159 F. Supp. 3d 11
D.D.C.2015Background
- Kelly Foster, a former SunTrust employee, claimed disability (dry eyes, anxiety, fatigue, fibromyalgia) and sought Short-Term Disability (STD) and Long-Term Disability (LTD) benefits.
- Sedgwick administered both plans; it denied Foster STD benefits and, because LTD eligibility required sustained STD or Workers’ Compensation eligibility during a 180-day waiting period, Sedgwick also denied LTD benefits.
- Foster sued under ERISA to challenge the denials. Defendants moved for summary judgment.
- The Court (Aug. 28, 2015) granted summary judgment: Foster conceded STD was not an ERISA plan (court agreed it resembled a payroll-practices plan), and the LTD denial was reviewed for abuse of discretion (plan conferred discretionary authority) and was upheld.
- Foster filed a Rule 59(e) motion to alter judgment and sought leave to amend her complaint to add an ERISA § 510 interference claim, arguing (1) STD actually is an ERISA plan or is preempted as “related to” the LTD plan, (2) LTD denial should have been reviewed de novo, and (3) Sedgwick had a conflict of interest.
- The Court denied the Rule 59(e) motion and leave to amend, holding Foster offered no new evidence or intervening law, had waived prior positions, and her new theories would not alter the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the STD Plan is governed by ERISA | Foster: STD is an ERISA plan (abandoning prior concession) | Defendants: STD is a non-ERISA payroll-practices plan; Foster conceded this | Court: Foster waived the argument; STD resembles payroll-practices plan and new theory fails |
| Whether STD claims are preempted as "related to" the ERISA LTD Plan | Foster: STD "relates to" LTD so ERISA preempts state-law remedy | Defendants: STD claims do not depend on existence of ERISA plan; no preemption | Court: Preemption requires ERISA plan be critical to liability; here LTD does not affect merits of STD claim, so no preemption |
| Standard of review for LTD denial (de novo vs. abuse of discretion) | Foster: LTD administrator lacked discretionary authority; de novo review required | Defendants: Plan grants Sedgwick discretionary authority; abuse of discretion applies | Court: LTD confers discretion; abuse-of-discretion review applies; denial was reasonable |
| Conflict of interest by Sedgwick (administrator for both plans) | Foster: dual-administrator role created a conflict that tainted decision | Defendants: mere existence of potential conflict does not make denial unreasonable | Court: No evidence that conflict affected reasonableness; insufficient to overturn denial |
Key Cases Cited
- Ciralsky v. CIA, 355 F.3d 661 (D.C. Cir. 2004) (Rule 59(e) standard and final-judgment amendment limits)
- Firestone v. Firestone, 76 F.3d 1205 (D.C. Cir. 1996) (grounds for relief under Rule 59(e))
- Patton Boggs LLP v. Chevron Corp., 683 F.3d 397 (D.C. Cir. 2012) (Rule 59(e) cannot be used to advance new legal theories available before judgment)
- Kolkowski v. Goodrich Corp., 448 F.3d 843 (6th Cir. 2006) (ERISA-plan status is fact-intensive; all circumstances considered)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (Supreme Court 2004) (state-law causes duplicative of ERISA enforcement are preempted)
- Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (Supreme Court 1990) (ERISA preemption applies where ERISA plan existence is critical to establishing liability)
- Exxon Shipping Co. v. Baker, 554 U.S. 471 (Supreme Court 2008) (Rule 59(e) not for relitigating matters or raising arguments available earlier)
- Benoit v. U.S. Dept. of Agriculture, 608 F.3d 17 (D.C. Cir. 2010) (motion for leave to amend must be a written motion)