NELA Amicus Brief: Rochow v. Life Insurance Co. of North America (ERISA)

Posted By: Roberta L. Steele May 06, 2014 3:29 pm
Posted In: NELA Amicus Briefs
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Statutes : ERISA  Federal Appellate Courts : 6th Circuit  Admin : Amicus

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On May 2, 2014, NELA joined AARP in submitting an amicus curiae brief in Rochow v. Life Insurance Co. of North America, No. 12-2074, pending before the U.S.  Court of Appeals for the Sixth Circuit, sitting en banc, in support of plaintiff the Estate of Daniel Rochow. John J. Cooper of the Cooper Law Firm in Troy, Michigan, and Erik W. Scharf of the Scharf Appellate Group in Miami, Florida, represent the plaintiff. This case concerns the scope of equitable remedies available under ERISA § 502(a)(3), particularly whether defendant must disgorge profits gained from wrongfully retained benefits upon a finding of breach of fiduciary duty. 

Plaintiff Daniel Rochow was insured under Life Insurance Co. of North America's (LINA) disability plan. In 2001, Rochow began experiencing short-term memory loss, was demoted from President to sales executive and shortly thereafter terminated. A few months later, Rochow was diagnosed with a rare virus that causes brain trauma. LINA denied Rochow's application for long-term disability benefits. After three administrative appeals, Rochow filed suit, challenging the denial of benefits and alleging breach of fiduciary duties. The district court held that LINA's denial was arbitrary and capricious, and awarded Rochow benefits. On appeal, the Sixth Circuit affirmed the district court's judgment in its entirety. See Rochow v. LINA (Rochow I), 482 F.3d 860 (6th Cir. 2007). On remand, plaintiff sought an equitable accounting and disgorgement of profits. The district court held disgorgement was proper and ordered LINA to pay approximately $3.8 million.  LINA appealed a second time.  In a divided opinion, the Sixth Circuit again affirmed.See Rochow v. LINA (Rochow I), 737 F.3d 415 (6th Cir. 2013). On February 19, 2014, the Sixth Circuit granted rehearing en banc, vacated the panel decision and set oral argument for June 18, 2014. 

NELA and AARP made the following arguments in our amicus brief: (1) disgorgement prevents unjust enrichment and is necessary because prejudgment interest alone is insufficient to deter insurers from wrongfully withholding benefits; (2) whether fiduciary duties have been breached is a fact intensive inquiry, and not all benefit denials will rise to the level  of breach of fiduciary duty requiring disgorgement; (3) affirming the use of the discretionary equitable remedy of disgorgement would not incentivize plan participants to abuse the system by not participating in the administrative process; and (4) the Supreme Court has repeatedly rejected similar unfounded arguments by insurers  speculating that employers will cut or refuse to offer benefits because plans will be more expensive due to increased litigation costs. NELA and AARP made these points to refute arguments made by LINA’s amici, DRI, The Voice of the Defense Bar, the American Council of Life Insurers, American Benefits Council, Chamber of Commerce, and America's Health Insurance Plans.  

The excellent amicus brief was drafted by NELA members Jeffrey Lewis and Julie H. Wilensky at Lewis, Feinberg, Lee, Renaker & Jackson and Mary Ellen Signorille at AARP Foundation Litigation. 

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NELA & AARP File Amicus Brief In Rochow v. Life Insurance Co. of North America To Uphold Multi-Million Dollar Judgment In ERISA Case


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