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California Senate Bill 41 Reshapes PBM Rules

"The law bans discriminatory network steering, protects pharmacy ancillary services, and establishes new claims payment integrity rules. PBMs must be licensed by 2027 and owe a fiduciary duty to payers. These changes increase transparency, level the playing field for nonaffiliated pharmacies, and introduce new enforcement mechanisms, with provisions phasing in through 2029."

Law Firm's Mandatory Age 70 Retirement Policy Was Enforceable, Says Eighth Circuit

"In 2003, the United States Supreme Court established a six-factor test ... to determine whether an individual is likely an owner or an employee.... Not all partners in every firm are created equally, and firms with multitiered partnership levels should tread carefully. Most non-equity partners -- and even some equity partners, those with little or no management authority, and few voting rights -- potentially could be considered employees under the ADEA." [Von Kaenel v. Armstrong Teasdale, LLP, No. 18-2850 (8th Cir. Dec. 3, 2019)]

Employers with Chicago-Based Employees Face Significant New Mandatory Paid Leave Requirements Effective January 1

"A Covered Employee ... is any employee who, in a two-week period, works at least two hours for an employer while physically present in the geographic boundaries of the city.... The ordinance added a leave category and increased the total time for both forms of leave.... There are increased notice obligations that did not previously exist.... [E]mployers with unlimited vacation policies must still comply with the reasonable notice requirements, lack of pre-approval, and even payout requirements."

District Court Finds LTD Benefits Properly Terminated After Plaintiff Failed to Undergo Recommended Surgery for Disability

"[T]he court noted that 'together with Hall's failure to engage another doctor and her refusal (or inability) to schedule surgery, [the doctor's] disavowal casts doubt on the veracity of Hall's claims of total disability.' The court also held that Hall failed to offer any evidence to counter 'the reasonable assumption' that the doctor contacted Aetna because he was no longer comfortable certifying Hall's disability for medical reasons.' " [Hall v. Aetna Life Ins. Co., No. 20-1863 (N.D. Cal. Jun. 23, 2021)]

DOL Says Plan Administrators Must Provide Audio Recording or Transcript of Call Between Claimant and Plan Representative Upon Request

"The opinion came in the form of an Information Letter issued in response to an inquiry from a claimant's attorney who sought guidance after a plan administrator declined to produce an audio recording of a conversation on the grounds that a record of the call had been produced and the recording was for quality assurance purposes only. The DOL held that these justifications were inconsistent with ERISA's regulations."

ERISA Exhaustion Requirement Not Satisfied by Verbal Appeal When Plan Required Written Appeal

"the court stated that none of the documents Plaintiffs produced in discovery constituted appeals; they were mostly claims submissions made before the initial denials, as well as miscellaneous faxes, post-it notes and other documents that included no requests for appeal. Regarding the purported phone calls, the court held that the parties were bound by the unambiguous language in the subject plans requiring written appeals." [Ligotti v. United Healthcare Services, No. 16-60558 (S.D. Fla., Jun. 8, 2021)]

Ninth Circuit Joins Fourth Circuit in Holding That Equitable Estoppel Is Barred Where Use Would Contradict Express Terms of ESOP

"The Ninth Circuit ... explained that ... [if the ESOP's trustee] is correct that the ESOP overpaid for the company stock sold to it by Mr. Kemper, then applying equitable estoppel would require the ESOP to pay greater than the fair market value of the shares on their date of purchase. This would contravene the express terms of the ESOP, which requires that the shares be purchased at fair market value on the date of purchase." [Wong v. Flynn-Kerper, No. 19-56289 (9th Cir. Jun. 7, 2021)]

Texas District Court Upholds Denial of LTD Benefits Because Claimant Did Not Prove Functional Limitations Within Benefit Waiting Period

"The case ... highlights the need to focus on whether a claimant has a disabling condition and not merely a diagnosis within the benefit waiting period under the Policy.... Further, the reasoning of this case provides a strong basis for a Plan to argue to the reviewing court that it can only look to a claimant's condition during the benefit waiting period, and not the claimant's condition beyond, even though it may have worsened into a disabling condition during the administrative review, but after the elimination period." [Calkin v. United States Life Ins. Co., No. 20-0035 (S.D. TX., Apr. 29, 2021)]

Tenth Circuit: Onset of Disability After Notice of Termination Did Not Preclude LTD Benefits

"[T]he Tenth Circuit ... construed the ambiguous term ... to mean a 'current employee' rather than endorsing Reliance's proposed definition of an employee 'actually working' 'full time.' Because there was no dispute that Carlile was currently employed as of the date of his disability, which was prior to the effective date of his termination, the court affirmed the judgment of LTD benefits in Carlile's favor." [Carlile v. Reliance Standard Life Ins. Co., Nos. 19-4123, 20-4005 (10th Cir. Feb. 22, 2021)]

Second Circuit Decision on Statute of Limitations Is Favorable to Health Plan Administrators

"[W]hile the Second Circuit did not analyze what Cigna needed to prove to recover the alleged overpayments received by the labs under ERISA Section 1132(a)(3), the opinion states that showing fraud is unnecessary. It may be sufficient for the fiduciary to show that the payments were prohibited by the terms of the governing plan." [Connecticut General Life Ins. Co. v. Biohealth Labs, Inc., No. 20-2312 (2d Cir. Feb. 10, 2021)]