18th Annual Workplace Class Action Report - 2022 Edition

346 Annual Workplace Class Action Litigation Report: 2022 Edition averaged over $89 per participant during the class period, and that the fees increased every year. Finally, Plaintiffs alleged that ISO and the Administrative Committee did not adequately monitor the Committee Defendants because they failed to: (i) evaluate the Committee Defendants’ performance; (ii) review the processes for investment evaluations and investigate other low-cost, alternative investment options, and (iii) remove underperforming committee members. Id . at *13. Defendants contended that the allegations were recitations of the other claims, and thus insufficiently pled to survive a motion to dismiss. The Court disagreed. It ruled that Plaintiffs allegations that ISO and the Administrative Committee maintained the authority to appoint and remove committee members and had no system for monitoring or evaluating the Committee Defendants’ performance were more than a mere recitation of legal elements. Id . at *14. For these reasons, the Court denied Defendants’ motion to dismiss. R.J., et al. v. Cigna Behavioral Health, 2021 U.S. Dist. LEXIS 55023 (N.D. Cal. March 23, 2021). Plaintiff, as the representative of her beneficiary son, filed a class action challenging Defendant Cigna Behavioral Health, Inc.’s ("Cigna") alleged failure to reimburse covered mental health provider claims at the usual, customary, and reasonable ("UCR") rates in violation of the ERISA. Defendants filed a motion to dismiss, and the Court granted in part and denied in part the motion. Plaintiff filed claims for: (i) violations of RICO; (ii) underpayment of benefits; (ii) breach of benefit provisions; (iv) failure to provide accurate materials; (v) violation of fiduciary duties of loyalty and duty of care; (vi); declaratory and injunctive relief pursuant to § 502(a)(3) of the ERISA; and for (vii) "other appropriate equitable relief" under § 502(a)(3). Id . at *4. First, as to the second and third causes of action, the Court held that Plaintiff’s complaint contained sufficient factual allegations to support Plaintiff’s claims. Plaintiff alleged unequivocally that her Plan was governed by the ERISA and that her son was a beneficiary of that Plan. Plaintiff asserted that her healthcare provider contacted Cigna for verification of benefits, and Cigna represented it would reimburse the claims at issue at UCR rates, and that after Plaintiff reached the out of pocket maximum, Cigna "would pay according to MRC-1 methodology which translates to 100% of billed charges." Id . at *9. The Court ruled that Plaintiff’s allegations were sufficient to allege existence of an ERISA plan and a provision requiring Cigna to pay benefits calculated according to the MRC-1 methodology. Thus the Court denied the motion as to Plaintiff’s second and third cause of action. Under the fourth cause of action, Plaintiff alleged that Cigna failed to fulfill its obligation to furnish accurate materials summarizing its group health plans. The Court determined that as Intuit, not Cigna, was the plan administrator, this claim failed. For the breach of fiduciary duty claim, Plaintiff sought injunctive and declaratory relief, as well as removal of Cigna as a fiduciary. Id . at *15-16. Plaintiff alleged breach of duties of loyalty and due care "by making out-of-network benefit reductions and adverse benefit determinations that were not authorized by the plan documents and were also misrepresented, causing Plaintiff to incur, and pay, substantial balance bills at the benefit to Cigna’s bottom line. Id . at *14. Plaintiff alleged that separate and apart from the denial of benefits, Cigna breached its duty as a fiduciary by sending her misrepresentations, failing to provide accurate information about the methodology applied to calculate UCR rates, and failing to disclose the use of a repricing agent. Id . at *16. The Court ruled that although the allegations contained substantial overlap, Plaintiff’s breach of fiduciary duty claim might entitle her to equitable relief, separate and apart from an award of benefit, and thus it declined to dismiss the claims. Id . Finally, the Court opined that Plaintiff failed to sufficiently allege that Defendants acted with specific intent to deceive or defraud, which was required to assert a viable claim under the RICO, and the Court thus dismissed this claim. For these reasons, the Court granted in part and denied in part Defendants’ motion to dismiss. Windsor, et al. v. Sequoia Benefits & Insurance Services LLC, Case No. 21-CV-227 (N.D. Cal. June 1, 2021). Plaintiffs, a group of current and former participants in RingCentral, Inc.’s wellness benefits plan, filed a class action alleging that Defendants engaged in unlawful kickback schemes that violated their fiduciary duties under the ERISA. Defendants filed a motion to dismiss for lack of standing, which the Court granted. Plaintiffs alleged that they suffered injuries-in-fact due to Defendants receipt of commissions from the contracting insurers. Plaintiffs also asserted that the commissions should have been returned to plan participants in the form of rebates, and that any money the plan did not pay as commissions would have been returned to them as other employee benefits. The Court determined that the complaint failed to allege any facts to support a plausible inference that if Defendants had not paid a commission that the plan would have charged less for contributions from plan members or that even it if was charged less, that those savings would be passed on to the plan members themselves. Further, the Court opined that the complaint did not even provide any details about how the contributions were determined by Defendants. The Court reasoned that Plaintiffs could not claim that they