The Friday Five: Five ERISA Litigation Highlights - April 2025

Saul Ewing LLP is pleased to announce that Amy Kline and Caitlin Strauss have been honored in the 2025 JD Supra Readers' Choice Awards for their exemplary authorship of The Friday Five. This prestigious award recognizes the top authors and firms for exceptional thought leadership over the past year. The Friday Five was distinguished for achieving the highest visibility and engagement among readers within the Insurance Category, standing out from a pool of over 2,600 authors. We would like to extend our sincere gratitude to our readers for their continued support and engagement. To learn more about this esteemed recognition, click here.

The April Friday Five covers cases determining futility of exhausting administrative remedies, the nuances of the pre-existing condition exclusion, ERISA preemption, and genuine issue of material fact over an employee’s earnings.

1. Western District of Pennsylvania Adopts Report and Recommendation Denying Motion to Dismiss Based, in Part, on “Clear and Positive Showing of Futility” Absent Testimony From the Insurer. In an update to the magistrate judge’s Report and Recommendation discussed in the March 2025 Friday Five, the district judge adopted the Report and Recommendation over the defendant employer’s objections. The court primarily focused on whether the plaintiff—who sought to recover benefits under her husband’s Life Insurance Waiver of Premium (“LWOP”) policy—exhausted her administrative remedies. As the court acknowledged, exhaustion is an affirmative defense for which the burden to demonstrate belongs to the movant.  If the movant satisfactorily demonstrate a failure to exhaust, then the party claiming futility “must provide a clear and positive showing of futility.” The court concluded that the absence of testimony from the insurer co-defendant as to whether an administrative appeal would have been futile supported the plaintiff’s futility argument, though the employer could argue failure to exhaust again at the summary judgment stage of the proceedings. DiGregorio v. Trivium Packaging Co., No. 23CV2167, 2025 WL 782091 (W.D. Pa. Mar. 12, 2025).
2. Western District of Kentucky Grants Summary Judgment in Insurer’s Favor Finding Exhaustion of Administrative Remedies not Futile. A plaintiff filed a claim for short-term disability (“STD”) benefits due to “severe anxiety, depression, panic attacks, sadness, hopelessness, [and] isolation,” which the insurer initially granted, and later denied after the plaintiff no longer met the policy’s STD definition. The plaintiff never filed a claim for long-term disability (“LTD”) benefits. Nevertheless, he filed a complaint against the insurer for wrongfully denying both STD and LTD benefits. On cross-motions for summary judgment, the court rejected the plaintiff’s arguments that the insurer’s STD denial was arbitrary and capricious and “cut off” access to his LTD benefits. As an initial matter, the court concluded that termination of the plaintiff’s STD benefits was “based on substantial evidence” and was neither arbitrary nor capricious. Regarding LTD benefits, the court explained that the denial of STD benefits alone does not excuse exhaustion of the LTD administrative process. Thus, denial of the plaintiff’s STD benefits did not render exhaustion of administrative remedies for his LTD benefits futile. Accordingly, the court denied the plaintiff’s motion for summary judgment and granted the insurer’s motion. Lechner v. Mut. of Omaha Life Ins. Co., No. 3:23-CV-410-RGJ, 2025 WL 697673 (W.D. Ky. Mar. 4, 2025).
3. Northern District of Illinois Grants Plaintiff’s Motion for Summary Judgment Finding Insurer Failed to Prove Pre-Existing Condition Exclusion. The plaintiff was working as a human resources employee when she became unable to work due to postural orthostatic tachycardia syndrome (“POTS”). The insurer denied her application for LTD benefits because it determined her POTS was a pre-existing condition due to her prior diagnosis and treatment for sinus tachycardia and migraines, and thus excluded from coverage. The plaintiff moved for judgment under Federal Rule of Civil Procedure 52. To support its argument for denial of coverage, the insurer cited Bullwinkel v. New England Mutual Life Ins. Co., 18 F.3d 429 (7th Cir. 1994) for its holding that a breast lump that was detected before the coverage date and later diagnosed to be cancerous post-coverage was a pre-existing condition under the policy. The plaintiff, on the other hand, cited Pitcher v. Principal Mutual Life Ins. Co., 93 F.3d 407 (7th Cir. 1996) in which the Seventh Circuit held that a breast lump detected during the pre-coverage-period was not a pre-existing condition where the lump was detected while the patient was being monitored for a benign fibrocystic breast condition, not cancer. Here, the court, drawing on analysis from the Third Circuit, reconciled the two cases by delineating between “a suspected condition without a confirmatory diagnosis” (i.e., Bullwinkel) and “an unsuspected condition manifesting non-specific symptoms” (i.e., Pitcher). Applied to the plaintiff’s situation, the court determined that the plaintiff’s sinus tachycardia and migraine headaches could be associated with conditions other than POTS and the insurer failed to prove by a preponderance of the evidence that those symptoms were early manifestations of POTS. Moreover, the record indicated the plaintiff experienced a significant change in her health after the policy went into effect. Accordingly, the court concluded the pre-existing condition exclusion did not apply and granted judgment in the plaintiff’s favor. Krueger v. Reliance Standard Life Ins. Co., No. 23-CV-02493, 2025 WL 755252 (N.D. Ill. Mar. 10, 2025).
4. Southern District of California Grants Insurer’s Motion to Dismiss State Law Claims as Preempted by ERISA. The plaintiff made a claim under an LTD policy he alleged he purchased “for himself and his employees” after he was injured by a woman illegally riding an electric scooter on the sidewalk. After the insurer denied the claim, the plaintiff brought state law claims against the insurer in state court. The insurer removed the case to federal court and filed a motion to dismiss, attaching a copy of the policy to the motion and arguing the plaintiff’s claims were preempted by ERISA. The court agreed, finding the policy reflected a program providing employees with group LTD insurance within the scope of the definition of an “employee welfare benefit plan.” The court dismissed the complaint with leave to amend within 14 days. Dean v. Reliance Std. Life Ins. Co., No. 25-CV-341-RSH-BLM, 2025 WL 886960, (S.D. Cal. Mar. 20, 2025).
5. Eastern District of Tennessee Denies Cross-Motions for Summary Judgment Due to Dispute on Plaintiff’s Wages. The plaintiff, a truck driver, sought damages for unpaid benefits arising from the insurer’s alleged miscalculation of LTD benefits. The court found that the policy’s “Predisability Earnings” provision was ambiguous due to its interchangeable treatment of the terms “salary” and “wages.” Under the doctrine of contra proferntum, the court construed the provision in the plaintiff’s favor. However, it found the record of plaintiff’s earnings was incomplete and did not support the plaintiff’s calculated benefit amount. The court agreed with the insurer that just one additional week’s driving miles could impact the plaintiff’s average earnings such that he was already receiving a greater benefit calculation than he was owed under the plan even with the terms of the plan being construed in his favor. Ultimately, the court concluded that such “broad disagreement” in the plaintiff’s wages during the relevant period of time would require the court to make credibility determinations and weigh evidence. As the court acknowledged, “[a]lthough relatively uncommon in an ERISA dispute,” summary judgment was inappropriate and the parties’ cross-motions were denied. Dougharty v. Metro. Life Ins. Co. of Am., No. 3:24-CV-83-TAV-DCP, 2025 WL 747505 (E.D. Tenn. Mar. 7, 2025).