Law360 (October 9, 2020, 5:22 PM EDT) -- The Motion Picture Industry Health Plan's board can't be sued under ERISA for allegedly flouting its duties when it relaxed plan rules in response to COVID-19, a California federal judge has ruled, nixing a proposed class action filed by two cinematographers who still couldn't qualify for benefits.
In an order entered Thursday, U.S. District Judge R. Gary Klausner granted the board of directors' motion to dismiss Greg Endries and Dee Nichols' Employee Retirement Income Security Act suit accusing board members of breaching their duty to treat all plan participants fairly.
Endries and Nichols, members of Local 600 of the International Cinematographers Guild, said in July that the board left them and others "out in the cold" in its attempts to address the problems COVID-19 caused for plan participants.
But Judge Klausner agreed with the board's contention that the case, which alleged a fiduciary breach, should be tossed because plan administrators don't act as fiduciaries when they amend health care plans.
"A valid decision by plan administrators to amend the terms of the plan to extend benefits in response to Covid-19 does not implicate fiduciary review," the judge wrote.
The judge wasn't persuaded by the workers' assertion that certain U.S. Supreme Court and Ninth Circuit precedents didn't apply to their case because they addressed single-employer plans rather than multiemployer plans like the Motion Picture Industry Health Plan.
Although that was "technically true," the judge agreed with "the circuit courts who have taken up the issue and found that the principle applies equally in the context of an amendment to a multiemployer plan," the order said.
The workers' arguments that the board failed to follow the appropriate plan amendment procedures was also unavailing, Judge Klausner found,partly because the workers didn't include any such allegations in their suit.
"Furthermore, even if the court were to consider plaintiffs' arguments on this point, a resolution signed after the date on which the amendment is voted upon by the plan directors is no less valid under the procedures set forth in Article X of the plan agreement," the judge said.
According to the suit, union members participating in the plan must work a certain number of hours during a six-month period in order to receive plan benefits — 600 hours for newly qualifying participants, and then 400 hours after that.
Because the pandemic largely shut down the motion picture industry, the board of directors provided a 300-hour credit, premium waivers for dependents and COBRA subsidies, but only to participants whose eligibility period ended in April, the complaint said.
Participants whose eligibility periods ended in March who had at least 375 hours were given a 25-hour credit, the suit said. And those who had at least 300 hours but less than 375 were subject to the "more onerous standard" of demonstrating they would have met their hours requirement if it hadn't been for the pandemic, according to the complaint.
However, participants who weren't on track to meet the March deadline but were on track to meet the one in April were precluded from the hours credit, the suit said. Additionally, the relief was only extended to participants who already qualified for benefits, leaving out entirely those who were working toward their 600 hours, the complaint said.
The suit noted Endries had 283 hours by early March and was planning to go on COBRA for a month so he could count those hours towards the April deadline if he couldn't get to 400 hours by the March deadline, and Nichols had 512 of the 600 hours he needed when the pandemic hit.
An attorney for Endries and Nichols, Elizabeth Hopkins, told Law360 in a statement Friday that her clients filed the case because the board's actions "unfairly left Greg Endries and Dee Nichols and many others like them without health coverage under the MPI Health Plan during a worldwide pandemic, and their health and well-being is suffering as a consequence."
"It is discouraging that ERISA, the statute that is meant to comprehensively regulate employment-related healthcare plans and to protect the interests of plan participants and their family members, has instead been read to allow the board to act without any oversight and to prevent Mr. Endries and Mr. Nichols from having the merits of their claims considered in court," Hopkins said.
Counsel for the board of directors didn't respond Friday to a request for comment.
The workers are represented by Elizabeth Hopkins of Kantor & Kantor LLP and Teresa S. Renaker, Margo Hasselman Greenough and Kirsten G. Scott of Renaker Hasselman Scott LLP.
The board is represented by Jean Pierre Nogues and Theresa B. Bowman of Mitchell Silberberg & Knupp LLP.
The case is Endries et al. v. Board of Directors of the Motion Picture Industry Health Plan et al., case number 2:20-cv-06347, in the U.S. District Court for the Central District of California.
--Editing by Jill Coffey.
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