Wit v. United Behavioral Health

The Rules Enabling Act forbids interpreting Rules 23 to ‘abridge enlarge or modify and substantive right.

Defendant appealed a judgment finding it liable to classes of Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 (ERISA) plaintiffs under 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3). Defendant assigned error to the district court's class certification order, arguing that Plaintiffs lacked Article III standing, its conclusion that the Guidelines improperly deviated from generally accepted standards of care (GASC), and the excusal of unnamed class members from demonstrating compliance with the Plans’ administrative exhaustion requirement. To establish standing under Article III, “a plaintiff must show (i) that he suffered an injury in fact that is concrete, particularized, and actual or imminent; (ii) that the injury was likely by the defendant; and (iii) that the injury would likely be redressed by judicial relief.” TransUnion LLc v. Ramirez, 141 S. Ct. 2190, 2203 (2021). The Court found that Plaintiffs sufficiently alleged a concrete injury because Defendant’s alleged breach in fiduciary duty presented a material risk of harm to Plaintiffs' interest. “The Rules Enabling Act forbids interpreting Rules 23 to ‘abridge enlarge or modify and substantive right.’” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 367 (2011) (quoting 28 U.S.C. § 2072(b)). The Court agreed with Defendant and found that the district court abused its discretion in its certification order because it did not explain or refer to precedent showing how a reprocessing remedy constituted relief. “Where the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan, we ordinarily review the plan administrator’s decisions for an abuse of discretion.” Schikore v. BankAmerica Suppl. Ret. Plan, 269 F.3d 956, 960 (9th Cir. 2001). The Court found that Defendant did not abuse its discretion because its interpretation of ERISA did not conflict with the plain language of the Plans. “ERISA itself does not require a participant or beneficiary to exhaust administrative remedies in order to bring an action under § 502 of ERISA 29 U.S.C. § 1132.” Bilyeu v. Morgan Stanley Long Term Disability Plan, 683 F.3d at 1083, 108 (9th Cir. 2012) (internal citations omitted). The Court found that the district court erred in excusing unnamed class members if any absent members’ plans required exhaustion because it abridged Defendant’s affirmative defense of failure to exhaust and expanded many absent class members’ right to seek judicial remedies. Affirmed in part; Reversed in part.