California Insurance Litigation Blog

Keith Parker, an excellent mediator who specializes in mediating ERISA matters, authored the following article on “Recovery of Overpayments Under ERISA”   We at the McKennon Law Group PC are happy to recommend this outstanding article for your reading.  We include the entire article below with permission from Mr. Parker.

Section 1132(a)(3)(B) of ERISA authorizes participants, beneficiaries and/or fiduciaries to bring civil actions seeking “appropriate equitable relief” to enforce the provisions of an ERISA plan.  Just what constitutes “appropriate equitable relief” has challenged courts and practitioners, in large part because the Supreme Court has interpreted that language to incorporate the “archaic” (Justice Ginsburg’s word) and “obsolete” (Justice Steven’s word) distinction between relief available in equity and that available in law at the time of the so-called divided bench.  While most members of the bar (academics and certain members of the Supreme Court excepted) have no experience with, or interest in, the distinction in this day of the unified bench, the distinction is part of the Federal common law of ERISA and, so, must be considered when dealing with claims for equitable relief under ERISA.

A recent California Court of Appeals decision sought to clarify the application of California Insurance Code Section 533.5(b) concerning the statute’s preclusion of an insurer’s duty to defend its insured in criminal actions.  In Mt. Hawley Insurance Co. v. Richard Lopez, Jr.,__Cal.App.4th___, 2013 Cal. App. LEXIS 346 (May 1, 2013) the Court of Appeals held that Section 533.5 (b) is not applicable to criminal actions brought by federal prosecuting authorities, and thus is limited to precluding the insurer’s duty to defend its insured in state criminal actions brought by the Attorney General, any district attorney, any city prosecutor, or any county counsel.  The Court importantly held that the insurer’s Motion for Adjudication of the insured’s bad faith claim should be denied given the insurer’s potentially unreasonable actions even though the insurer gave a reasonable interpretation to an insurance code section.

By granting certiorari in Heimeshoff v. Hartford Life and Accident Insurance Co., 496 Fed. Appx. 129, 2012 U.S. App. LEXIS 19269, 2012 WL 4017133 (2d Cir. September 13, 2012), the United States Supreme Court is poised to address an issue that has left countless ERISA claimants without a remedy to challenge a wrongful denial of disability benefits.  Specifically, the Supreme Court will consider when the statute of limitations accrues following a decision to deny a claim for disability benefits.  Or, as a claimant would ask the question, “What is my deadline to file a lawsuit in an ERISA matter?”

A recent Ninth Circuit Court of Appeals decision reaffirmed the need for plan administrators to state the reasoning behind their denial of coverage.  In Lukas v. United Behavioral Health,  __ F.3d __, 2013 U.S. App. LEXIS 1230 (9th Cir. Jan. 17, 2013) the Ninth Circuit was faced with evaluating whether the district court properly weighed the factors necessary to determine if there was an abuse of discretion by the plan administrator in denying the benefits to the claimant.  On de novo review, the Ninth Circuit found that the lower court failed to properly weigh these factors and reversed the decision, remanding the case back to the district court for a benefit award and further necessary proceedings related to that award.

McKennon Law Group recently filed a case on behalf of Therabotanics, LLC, a subsidiary of Ideal Living, for breach of contract, unfair competition, misappropriation of trade secrets, harmful interference with contract, and conversion of assets against Sephora, USA, Inc. and Solazyme, Inc.  Therabotanics and Solazyme had entered into an exclusive agreement for a joint venture to sell a line of algae-based skin care products through a television infomercial.  The exclusive agreement contained a carve-out that allowed Solazyme to sell a “premium” product with other distributors, but at a higher price and under a specific name.