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California Health Provider, Others Can’t Sue Under ERISA Claims
San Francisco, CA: Two lawsuits aimed at defeating a request for reimbursement of funds under ERISA were struck down by the Ninth Circuit on grounds that plaintiff actions did not qualify under ERISA. A lower court came to the same conclusion over claims made in the two ERISA lawsuits.
ERISA is the acronym for the Employee Retirement Income Security Act (as amended, 1974). ERISA maintains a broad jurisdiction with guidance over retirement investing, employee rights and fiduciary duty.
The two ERISA lawsuits had little to do with retirement investments, however. Rather the disputes were founded upon various tests a collection of health care providers undertook on behalf of their clients and patients, in two states in 2010 and 2011. The tests involved patients who were plan members with Blue Cross Blue Shield of Arizona Inc. (BCBS) and Anthem Blue Cross Life and Health Insurance Co. (Anthem) of California. Two jurisdictions were involved.
The providers proceeded to submit the bills and receipts for such testing, to the plans.
In California, a women’s health care center was found by Anthem to have used faulty practices and protocols while billing for the tests, and thus was not entitled to payment, in its view. Meanwhile, in Arizona BCBS determined that tests undertaken by health care providers in that state were investigational in nature and therefore not covered by Anthem.
There were twelve health care providers and related nurse practitioners involved with the ERISA lawsuit against BCBS in Arizona, while the California-based women’s health center sued Anthem Blue Cross Life and Health Insurance Co.
The trouble began when BCBS and Anthem, having duly reimbursed the health care providers as requested, conducted post-payment analysis and found the providers were not, in their view, entitled for reimbursement.
BCBS and Anthem sought repayment. However the health care providers pushed back, suggesting that patients had assigned their rights to the health care providers under ERISA. The health care providers asserted further that any collection efforts on the part of Anthem and BCBS were in violation of claims procedures observed by ERISA.
However a lower court hearing the ERISA lawsuits determined the health care providers were not true beneficiaries under the terms of ERISA enforcement provisions, and therefore had no grounds to undertake an ERISA lawsuit.
The Ninth Circuit agreed with that finding: “Here, the employee benefit plans or the plan subscribers, or both, designate providers to receive direct payment from Anthem or Blue Cross,” the panel wrote. “This remuneration for medical services rendered is not a ‘benefit’ under ERISA.”
The value attached to the claims represented a combined total of $533,000.
The case is DB Healthcare LLC et al. v. Blue Cross Blue Shield of Arizona Inc., Case No. 14-16518, in the US Court of Appeals for the Ninth Circuit.
Medical Supplier of Surgical Gowns on Trial for Defective Products, Non-Compliance
Los Angeles, CA: A California OSHA lawsuit that alleges protective surgical gowns were rendered less protective due to cost-cutting on the part of the manufacturer, is meandering its way through US District Court for the Central District of California.
The class action lawsuit heard testimony last week that manufacturer Kimberly-Clark put profits ahead of safety when surgical gowns originally designed and manufactured to be impermeable against the transference of infectious pathogens, turned out to be porous and thus offered less protection than their design and approval would otherwise suggest.
The Division of Occupational Safety and Health is an organization that exists both at the federal and state level. Its mandate is to protect workers from any unnecessary hazard stemming from the workplace. The lawsuit is not brought by California OSHA, but rather by individuals and organizations that purchased, and used the allegedly defective garments.
The spirit of the lawsuit, however, is in line with Cal/OSHA tenets of safety in the workplace. Such efforts do not exclude medical staff, or patients in the surgical arena.
In the surgical and medical sector, various precautions are implemented to ensure surgeons, surgical nurses and other support staff is allowed to work in a relatively safe environment free from grievous harm. Surgical gowns are designed to ward against the transference of pathogens from a patient to the medical staff through an otherwise porous garment.
According to court documents, lead plaintiff in the OSHA lawsuit is Bahamas Surgery Center LLC. The plaintiff is accusing defendants Kimberly-Clark Corp. and Halyard Health Inc. of misleading buyers and the industry as to the safety and efficacy of its line of MicroCool surgical gowns. The allegation is that the gowns do not comply with the AAMI 4 Medical Safety Standard for pathogen barriers.
The gowns in question were sold to both individuals and surgical facilities between February 2012, and January 2015. The gowns were approved by the US Food and Drug Administration (FDA) through an FDA 510(k) Clearance, which fast-tracks medical devices through what is normally a more rigorous testing and clinical trial process. Nonetheless, certain conditions are required to be met. A former director of Kimberly-Clark testified at trial last week that the manufacturer not only misled customers and clients as to the protective capacity of the gowns, but that Kimberly-Clark also provided inaccurate information to the FDA to secure the necessary 510(k) clearances.
Whatever tests and trials carried out to secure approvals, are alleged to have been conducted in “ideal conditions” that may not have adequately represented the real-world aspects of an operating theatre.
The former executive – who left the employ of Kimberly-Cark in 2014 – testified that design changes were made to the gowns after the FDA approved the design in 2010.
“All of those changes were driven by cost reduction, to improve the bottom line; they were not implemented to improve performance,” former Kimberly-Clark executive Keith Edgett testified.
Another former member of senior staff with the manufacturer, also identified as a former commissioned officer with the US Army, testified that a defective product such as a porous surgical gown can result in a surgeon becoming infected, or a patient becoming infected.
The MicroCool surgical gowns were marketed as providing the highest level of liquid barrier protection, “impermeable” and effective against such robust pathogens as Ebola. And yet, the plaintiff asserts Kimberly-Clark knew their gowns were failing compliance tests as early as February, 2012.
One round of tests by an independent lab found that 48 out of 96 gowns tested failed compliance tests. Of those 48 failures, the vast majority – 32 gowns – were found to have failed catastrophically.
Kimberly-Clark is standing behind its product, and its reputation.
The lawsuit is Shahinian v. Kimberly-Clark et al., Case No. 2:14-cv-08390, in the US District Court for the Central District of California.
‘Guerrilla’ Wrongful Termination Lawsuit Heads Back to State Court
Los Angeles, CA: An update now on the California wrongful termination lawsuit filed by a former ESPN tennis commentator allegedly fired from his position with the network over the use of a word plaintiff Doug Adler claims he never used.
Adler – a tennis expert, former All-American player and a commentator on behalf of ESPN for numerous tennis events – was covering the 2017 Australian Open and was describing the aggressive style of play exhibited by competitor Venus Williams. Adler claims he used the word ‘guerrilla,’ a term Adler says has been used previously to describe aggressive tennis.
Viewers, however, heard ‘gorilla’ and assumed Adler was using a demeaning term to lash out at Williams, who is African American. ESPN received a number of complaints and negative backlash. Adler was fired. He alleges wrongful termination, and claims the network was not sympathetic given the reality the two words – spelled differently and meaning two different things – sound exactly the same when spoken.
Adler filed his wrongful termination lawsuit in state court in California in February. Earlier this month, on March 16 the lawsuit was moved to federal court on grounds that Adler and the defendants hailed from two different states, thus giving the federal district court jurisdiction to hear the case. ESPN Productions Inc., the defendant, also held an assumption that damages sought by the plaintiff would exceed the $75,000 ceiling observed by the state court for amounts-in-controversy.
However, US District Court Judge Percy Anderson didn’t feel there was sufficient grounds in the defendant’s statement that co-defendant Mark Gross and Jamie Reynolds – two vice-presidents of ESPN – resided in Connecticut “upon information and belief” of ESPN. The network is also based on Connecticut.
According to Judge Anderson, “upon information and belief” was an insufficient statement to qualify, for the purposes of the Court and the litigation at hand that Gross and Reynolds did, indeed reside in New England.
“The notice of removal’s allegations, alleged on information and belief, are insufficient to establish the citizenship,” the ruling states, adding that a party should be able to allege “affirmatively” the citizenship of the relevant parties.
Given that diversity jurisdiction could not be invoked, the wrongful termination lawsuit goes back to state court in California.
Adler has not specified amounts for damages and recovery he seeks within his California wrongful termination lawsuit. ESPN, for its part worked up a figure of at least $148,000 based on a calculation estimating lost wages, emotional distress, punitive damages and legal fees.
The wrongful termination lawyer representing Adler noted in a statement that one cannot place a value on one’s reputation – since destroyed, the lawsuit claims – when an employer imposes a false label of ‘racist’ followed by termination of employment over an “innocuous comment,” the statement said.
While covering the match and describing Williams’ aggressive play, Adler stated, “She misses her first serve and Venus is all over her. You see Venus move in, and put the guerrilla effect on...charging [opponent Stefanie Voegele].”
Adler maintains he said ‘guerrilla.’ Viewers, however, heard ‘gorilla’ and assumed Adler was uttering a racial slur against the accomplished tennis star. The plaintiff was made to apologize on-air the next day, only to be fired one day after that.
Compliance Lawsuit Settlement Sent Back to the Drawing Board
Los Angeles, CA: A proposed settlement worth $2.2 million that would have put an end to a compliance lawsuit against Google Inc. has been scuppered after a judge in a California court struck down the settlement. US District Judge Lucy Koh indicated in her ruling that the benefits to the class derived from the settlement were “difficult to understand.”
Plaintiff Daniel Matera launched the putative class action lawsuit against Google in September of 2015 with regard to allegations that Gmail, an entity of Google, violated the Wiretap Act and Electronic Communications Privacy Act through the interception of emails in an effort to create user profiles for the purposes of targeted advertising.
The lawsuit proposed not to represent individuals who were actual users and clients of Gmail, but rather those individuals who did not maintain Gmail accounts and were not users of Gmail, but communicated with Gmail users and were at risk of being targeting for advertising by association.
In addition to suing for damages, the compliance lawsuit sought to have Gmail brought into compliance with the California Invasion of Privacy Act and the Electronic Communications Privacy Act, as well as the Wiretap Act.
The compliance lawsuit settlement, according to court documents, would have encumbered Google to cease and desist the processing of incoming email content for advertising purposes up to a certain plateau, and by the same token refrain from undertaking similar scanning and monitoring of outgoing mail.
However, it appeared that the only benefit to class members would be the changes to Gmail processing and bringing the processes into compliance with the various privacy acts. Meanwhile the $2.2 million, it appears, would go to class counsel.
Judge Koh found the agreement “very vague” and unclear “at best” with regard to what was specifically expected of Google, and the changes that would ensue for the benefit of class members. The judge also opined the language in the agreement was “difficult to understand” and failed to afford any insight into the compliance changes Google would have to undertake, and whether or not the defendant would be afforded the right to continue scanning some content for “dual purposes.”
“In sum, based on the parties’ current filings, the court cannot conclude that the settlement is ‘fundamentally fair, adequate, and reasonable,’” Judge Koh wrote.
The case is Daniel Matera v. Google Inc., Case No. 5:15-cv-04062, in the US District Court for the Northern District of California.
Sexual Harassment Allegations Made Within Pay Discrimination Complaint
Fresno, CA: A disturbing harassment story has been emerging from a successful jewelry retail chain that has locations in California. So far there have been no reports of sexual harassment allegations stemming from Sterling Jewelers at Edwards, or Kay Jewelers located in Visalia and Fresno. It is also not known if any current or former employees in California are part of the arbitration class.
However, that doesn’t appear to be the case elsewhere in the country – or so it has been alleged – as various media reports have focused on allegations of harassment made by hundreds of former and current employees, according to a report from ABC News (03/01/17). The allegations have come forward within a pay discrimination case brought against the firm. Sterling Jewelers (Sterling) is identified as the multi-billion dollar parent of company of Kay Jewelers and Jared-the Galleria of Jewelry.
Sterling is based in Ohio, but has retail locations throughout the country including California. The discrimination complaint, currently being heard by a private arbitrator, has been approved as a class arbitration and is brought on behalf of 69,000 current and former employees.
A key plaintiff in the complaint is Heather Ballou. The former store manager at Kay Jewelers began her tenure with the firm as a sales associate at a location in Pensacola, Florida. Ballou, amongst her allegations, asserts that she was propositioned for sex during one of Sterling’s annual management retreats, in return for a promotion back to her home city.
“I am not proud to say but I did it,” Ballou told ABC News. “I mean, I wanted to get home.”
Ballou asserts in her complaint that Sterling observes a culture that can be likened to a crude “boy’s club,” or so it is alleged. Various sworn statements, according to ABC News, allege that managerial retreats were reduced to “booze fests” where spouses were not allowed, at which managers “prowled around the [resort] like dogs…and there was no one to protect female managers from them,” according to documents filed with the arbitrator.
The allegations of harassment, sexual harassment and other allegations grew out of a pay equity complaint that alleges discrimination in promotions and pay. It is alleged that employees were forbidden from discussing pay levels amongst themselves, or sharing their rates of pay with others. ABC News reported on the situation involving one female employee who was paid a yearly salary of between $42,000 and $43,000 when she witnessed a male employee at another Kay Jewelers retail outlet in the same state complain that he was being paid only $70,000.
Yet another sworn statement alleges that “female sales associates were hired at about $1 an hour less than male sales associates.”
For its part, the defendants issued a statement to ABC News suggesting that allegations of sexual harassment pose a “distorted and inaccurate picture of our company,” adding that the original complaint filed in 2008 is about promotions and pay, not harassment.
“Since the case was filed in 2008, it has never included legal claims of sexual harassment or hostile work environment discrimination,” the statement read.
As for claims relating to professional advancement, Sterling noted the claims are “not substantiated by the facts and certainly do not reflect our culture.”
The complaint is not a lawsuit per se, but rather a private claim seeking resolution through a private arbitrator.
Former Blogger with the Los Angeles Times Alleges Age Discrimination
Los Angeles, CA A discrimination lawsuit alleging age discrimination and ‘failure to hire’ on the part of the Los Angeles Times is headed for arbitration following a ruling by a California Superior Court judge who found that discrimination and failure to hire claims fell outside the bounds of the freelance agreement signed by, and governing the activities of, the plaintiff.
Plaintiff Stephen Dilbeck launched a discrimination lawsuit against the Los Angeles Times, claiming that his former freelance employer failed to consider him for a promotion to staff writer from freelance blogger in spite of frequent overtures and requests on the part of the plaintiff, who covered the Los Angeles Dodgers as a blogger for the LA Times.
Dilbeck, who is 64, claimed that instead of a promotion, he was eventually terminated based on his age. Dilbeck is alleging discrimination.
Legal teams for his former employer argued that Dilbeck’s freelance agreement signed by the plaintiff included an arbitration clause that compelled Dilbeck to arbitrate any issues with his employer. The use of arbitration agreements is a growing trend, compelling plaintiffs to arbitrate disputes outside the courts. A growing number of arbitration agreements contain language that, when signed, does not authorize or allow the signatory to fight a dispute in a court of law.
Dilbeck’s discrimination lawyer argued that his client’s ‘failure to hire’ claim was a legitimate claim to bring to a court as it fell outside the bounds of the arbitration agreement due to the fact, so said the plaintiff, that the claim relates to employment discrimination, while provisions spelled out in the independent contractor agreement and subsequent arbitration clauses were specific to the freelance assignments Dilbeck, at one time, penned for the LA Times.
Judge Teresa A. Beaudet of the Los Angeles County Superior Court was somewhat sympathetic, opining that “your argument is not frivolous that’s certainly true and reasonable minds might differ,” she said during proceedings in early February.
“But I don’t think calling [Dilbeck] a freelancer limits the scope of the agreement on what he’s going to arbitrate,” adding that the freelance agreement and accompanying arbitration clauses were broad, covering “any and all claims, disputes, or controversies” between the parties.
Dilbeck asserted not only age discrimination in his failure to secure a full time position with the paper, but also that he was retaliated against for testimony he gave in an unrelated age discrimination lawsuit brought by another individual, against the LA Times.
“Plaintiff believes that defendants never hired him to a permanent, full-time position because of his age, participation in protected activities, and good faith complaints,” the operative lawsuit states.
According to claims asserted by the plaintiff in his discrimination lawsuit, a former sports editor at the LA Times – since retired from that position – retorted to Dilbeck in 2013 that the average age of the staff was 53, and “we have to get younger,” according to court documents.
Dilbeck also noted that two other individuals were let go when their blogs were eliminated by the LA Times, although a 27-year-old blogger affected by the termination was hired on as a full-time writer a week later.
The complaint brings age discrimination, failure to prevent discrimination, intentional infliction of emotional distress and retaliation against a protected employment activity under the California Fair Employment and Housing Act.
Dilbeck filed his discrimination lawsuit in November of last year. The case is Stephen Dilbeck v. Los Angeles Times Communications LLC, et al., Case No. BC641273, in the Superior Court of the State of California for the County of Los Angeles.
Support Shown to the Undocumented Worker Growing in California
Palm Desert, CA: As the Trump Administration continues to target, in various efforts the undocumented worker, there remains a growing wave of support for undocumented workers in California and their role in the economy of the state. Not lost on supporters of undocumented workers both in the state and the country overall is the debacle that involved the President’s original nominee for Labor Secretary, Andrew Puzder, the CEO of CKE Restaurant Holdings Inc. (CKE), who admitted employing an undocumented worker, and failing to pay legally-required taxes on her wages.
Pundits found it remarkable that such a double-standard existed: an Administration intent on ousting undocumented workers, while allegedly looking the other way when the President’s nominee for Labor Secretary was revealed as employing an undocumented worker himself. Puzder and CKE are also embroiled in a lawsuit brought by a disabled worker at a CKE restaurant who alleges age and disability discrimination, and wrongful termination. That California-based lawsuit had been scheduled to go to trial February 27, however the matter was pushed back to June 5 at the request of CKE, which argued it couldn’t get a fair trial given the contentiousness of Puzder’s nomination. (James Dombrowski v. CKE Restaurants Holdings Inc., Case No. 30-2015-00803215, before the Superior Court of the State of California for the County of Orange).
That concern was rendered moot when Puzder, on the eve of his Senate Confirmation Hearing, withdrew his nomination last month.
Meanwhile, commentators are continuing to weigh in on the undocumented worker. Dori J. Smith, writing in The Desert Sun of Palm Springs (03/11/17) noted that raids on the undocumented workers have begun, “and it is reported that agents are arresting people who have committed zero crimes,” wrote Smith, a resident of Palm Desert who identifies herself as a volunteer with Moms Demand Action and former president of Democratic Women of the Desert. “The vast majority of undocumented workers do NOT commit crimes, yet they do contribute to our communities (including paying into Social Security). Mass deportations will deplete America of workers, will dramatically increase consumer costs, and will cost billions.”
Meanwhile, the Mercury News (03/11/17) hit the streets in California and queried passersby on their views of Trump policies. Rocco Biale, who runs Rocco’s Ristorante Pizzeria in Walnut Creek, referenced the California undocumented worker amongst his comments.
“It appears as though there will be an opening to find a way to keep the millions of undocumented workers, who in my opinion are the backbone of the US economy,” said Biale, 55. “We need to find a way to document them so they no longer have to work and live in the shadows.
“They are doing the work most Americans won’t, or can’t do.”
Data compiled and released last month suggests undocumented workers support ten percent of the economy in the State of California. Almost half of the state complement of agriculture workers is undocumented workers, who also comprise 21 percent of the construction industry.
It is not known what impact federal attempts to round up undocumented workers will have on workers, their families, the economies they support, or the potential for a spike in undocumented worker lawsuits.
Having Once Struck Out, Minor League Players Finally Get to First Base
San Francisco, CA: With spring training underway in southern climes, and the Major League Baseball season about a month away, the timing for certification of a once-rejected wage and hour class action lawsuit seems somewhat appropriate for the time of year, not to mention a source of relief for a collective of minor league players having already faced a rejection of their proposed class action lawsuit.
According to court documents, minor league baseball players filed what was proposed as a class action wage and hour lawsuit in February, 2014. The lawsuit was filed in California. Plaintiffs asserted that minor league players, in deference to the overall wealth of teams and Major League Baseball (MLB) overall, were paid earnings that fell below minimum wage. Plaintiffs alleged that some minor league baseball players earned as little as $1,100 per month during the baseball season, in spite of working upwards of 50 hours in a week. Not only is such a stipend well below minimum wage requirements, it is alleged that no overtime pay was forthcoming for those extra hours in the week, either.
The proposed wage and hour class action was conditionally certified under the Fair Labor Standards Act (FLSA) in October, 2015 and no fewer than 2,200 minor league players joined the lawsuit.
However, the momentum didn’t last when the federal judge assigned to the case, US Magistrate Judge Joseph C. Spero of the US District Court for the Northern District of California, decertified the collective and declined the players’ motion for full certification on grounds that individual experiences by the athletes lacked sufficient commonality to warrant a class. A survey undertaken to estimate the number of hours worked by the proposed class members, was found to be flawed.
That was in July of last year. Undaunted, the players went back to work and, in spite of this occurring in the middle of the baseball season, revised their claim by trimming away physical conditioning that took place during the winter months outside of spring training and the regular season. What complicated the issue was the fact that players, over the winter months, were not required to maintain their conditioning at facilities under the auspices of Major League Baseball, and thus their efforts were not diligently tracked as they would during spring training and the regular season, in facilities within the purview of MLB.
Plaintiffs re-filed their proposed wage and hour lawsuit as a class action in September of last year, and that change allowed Judge Spero to certify the class, in part. “In dropping these claims, they have significantly reduced the variations that led the court to conclude that plaintiffs were attempting to stretch the holding of Tyson Foods too far,” Judge Spero wrote, in reference to the US Supreme Court’s ruling in Tyson Foods v. Bouaphakeo, which held that workers can’t be punished in litigation due to the inability on the part of the employer to keep proper time records. With the initial filing, the judge determined that positions taken by the plaintiffs failed to align with precedents stemming from Tyson v. Bouaphakeo, and thus he couldn’t allow it.
However with revisions, the subsequent filing satisfied, and resolved the legal hurdles. “The remaining variations are not so significant as to preclude a jury from addressing plaintiffs’ claims on a classwide basis,” Judge Spero opined.
Plaintiffs had tightened their bid for class action status to include just three states – Arizona, Florida and California. In the end, Judge Spero found that including the Arizona and Florida classes was problematic given specific provisions of state law, in those two states, that raised different questions for the players involved.
In the end, Judge Spero granted preliminary certification of the wage and hour class action for the state of California. The order covers anyone who participated in California League, spring training, instructional leagues, or extended spring training from February 7, 2011 and who hadn't signed a Major League contract prior to that date.
Cal / OSHA’s Role in Ski and Snowboarding Resort Oversight
June Lake, CA: It appears prevailing opinion does not quite align when it comes to regulating the safety of ski and snowboard hills in the state of California. Two experts on ski, and snowboard safety opine that federal and state regulations with regard to trail safety are either sorely lacking, or non-existent altogether. However that position is in deference to one taken by the head of a ski industry association, who holds that standards and regulations do exist, including regulations and guidelines issued by California Division of Occupational Safety and Health (Cal / OSHA).
Skiing and snowboarding remains a growing trend, with more families taking up the sports for either recreational enjoyment or within competition. Middle-aged and newly-retired Californians are also skiing into their twilight years for the fresh air, exercise and vitality.
However, according to The Davis Enterprise (01/04/17), there is some disagreement with regard to safety regulations. Ski safety expert Richard Penniman, an avid skier and expert for some four decades, notes there is a voluntary code of safety and conduct for skiers and snowboarders – known popularly as the Responsibility Code – but no similar code for ski and snowboard resorts.
“We assume when we drive that the highways are in good shape, the signs are posted, etc.,” Penniman said, in comments published in the Davis Enterprise. “The exact same mentality exists at the ski resorts; you assume that the ski resorts have done what is necessary.”
But Penniman maintains there are no slope and safety trail laws, regulations or standards. Dr. Daniel Gregorie, president of the SnowSport Safety Foundation, echoes those comments. Both maintain that given an absence of standards and guidelines regulating all resort operators against a common template, each resort must use its own discretion in choosing how to administer safety policies and practices.
However that position doesn’t sit well with Michael Reitzell, president of the California Ski Industry Association. Reitzell holds that resorts “follow rigid standards and protocols established by state and federal regulatory agencies.”
That includes Cal / OSHA, which administers regulations for lifts, tows and conveyances. The US Forest Service, says Reitzell, requires all resorts to prepare operating plans that cover a variety of safety issues – including lift maintenance, ski patrol, accident investigation procedures, avalanche mitigation, slope maintenance, snow placement, terrain parks and transportation. There are further guidelines issued by the American Society of Safety Engineers, amongst others.
Reitzell admits “there is no one-size-fits-all safety handbook that applies to each resort.” He went on to say, however, that “resorts share safety information and work together on safety issues, but they also consider the differences that exist at each resort,” he said.
How does a lawsuit, such as the potential for an OSHA lawsuit, fit into all of this?
Take the design and build of winter snow park jumps. Regulations or no, Mont Hubbard, UC Davis professor emeritus of aerospace and mechanical engineering who has written academic papers on the subject of designing and building winter snow park jumps, notes that “resorts just don’t know or appreciate the laws of physics.” He said a terrain park manager is often promoted through the ranks from beginnings as a lift operator. No disrespect, Hubbard said, “But you wouldn't want Honda or Ford to design its cars by people coming up as car washers, then mechanics…”
“I’ve been an expert witness in lawsuits against ski resorts, for paralyzed skiers and riders and un-designed jumps,” Hubbard explained. In these cases, he said, it always turns out that there is no “analytical engineering design” available for the jump in question.
California ERISA Lawsuit Settled for $2.75 Million
Thousand Oaks, CA: As we move ever closer to tax time, which is also a time when investors review their investments to maximize returns, a look back in the rear view mirror reminds us of a multi-million dollar ERISA settlement announced late last year that hinged on the fiduciary duties of those entrusted with growing, and managing retirement funds according to tenets of the Employee Retirement Income Security Act (as amended, 1974).
In was ten years ago, in 2007 that current and former employees of pharmaceutical giant Amgen Inc. filed an ERISA lawsuit in US District Court for the Central District of California over accusations that the corporation and its agents breached their fiduciary duties under ERISA by offering Amgen stock as an option for investment. Plaintiffs held that Amgen and its representatives knew, or should have known that safety concerns swirling around two anemia drugs within the Amgen banner posed a risk to the company’s stock value.
To that end, the plaintiffs asserted that Amgen stock was overvalued for the purposes of their investment, and subsequent returns. The stock price for Amgen did, indeed fall in 2007 when Amgen went public with regard to off-label marketing efforts associated with the two drugs.
Off-label marketing of drugs for indications outside the boundaries of FDA approvals is illegal activity for manufacturers. Doctors and other qualifying healthcare professionals have the medical and legal authority to step outside the bounds of the US Food and Drug Administration should they feel a particular drug would be of benefit to a patient, regardless of whether, or not the FDA has sanctioned the drug for that particular purpose.
It was alleged by plaintiffs in the ERISA lawsuit that revelations concerning the off-label marketing devalued Amgen stock, as did news about safety concerns.
ERISA fiduciaries are required, under law, to act according to the best interests of investors and employees enrolled in retirement savings plans, rather than those of the sponsoring company. Investors in retirement plans have a relatively short window within which to raise capital to fund retirement, and rarely can afford unnecessary losses.
The Employee Retirement Income Security Act lawsuit ran a tumultuous path, landing at the US Supreme Court following original appeals considered by the Ninth Circuit. On two occasions the Supreme Court remanded the case back to the Ninth Circuit. The most recent remand occurred a year ago January, when the Supreme Court ordered the Ninth Circuit to reconsider a ruling reviving the case, saying the appellate court failed to consider whether the complaint plausibly alleged that a prudent fiduciary in the same position could have taken an alternative action that would not have done “more harm than good.”
In the midst of all that, in September of last year the two parties reached a settlement deal. On November 26, US District Judge Philip S. Gutierrez gave preliminary approval to the $2.75 million ERISA settlement, ending a protracted legal journey for all parties concerned.
The California ERISA lawsuit is Steve Harris et al v. Amgen, Inc. et al, Case No. 2:07-cv-05442, in the US District Court for the Central District of California. Amgen maintains its headquarters at Thousand Oaks, California.
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