Warrantless Arrest: When Can It Be Lawful?
An individual who committed an offense was chased by a police officer. The individual attempted to go inside a house to hide from the police authorities. The officer followed and discovered drugs lying around. Can the drugs be confiscated and used as evidence? According to the plain view doctrice, the evidence can be used as the intrusion was valid. If the police officer peeks through the window of the house and sees the drugs, he can also confiscate the evidence without prejudice. However, the plain view doctrine cannot be used because there was no previous valid intrusion.
(c) When the person to be arrested is a prisoner who has escaped from a penal establishment or place where he is serving final judgment or is temporarily confined while his case is pending, or has escaped while being transferred from one confinement to another.
7. Exigent and emergency circumstances.
What constitutes a reasonable or unreasonable warrantless search or seizure is purely a judicial question, determinable from the uniqueness of the circumstances involved, including the purpose of the search or seizure, the presence or absence of probable cause, the manner in which the search and seizure was made, the place or thing searched, and the character of the articles procured.
In searches incident to a lawful arrest, the arrest must precede the search; generally, the process cannot be reversed. Nevertheless, a search substantially contemporaneous with an arrest can precede the arrest if the police have probable cause to make the arrest at the outset of the search. Although probable cause eludes exact and concrete definition, it ordinarily signifies a reasonable ground of suspicion supported by circumstances sufficiently strong in themselves to warrant a cautious man to believe that the person accused is guilty of the offense with which he is charged.
Hospitals provide medical care and attention to patients who are sick. Whenever an individual fails to nurse himself/herself back to health, confinement is required for further treatment. Ensuring that you are in good shape is essential because as they say, getting sick is a luxury nowadays considering the vast amount of money you have to pay for your hospital bills. There are many cases where patients are not allowed to be discharged unless bills are settled. Now the question is: Does the hospital have the right to detain patients due to unpaid hospital bills? What are the conditions that determine hospital detention?
The Republic Act No. 9439 otherwise known as "An Act Prohibiting the Detention of Patients in Hospitals and Medical Clinics on Grounds of Nonpayment of Hospital Bills or Medical Expenses" provides policies and guidelines to hospital and patients.
1. Patients, except those who stay in private rooms, who are partially or fully recovered and who wish to leave the hospital or medical clinic but are incapable to pay, in part or in full, their hospital bills or medical expenses/ hospitalization expenses shall be allowed to leave the hospital or medical clinic and shall be issued the corresponding medical certificate and other pertinent documents for their release from the hospital or medical clinic upon execution of a promissory note covering the unpaid obligations. The promissory note shall be secured by either a mortgage, or a guarantee of a co-maker who shall be jointly and severally liable for the unpaid obligations.
2. In the case of a deceased patient, any of his/ her surviving relatives shall be issued the corresponding death certificate and other pertinent documents for interment purpose only. For other purposes, such documents shall be issued only upon execution of a promissory note covering the unpaid obligations by any of the surviving relatives. The promissory note shall be secured by either a mortgage, or a guarantee of a co-maker who shall be jointly and severally liable for the unpaid obligations. In the event the documents will be needed for purposes of getting the benefits from the Social Security System. Government Service Insurance System, Philippine Health Insurance Corporation, insurance policies or pre-need plans, the hospital may require the execution of an assignment of proceeds up to the extent of the hospital bills or medical expenses/ hospitalization expenses.
3. In the case of a deceased patient, any of his/ her surviving relatives who refuse to execute a promissory note shall be allowed to claim the cadaver and can demand the issuance of death certificate and other pertinent documents for interment purposes. Documents for other purposes shall be released only after execution of a promissory note.
d) The officer or employee of the hospital or medical clinic responsible for releasing the patient has restrained him from leaving the hospital premises.
d) The officer or employee of the hospital or medical clinic responsible for releasing the deceased patient has refused to release the cadaver and/ or relevant documents.
a) Government hospitals or medical clinics shall classify patients in terms of their capacity to pay according to the guidelines set by the DOH in Administrative Order No. 51-A s. 2000: Implementing Guidelines on Classification of Patients and on Availment of Medical Social Services in Government Hospitals, dated October 12, 2001.
b) Private hospitals or medical clinics shall have written policies and procedures to classify patients in terms of their capacity to pay. For this purpose, private hospitals or medical clinics may refer to AO No. 51-A s. 2000.
c) The DOH, government and private hospitals or medical clinics shall, as far as practicable, assist patients in looking for financial assistance from government and non-government sources to settle the unpaid hospital bills or medical expenses/ hospitalization expenses. Toward this end, the DOH shall work closely with financial institutions like, but not limited to, Philippine Health Insurance Corporation, Philippine Charity Sweepstakes Office, Philippine Amusement and Gaming Corporation, Local Government Units, as well as ,Congress, to provide funds for this purpose.
d) All hospitals or medical clinics shall establish billing and collection procedures subject to current accounting and auditing rules and regulations.
e) All hospitals or medical clinics shall have written policies and procedures for admitting and releasing patients, including identifying the officer/s or employee/s responsible for releasing patients.
a) Except those who stay in private rooms, patients who are partially or fully recovered and who wish to leave the hospital or medical clinic but are incapable to pay, in part or in full, their hospital bills or medical expenses/ hospitalization expenses are obliged to execute a promissory note secured by either a mortgage, or a guarantee of a co-maker.
b) In the case of a deceased patient, any of his surviving relatives is obliged to execute a promissory note secured by either a mortgage, or a guarantee of a co-maker.
c) Hospitals or medical clinics shall have written policies and procedures for execution of promissory notes secured by either a mortgage, or a guarantee of a co-maker.
Any officer or employee of a hospital or medical clinic responsible for releasing patients who has been found to commit any violation of R.A. No. 9439 and its implementing rules and regulations shall be punished by either a fine of not less than Twenty Thousand Pesos (P20,000) but not more than Fifty Thousand Pesos (P50,000), or imprisonment of not less than One (1) Month but not more than Six (6) months, or both such fine and imprisonment, at the discretion of the proper court.
What is the appropriate charge for someone who has held another person hostage? Hostage-taking is a crime against liberty. Can a hostage taker be charged with serious illegal detention or kidnapping? Here is what the Revised Penal Code of the Philippines has to say about serious illegal detention, kidnapping and slight illegal detention.
1. If the kidnapping or detention shall have lasted more than five days.
2. If it shall have been committed simulating public authority.
3. If any serious physical injuries shall have been inflicted upon the person kidnapped or detained; or if threats to kill him shall have been made.
4. If the person kidnapped or detained shall be a minor, female or a public officer.
The penalty shall be death where the kidnapping or detention was committed for the purpose of extorting ransom from the victim or any other person, even if none of the circumstances above-mentioned were present in the commission of the offense.
Art. 268. Slight illegal detention. — The penalty of reclusion temporal shall be imposed upon any private individual who shall commit the crimes described in the next preceding article without the attendance of any of circumstances enumerated therein.
The same penalty shall be incurred by anyone who shall furnish the place for the perpetration of the crime.
If the offender shall voluntarily release the person so kidnapped or detained within three days from the commencement of the detention, without having attained the purpose intended, and before the institution of criminal proceedings against him, the penalty shall be prision mayor in its minimum and medium periods and a fine not exceeding seven hundred pesos.
Art. 269. Unlawful arrest. — The penalty of arresto mayor and a fine not exceeding 500 pesos shall be imposed upon any person who, in any case other than those authorized by law, or without reasonable ground therefor, shall arrest or detain another for the purpose of delivering him to the proper authorities.
Art. 270. Kidnapping and failure to return a minor. — The penalty of reclusion perpetua shall be imposed upon any person who, being entrusted with the custody of a minor person, shall deliberately fail to restore the latter to his parents or guardians.
Art. 271. Inducing a minor to abandon his home. — The penalty of prision correccional and a fine not exceeding seven hundred pesos shall be imposed upon anyone who shall induce a minor to abandon the home of his parent or guardians or the persons entrusted with his custody.
If the person committing any of the crimes covered by the two preceding articles shall be the father or the mother of the minor, the penalty shall be arresto mayor or a fine not exceeding three hundred pesos, or both.
Art. 272. Slavery. — The penalty of prision mayor and a fine of not exceeding 10,000 pesos shall be imposed upon anyone who shall purchase, sell, kidnap or detain a human being for the purpose of enslaving him.
If the crime be committed for the purpose of assigning the offended party to some immoral traffic, the penalty shall be imposed in its maximum period.
Art. 273. Exploitation of child labor. — The penalty of prision correccional in its minimum and medium periods and a fine not exceeding 500 pesos shall be imposed upon anyone who, under the pretext of reimbursing himself of a debt incurred by an ascendant, guardian or person entrusted with the custody of a minor, shall, against the latter's will, retain him in his service.
Art. 274. Services rendered under compulsion in payment of debt. — The penalty of arresto mayor in its maximum period to prision correccional in its minimum period shall be imposed upon any person who, in order to require or enforce the payment of a debt, shall compel the debtor to work for him, against his will, as household servant or farm laborer.
Art. 280. Qualified trespass to dwelling. — Any private person who shall enter the dwelling of another against the latter's will shall be punished by arresto mayor and a fine not exceeding 1,000 pesos.
If the offense be committed by means of violence or intimidation, the penalty shall be prision correccional in its medium and maximum periods and a fine not exceeding 1,000 pesos.
The provisions of this article shall not be applicable to any person who shall enter another's dwelling for the purpose of preventing some serious harm to himself, the occupants of the dwelling or a third person, nor shall it be applicable to any person who shall enter a dwelling for the purpose of rendering some service to humanity or justice, nor to anyone who shall enter cafes, taverns, inn and other public houses, while the same are open.
Art. 281. Other forms of trespass. — The penalty of arresto menor or a fine not exceeding 200 pesos, or both, shall be imposed upon any person who shall enter the closed premises or the fenced estate of another, while either or them are uninhabited, if the prohibition to enter be manifest and the trespasser has not secured the permission of the owner or the caretaker thereof.


There were several notable decisions that were published this past week, our favorite being Wilson v. Pharmerica Corp. Long Term Disability Plan, No. CIV.A. 14-12345-LTS, __F.Supp.3d___, 2015 WL 1962812 (D. Mass. May 1, 2015), where the court ordered Aetna to respond to discovery requests relevant to its conflict of interest in administering the plaintiff’s long-term disability claim. These discovery requests sought information about the medical experts who conducted the allegedly “independent” medical reviews of plaintiff, including how often a particular expert determined that an insured was disabled and not disabled. The court also ordered Aetna to produce information about how much it paid to a third-party vendor through which it obtained medical expert reports. Our guess is probably somewhere between a lot and a lot. Enjoy this week’s case summaries!
Aetna must respond to discovery requests relevant to its conflict of interest in administering long-term disability claim. In Wilson v. Pharmerica Corp. Long Term Disability Plan, No. CIV.A. 14-12345-LTS, __F.Supp.3d___, 2015 WL 1962812 (D. Mass. May 1, 2015), a dispute involving a denial of long-term disability benefits, Plaintiff filed a discovery motion which included requests for documents and responses to interrogatories. Plaintiff sought: (1) documents which relate to Aetna’s adjudication of her claim; and (2) documents and responses to interrogatories which relate to Aetna’s conflict of interest, as Aetna both insures and administers claims for LTD benefits. The court ordered Aetna to produce the portion of the instruction manual, policy manual, and internal interpretations or guidance pertaining to the Plan’s twenty-four month limitation exception. The court also ordered Aetna to respond to certain interrogatories, and for experts it identifies in one interrogatory, to report the total number of evaluations each expert performed for Aetna in 2011 and 2012 and, for each year, a breakout of the number of times in which the expert concluded the insured was disabled and not disabled. The court further ordered Aetna to: (1) report the total compensation it paid to MES (a third-party medical review vendor) in 2011; (2) explain Aetna’s basis for determining how much to compensate MES in 2011; (3) explain the basis or method for compensating the experts it identifies; and (4) produce documents showing its procedures, if any, to prevent or to mitigate the effect of structural conflicts.
Governmental plan exemption does not apply to University Medical Center since it is not a political subdivision, agency, or instrumentality of Kentucky. In Milby v. Liberty Life Assur. Co. of Boston, No. 3:13-CV-00487-CRS, __F.Supp.3d___, 2015 WL 1968840 (W.D. Ky. Apr. 30, 2015), the court denied Plaintiff’s motion to remand her state law claims related to the denial of her employer-provided long-term disability benefits, finding that University Medical Center (“UMC”) is not a political subdivision, agency, or instrumentality of Kentucky under ERISA’s governmental plan exemption. UMC is not a political subdivision under the Hawkins County test because neither Kentucky nor its arm, University of Louisville (“U of L” -a state institution), directly created UMC. Further, no special act of the legislature or a public official brought UMC into existence and UMC does not bear sufficient indicia of sovereignty to be deemed a political subdivision. The court also found that UMC is not an agency or instrumentality of Kentucky according to the multi-factor test created by the IRS for the following reasons: (1) U of L does not control the everyday operations of UMC; (2) no specific legislation created UMC; (3) UMC maintains a financial separation from U of L; (4) U of L lacks the removal power to control and discipline Board members once they are appointed or elected; and (5) UMC’s employees are not considered employees of U of L, and UMC’s employees are not entitled to public employee benefits. Finally, UMC is not an agency or instrumentality of Kentucky under the employment-relationship test since UMC clearly functions as a private enterprise in relating to its employees. Because UMC does not meet the “governmental plan” exception, the court found that all of Plaintiff’s claims are preempted by ERISA.
District court award of monthly defined benefit payment based on unexplained calculation in benefit statement is reversed and remanded. In Reilly v. Cont’l Cas. Co., No. 14-2888, __F.3d___, 2015 WL 2081418 (7th Cir. May 6, 2015), the court reversed and remanded the district court’s decision ordering Continental to pay Plaintiff a $5,400 monthly defined pension benefit based on a 1999 benefit statement. In 2012, Continental sent Plaintiff a different calculation, showing lower compensation and entitlement to roughly $4,200 a month. The district court concluded that Continental’s decision was arbitrary and capricious and ordered it to pay monthly benefits at the $5,400 level. Continental appealed, contending that its calculation should have been sustained, and if not that the district court should have remanded for a new calculation rather than ordering payment at the rate projected in 1999. The district court found Continental’s 2012 decision to be arbitrary and capricious because it was not based demonstrably on the Plan’s definition of “compensation.” Continental asserted that the 1999 statement reflected Plaintiff’s qualifying compensation plus a “benefit salary,” but “benefit salary” is not a term used or defined in the Plan. Continental did not explain why $164,747.16 is the right number for 1994 and did not show how it had ascertained Plaintiff’s top 60-months’ compensation. However, the court determined that to show that $164,747.16 is an unexplained number does not justify a judicial award of a $5,400 monthly pension. The district court needed to determine, or allow the administrator to determine, the right number, and not just to assume that whatever had been estimated in 1999 is Plaintiff’s entitlement. Plaintiff also did not offer a calculation in support of the pension to which he claims entitlement and the only way to reach a reliable decision is to apply the Plan’s terms to Plaintiff’s qualifying compensation, one month at a time, to find the top-60-month average. If the parties cannot agree, then the district court must remand this matter to Continental so that the administrator can make a fresh calculation, which then could be subjected to another round of judicial review.
A Plan is not “established” or “maintained” by a government entity based on school districts’ participation in the Plan that was established by a union. In Wilson v. Provident Life & Acc. Ins. Co., No. C14-1479RSL, __F.Supp.3d___, 2015 WL 1941334 (W.D. Wash. Apr. 29, 2015), the court found that the “Washington Education Association Group Plan W-138 Plan 11,” a group insurance plan underwritten by Provident and “established and maintained” by the Washington Education Association (“WEA”) is not a governmental plan exempt from ERISA. Provident issued the Plan to the WEA, and the Plan covers (a) employees of the WEA and its affiliates and (b) employees of Washington public school districts that elect to participate in the Plan. The Plan was not the product of collective bargaining, but the result of a separate negotiation between the WEA and Provident; the District merely “elected” to participate in the Plan. The court found that the Plan was independently created by the WEA for the benefit of its employees along with government employees, and the evidence does not suggest that school districts played any direct role in the Plan’s creation. Private plans do not become public plains merely through the participation of public employers. Because the Plan is not a governmental plan, the court denied Plaintiff’s Motion to Remand.
ERISA fiduciary exception to employee liability insurance applies to fiduciary duty to inform a participant about life insurance conversion rights. In Fed. Ins. Co. v. Am. Home Assur. Co., No. 1:14-CV-929-SCJ, 2015 WL 1964303 (N.D. Ga. Apr. 30, 2015), Plaintiff, Federal Insurance Company, filed suit against Defendant, American Home Assurance Company, for contribution, indemnity, and declaratory relief to recover a payment it made to settle a claim made against Career Systems Development Corporation, a subsidiary of Owl Companies, an insured of both Federal and American Home. The settled claim involved an ERISA breach of fiduciary duty claim against Career Systems for failing to inform a former employee of his right to convert group life insurance although it was aware that the employee had terminal cancer. The American Home Employee Benefits Liability Endorsement contained an ERISA exclusion which provides that the Endorsement does not apply to damages for which any insured is liable because of liability imposed on a fiduciary by ERISA. Although ERISA does not require notice of conversion rights for life insurance, the court found that the duties of an ERISA fiduciary are not limited to those requirements expressly set forth in the statute. An ERISA fiduciary has a duty to disclose material information and to inform a beneficiary of material facts when it knows the beneficiary is not aware of them. The court found that Career Systems was acting in a fiduciary capacity when it failed to provide its employee with notice of his conversion rights as to his life insurance policy. As such, the ERISA exclusion in the American Home policy applies. The court denied Plaintiff’s motion for summary judgment and granted Defendant’s motion for summary judgment.
Court approves class action settlement for interest on delayed lump-sum retirement payments. In Stephens v. US Airways Grp., Inc., No. 07-1264 (RMC), __F.Supp.3d___, 2015 WL 1949749 (D.D.C. Apr. 30, 2015), the court wrote an Opinion to further explain its grant of the parties’ Joint Motion for Final Approval of Class Action Settlement and Class Counsel’s Motion for Approval of Attorneys’ Fees and Expenses. The court approved of a $5.25 million class action settlement to remedy claims of certain retired U.S. Airways pilots. The Class consists of pilots who chose to receive a lump sum payment as a full or partial distribution of their retirement benefits, but who did not receive their lump sum payment on the first day of the month after the pilot retired and did not receive interest on the delayed payment. The court granted Class Counsel’s motion for an award of $2 million in attorneys’ fees, $75,000 in litigation expenses, and a maximum of $75,000 for settlement administrative expenses. After accounting for attorneys’ fees and costs, the settlement amount represents a recovery of over 70% of the damages for the Class based on an administrative delay of 45 days at 6% interest, without prejudgment interest.
In Taveras v. UBS AG, No. 14-4009, __Fed.Appx.___, 2015 WL 1934576 (2d Cir. Apr. 30, 2015), the court determined that the district court did not err in denying the Plus Plan Plaintiffs’ motion to revive their duty-of-prudence claims in light of the Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer, 134 S.Ct. 2459 (2014). In March 2011, the district court granted Defendants’ motion to dismiss the entire consolidated Amended Complaint, including the Plus Plan Plaintiffs’ duty-of-prudence claims, holding that the fiduciaries of both plans were entitled to the then-established “presumption of prudence” under Moench. On appeal from the final judgment, the Second Circuit affirmed the dismissal of all of the Plus Plan Plaintiffs’ claims and denied their motion for panel rehearing or rehearing en banc on their duty-of-prudence claims. The time to petition for a writ of certiorari expired on August 5, 2013, rendering the judgment dismissing those claims final.
In Int’l Union, United Auto., Aerospace, & Agr. Implement Workers of Am. v. Kelsey-Hayes Co., No. 2:11-CV-14434, 2015 WL 1906133 (E.D. Mich. Apr. 28, 2015), Plaintiffs challenge Defendants replacement of health insurance for retirees over age 65 with health reimbursement arrangements. Defendants also assert the right to further alter or terminate retiree healthcare in the future. In an order on an unopposed motion for class certification, the court certified the following class: Employees who retired under the 1998 collective bargaining agreement from the UAW-represented unit at the now-closed Kelsey-Hayes/TRW Detroit, Michigan plant and the retirees’ surviving spouses and other dependents eligible for company-paid retiree health insurance.
In Daus v. Gardiner, No. CV 11-67, 2015 WL 1969140 (D.V.I. May 1, 2015), Plaintiff alleged that she never received a “COBRA letter” after she was fired, and claims that by failing to provide her with such, “Defendants have violated the COBRA law.” Plaintiff did not allege that Defendants’ Group Health Plan was covered by ERISA, that Defendants either were the administrator of the Group Health Plan or that they did not notify the administrator of the Group Health Plan of Plaintiff’s termination, or that Defendants had more than 20 employees. With respect to this last requirement the court disagreed that it is an affirmative defense that Plaintiff is not required to anticipate in its pleadings. Accordingly, the court dismissed Plaintiff’s COBRA claim without prejudice and granted Plaintiff leave to file an amended complaint on this claim.
In De Leon-Serrano v. Nw. Selecta, Inc., No. CIV. 13-1474 DRD, 2015 WL 1968598 (D.P.R. May 1, 2015), the court rejected the employer’s argument that the notice requirements in 29 U.S.C. § 1166, which use the term “shall,” are permissive rather than mandatory. To adopt employer’s argument would allow an employer or a plan administrator to properly decide not to inform its employees or qualified beneficiaries of their rights to continuing coverage, which does not comport with the purposes of ERISA. The court determined that Defendant failed to adequately notify Plaintiffs of their right to continuing health coverage, which is subject to penalties of 29 U.S.C. §§ 1132(a)(1)(A) and 1132(c)(1). Under these provisions, the Court has the discretion to award Plaintiff any amount from $0 to $110 per violation. The court ordered a status conference to discuss (a) whether a jury is required to determine any factual aspect of this case3, (b) whether Plaintiffs’ claim for reimbursement of medical expenses is preempted by the statutory penalties of ERISA, and (c) whether there is any need to continue discovery in the instant case.
In Brown v. Fed. Exp. Corp., No. 14-5777, __Fed.Appx.___, 2015 WL 2056463 (6th Cir. May 5, 2015), the court affirmed the district court’s decision that FedEx’s denial of short-term disability benefits was not arbitrary and capricious. Plaintiff alleged that several doctors had diagnosed her with Lyme disease and thyroiditis, but Aetna Life Insurance Company, the claims administrator, denied her request for benefits due to the contradiction between negative lab results and her doctors’ diagnoses. The court found that Aetna did not act arbitrarily and capriciously in concluding that the opinions of her doctors did not establish – or were not based on – “significant objective findings” as required by the Plan. Aetna did not need to credit a diagnosis predicated on a “multitude of symptoms” since the STD Plan clearly states that observable symptoms may not be the basis for a finding of disability.
In Nolley v. Bellsouth Long Term Disability Pl an For Non-Salaried Employees, No. 14-13470, __Fed.Appx.___, 2015 WL 1947390 (11th Cir. May 1, 2015), the court affirmed the district court’s decision granting summary judgment in favor of Defendant on the pro se plaintiff’s ERISA claims because Sedgwick’s (the third-party administrator) decision to terminate her LTD benefits was not “de novo wrong.” Although Plaintiff’s psychiatrist concluded that she was incapable of working due to her depression, his progress notes indicate that the majority of her cognitive processes were within normal limits. Multiple independent physician advisors concluded that there were no objective findings substantiating the conclusion that Plaintiff was unable to work. The court found that Sedgwick’s benefits decision was not wrong simply because it denied Plaintiff’s claim based on her failure to furnish objective medical evidence of her disability. The relevant Plan document specifically provided that LTD benefits would terminate if Plaintiff failed to furnish objective medical evidence demonstrating the continuing nature of her disability, and the claims administrator may rely on such a provision in making its determination to terminate benefits.
In Duda v. Standard Ins. Co., No. CIV.A. 12-1082, 2015 WL 1961170 (E.D. Pa. Apr. 30, 2015), Plaintiff, an orthopedic surgeon and co-owner of Northwest Orthopaedic Specialists, LLC (“Northwest”), applied for total and partial disability benefits under a policy issued by Standard Insurance Company. Plaintiff alleged that an accident in 2000 and 2007 triggered his entitlement to benefits under the policy. Northwest (as the Group Policy Sponsor) and Plaintiff’s business partner and co-owner of Northwest also sued Standard (“Northwest Plaintiffs”). With respect to the ERISA claim against Standard, the court found that Standard did not abuse its discretion by defining Plaintiff’s Own Occupation without reference to pre-2006 data regarding his practice, despite his claim that his wrist injury began to manifest in 2002-2003. Because Plaintiff successfully returned to practice before the degenerative condition manifested itself, the court found that there is no reason to treat his situation differently than any ordinary claim for total disability. The court also concluded that the Northwest Plaintiffs had Article III standing to sue Standard but lacked statutory standing under Section 502(a)(3). Northwest is not a fiduciary under ERISA, but in any event, ERISA does not afford fiduciaries a cause of action for benefits. Further, all of the relief sought by the Northwest Plaintiffs are or would have been achievable by Plaintiff himself under Section 502(a)(1)(B).
In Hershberger v. Liberty Life Assur. of Boston, No. 1:CV-13-2795, 2015 WL 1945022 (M.D. Pa. Apr. 29, 2015), Plaintiff challenged Liberty Life’s denial of “any occupation” disability benefits, where Plaintiff alleged work impairment due to coronary disease, hypertension, diabetes, sleep apnea, and diabetic peripheral neuropathy. In determining whether Liberty Life’s determination was arbitrary and capricious, the court gave the conflict-of-interest factor some weight as Liberty Life is responsible for both benefit determinations and payment of benefits, and as its disability determination under the Policy was inconsistent with the Social Security Administration’s determination that Plaintiff was disabled under the Social Security Act. However, the court determined that Liberty’s treatment of medical opinion evidence was reasonable, where it rejected earlier opinions of treating physicians and credited other opinions advanced by other treating and consulting physicians. Liberty Life had Plaintiff’s claim reviewed by Dr. Albert C. Fuchs (consulting internist), Dr. Raye L. Bellinger (consulting cardiologist), Dr. Mark Nathan (consulting cardiologist), Dr. Lucien Parrillo (consulting internist), Dr. Ira M. Fox (consulting podiatrist).
In Thomason v. Metro. Life Ins. Co., No. 3:14-CV-00086-P-BF, 2015 WL 1914557 (N.D. Tex. Apr. 27, 2015), Plaintiff challenges Defendants’ decision to offset his long-term disability benefits by $1,250/month as a result of his direct rollover of his pension benefits into an IRA. Plaintiff moved to compel MetLife to respond to certain discovery requests. The court determined that MetLife’s responses to request for admissions seeking information regarding the rollover of Plaintiff’s pension benefits to an IRA and whether the rollover was accomplished by a “direct trustee-to-trustee transfer” were not evasive. The RFA concerning whether Plaintiff’s rollover was a direct trustee-to-trustee transfer improperly asks MetLife for a legal conclusion. The court denied Plaintiff’s motion to compel MetLife to fully answer RFPs seeking “[a]ll correspondence, guidelines, policies, procedures, forms, manuals and other written instructions” that governed the denial letter authors’ “role as a fiduciary” with respect to their handling of Plaintiff’s claim and “[a]ll correspondence, guidelines, policies, procedures, forms, manuals and other written instructions” that govern a claims administrator’s “role as a fiduciary.” The court also denied Plaintiff’s challenges to MetLife’s responses to discovery requests seeking information about the application of pension offsets on other occasions. However, the court did grant Plaintiff’s motion with respect to interrogatories which seek information regarding other claims under the same LTD plan that governs Plaintiff’s claim or other plans with the same language, determining that evidence of how MetLife has interpreted the governing LTD plan and/or identical offset provisions in other plans is relevant, or reasonably likely to lead to other relevant information, and therefore discoverable.
In Thomason v. Metro. Life Ins. Co., No. 3:14-00086-P-BF, 2015 WL 1914527 (N.D. Tex. Apr. 27, 2015), the court denied Plaintiff’s motion to compel against Defendant Verizon Employee Benefits Committee (“VEBC”) to produce discovery in this matter. Here, it is undisputed that Plaintiff’s claims are governed by the 2008 summary plan description for the LTD plan for Verizon’s management employees so Plaintiff’s requests concerning the 2005 summary plan description for the LTD plan governing non-management employees is not applicable to Plaintiff’s claims, and discovery regarding the development of language used in the 2005 summary plan description is not relevant.
In Saunders v. Ford Motor Co., No. 3:14-CV-00594-JHM, 2015 WL 1980215 (W.D. Ky. May 1, 2015), Plaintiff asserted a state law insurance bad faith claim, under KRS 304.12-230, arising from alleged improper processing of benefits under Ford’s self-funded ERISA employee benefit plan. The court found that this clearly “relates to” an employee benefit plan and therefore falls under ERISA’s express preemption clause, § 514(a), 29 U.S.C. § 1144(a). The court also concluded that because the proposed bad faith claim could not withstand a Rule 12(b)(6) motion to dismiss, Plaintiff’s proposed amendment is futile and his bad faith claim is dismissed.
In Trigg v. Merck Sharp & Dohme Corp., No. CIV.A. 14-6063, 2015 WL 1954212 (E.D. Pa. May 1, 2015), Plaintiff brought claims under the ADEA and Pennsylvania Human Relations Act, alleging that the reason for his termination is a pretext for age-based discrimination. The court found that the amended complaint should not be dismissed for failure to exhaust administrative remedies under ERISA or due to ERISA preemption or that Plaintiff was not entitled to severance under the terms of the Separation Benefits Plan. The court did not read the amended complaint to include a claim for severance benefits under ERISA, but rather that the allegations relating to denial of severance supported his claim that younger team members were offered severance packages when terminated. It may well be that Plaintiff was not eligible for Merck’s severance plan, but that fact goes to the employer’s burden of production, under McDonnell Douglas, to articulate a legitimate non-discriminatory reason for its adverse employment action. However, should Plaintiff assert a claim for severance benefits under an ERISA plan, Defendant may raise any and all affirmative defenses to such a claim, including failure to exhaust.
In Lewis-Burroughs v. Prudential Ins. Co. of Am., No. 14-CV-1632 KM, 2015 WL 1969299 (D.N.J. Apr. 30, 2015), Plaintiff submitted an administrative appeal to Prudential and then supplemented her appeal with the results of a functional capacity evaluation that Prudential had not specifically requested. When Prudential did not render a decision within 90 days of the date Plaintiff submitted her appeal, Plaintiff filed suit and Prudential filed a motion to dismiss based on a failure to exhaust, arguing that it had 90 days after Plaintiff supplemented her appeal to make a decision. The court determined that the parties are bound by the appeal process set forth in the Plan, which states that Prudential “shall” decide an appeal no later than 90 days after “the receipt of [the plan holder’s] appeal request.” The court explained that this literal reading of the Plan is strongly supported by 29 C.F.R. § 2560.503-1(i), which expressly states that the deadline for deciding an appeal begins when the “appeal is filed”…”without regard to whether all the information necessary to make a benefit determination on review accompanies the filing.” The court rejected Prudential’s argument that the Plan and the ERISA regulations allow for tolling of the 90-day deadline in this circumstance. Both the Plan and the Regulations require that: (1) the plan holder must have failed to provide information “necessary” to the resolution of the appeal; (2) before the initial 45-day period expires, Prudential must send the participant written notice that it is claiming the extension; and (3) that notice must list the “necessary” information that Prudential requires from the participant. Also, even if these conditions were met, the 90-day clock does not restart from zero, rather the clock is suspended from the date that Prudential sends the notification of extension until the date the participant furnishes the “necessary” information. The court also found that the substantial compliance doctrine does not affect Plaintiff’s right to commence this action. Accordingly, the court denied Prudential’s motion to dismiss.
In Locklear v. Sun Life Assur. of Canada, No. 4:14-CV-00401, 2015 WL 1964675 (M.D. Pa. May 1, 2015), Sun Life denied Plaintiff AD&D benefits for her deceased husband, taking the position that his death occurred during the commission of a crime. The decedent died from injuries sustained in a collision after he attempted to pass a construction vehicle in a no-passing zone. Sun Life believed that violations of Pennsylvania Vehicle Code, 75 Pa.C.S. §§ 3301, 3714, and 3736 were properly classified as crimes. The court noted that in Pennsylvania, an offense must carry the possibility of imprisonment or death in order to constitute a crime. Offenses for motor vehicle violations are not contained in the Pennsylvania Crimes Code, but in the Vehicle Code. Under this straight-forward definition of a crime under Title 18, the court found that none of the decedent’s Vehicle Code violations constitute a crime. With respect to Sun Life’s argument that the decedent’s actions constitute reckless endangerment, the court found that Sun Life failed to raise this issue at the administrative level and cannot provide post hoc rationales for its denial of benefits, especially where it had possessed adequate facts to deny benefits on the ground of reckless endangerment. Regardless, the court found that a denial of benefits on this basis would not be appropriate. Sun Life failed to carry its burden that the decedent possessed the mens rea necessary to commit reckless endangerment of another person and therefore be excluded from coverage. As such, the court denied Sun Life’s motion for summary judgment and granted Plaintiff’s motion for summary judgment.
In Burnick v. Office & Prof’l Employees Int’l Union, No. 14-C-1173, 2015 WL 1898310 (E.D. Wis. Apr. 27, 2015), Plaintiff brought suit against both Local 35 and the Office and Professional Employees Union (“OPEIU”) to enforce her right to life, dental, vision, and health insurance coverage. OPEIU filed a motion to dismiss, which the court granted. The court determined that the Plan was created by the collective bargaining agreement between Local 35 and the Employees Union, and possibly also a 2008 letter agreement. OPEIU was not a party to any of these agreements and OPEIU never assumed any obligations created by those agreements. Thus, OPEIU’s payment of some of Plaintiff’s insurance premiums without assuming any continuing obligation to do so did not transform it into a plan sponsor that is liable for continuing to provide vested benefits.
In Hogan v. Jacobson, No. 3:12-CV-820-DJH, 2015 WL 1931845 (W.D. Ky. Apr. 28, 2015), the court dismissed Plaintiff’s interference claim against two LINA employees who reviewed her medical records in connection with her long-term disability claim. The court found that aside from the fact that Hogan was not employed by Defendants, she does not allege any action by either of them that is prohibited under ERISA section 1140. Plaintiff alleged that Defendants provided opinions concerning her diagnosis and treatment, including her physical and mental restrictions and limitations. One defendant concluded that there was a lack of clinical evidence to support Plaintiff’s reported symptoms. Plaintiff alleged that Defendants sought to render a diagnosis and treatment conclusion that would prevent her from becoming eligible to receive her long-term disability benefits for their own financial gain, both in terms of favorable performance reviews and in compensation. Nothing in Plaintiff’s amended complaint could be read to suggest that she was discharged, fined, suspended, expelled, disciplined, or discriminated against.
In Bilheimer v. Fed. Exp. Corp. Long Term Disability Plan, No. 13-1859, __Fed.Appx.___, 2015 WL 2058811 (4th Cir. May 5, 2015), the court affirmed the district court’s application of de novo review to the Plan’s decision on Plaintiff’s long-term disability claim because Aetna, who made the decision on appeal, did not have discretionary authority to do so. Appeals of benefits denials are handled by an appeal committee, and FedEx, the administrator of the Plan, is charged with appointing this appeal committee. Originally, FedEx appointed its internal Benefit Review Committee to serve as the appeal committee, but in 2008, the director of FedEx’s Employee Benefits Department recommended that the Board outsource all long-term disability appeals to Aetna. The Board approved this recommendation, but did not expressly state that the Board was appointing Aetna as the appeal committee contemplated under the Plan. FedEx and Aetna amended their service agreement such that Aetna became fully responsible for final appeal benefit determinations for the disability plans. The court construed the term “appoint” to incorporate the notion of a selection and designation process and not to include “outsource.” In order to comply with the Plan the Board needed to actually designate Aetna as the appeal committee, which it did not do.
In Gordon v. Metro. Life Ins. Co., No. 5:10-CV-05399-EJD, 2015 WL 1940209 (N.D. Cal. Apr. 29, 2015) (Not Reported in F.Supp.3d), the court determined that abuse of discretion review would apply to MetLife’s disability claim decision, despite that MetLife failed to render a decision on Plaintiff’s appeal. The court explained that Plaintiff did not suffer any substantive harm from MetLife’s conduct, distinguishing this case from Blau v. Del Monte Corporation, 748 F.2d 1348 (9th Cir.1984), where the evidence showed that the administrator failed to comply with virtually every applicable mandate of ERISA. However, the court did observe that procedural violations of ERISA’s requirements are evidence of arbitrary and capricious decisionmaking. The court will conduct the review with a heightened degree of skepticism and will consider additional evidence submitted with Plaintiff’s notice of appeal.


§ 217-2 Discharge of substances other than sewage prohibited.
§ 217-3 Notice of violation; failure to comply.
§ 217-4 Contract permitting certain other discharges; compliance.
§ 217-5 Violations and penalties.
§ 217-7 Sewer connections required.
§ 217-8 Privy vault, cesspool or septic tank prohibited; notice to discontinue.
§ 217-9 Violations and penalties.
§ 217-11 Designation of BASA as agent.
§ 217-12 Sale, transfer, mortgaging or refinancing without evidence of compliance prohibited.
§ 217-13 Evidence of compliance, document of certification; application.
§ 217-14 Inspection of sanitary sewer status.
§ 217-15 Reports of and repairs of deteriorating laterals and sewer service connections.
§ 217-16 Powers of BASA.
§ 217-17 Powers in addition to other powers and responsibilities of BASA.
§ 217-18 Rules and regulations.
§ 217-19 No conflict with general police powers.
§ 217-20 Violations and penalties; appeal.
Butler Area Sewer Authority — See Ch. 6, Art. III.
Plumbing standards — See Ch. 201.


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In the absence of prospective rules, the courts are slowly accumulating an ad hoc list of examples of what they consider patent-ineligible subject matter. Most of these examples pertain to computer- and software-implemented technologies, and are decided by analogy to cases relating to those technologies. Troublingly, some judicial opinions have seemed to conflate the issue of patentable subject matter with the separate statutory issues of novelty and non-obviousness.
In the absence of a clear, prospective definition from the Supreme Court, the Federal Circuit has returned to an emphasis on physical or tangible results, characterizing data manipulation techniques as unpatentable abstract ideas. Recent Federal Circuit decisions in BuySAFE, Digitech, Planet Bingo, and I/P Engine have given broad software patent claims harsh treatment, and the Patent Trial and Appeal Board (PTAB) has followed suit. The BuySAFE opinion and a concurrence in I/P Engine do the most to try to make sense of this still unsettled area of patent law. We provide a summary of recent cases, as well as key precedents.
Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2014), addressed the patent-eligibility of diagnostic methods and drug therapies for treating gastro-intestinal disorders. Mayo found that these claims were directed primarily toward a law of nature, Id. at 1294-96, and then asked whether other limitations in the claims provided an “‘inventive concept’ sufficient to ensure that the patent in practice amount[ed] to significantly more than a patent upon the natural law itself.” Id. at 1294. The Court asked whether claims were sufficiently limited to avoid preempting further innovation or exploration in the technical field. Id. at 1301. Building upon Flook and Diehr, the Court explained that neither postsolution nor presolution activity (e.g. collecting or reporting data) could save patentability if such activity was unrelated to the core “inventive concept.” Id. at 1303-04.
In May of 2013 the Federal Circuit issued an en banc decision in CLS Bank Int’l v. Alice Corp. 717 F.3d 1269 (Fed. Cir. 2013) (per curiam). Alice concerned several patents with claims directed to business methods, systems, and a “Beauregard” style apparatus for computer-implemented escrow services. In a 7-3 decision with no majority opinion, the Federal Circuit held that Alice’s method and Beauregard apparatus claims were directed towards patent ineligible subject matter. The Circuit was evenly split as to whether Alice’s system claims were patentable.
In June of 2014 the Supreme Court unanimously held that all of Alice’s claims were ineligible for patenting. According to the Court, analysis of patent-eligible subject matter questions involves a two-part test implicit in Mayo, and later elaborated on by the Federal Circuit. The first step in this test is determining “whether the claims at issue are directed to a patent-ineligible concept. If so, the court then asks whether the claims’ elements … transform the nature of the claim into a patent-eligible application.” The Court provided no new guidance as to what constitutes an abstract idea or patent-ineligible concept, however, falling back on analogy to Bilski. Contrary to the analysis of the Federal Circuit, and to its own precedent in Diehr and Flook, the Court appeared to rely on the fact that risk hedging, although not a “preexisting, fundamental truth,” was still a “fundamental economic practice” sufficiently well-known to establish it as a mere abstract idea. Alice at 2357. In Alice, as in Bilski, the Court seems to conflate issues of patent-eligible subject matter with what were previously considered separate questions of novelty and non-obviousness. The Court ignored much of Mayo’s extensive discussion of “preemption,” and (again) sidestepped any sort of categorical holding on when commercial and social relationships in economic “processes” could ever be patent-eligible.
Shortly after Alice the Federal Circuit decided Digitech. The claims in Digitech recited a method and a “device profile” used for image capture, transformation and reproduction, which the Circuit characterized as directed exclusively towards data manipulation and transformation. Citing Mayo and Alice, mere data manipulation was found categorically unpatentable as an “ethereal, non-physical” abstract idea. Id. at 1350. “Without additional limitations, a process that employs mathematical algorithms to manipulate existing information to generate additional information is not patent eligible.” Id. at 1351. The patent owner’s argument that the “device profile” was a tag or other embodiment of hardware or software was rejected as not reflecting the actual claim language. Id. Under the pre-emption analysis of Mayo, Judge Edmond explained that the claims at issue were “so abstract and sweeping as to cover any and all uses of a device profile,” an abstract idea. Id. Following this rule, any algorithmic data manipulation without physical transformations would appear to constitute an unpatentable abstract idea. Mere presolution or postsolution steps such as collecting data and reporting results via a conventional apparatus remain insufficient to satisfy the second prong of the Mayo/Alice test.
“[s]ection 101 mandates not only that claims disclose an advance in science and technology—as opposed to an innovation in a non-technological discipline such as business, law, sports, sociology, or psychology—but also that this advance be both significant and well-defined. *** [I]f claims are drawn to the application of principles outside of the scientific realm—such as principles related to commercial or social interactions—no amount of specificity can save them from patent ineligibility. *** In the more difficult cases—where it is uncertain whether claims are sufficiently ‘technological’ to warrant patent protection—subject matter eligibility will often turn on whether the claims describe a narrow inventive application of a scientific principle, or instead simply recite steps that are necessarily part of the principle itself. *** At its core, section 101 prohibits claims which are ‘overly broad’ . . . in proportion to the technological dividends they yield. Id. at *10.
Mayer sees this as a Constitutional limit of patent eligibility. Id. at *11. While his statements go far beyond the literal language of Alice and Mayo, they nonetheless seem to explain the actual results of those and other recent cases, and pick up the question of the “preemption” raised in Mayo but not analyzed in Alice. Judge Mayer found that the I/P Engine claims represented “merely an Internet iteration of the basic concept of combining content and collaborative data,” as a person might do manually by consulting a guidebook and asking friends for suggestions while planning a visit to London. Id.
Planet Bingo dealt with claims to a computer system for managing bingo games, and in particular storing bingo numbers for multiple game sessions. The Federal Circuit found the claims ineligible for patenting. Returning to a familiar pre-Bilski “machine-or-transformation” analysis, the Federal Circuit asked, hypothetically, whether the method could have been performed solely using “mental steps.” Under this analysis, the mere recitation of a computer added no meaningful limitation to the claims. The patent owner’s argument that humans could not manage the “thousands, if not millions” of numbers involved were rejected as not being commensurate with the explicit language of the claims, which only required “two sets of Bingo numbers”. Id. at *2–3. In an faint echo of a technological arts test (but with little explicit analysis), the Federal Circuit determined that the solution of a “tampering problem” and “other security risks” constituted unpatentable abstract ideas that failed to add “significantly more”, drawing analogies to Bilski and Alice.
The Federal Circuit also recently issued the precedential opinion BuySAFE, Inc. v. Google, Inc. BuySAFE dealt with method and Beauregard claims toward providing a performance guarantee for an “online commercial transaction” via a “computer network”. Id. at 1351-52. In keeping with Digitech, BuySAFE noted that this “inventive concept” must exist “in the physical realm”—data manipulation is not sufficient. Id. at 1353. The claims were held to be “squarely about creating a contractual relationship” that was “beyond question of ancient lineage” and the “invocation of computers add[ed] no inventive concept.” Id. at 1355. The mere fact “that a computer receives and sends the information over a network—with no further specification—is not even arguably inventive.” Id. However, citing Bilski, the opinion adds the caveat that “[i]f enough extra is included in a claim, it passes muster under section 101 even if it amounts to a ‘business method.’” Id. at 1354. An example of a “business method” that recites an “inventive concept” sufficient to establish patent eligibility has yet to pass before the Supreme Court, and none of the post-Alice Federal Circuit (or PTAB) decisions have found one either. Quoting Alice, the BuySAFE opinion further discusses a need to “effect an improvement in any other technology or technical field[.]” Id. (emphasis added). Whether other Federal Circuit judges will join Judge Mayer in establishing an explicit post-Alice “technological arts” test therefore remains to be seen. If any sort of consensus view is emerging on the Federal Circuit, it may be less due to insights provided by Alice and more a result of the changing makeup of the court and the chance makeup of the panels hearing recent cases.
By failing to present the claimed steps as representing new computer programming or hardware rather than known, general purpose computer equipment and techniques, the patent failed to meaningfully limit the abstract idea it invoked, rendering it patent-ineligible. “Neither the claims nor the specification provide[d] complex technological implementations or modifications of” the technologies involved, and the patent “recite[d] no specific technological mechanism for achieving its result.” This analysis suggests that if complex programming is not described somewhere in a patent application for a software-related invention, there is a substantial risk of fatal patent eligibility concerns. The PTAB panel mentioned in passing the question of preemption by “encompass[ing] the full scope of an abstract idea” but did not rule on that question or even assign it to any particular step of the overall eligibility analysis. Id. at 20.
Recent district court decisions have offered new analyses of a wider range of claimed technologies. For instance, a very articulate order in McRO, Inc. v. Activision Publ’n, Inc., CV-14-336 (C.D. Cal. Sept., 22, 2014), struck down claims for lip-synching of animation as patent ineligible because a generic recitation of “rules” at the point of novelty merely required automation of known, manual processes, and was therefore preemptive. Although the claimed point of novelty went beyond the prior art, that “extra” recitation was still found to be an unpatentable abstract idea. Another district court case, Tuxis Techs., LLC v. Amazon.com, Inc., No. 13-1771 (D. Del., Sept. 3, 2014) employed, at least in part, a different analysis than post-Alice Federal Circuit or PTAB decisions. Although the court credits this analysis to Alice (when Mayo seems closer), it directly assessed whether the claims were “preemptive” by looking to a list of hypothetically non-infringing processes enumerated by the patent owner. Cases like these will be worth watching if appealed.
 Alice Corp. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014).
 Id. at 2355, citing Mayo, 132 S.Ct. at 1296–97.
 Bilski v. Kappos, 561 U.S. 593 (2010), determined that claims to a business method for risk hedging were directed to an unpatentable abstract idea, but rejected the Federal Circuit’s exclusive use of the “machine or transformation” test in favor of a vaguer and highly discretionary inquiry based in part based characterizing the underlying principles of the claims as being old and well-known.
 Diamond v. Diehr and Parker v. Flook, for instance, state that the issue of subject matter patent eligibility is distinct from and unrelated to novelty and obviousness inquiries. Diehr, 450 U.S. at 188; Flook, 437 U.S. at 588.
 Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014) (concerning U.S. Pat. No. 6,128,415).
 IP Engine, Inc. v. AOL Inc., 2014 WL 3973501 (Fed. Cir., Aug. 15, 2014) (non-precedential).
 The claimed filtering system used both content based filtering (e.g. extracting features such as text from an information item) and collaborative filtering (e.g. assessing relevance based on feedback from other users).
 But compare MySpace, Inc. v. GraphOn Corp., 672 F.3d 1250 (Fed. Cir. 2012) (Mayer, J., dissenting).
 Planet Bingo, LLC v. VKGS LLC, 2014 WL 4195188 (Fed. Cir., Aug. 26, 2014) (non-precedential).
 BuySAFE, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014).
 U.S. Bancorp v. Retirement Capital Access Mgmt. Co., 2013 WL 8538864, CBM2013-00014 (PTAB, Aug. 22, 2014).
 Id., but contrast Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1342,1353 (Fed. Cir. 2013).

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In Johnson v. Omega Insurance Co., 200 So. 3d 1207 (Fla. 2016), the Florida Supreme Court held that an insured was entitled to an award of attorneys’ fees under section 627.428, Florida Statutes and the confession of judgment doctrine based on an insurer’s post-suit tender of policy benefits for a sinkhole claim after the insurer initially denied the claim. To view the Court’s slip opinion click here; to view the Court’s docket click here.
Omega Insurance Co. issued to Kathy Johnson a homeowner’s policy that included coverage for sinkhole damage. When Johnson noticed structural damage to her home, she filed an insurance claim with Omega, asserting that the damage was caused by sinkhole activity on her property. Omega investigated the claim pursuant to chapter 627 by retaining a professional engineering and geology firm to conduct testing. The firm’s report concluded that, while the property was damaged, there was no sinkhole activity on the property. Based on the report, which is presumed correct by statute, Omega denied Johnson’s claim. In turn, Johnson, at her expense, retained a civil engineering firm to evaluate the cause of the damage to her home. Johnson’s firm found that sinkhole activity did cause the structural damage.
Johnson then filed suit against Omega for failing to pay her sinkhole benefits. Upon motion by Omega, the trial court stayed the litigation to allow a neutral evaluation to take place. The neutral evaluation agreed with the report issued by Johnson’s firm. Upon receipt of the report, Omega paid the policy benefits. Johnson then moved for an award of attorneys’ fees under § 627.428 which provides that “[u]pon the rendition of a judgment or decree . . . against an insurer and in favor of any named . . . insured . . . under a policy or contract executed by the insurer, the trial court . . . shall” award the insured its reasonable attorneys’ fees. Based upon the confession of judgment doctrine, which equates an insurer’s tender of policy benefits or a settlement agreement with a “judgment” under § 627.428, the trial court granted the motion.
Omega appealed to the Fifth District which reversed, finding that Omega’s initial denial was not wrongful or unreasonable. The district court equated “wrongful” with an insurer’s bad faith denial of a claim. The Court’s conclusion was buttressed by several facts: (1) Omega complied with its statutory obligations under chapter 627 by retaining an engineer to identify the cause of loss and issue a report; (2) The report, which is presumed correct by statute, found that sinkhole activity was not the cause of the damage; (3) Before filing suit, Johnson failed to present her countervailing report to Omega, failed to at least notify Omega that she disagreed with its report or failed to further attempt to discuss her claim with Omega.
The Florida Supreme Court quashed the Fifth District’s decision, finding that it misapplied both the statutory presumption of correctness found in the sinkhole statutes and § 627.428. The Court addressed two main issues: (1) whether the statutory presumption of correctness for an insurer’s internal report during the investigation process in the sinkhole statutes extends to later proceedings; and (2) whether an insured’s recovery of attorneys’ fees under § 627.428 requires an insurer’s bad faith in denying a valid claim, or simply an incorrect denial of benefits.
The Court—based on prior precedent—concluded that the statutory presumption of correctness in the sinkhole statutes only applies to the sinkhole “initial claims process” and not to litigation instituted by an insured to recover policy benefits. Johnson therefore did not have the burden of separately rebutting that initial presumption to recover attorneys’ fees under § 627.428.
The Court also concluded that “in the context of section 627.428, a denial of benefits simply means an incorrect denial.” An insured does not need to prove that the insurer engaged in bad faith or malicious conduct in denying a claim. Instead, if there is dispute between the insurer and the insured over policy benefits and there is a judgment in favor of the insured or the insurer pays without a judgment, then the insured is entitled to fees under § 627.428.
The upshot of this decision is that once an insurer denies benefits and the insured files suit to dispute the denial, the insurer cannot then abandon its position “without repercussion.” In other words, an insurer cannot “backtrack after the legal action has been filed” by paying the claim to avoid an insured’s fee entitlement under § 627.428. In short, insurers should be absolutely positive of their denial of benefits before informing the insured. If an insured files suit and the denial is proven “incorrect,” then an insured is entitled to fees. Most importantly, it is irrelevant to the insured’s fee entitlement whether the insured fails to challenge the insurer’s denial before filing suit.
Image Courtesy of Flickr by Seattle Municipal Archives (no changes).


A group of advertisers sued Yelp for allegedly extorting them to buy ads from Yelp with the implied/express threat that Yelp would degrade their ranking in Yelp’s database if they didn’t. In a previous ruling, Judge Patel dismissed the second amended complaint, but her opinion exhibited her characteristic quirkiness.
The case got reassigned to Judge Chen, who was presented with a motion to dismiss a third amended complaint. Deviating in part from Judge Patel’s analysis, he reaches the same conclusionthat the complaint should be dismissed–but this time he does so with prejudice, sending the case to the Ninth Circuit (likely) or its grave.
The plaintiffs asserted that Yelp itself wrote negative reviews about the advertisers. In support of this assertion, the plaintiffs claimed that Yelp employees write some reviews, Yelp pays authors for reviews and some reviews don’t match the advertisers’ customer records. The court says those allegations aren’t enough to survive a 12(b)(6) motion to dismiss because they do “not raise more than a mere possibility that Yelp has authored or manipulated content related to Plaintiffs in furtherance of an attempt to ‘extort’ advertising revenues.” The plaintiffs’ arguments were too inferential, and other stories plausibly fit the alleged facts.
Plaintiffs’ allegations of extortion based on Yelp’s alleged manipulation of their review pages – by removing certain reviews and publishing others or changing their order of appearance – falls within the conduct immunized by § 230(c)(1).
Once again, a defense win cites to Roommates.com.
To get around 230, the plaintiffs argued that Yelp assembled a star rating, and the star rating was its own expression, not its users. The court notes this argument was rejected a decade ago in Gentry v. eBay. To get around Gentry, the plaintiffs argued that Yelp improperly monkeyed with reviews to shape the star rating with bad intent (to “extort”/pull cash out of advertisers’ pockets).
Judge Chen responds that “§ 230(c)(1) contains no explicit exception for impermissible editorial motive.” He contrasts 230(c)(2)’s “good faith” requirement, saying that the absence of a parallel “good faith” requirement in 230(c)(2) means editorial intent is irrelevant to 230(c)(1). [For more on the “good faith” requirement in Section 230(c)(2), see my article on account termination and 230(c)(2).] On this point, he diverged from Judge Patel’s analysis, but unlike her, he actually cites a Ripoff Report victory in support of his conclusion. (Still no cite to the Reit v. Yelp ruling).
traditional editorial functions often include subjective judgments informed by political and financial considerations….Determining what motives are permissible and what are not could prove problematic. Indeed, from a policy perspective, permitting litigation and scrutiny motive could result in the “death by ten thousand duck-bites” against which the Ninth Circuit cautioned in interpreting § 230(c)(1)….As illustrated by the case at bar, finding a bad faith exception to immunity under § 230(c)(1) could force Yelp to defend its editorial decisions in the future on a case by case basis and reveal how it decides what to publish and what not to publish. Such exposure could lead Yelp to resist filtering out false/unreliable reviews (as someone could claim an improper motive for its decision), or to immediately remove all negative reviews about which businesses complained (as failure to do so could expose Yelp to a business’s claim that Yelp was strong-arming the business for advertising money).
The judge adds that a lawsuit based on Yelp’s marketing representations might not be covered by 230(c)(1). I discuss this issue more in my 230(c)(2) paper. I disagree with the judge’s statement. As I explain in my paper, 230(c)(1) can preempt marketing-based claims; plus see cases like Milo v. Martin. Fortunately, it’s inconsequential to this lawsuit as the plaintiffs dropped their false advertising claims. Unfortunately, I expect plaintiffs to seize this language (along with similar statements in other rulings) and do lots of research to find shreds of marketing and support material published by a service provider that could be used to support a false advertising claim that’s fundamentally based on user-generated content. (But cf. the Woods v. Google ruling, where Judge Fogel put his foot down on that nonsense).
This ruling makes clear that Yelp can manage its database of user reviews however it wants. This is as it should be. However, it doesn’t mean that we as consumers will find Yelp trustworthy. Section 230(c)(1) simply means that Yelp has to earn and keep our trust as readers/consumers, which remains an important and ongoing challenge.