Fifth Circuit noted that courts have typically applied the arbitrary
and capricious standard to review of factual determinations. 84 In so
doing, the court stated that "de novo review of factual determinations
is a difficult and uncertain exercise on a cold record.' '85 The court
then described the types of factual determinations that plan administrators typically make:
on other grounds, 910 F.2d 1441 (7th Cir. 1990) and Questech, Inc. v. Hartford Accident &
Indem. Co., 713 F. Supp. 956, 962-63 (E.O. Va. 1989) (applying arbitrary and capricious
standard).
78. 932 F.2d at 1557 (citations omitted).
79. See id. at 1558.
80. Id.
81. Id.
82. Id.
83. Id.
84. See id.
85. Id. at 1559. The court noted:
In virtually all decisional review, some deference is given to the fact finder, whether
it is a district court giving deference to an administrative body, or an appellate court
giving deference to the district court. We see no reason why the plan administrator,
i.e., the trier of fact, should be placed in a different status.
Id. (citations omitted).
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The plan administrator must determine if someone qualified for
a benefit by length of service, the remaining unused benefits, the
nature of the injury, where the injury occurred, whether a particular injury was accidental or whether it was during the course
and scope of employment, and on and on. The courts simply
cannot supplant plan administrators, through de novo review, as
resolvers of mundane and routine fact disputes. 86
The Fifth Circuit concluded that a plan administrator's factual
determinations are governed by the abuse of discretion standard of
review as this "standard best balances the need to respect the plan
administrator's factual determinations and the need to protect beneficiaries by providing some judicial review of those decisions.' '87
Applying this standard to Pierre's claim, the court held that the plan
administrator did not abuse its discretion by relying on the hearsay
and corroborating evidence. 88 The court reversed and remanded for
entry of judgment in favor of Connecticut General.
IV.
A.
ORAL
MODIFICATION
Rodrigue v. Western & Southern Life Insurance Co.
In Rodrigue v. Western & Southern Life Insurance Co. ,89 the
Fifth Circuit held that a participant cannot enforce an oral modification of a written employee benefit plan governed by ERISA.
Rodrigue was a participant in a medical plan sponsored by his
employer. The plan excluded treatment for any genitourinary illnesses
contracted by Rodrigue. 90 When Rodrigue was hospitalized for kidney
stones, the hospital contacted an employer representative who authorized Rodrigue's hospital admission. 91 Later, the employer refused
to pay hospital expenses related to the kidney stones, based on the
plan's exclusion of coverage for any genitourinary illnesses incurred
by Rodrigue. 92 Rodrigue sued, claiming that his employer was estopped from denying coverage based on this oral modification of the
plan.
86.
87.
88.
89.
90.
91.
92.
Id.
Id. at 1562.
Id. at 1563.
948 F.2d 969 (5th Cir. Dec. 1991).
Id. at 970.
Id.
Id.
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The court relied on Cefalu v. B.F. Goodrich CO.93 and Degan
v. Ford Motor CO.94 to hold that Rodrigue could not successfully
assert that his employer was estopped to deny coverage based on this
oral modification of the plan. ERISA section 402(a)(1)95 requires all
employee benefit plans to be established and maintained pursuant to
a written plan. The court refused to subvert this writing requirement
by enforcing an oral modification of a written plan. The court
observed that if it were to recognize equitable estoppel, participants
would be able to submit claims which are excluded from coverage
under the plan and that "have lain unsuspected and inert for years.
That prospect would threaten the stability and solvency of many
plans upon which so many other employees are dependent."96 The
"writing requirement protects the plan's actuarial soundness by preventing plan administrators from contracting to pay benefits to
persons not entitled to such under the express terms of the plan.' '97
For these reasons, the court noted that "ERISA precludes oral
modifications to benefit plans and that claims of promissory estoppel
are not cognizable in suits seeking to enforce rights" under employee
benefit plans. 98
B.
Williams v. Bridgestone/Firestone, Inc.
Three months after the Fifth Circuit decided Rodrigue, the court
considered the oral modification of a pension plan in Williams v.
BridgestonelFirestone, Inc. 99 Williams, in a motor-vehicle accident,
sustained serious back injuries that would someday require surgery. 100
At the time of the accident, Williams had been an employee of
Bridgestone/Firestone for approximately three years and was a participant in the company's medical plan. 101 Williams returned to work
after the accident and worked for two more years, during which time
93. 871 F.2d 1290 (5th Cir. 1989).
94. 869 F.2d 889 (5th Cir. 1989).
95. 29 U.S.C. § 1l02(a)(I) (1988).
96. Rodrigue v. Western & S. Life Ins. Co., 948 F.2d 969, 972 (5th Cir. Dec. 1991)
(quoting Degan v. Ford Motor Co., 869 F.2d 889, 895 (5th Cir. 1989».
97. [d. at 971 (quoting Cefalu v. B.F. Goodrich Co., 871 F.2d 1290, 1296 (5th Cir.
1989».
98. [d. (quoting 869 F.2d at 895).
99. 954 F.2d 1070 (5th Cir. Mar. 1992).
100. [d. at 1071.
101. [d.
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his back condition worsened. 102 His doctor advised him to undergo
surgery and informed him that as a result of the surgery Williams
might become disabled. 103
Prior to undergoing this surgery, Williams asked his supervisor
whether he was entitled to enhanced benefits under the medical
plan. 104 Under the plan, benefits significantly increased for employees,
with more than five years of employment with Bridgestone/Firestone. lOS Although disabled employees with less than five years were
entitled to two years of medical coverage from the date of disability, 106
employees with five years of employment were eligible for medical
benefits until age 65. 107 At the time of the surgery, Williams was two
weeks shy of five years of employment. Williams' supervisor assured
Williams that his two weeks of accrued vacation time would count
toward the five years of service and that he would be entitled to the
enhanced benefits. lOS Because Williams knew it was likely that the
surgery would leave him disabled, the enhanced medical benefits
available at the five year point were crucial to his decision as to
when to schedule the surgery.
After conferring with his supervisor, Williams scheduled the
surgery for April 12, two weeks before his fifth employment anniversary.l09 April 12 was "a slack time of business for the Bridgestone/
Firestone store . . . and it was therefore the best time, from Bridgestone/Firestone's point of view, for [WilliamsJ to undergo the surgery
and be away from work."11O Williams had surgery on April 12 and
was rendered disabled. 11I Bridgestone/Firestone advised Williams that
his medical coverage would continue for two years from his last day
work~d, as he had less than five years of service. 1I2 Williams sued.
Relying on Rodrigue v. Western & Southern Life Insurance
Co. ,113 the Fifth Circuit held that Williams could not prevail by
102.
103.
104.
105.
106.
107.
108.
109.
110.
Ill.
112.
1l3.
[d.
[d.
[d. at 1072.
[d. at 1071-72.
[d. at 1071.
[d. at 1071-72.
[d. at 1072.
[d.
[d.
[d. at 1071.
[d. at 1072.
948 F.2d 969 (5th Cir. Dec. 1991).
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arguing that the plan had been orally modified nor by contending
that Bridgestone/Firestone was estopped from denying the enhanced
coverage. 1I4 The court noted that oral modifications cannot "form a
basis for a breach of contract claim."lIs The court also noted that
the doctrine of equitable estoppel cannot be used to alter the plain
meaning of an employee benefit plan. 1I6
The court addressed Williams' claim that the plan did not
adequately define the term "five years." Williams argued that any
ambiguity should be resolved in his favor because the definition
applied by his supervisor was reasonable. II? Although the court
refused to address the estoppel issue, the court agreed that if Williams
could prove that Bridgestone/Firestone calculated years of service by
including accrued vacation time, then he would be entitled to receive
the enhanced benefits available to five-year employees. liS The court
held that a genuine issue of material fact existed and, therefore, the
district court had improperly granted the motion for summary judgment. 1l9 The court reversed and remanded. 120
Judge Duhe dissented. As the author of the Rodrigue opinion,
he claimed that the majority had ignored the precedent established
in Rodrigue. 12I He criticized the majority's assertion that the phrase
"five years" is ambiguous: "The majority is estopping the company
from following the plain meaning of the Plan because of what the
company may have said or done in the past."I22 The plan clearly
stated "five years," not "5 or more years of service, less accrued,
unused vacation time. "123 Judge Duhe criticized the majority for
finding an ambiguity in language that is plainly unambiguous: "[T]he
courts [should] still recognize the possibility of an unambiguous
text. "124
114.
liS.
116.
117.
118.
119.
120.
121.
954 F.2d at 1072.
[d. {citing Cefalu v. B.F. Goodrich, 871 F.2d 1290 (5th Cir. 1989».
[d. {citing Degan v. Ford Motor Co., 869 F.2d 889 (5th Cir. 1989».
[d. at 1073.
[d. at 1074.
[d.
[d.
[d.
122~ [d. at 1075.
123. [d. at 1074-75.
124. [d. at 1075 {quoting Ideal Mut. Ins. Co. v. Last Days Evangelical Ass'n, 783 F.2d
1234, 1238 (5thCir. 1986».
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V.
A.
601
PREEMPTION
Christopher v. Mobil Oil Corp.
In Christopher v. Mobil Oil Corp., 125 the Fifth Circuit held that
ERISA preempts allegations under state law that an employer, under
the guise of an employee benefit plan, fraudulently induced employees
to retire,126 The court held that the empioyee's claims of fraud, civil
conspiracy, breach of employment contract, unlawful interference
with contract rights, negligence, and gross negligence were preempted
because they "relate to" an ERISA-governed plan. 127
The Fifth Circuit had previously held that "the fact that a claim
sought damages measured by pension benefits sufficed as the requisite
'connection' to an employee benefit plan for preemption purposes."128
In Cefalu v. B.F. Goodrich Co., 129 a case discussed by the Christopher
court, the Fifth Circuit preempted a breach-of-contract claim against
an employer alleged to have orally misrepresented that retirement
options provided equivalent benefits. 130 In Lee v. E.I. DuPont de
Nemours & Co., 131 a case that the Christopher court described as
closely analogous,132 the plaintiffs claimed that they had retired in
reliance on fraudulent representations that the employer was not
planning to adopt an early retirement incentive plan. The Fifth Circuit
held that this claim was preempted under ERISA section 514(a).133
The court rejected Christopher's attempt to classify the case as
a "run-of-the mill state-law claim"134 under Mackey v. Lanier Collections Agency & Service, Inc. 135 The Fifth Circuit held that all state
law causes of action that relate to an employee benefit plan are
125.
126.
127.
128.
950 F.2d 1209 (5th Cir. Jan. 1992), cert. denied, 113 S. Ct. 68 (1992).
[d. at 1217-18.
[d.
[d. at 1219 (citing Cefalu v. B.F. Goodrich Co., 871 F.2d 1290, 1294 (5th Cir. 1989».
But see Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 247 (5th Cir. 1990)
(stating that even though damages would be measured in part by the amount of benefits that
would have been received under the plan, such an "incidental relation to an ERISA plan is
insufficient ... to require a finding of preemption").
129. 871 F.2d 1290 (5th Cir. 1989).
130. [d. at 1295.
131. 894 F.2d 755 (5th Cir. 1990).
132. 950 F.2d at 1218.
133. 894 F.2d at 758; see 29 U.S.C. § 1144(a) (1988).
134. 950 F.2d at 1218-19.
135. 486 U.S. 825 (1988).
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preempted, even when the claim arises under a general law that is
unrelated to an employee benefit plan. 136 Here, the conduct complained of directly related to an employee benefit plan. The court
. noted that "[s]uperimposing state law fraud standards on the elaborate ERISA provisions governing the content and timing of notice
of plan provisions and amendments would undercut the goal of
uniform national regulation in the manner that section 514(a) seeks
to prevent."13? For this reason, the Court concluded that the conduct
alleged by plaintiff Christopher was a "far cry from the 'run-of-themill' claims alluded to in Mackey," and that the claims were preempted. 138
B.
Heitkamp v. Dyke (In re Dyke)
In Patterson v. Shumate,139 the Supreme Court held that "a
debtor's interest in an ERISA-qualified pension plan may be excluded
from the property of the bankruptcy estate pursuant to section
541(c)(2)" of the Bankruptcy Code. l40 Section 541(c)(2) provides that
"[a] restriction on the transfer of a beneficial interest of the debtor
in a trust that is enforceable under applicable nonbankruptcy law is
enforceable in a case under this title." 141 The Court held that the
term "applicable nonbankruptcy law" is not limited to state law. 142
The Court then considered whether ERISA's anti-alienation rule 143 is
"applicable nonbankruptcy law." ERISA's anti-alienation provision
requires that "[e]ach pension plan shall provide that benefits provided
under the plan may not be assigned or alienated. "144 The Court held
that an anti-alienation provision is an enforceable transfer restriction
under Bankruptcy Code Section 541(c)(2), and therefore, the debtor's
interest in the pension plan is excludable under section 541(c)(2).145
The Court noted that "[c]onstruing 'applicable nonbankruptcy law'
136. 950 F.2d al 1218-19 (citing Cefalu v. B.F. Goodrich Co., 871 F.2d 1290, 1292 n.5
(5th Cir. 1989».
137. [d. at 1219 (citation omitted).
138. [d.
139. 112 S. Ct. 2242 (1992).
140. [d. at 2250.
141. 11 U.S.C. § 541(c)(2) (Supp. III 1991) (emphasis added).
142. 112 S. Ct. at 2247.
143. 29 U.S.C. § 1056(d)(I) (1988).
144. [d.
145. 112 S. Ct. at 2247-48.
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603
to include federal law ensures that the security of a debtor's pension
benefits will be governed by ERISA. "146
Patterson resolved the conflict among courts of appeal as to
whether an anti-alienation provision is an enforceable restriction on
transfer under "applicable nonbankruptcy law. "147 The Third,148
Fourth,149 Sixth,150 and Tenth151 Circuits have held that ERISA's antialienation provision constitutes "applicable nonbankruptcy law,"
while the Fifth,152 Eighth,153 Ninth 154 and Tenth ISS Circuits have held
to the contrary. Patterson rendered invalid a Fifth Circuit decision
last term, Heitkamp v. Dyke (In re Dyke),156 in which the Fifth
Circuit held that ERISA's anti-alienation provision does not constitute "applicable nonbankruptcy law." 157
VI.
DEFINITION OF EMPLOYEE BENEFIT PLAN
In Hansen v. Continental Insurance Co., 158 the court considered
whether a group accident plan was an employee welfare benefit plan
regulated by ERISA.159 The accident plan did not meet the requirements of the Department of Labor regulations for exclusion under
ERISA section 3(1);160 therefore, the court scrutinized the plan to
Id. al 2250.
See id. at 2246.
148. Velis v. Kardanis, 949 F.2d 78 (3d Cir. Nov. 1991).
149. Shumate v. Patterson, 943 F.2d 362 (4th Cir. 1991), afl'd, 112 S. Ct. 2242 (1992);
Anderson v. Raine (In re Moore), 907 F.2d 1476 (4th Cir. 1990).
150. Forbes v. Lucas (In re Lucas), 924 F.2d 597 (6th Cir.), cert. denied, III S. Ct. 2275
(1991).
151. Gladwell v. Harline (In re Harline), 950 F.2d 669 (10th Cir. 1991), cert. denied, 112
S. Ct. 2991 (1992).
152. Heitkamp v. Dyke (In re Dyke), 943 F.2d 1435 (5th Cir. Oct. 1991); Goff v. Taylor
(In re Goff), 706 F .2d 574 (5th Cir. 1983).
153. Samore v. Graham (In re Graham), 726 F.2d 1268 (8th Cir. 1984).
154. Daniel v. Security Pac. Nat'l Bank (In re Daniel), 771 F.2d 1352 (9th Cir. 1985),
cert. denied, 475 U.S. 1016 (1986).
155. Lichstrahl v. Bankers Trust (In re Lichstrahl), 750 F.2d 1488 (11th Cir. 1985).
156. 943 F.2d 1435 (5th Cir. Oct. 1991).
157. Id. at 1441-44.
158. 940 F.2d 971 (5th Cir. Sept. 1991).
159. This issue was important because if the plan is an ERISA plan, the federal court
properly had jurisdiction over the case and Hansen's state law claims were properly preempted.
160. 29 C.F.R. § 2510.3-10) (1992). These regulations set forth four requirements. In order
to avoid classification as an employee benefit plan, the "plan" must be a group insurance
program offered by an insurer to employees, or union members, and: (I) The employer (or
union) must not contribute to the plan; (2) Participation is voluntary; (3) The only role of the
146.
147.
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determine if it was a "plan" under the Eleventh Circuit test:
In determining whether a plan, fund or program (pursuant to a
writing or not) is a reality a court must determine whether from
the surrounding circumstances a reasonable person could ascertain
the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits. 161
Because the plan met each of these criteria, the court held that
the plan was, in reality, an employee benefit plan, although it was
not necessarily an· ERISA plan. 162 However, the court noted that the
inquiry does not end there. The next step is to determine if the plan
is governed by ERISA.
In order to qualify as an ERISA plan, the plan must have been
established and maintained by an employer or employee organization
for the purpose of providing certain employee benefits. 163 The court
determined that the group accident plan was an ERISA plan. l64 The
employer had endorsed the plan and encouraged employees to purchase the insurance and participate in the plan}6S Also, the employer
had hired a full-time administrator who accepted employee claim
forms and submitted the forms to the insurer.166 This action met the
requirement that there must be "some meaningful degree of participation by the employer in. the creation or administration of the
plan."167 The employer also met the statutory requirement 168 that the
employer (or union) is to "permit the insurer to publicize the program to employees or [union)
members to collect premiums through payroll deductions or dues checkoffs and to remit them
to the insurer." The employer may not endorse the program; (4) The employer (or union)
may receive no payment in connection with the program, other than reasonable compensation
(excluding profit) "for administrative services actually rendered in connection with payroll
deductions or dues checkoffs." 940 F.2d at 976-77.
The court held that the employer did not meet the third criterion because the employer
endorsed the program, encouraged employees to participate, and hired a full-time benefits
administration to accept claim forms and submit them to the insurer. Therefore, the plan was
not excluded from ERISA coverage under the Department of Labor regulations. [d. at 977.
161. 940 F.2d at 977 (quoting Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th CiT.
1982».
162. [d.
163. [d. at 978.
164. [d.
165. [d.
166. [d.
167. [d. The court noted that "if an employer does no more than purchase insurance for
her employees, and has no further involvement with the collection of premiums, administration
of the policy, or submission of claims, she has not established an ERISA plan." [d. (citing
Kidder v. H & B Marine, Inc., 932 F.2d 347, 353 (5th Cir. 1991); Memorial Hosp. Sys. v.
Northbrook Life Ins. Co., 904 F.2d 236, 242 (5th Cir. 1990».
168. 29 U.S.C. § 1002(1) (1988).
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employer's purpose in providing the plan must be to provide health
insurance, accident insurance, or other specified types Qf benefits to
its employees. 169
Because the plan was an ERISA plan, state law claims brought
by the employer were properly preempted. 170 This included claims
brought under article 21.21 of the Texas Insurance Code for deceptive
practices, fraud, and misrepresentation. 171 ERISA provides an exclusive remedy for participants who are seeking to recover plan benefits,172 even where preemption leaves a victim of fraud without a
remedy. 173
The court also addressed the amount of death benefits the
participant, Hansen, was entitled to under the terms of the plan.
Hansen argued that pursuant to the terms of the summary plan
description, he was entitled to recover $120,000. 174 According to the
summary plan description, Hansen was entitled to 40010 of the principal sum, $200,000, plus an additional 10% for each of his two
children, or $120,000. The employer claimed, pursuant to the certificate of insurance, which was reprinted in the summary plan description, that the benefit was $80,000, or simply 40% of the principal
sum. 17S The Fifth Circuit rejected the employer's argument that the
certificate of insurance was part of the summary plan description. 176
The court observed that, at the very least, the summary plan description was ambiguous, "if not in outright conflict with both the
certificate of insurance and the master policy."177 The court rejected
the employer's claim that when the summary plan description and
policy conflict, the terms of the policy should control. 178 The court
observed that if the employer's argument were adopted it would
render summary plan descriptions meaningless:
169. 940 F.2d at 978.
170. [d. at 979.
171. [d.; see Ramirez v. Inter-Continental Hotels, 890 F.2d 760, 763-64 (5th Cir. 1989).
172. 940 F.2d at 979; see 29 U.S.C. § 1132(a)(I)(8) (1988); Degan v. Ford Motor Co., 869
F.2d 889, 895 (5th Cir. 1989).
173. 940 F.2d at 979; see Lee v. E.I. DuPont de Nemours & Co., 894 F.2d 755, 757 (5th
Cir. 1990); 869 F.2d at 895.
174. 940 F.2d at 979.
175. [d. at 980.
176. [d. at 981.
177. [d.
178. [d.
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The result would be that before a participant in the plan could
make any use of the summary, she would have to compare the
summary to the policy to make sure that the summary was
unambiguous, accurate, and not in conflict with the policy. Of
course, if a participant has to read and understand the policy in
order to make use of the summary, then the summary is of no
use at aII.179
The court held that the summary controls whenever there is a
conflict between the summary and the policy. ISO On this basis, the
court affirmed the district court's award of $120,000, plus prejudgment interest of 10%, and attorney fees. lSI
VII.
SUMMARY PLAN DESCRIPTIONS
In Hicks v. Fleming Cos., IS2 a case of first impression, the Fifth
Circuit adopted a bright-line standard to determine when a document
is a summary plan description ("SPD"). In Hicks, the court held
that a computerized summary of individual employee benefits is not
a summary plan description. ls3
In January 1988, Johnny Hicks received from his employer a
six page booklet entitled "Your 1988 Total Compensation Report."I84
The booklet was a summary of employee benefits available through
the employer. The information contained in the booklet was individualized for Hicks; it contained his birthday, social security number,
date of hire, and his elections under various employee benefit plans. ISS
As the result of a computer "glitch," the booklet stated that Hicks
would be eligible for long-term disability benefits, although, in fact,
179. [d. at 981-82.
180. The court stated: "Accuracy is not a lot to ask. And it is especially not a lot to ask
in return for the protection afforded by ERISA's preemption of state law causes of actioncauses of action which threaten considerably greater liability than that allowed by ERISA."
[d. at 982. The court also refused to give effect to a disclaimer as it "would wholly undermine
the rule that the statements of the summary plan description are binding." [d.
181. The court upheld the district court's award of 10070 prejudgment interest. The court
noted that in determining the applicable interest rate, courts should look to state law. Texas
law sets prejudgment interest rates at 6070 for contract actions and although 6070 would be an
appropriate rate, "because state law is not binding but merely provides guidance, it is within
the discretion of the district court to select an equitable rate of prejudgment interest." The
court held that the district court did not abuse its discretion by awarding prejudgment interest
at 10070. [d. at 983-85.
182. 961 F.2d 537 (5th Cir. May 1992).
183. [d. at 538.
184. [d.
185. [d.
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Hicks was not enrolled in the disability plan. 186 The booklet contained
various disclaimers and described its purpose as a "simple but
comprehensive summary" containing "personalized information" on
employee benefits. 187
Five months later, Hicks became disabled. 188 His application for
disability benefits was denied. 189 Hicks sued and invoked the '''walks
like a duck, quacks like a duck' argument [in contending that] the
booklet is an SPD because it looks like an SPD, contains information
required in an SPD, and purports to serve the same purposes as an
SPD."I90
The Fifth Circuit held that a document is an SPD if "it contains
all or substantially all categories of information required" 191 by
ERISA section 102(b )192 and the applicable SPD regulations. 193 Although ERISA does not define the term "summary plan description,"
section 102(b) sets forth twelve categories of information required in
an SPD.I94 Regulations issued by the Department of Labor add several
more requirements. 195 The employer argued that because the booklet
did not contain all twelve statutorily required items, the booklet was
[d. at 538-39.
[d. at 539.
[d.
[d.
[d.
[d. at 542.
192. 29 U.S.C. § 1022(b) (1988).
193. 29 C.F.R. § 2520.102-3 (1992).
194. ERISA § 102(b) provides:
The plan description and summary plan description shall contain the following
information: The name and type of administration of the plan; the name and address
of the person designated as agent for the service of legal process, if such person is
not the administrator; the name and address of the administrator; names, titles and
addresses of any trustee or trustees (if they are persons different from the administrator); a description of the relevant provisions of any applicable collective bargaining agreement; the plan's requirements respecting eligibility for participation and
benefits; a description of the provisions providing for nonforfeitable pension benefits;
circumstances which may result in disqualification, ineligibility, or denial or loss of
benefits; the source of financing of the plan and the identity of any organization
through which benefits are provided; the date of the end of the plan year and
whether the records of the plan are kept on a calendar, policy, or fiscal year basis;
the procedures to be followed in presenting claims for benefits under the plan and
the remedies available under the plan for the redress of claims which are denied in
whole or in part (including procedures required under section 1133 of this title).
29 U.S.C. § 1022(b) (1988).
195. For example, the regulations require the SPD to include a statement of ERISA rights,
the employer identification number, and a plan number. 29 C.F.R. § 2520.102-3(c), (t)(I)
(1992).
186.
187.
188.
189.
190.
191.
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nGt an SPD. The court held that a document need not contain all
twelve items, but must at least contain substantially all of the required
information. 196 A document is not an SPD simply because it contains
some of the required information: such a rule "would have a chilling
effect on the cautious employer who might otherwise write freely to
his or her employees about their benefit plans."197 The court noted:
"Quite simply, there should be no accidental or inadvertent SPDS."198
The court applied the new "all or substantially all" test to the
booklet at issue and concluded that the booklet was not an SPD.l99
The booklet contained only cursory information on monthly disability
payments and did not contain any of the information required by
ERISA section 102(b) or the SPD regulations. 2°O The court concluded:
"Frankly, the question is not even close. "201
VIII.
MULTIPLE EMPLOYER WELFARE ARRANGEMENTS ("MEW As")
In MDPhysicians & Associates v. State Board of Insurance,202 a
corporate subsidiary of MDPhysicians, Inc. ("MDP"), an association
of more than 130 physicians who practice in and around Amarillo,
Texas formed an employee benefit plan that contracted with a third
party administrator to provide administrative services for the plan.
The plan was self-funded. 203
The subsidiary advertised the plan to nearby employers. More
than one hundred employers subscribed to the plan. The employers
were not associated with the plan or each other. For a monthly fee,
the plan would provide medical benefits to the subscribing emilloyers'
employees and their dependents. 204 Employees were not limited to
196. The court noted that not all categories of information are required for every type of
plan. Some information is only required for pension plans and is not required for certain
types of welfare plans. 961 F.2d at 540.
197. [d. at 542.
198. [d.
199. [d. at 542-43. In Hansen v. Continental Ins. Co., 940 F.2d 971 (5th Cir. Sept. 1991),
the Fifth Circuit held that when the SPO conflicts with the terms of a policy, the SPO
controls.
200. In fact, the employer distributed a proper SPO for the long-term disability plan to
plan participants. Hicks did not receive a copy because he was not a plan participant. 961
F.2d at 539.
201. [d. at 542.
202. 957 F.2d 178 (5th Cir. Apr. 1992), cerf. denied, 113 S. Ct. 179 (1992).
203. [d. at 180.
204. [d.
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network doctors. However, if they chose to receive medical care
from a physician outside of the network, the reimbursement rate
would be lower.205
When the State of Texas tried to regulate the plan, the corporation sued the Texas Board of Insurance and sought a declaratory
judgment that the plan was to be governed by ERISA, not state
insurance regulation. 206 The district court held that the plan is not
an employee welfare benefit plan under ERISA.207 The court noted
that even if the plan were governed by ERISA, the plan would still
be required to obtain a certificate of authority as a Texas insurance
company.208 The Fifth Circuit affirmed.
The parties had conceded that the plan was a MEWA as defined
by ERISA.209 A MEWA includes all arrangements "established or
maintained for the purpose of offering or providing" certain benefits
"to the employees of two or more employers '" or to their
beneficiaries. "210 However, not every MEWA is governed by ERISA.
Only MEWAs that meet the statutory definition of an employee
welfare benefit plan are governed by ERISA.211 Those MEWAs that
do not meet the statutory definition are governed by state law. m
The court cited Hansen v. Continental Insurance Co. m and held
that the MDP plan was a "plan." Again, the court cautioned that
"[j]ust because a 'plan' exists, however, does not necessarily mean that
the plan is an ERISA plan. "214 An ERISA-governed employee welfare
benefit plan must meet two requirements: (1) an employer must establish
and maintain the plan; and (2) the employer must have intended to
provide benefits to its employees. 21S The court found that MDP did
not act directly or indirectly as an employer in relation to the employees
205. [d.
206. [d. As in Hansen, the status of the plan is relevant to determine whether the district
court properly dismissed the case for lack of subject matter jurisdiction. If the plan is not an
employee benefit welfare plan under ERISA, then ERISA does not preempt state law claims
and the federal court has no subject matter jurisdiction over the dispute.
207. [d.
208. [d.
209. [d. at 181.
210. 29 U.S.C. § lOO2(4O)(A) (1988).
211. 957 F.2d at 181.
212. [d.
213. 940 F.2d 971 (5th Cir. Sept. 1991).
214. 957 F.2d at 183 (quoting 940 F.2d at 977).
215. [d.
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of the subscribing employers. 216 The court noted that there was no
nexus between the plan and the employees: "MOP was merely an
entrepreneurial venture formed to market the MDP Plan to unrelated
employers and . . . the Subscribing Employers did not 'participate in
the day-to-day operation or administration' of the MOP Plan."2J7
The Fifth Circuit also held that MOP did not act directly or
indirectly for the subscribing employers. 218 The court stated:
Rather, it acted for itself in relation to the MDP Plan. MDP
advertised the MDP Plan as a "commercial product" to "employers at large" in the Texas panhandle.... To allow an entrepreneurial venture to qualify as an "employer" by establishing
and maintaining a multiple employer welfare arrangement without
input by the employers who subscribe to the plan would twist the
language of the statute and defeat the purposes of Congress. 219
Because the plan did not meet the definition of an employee welfare
benefit plan under ERISA, the Fifth Circuit affirmed the district
court's decision to dismiss the case for lack of subject matter jurisdiction.
IX.
CALCULATION OF BENEFITS
In Kennedy v. Electricians Pension Plan, IBEW No. 995,220
the Fifth Circuit held that the trustees abused their discre-
216. [d. at 186.
217. [d. at 183 (quoting MDPhysicians & Assocs. v. State Bd. of Ins., 762 F. Supp. 695,
698 (N.D. Tex. 1991), afi'd, 957 F.2d 178 (5th Cir. Apr. 1992), cert. denied, 113 S. Ct. 179
(1992».
218. [d.
219. [d. at 185 (emphasis added). The court cited the congressional record that provided
in pertinent part:
[W)e are of the opinion that these programs are not 'employee benefit plans' ....
These plans are established and maintained by entrepreneurs for the purpose of
marketing insurance products or services to others. They are not established or
maintained by the appropriate parties to confer ERISA jurisdiction.... They are
no more ERISA plans than is any other insurance policy sold to an employee benefit
plan .
. . . [W)e do not believe that the statute and legislative history will support the
inclusion of what amounts to commercial products within the umbrella of the
['employee benefit plan') definition .... To be properly characterized as an ERISA
employee benefit plan, a plan must satisfy the definitional requirement of section
3(3) [,which defines "employee. benefit plan",) in both form and substance.
[d. at 184 (quoting H.R. REP. No. 1785, 94th Cong., 2d Sess. 48 (1977».
220. 954 F.2d 1116 (5th Cir. Mar. 1992).
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tion 221 by refusing to grant past service credits to Willie Kennedy for
his three years of service as an apprentice. 222 According to the pension
plan, a participant "will be credited with one Past Service Credit for
each continuous and successive Plan Year, not to exceed twenty,
before October 1, 1970, in which he was. dependent for livelihood
upon his trade as an Electrician within the jurisdiction of the Union. "223 The plan provided that any participant who was a member
of the collective bargaining unit on October 1, 1970, would receive
past service credits for each continuous year of service, not to exceed
twenty, in the bargaining unit. 224 A participant could use union
records to prove membership in the union. 22S
Willie Kennedy was an apprentice from August 1956 to February
1959. 226 After his union initiation, Kennedy was continuously employed as an electrician within the bargaining unit. 227 Trustees of the
plan refused to credit Kennedy with three years of past service credits
for his years as an apprentice. 228 At first, the plan trustees denied
the credits because "status as an apprentice is not . . . 'reasonable
evidence of an Employee's dependence upon such Employment,' and
because status as an apprentice is not sufficient proof of continuous
and successive employment.' '229 Kennedy appealed and submitted
written proof of his apprenticeship status, his dependence on the
union for work, and the continuity of his employment,23o The trustees
again denied his request for past service credit, this time because
Kennedy had not been a union member during his apprenticeship.231
Kennedy sued to clarify his rights to benefits under the plan. 232
The district court held that the trustees had abused their discretion
221. The plan authorized the trustees to interpret and construe the past service credit
provisions. [d. at 1121. Decisions of the trustees were final and binding. Therefore, the court
applied the abuse of discretion standard. [d.; see Firestone Tire & Rubber Co. v. Bruch, 489
U.S. 101 (1989).
222. 954 F.2d at 1125.
223. [d. at 1119.
224. [d.
225. [d.
226. Id. at 1118.
227. Id.
228. Id. at 1119.
229. Id.
230. Id.
231. Id. at 1119-20.
232. Id. at 1120. The district court rejected the trustees' claim that Kennedy was barred
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by refusing to grant Kennedy the three years of service. 233 In affirming, the Fifth Circuit applied a two-prong test based on Batchelor v.
IBEW Local 861 Pension & Retirement Fund. 234 First, the court must
determine the legally correct interpretation of the plan. Second, the
court must determine if the interpretation adopted by the trustees
was an abuse of discretion. 235
The Fifth Circuit examined three issues to determine how the
plan should be interpreted: (1) whether the trustees have uniformly
construed the plan; (2) whether the trustees' interpretation is fair and
reasonable; and (3) whether the interpretation will cause substantial
unanticipated costs. 236 The court ruled that the trustees had not
uniformly construed the plan because the trustees had cited different
reasons for their denial of each of Kennedy's requests for past service
credits. 237 The court held that the trustees' interpretation of the plan
was neither fair, reasonable, nor supported by the language of the
plan. 238 The plan provided that participants who were active members
of the bargaining unit in October 1970 would receive "Past Service
Credit for each full year of continuous and unbroken membership
in the Collective Bargaining Unit. "239 Clearly, as an apprentice,
Kennedy was a member of the bargaining unit. Kennedy provided
written documentation which proved that his union membership was
continuous and unbroken. 240 For these reasons, the court held that
from bringing this action by the three year statute of limitations for breach of fiduciary duty
under ERISA § 413. 29 V.S.c. § ll13 (Supp. II 1990). The Fifth Circuit affirmed, noting
that Kennedy did not bring an action for breach of fiduciary duty, but sued "to clarify his
rights to future benefits" under ERISA § 502(a)(I)(B). 29 V.S.C. § 1132(a)(I)(B) (1988).
Therefore, Kennedy's suit was not subject to the three year statute of limitation. The Fifth
Circuit held that "[b)ecause ERISA does not provide a statute of limitations for actions
brought to clarify rights to future benefits under section I 132(a)(I)(B), we look to state law
for the applicable time limit." 954 F.2d at ll20. The court identified Kennedy's action as a
personal action, and applied the ten year limitation period for personal actions under Louisiana
state law. LA. CIV. CODE ANN. art. 3499 (West 1992 Supp.). Because Kennedy initiated this
action within the ten year limitation, his claim was not barred by the applicable limitation
period. 954 F.2d at ll20.
233. 954 F.2d at ll20.
234. 877 F.2d 441 (5th Cir. 1989).
235. 954 F.2d at 1121.
236. [d.
237. [d. at ll22.
238. [d. at 1122-23.
239. [d. at 1119.
240. [d. The court recognized that initiation into the union is not a prerequisite for attaining
past service credits. [d. at 1122.
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a fair reading of the plan would require the trustees to give Kennedy
past service credits for his apprenticeship years. 241
Next, the court addressed the plan's concern that the floodgates
would be opened if Kennedy were granted past service credits, thus
subjecting the plan to substantial unanticipated costs. The trustees
noted that each of the plan's 440 participants might claim past service
credits for apprenticeship years. 242 The Fund's actuary estimated these
costs to range between $849,500 and $3,186,900, an increase in
actuarial liability of 2.3070 for one additional year of past service
credits if granted to all the participants. 243 The court acknowledged
that "the granting of apprenticeship credit could have a substantial
impact on the Plan. "244 However, the court stressed that these costs
were not unanticipated, citing a 1976 plan amendment that was
drafted to "extend prior service credits to apprentices. "245 Although
the costs might be substantial, the court indicated that these costs
should have been anticipated when the plan was "liberalized to grant
credit for years of apprenticeship service. "246
After the court determined that the trustees' interpretation of
the plan was legally insupportable, the court turned to the question
of whether the trustees had abused their discretion by refusing to
grant Kennedy the past service credits. The court applied a three
prong test which considered: "(1) the internal inconsistency of the
Plan under the interpretation given by the Trustees; (2) any relevant
regulations formulated by the appropriate administrative agency; and
(3) factual background of the determination and inferences of lack
of good faith. "247 The court summarily dealt with the first two
prongs of the test. The Fifth Circuit held that neither party had
produced persuasive evidence that would show that the relevant plan
language conflicted with another plan provision. 248 The court observed
that no pertinent regulations had been brought to the court's attention. 249
241.
242.
243.
244.
lation."
245.
246.
247.
248.
249.
[d. at 1122-23.
[d. at 1123.
[d.
[d. The court described the actuary's prediction as a "calculation steeped in specu[d.
[d.
[d. at 1124.
[d.
[d.
[d.
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The court gave careful attention to the third prong of the test,
noting that although the trustees' interpretation of the plan was
unreasonable and unfair, it was not made in bad faith. 250 The trustees
had produced no evidence of a legal basis for their decision, other
than a good faith belief that their interpretation was fair. Because
the trustees failed to prove that their interpretation was legally sound,
the court affirmed the lower court's ruling that the trustees abused
. their discretion by disallowing the past service credits to Kennedy.
X.
ASSIGNMENT OF BENEFITS
In Hermann Hospital v. MEBA Medical & Benefits Plan,251 the
Fifth Circuit held that a plan participant validly assigned to Hermann
Hospital her right to payment for benefits for treatment rendered at
the hospital. 252 As an assignee, Hermann Hospital was entitled to sue
the participant's medical plan. The court rendered judgment in favor
of the hospital for the full amount of the unpaid medical bills,
$341,921, and remanded to the district court for the purpose of
determining the amount of interest, costs, and attorney's fees. 253 The
case is now nearing conclusion a mere ten years after the participant
received medical treatment at Hermann Hospital.
In May 1982, Patricia Nicholas, a beneficiary in the MEBA
Medical Benefits Plan, was admitted to Hermann Hospital for treatment of cancer. 254 She remained hospitalized until her death in
November. 255 When she was admitted, Mrs. Nicholas signed an
"Assignment of Insurance Benefits" form. 256 Her husband also signed
250. [d.
251. 959 F.2d 569 (5th Cir. Apr. 1992).
252. [d. at 579.
253. [d.
254. [d. at 571.
255. [d.
256. The text of the assignment is reproduced below:
I hereby irrevocably assign and transfer to Hermann Hospital (hereinafter referred
to as the "Hospital"), all rights, title and interest in the benefits payable for services
rendered by the Hospital, provided in any insurance policy(ies), under which I am
insured.... Said irrevocable assignment and transfer shall be for the purpose of
granting the Hospital, an independent right of recovery on said policy(ies) of
insurance, but shall not be construed to be an obligation of the Hospital to pursue
any such right of recovery. Provided, however, this assignment and transfer shall
not take away my standing to make claim or sue for benefits individually should
coverage be denied by any insurance company(ies).
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a form that authorized payment of benefits directly to Hermann
Hospital.257
MEBA refused to pay the claim of $341,921. 258 According to
MEBA, the hospital bill was the highest bill they had ever received. 2S9
The hospital sued MEBA under ERISA to compel payment of
benefits. 260 The complaint also contained several allegations of state
common law claims of negligent misrepresentation and fraud. 261 The
district court dismissed the case, stating that Hermann Hospital did
not have standing to sue in its own right or as an assignee. 262 The
court also held that ERISA preempted all state law claims. 263 Costs
of $37,900 were taxed against Hermann Hospital.264
In the first appeal of this case, the Fifth Circuit held that
Hermann Hospital did not have standing to sue under ERISA as a
non-enumerated party.265 However, the court noted that if Mrs.
Nicholas had lawfully assigned her rights to payment of benefits to
Hermann Hospital, then the hospital would have derivative standing
to sue the plan as an assignee. 266 The court remanded the issue of
whether the assignment of the right to payment was lawful, and
affirmed the preemption of Hermann's state law claims. 267
On remand, the district court held that a valid assignment had
not been made. 268 Because Mrs. Nicholas had reserved her right to
sue, she retained control over the assignment and did not validly
assign to the hospital her right to payment. Alternatively, the court
held that the assignment was ambiguous. The court looked to the
I hereby authorize all insurance company(ies) under which I am insured, to pay
directly to the Hospital, all benefits due under said policy(ies) by reason of services
rendered therein.
[d.
257. [d. at 572.
258. [d.
259. [d.
260. [d.
261. [d.
262. [d.
263. [d.
264. [d.
265. [d. ERISA § 502(a) enumerates certain persons who have standing to sue: a participant,
beneficiary, or fiduciary can bring an action under § 502(a). 29 U.S.C. § 1132(a) (1988 &
Supp. II 1990).
266. 959 F.2d at 572.
267. [d.
268. [d.
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parties' intent and deterrpined that they intended the plan to directly
pay Hermann Hospital rather than to assign Nicholas' right to
payment for the services rendered by Hermann. 269 Because Hermann
Hospital had no standing to sue, the district court entered a take
nothing judgment against Hermann and further taxed costs of $37,900
against Hermann. 27o Hermann Hospital again appealed.
On the second appeal, the Fifth Circuit found that the assignment
of Mrs. Nicholas' right to payment was valid. 271 Because the assignment was valid, Hermann Hospital had the sole right to sue for the
payment of benefits provided by the hospital. 272 The court noted that
the assignment was not ambiguous. 273
Next, the court considered MEBA's claims that an anti-assignment clause in the pension plan invalidated any attempted assignment.
The court agreed with Hermann's argument that because MEBA did
not raise this argument until three years after Hermann Hospital first
demanded payment for the benefits, the plan was estopped from
relying on the anti-assignment clause. 274 The court further noted that
even if MEBA had not been estopped, the anti-assignment clause
only applied to unrelated third party assignees such as creditors who
attempt to obtain voluntary assignments or try to garnish payment
from plan benefits. 275 The court noted that:
[t]he anti-assignment clause should not be applicable, however, to
an assignee who, as here, is the provider of the very services
which the plan is maintained to furnish. Were we to conclude
otherwise, health care providers such as Hermann, which is entitled
to payment for the services it provided as benefits covered under
the Plan, would be unable to recover for those services unless
Mr. Nicholas were to sue MEBA for recovery of benefits and
Hermann in turn sue Mr. Nicholas. Such a result would be
inequitable. 276
269. [d.
270. [d.
271. [d. at 573.
272. [d. The assignment form assigned to Hermann Hospital "all rights. title and interest
in the benefits payable for services rendered" and reserved to Mrs. Nicholas only the right to
sue if coverage was denied. [d. Because MEBA never denied coverage, Hermann "was entitled
... to sue to recover payment for those services to the full extent they were covered under
the Plan." [d.
273. [d.
274. [d. at 574-75.
275. [d.
276. [d.
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The court also held that the state law claims raised by Hermann
were preempted. 277 The court relied on Mackey v. Lanier Collection
Agency & Service, Inc. 278 and Memorial Hospital System v. Northbrook Life Insurance CO.279 In so doing, the Hermann Hospital court
held that the fraud and misrepresentation claims brought by Hermann
Hospital did not qualify as the kind of "run-of-the-mill state law
claims" preempted by the Supreme Court in Mackey because the
claims were based on MEBA's failure to pay the benefits to Hermann
Hospital.280
XI.
RECOVERY OF OVERPAID CONTRIBUTIONS
In Jamail, Inc. v. Carpenters District Council,281 the Fifth Circuit
allowed an employer to recover an overpayment of $51,435 mistakenly paid into a multiemployer plan. 282 The overpayment was discovered when the Carpenters District Council Trust Funds audited
Jamail. The audit revealed that the overpayment was made when
Jamail made contributions on behalf of employees who worked on
non-union jobs. 283 The trustees notified Jamail of the overpayment. 284
When Jamail requested a refund, the trustees advised Jamail that
pursuant to the Fund's refund policy, the trustees could only refund
$1,146, the amount of the overpayment for the last six months less
an administrative audit fee of $600. 285 Jamail sued and the district
court granted Jamail's motion for summary judgment but offset the
judgment by an administrative fee of 20070. 286
The Fifth Circuit noted that this is a case of first impression as
to whether a contributing employer has standing to sue under ERISA
to recover overpaid contributions. The court noted that employers
are "conspicuously absent from the list of those entitled to bring a
277. [d. at 576.
278. 486 U.S. 825 (1988).
279. 904 F.2d 236 (5th Cir. 1990).
280. 959 F.2d at 578. The court relied on Christopher v. Mobil Oil Corp., 950 F.2d 1209
(5th Cir. Feb. 1992), cert. denied, 113 S. Ct. 68 (1992), another preemption case discussed
supra notes 125-38 and accomPllnying text.
281. 954 F.2d 299 (5th Cir. Mar. 1992).
282. [d. at 306.
283. [d. at 301.
284. [d.
285. [d.
286. [d.
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civil action" under ERISA section 502. 287 In quoting Hermann Hospital v. MEBA Medical & Benefits Plan,288 the court stated that
"[w]here Congress has defined the parties who may bring a civil
action founded on ERISA, we are loathe to ignore the legislature's
specificity. Moreover, our previous decisions have hewed to a literal
construction of" section 502(a).289 The court concluded that Jamail
had no standing to sue under ERISA section 502(a).290 The court
also rejected Jamail's claim that it had standing to sue under ERISA
section 403(c)(2)(A)(ii).291 The court noted that this section merely
authorizes trustees to return overpayments but does not so require. 292
No private cause of action can be implied from section 403. 293
The court examined whether it had the power to develop federal
common law to address pension and welfare issues not specifically
addressed by statute. In citing Rodrigue v. Western & Southern Life
Insurance Co. ,294 the court said: "Congress intended that federal
courts should create federal common law when adjudicating disputes
regarding ERISA. "295 The court noted that the First, Third, and
Sixth Circuits have found a federal common law right of restitution
under ERISA, while the Eleventh Circuit has found that such right
does not exist. 296 The court noted that there are .many reasons an
employer may make a computational error and that small, fledgling
employers such as Jamail should be encouraged: "If ERISA is going
to achieve its objective, it should encourage employers to err toward
overpayment rather than to slight the fund because of the fear that
there can be no effective restitution. "297
287. [d. at 302.
288. 845 F.2d 1286, 1288-89 (5th Cir. 1988).
289. 954 F.2d at 302 (quoting 845 F.2d at 1288-89); see 29 U.S.c. § 1132(a) (1988 & Supp.
II 1990).
290. 954 F.2d at 302.
291. [d.; see 29 U.S.c. § 1l03(c)(2)(A)(ii) (Supp. II 1990).
292. 954 F.2d at 302.
293. [d.
294. 948 F.2d 969 (5th Cir. Dec. 1991).
295. 954 F.2d at 303 (citing 948 F.2d at 971).
296. 954 F .2d at 304 n .10.
297. [d. at 304. The court also noted that its decision is consistent with South Cent. UFCW
Unions v. C & G Mkts.• Inc., 836 F.2d 221 (5th Cir.), cert. denied, 486 U.S. 1056 (1988), in
which the Fifth Circuit held that when a fund sues for underpayment of contributions to
employee benefit plans, the amount awarded to the fund is offset by overpayments made in
error. [d. at 225. The lamail court noted that
[u]nless we now hold that an employer has a claim for restitution, an employer who
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The court also held that the six-month limitation on return of
contributions was invalid as applied to Jamail. 298 Although the court
noted that in some circumstances a six month limitation may be
appropriate, here, when the policy was applied retroactively without
notice, it is invalid. 299
XII.
GOLDEN PARACHUTES
In Fontenot v. NL Industries, Inc. ,300 the Fifth Circuit held that
a golden parachute plan is not a "plan" within the meaning of
ERISA.30I Fontenot was employed as vice president of a subsidiary
of NL Industries. 302 When NL Industries became the target of a
takeover attempt, the corporation adopted a severance plan for senior
executives. 303 Fontenot was not covered by the severance plan and
when the takeover was consummated, Fontenot pulled the "ripcord"
but was not protected by the golden parachute. 304 One year later, he
was terminated. 30s He participated in an outplacement program under
which he remained on the payroll for six months while he searched
for work. As a condition of participation in the program, Fontenot
waived, in writing, all of his rights to "vacation entitlement, separation allowance, as well as participation in any incentive plan. "306
Later, Fontenot requested severance benefits, which he was
denied. 307 He sued to recover these benefits under ERISA. The lower
court dismissed Fontenot's claims. 308 The district court relied on Fort
Halifax Packing Co. v. Coyne 309 and Wells v. General Motors Corp. 310
to hold:
makes an overpayment must cease making payments and counterclaim when it is
sued if it wants to recover its overpayments. This result would be grotesque. It can
be avoided by recognizing an employer's right to sue for restitution.
954 F.2d at 305.
298.954 F .2d at 306.
299.
[d.
300.
301.
302.
303.
304.
305.
306.
307.
308.
309.
310.
953 F .2d 960 (5th Cir. Feb. 1992).
[d. at 961.
[d.
[d.
[d.
[d.
[d.
[d.
[d.
482 U.S. 1, 11 (1987).
881 F.2d 166, 176 (5th Cir. 1989), cert. denied, 495 U.S. 923 (1990).
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The requirement to pay was triggered by a single event. This
single event -:- the change of control in NL Industries, Inc. was a contingency that may have never materialized. Defendant
may potentially never have had to make severance payments
pursuant to the NLSES Plan. This theoretical possibility of a onetime obligation in the future created no need for an on-going
administrative program to process claims and pay benefits. Consequently, the NLSES Plan is not an employee benefit plan and
therefore is not governed by ERISA.311
The court held that the NL severance plan was a "one-time
lump sum payment triggered by a single event . . . that may never
materialize."312 The court quoted Fort Halifax, noting that it "requires no administrative scheme whatsoever to meet the employer's
obligation," and "[t]he employer assumes no responsibility to pay
benefits on a regular basis." 313 As the Supreme Court succinctly
stated in Fort Halifax: "To do little more than write a check hardly
constitutes the operation of a benefit plan. "314 The Fifth Circuit
concluded that the golden parachute plan was not governed by ERISA
and "pull[ed] the rip cord on this appeal ... confident that [the
court could] land safely on the district court's judgment. "315
XIII.
EXPERIMENTAL TREATMENT
Many cases relating to experimental treatment have involved the
use of high dose chemotherapy in conjunction with autologous bone
marrow transplants to treat Stage IV metastatic breast cancer. 316 In
Holder v. Prudential Insurance Co. of America,317 the Fifth Circuit
held that, at the time treatment was rendered to the participant, it
311. 953 F.2d at 962 (quoting district court op. at 7).
312. [d. (emphasis added) (quoting 482 U.S. at 12).
313. [d. (quoting 482 U.S. at 12).
314. [d. (quoting 482 U.S. at 12).
315. [d. at 963.
316. See White v. Caterpillar, Inc., 765 F. Supp. 1418 (W.D. Mo. 1991); Bucci v. Blue
Cross-Blue Shield of Conn., 764 F. Supp. 728 (D. Conn. 1991); Adams v. Blue Cross-Blue
Shield of Md., 757 F. Supp. 661 (D. Md. 1991); Pirozzi v. Blue Cross-Blue Shield of Va.,
741 F. Supp. 586 (E.D. Va. 1990); Sweeney v. Gerber Prods. Co. Medical Benefits Plan, 728
F. Supp. 594 (D. Neb. 1989); Thomas v. Gulf Health Plan, 688 F. Supp. 590 (S.D. Ala.
1988).
317. 951 F.2d 89 (5th CiT. Jan. 1992).
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was experimental,318 and could be excluded under the plan. 319 The
participant, Mrs. Holder, signed a consent form that described the
treatment as experimental. 320 Mrs. Holder received the treatment and
subsequently died of complications. Her husband submitted her medical claims to Prudential for payment. Prudential denied the claims
based on the policy's exclusion of experimental treatment. 321
In order for medical treatment to be '''reasonably necessary,'
the treatment must be ordered by a doctor and customarily recognized
as appropriate, and it could not be experimental in nature. "322 At
trial, doctors presented conflicting opinions as to whether the treatment was experimental. 323 The doctors noted that while the treatment
was customary for the treatment of leukemia, Hodgkin's disease,
and lymphoma, at the time treatment was rendered to Mrs. Holder,
it was still being investigated as a possible treatment for breast
cancer. 324 In 1987, when Mrs. Holder underwent the treatment, only
twenty to thirty women had been given the treatment in the United
States. 32S
The court noted that although several recent studies indicate that
the treatment may no longer be considered experimental, at the time
the treatment was rendered in 1987, the treatment was experimental. 326
The court noted that "it is the nature of medical research that what
may one day be experimental may the next be state of the art
treatment. Had Mrs. Holder undergone a similar treatment more
recently under an accepted protocol, this case may have turned out
differently. "327
The court upheld the district court's decision not to award
attorney fees to Prudential. 328 The court emphasized that because
courts have split on the issue of whether the treatment is experimental,
318. [d. at 91. More recent medical studies and cases indicate that this treatment no longer
is considered experimental. See White v. Caterpillar, Inc., 765 F. Supp. 1418 (W.D. Mo.
1991); Bucci v. Blue Cross-Blue Shield of Conn., 764 F. Supp. 728 (D. Conn. 1991); Adams
v. Blue Cross-Blue Shield of Md., 757 F. Supp. 661 (D. Md. 1991).
319. 951 F.2d at 91. The plan specifically excluded experimental treatment. [d. at 91 n.3.
320. [d. at 90.
321. [d.
322. [d.
323. [d.
324. [d.
325. [d.
326. [d. at 91 n.5.
327. [d. at 91.
328. [d. at 92.
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it would be unfair to require Mr. Holder to pay Prudential's attorneys
fees. 329
329.
[d.
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