BENEFITS DIGEST

Thomas Hannon sued Guardian after it reduced and then ended his disability payments. Guardian argues that federal benefits law displaces his state-law claims, a question the court has not yet decided. Judge Leo Sorokin refused to exclude Guardian’s witness statement or let Hannon question the witness after the evidence-gathering deadline, because Hannon had sought no evidence during the period set aside for that dispute. Guardian’s witness disclosure was deficient, but the court found that Hannon had enough notice of the witness and her role. Guardian must produce any documents supporting her statement that it has not already produced by October 23. Hannon’s response is due November 6, and Guardian’s reply is due November 13. Roberts Disability Law has a [write-up](https://robertsdisability.com/use-it-or-lose-it-court-wont-strike-guardians-declaration-in-an-erisa-preemption-dispute-after-the-claimant-sat-out-discovery/) of the ruling.

Roberts Disability Law’s analysis of Whitlock v. Provident reaches beyond the label on a voluntary benefit. The employer’s endorsement and receipt of commissions brought the supplemental disability policy under ERISA, but the claimant still had to prove that she met its partial-disability definition. A reduction in earnings satisfied one element; it didn’t establish the required limits on her ability to work. The court also found that the final appeal decision used the appropriate disability standard despite a problem in the initial denial. The insurer won on the record, including evidence about the claimant’s continued work in her own business.

The Seventh Circuit upheld an Arkansas rule requiring health plans to disclose pharmacy compensation and cover dispensing fees when a pharmacy benefit manager or another intermediary underpays a pharmacy. The multiemployer fund behind Central States v. McClain, suing in Illinois federal court, argued that ERISA preempted the rule. The court concluded that the payment requirement regulates costs and that the reporting requirement does not intrude on the central administration of an employee benefit plan. Self-funded plans operating nationally now have one more state PBM rule the courts have let stand.

Amro Naddy ran the 360 Reviews division at U.S. News & World Report and says the company owed him roughly $1.9 million under two long-term incentive plans and a 2024 bonus plan when cash ran short. He alleges the CFO offered him a choice between taking less and being fired for cause, and that the termination email arrived two hours later. In a September 28 opinion, Judge Dabney Friedrich let Naddy’s contract and D.C. wage claims on the incentive plans proceed. The 2020 plan was never signed, but under D.C. law continued employment can supply both acceptance and consideration, and clauses making the company’s calculations ‘final’ don’t amount to discretion to pay nothing at all. The severance claim failed because the employee handbook summarizing the severance plan disclaims being a contract and promises only that employees ‘may be eligible’ for severance. The court expressly left open whether claims under the separate severance plan document itself would be preempted by ERISA. The handbook disclaimers did exactly the job they were drafted to do.

In a new Trucker Huss alert, Bryan Card walks through April's Technical Release 2026-01 on proxy advisory firms, the consultants who advise large investors on how to vote their shares in corporate elections. The Labor Department said such a firm can become an ERISA fiduciary two ways: by exercising control over votes tied to plan shares, or by regularly giving individualized voting advice for a fee. A contract disclaimer saying the advice won't be a 'primary basis' for decisions doesn't settle the question if the actual relationship says otherwise, and the department concluded ERISA generally doesn't preempt state laws requiring proxy advisers to disclose recommendations driven by nonfinancial considerations. This matters mainly for plans invested through collective investment trusts and separately managed accounts, because the shares those vehicles hold are plan assets whose votes belong to the plan. Shares held inside a mutual fund generally are not, so advice about voting them usually isn't fiduciary advice to the plan.

Airlines for America is challenging Colorado's Healthy Families and Workplaces Act as applied to flight and ground crews at five member airlines, arguing the federal Airline Deregulation Act preempts it and that it unconstitutionally burdens interstate commerce. Chief Judge Daniel Domenico denied the state's summary judgment motion on both claims. He wrote that the state makes a persuasive case under the governing law, as he also said at the pleading stage, but the record is now a duel between experts: the airlines' expert found that as employee sick rates rise, flight delays and cancellations rise too, while the state's expert says the evidence doesn't show the law measurably changed airline services at all. Weighing expert credibility is a trial job, not a summary judgment one. The sick leave law has covered employees working in Colorado, airline crews included, since July 2020; what a factfinder must now decide is whether its effect on airline operations is tenuous or significant.

In Commonwealth of Kentucky v. Express Scripts, No. 25-5866 (6th Cir. Sept. 18, 2026), Chief Judge Sutton reversed a remand and kept Kentucky's opioid suit against Express Scripts and Optum in federal court under the federal officer removal statute. The PBMs negotiate formulary placement and rebates for federal employee, TRICARE, and veterans programs alongside their commercial book, and the court found “little to no daylight between their federal and non-federal conduct” because they conduct a single negotiation for all clients. Kentucky's attempt to disclaim the federal side of that indivisible conduct didn't work, a result the opinion counts five circuits reaching. Among the colorable federal defenses: ERISA preemption of claims aimed at how a PBM structures its standard formulary offerings. The decision concerns where Kentucky's lawsuit will proceed, not whether the PBMs are liable. But the structural fact that drove it, one negotiation serving federal and commercial plans alike, is the same feature at the center of the PBM transparency debates sponsors are living through.

The court enjoined enforcement of the Prescription Drug Affordability Act's reporting requirements against PCMA members serving ERISA covered plans, finding the claim by claim disclosure mandates—drug lists, dosage units, out of pocket spending, rebate passthroughs, copies of PBM contracts—most analogous to the Vermont database law preempted in Gobeille. Last month's Seventh Circuit decision in McClain did not save the statute, because the Illinois requirements are not incidental to any fee or tax provision and reach far beyond one. Fines of $10,000 per day made the harm irreparable, relief runs association wide, and the first annual reports had been due the day after the order.

This week's roundup, a short-handed edition with no case of the week, flags two decisions as most notable. In Central States v. McClain the Seventh Circuit held that Arkansas's latest pharmacy benefit manager regulation survives ERISA preemption, and in Liu v. Kaiser the Ninth Circuit extended the substantial compliance doctrine to benefit elections. The edition also collects the week's decisions on arbitration, attorneys' fees, fiduciary breach, disability claims, preemption, exhaustion, and pleading.

In Laurel Hill Management Services v. La-Z-Boy, the Sixth Circuit held that ERISA preempts out-of-network providers' negligent-misrepresentation and promissory-estoppel claims premised on oral assurances given during benefits-verification calls, reaffirming its 1991 Cromwell precedent. Mayer Brown flags a developing circuit split and counsels administrators to keep call recordings and rely on the written plan when providers claim they relied on the phone call.

Roberts Disability Law walks through the Seventh Circuit's decision in Central States v. McClain, covered here yesterday from the slip opinion, affirming dismissal of the fund's ERISA preemption challenge to Arkansas Rule 128's pharmacy dispensing-fee and reporting requirements.

Kantor & Kantor's weekly survey leads with Laurel Hill Management Services v. La-Z-Boy, where the Sixth Circuit held a provider's claims preempted, reinforcing the circuit split with the Ninth Circuit's Healthcare Ally decision covered here last week. The same edition rounds up the week's district courts, including Kovacs v. Moradi, holding that restricted stock units are not ERISA plans, and Cregan v. Unum, finding that a voluntary accident plan failed the safe harbor on three of four prongs and is therefore ERISA-governed.

The Seventh Circuit affirmed dismissal of Central States' ERISA preemption challenge to Arkansas Insurance Rule 128, holding that the state's requirement that health plans pay pharmacies “fair and reasonable” dispensing fees is a cost regulation permitted under Rutledge, and that the rule's companion reporting mandate survives because it exists only to enforce that fee requirement, fitting the narrow room the Supreme Court's Gobeille decision leaves for state reporting duties. The panel flagged that ERISA's newly enacted uniform pharmacy-compensation reporting rules, effective for plan years beginning 30 months after February 3, 2026, may change the analysis later. For self-funded plans, the decision extends Rutledge's reach from reimbursement floors to state-mandated fees and data reporting.

The Ninth Circuit held that ERISA preempts a promissory estoppel claim over a misrepresented reimbursement rate on a benefits-verification call, but not a negligent misrepresentation claim on the same facts, because that injury flows from the false statement itself rather than from interpreting or denying plan terms. Mayer Brown's takeaway for administrators: record verification calls and put coverage representations in writing.

In Cregan v. Unum Life Insurance Company of America, No. 24-CV-340-DES, 2026 WL 2427920 (E.D. Okla. Aug. 19, 2026), United States Magistrate Judge D. Edward Snow addressed whether a voluntary accident policy offered through an employer falls under ERISA.

Roberts walks through Laurel Hill v. La-Z-Boy, yesterday's Court Decisions lead: the Sixth Circuit's published holding that ERISA preempts out-of-network providers' negligent misrepresentation and promissory estoppel claims over a plan administrator's oral reimbursement assurances, and what it means for providers who rely on verification calls in the Sixth Circuit.

In a published opinion, the Sixth Circuit held that ERISA preempts out-of-network providers' negligent misrepresentation and promissory estoppel claims based on a plan administrator's oral assurances about reimbursement, affirming dismissal of a suit that sought UCR-rate payment from La-Z-Boy's health plan after Blue Cross allegedly promised it by phone. The panel applied its Cromwell precedent, and Judge Murphy concurred separately to note most circuits allow some misrepresentation claims against administrators. The same week, the Ninth Circuit went the other way on a nearly identical negligent misrepresentation claim in Healthcare Ally v. WSP USA.

In a published opinion by Judge Berzon, the Ninth Circuit held that ERISA does not preempt an out-of-network surgery center's negligent misrepresentation claim over a benefit-verification call in which Aetna said reimbursement would run at the UCR rate, then paid roughly five percent of the bill at the Medicare rate. The provider's injury is its own, not a derivative claim for plan benefits, and letting administrators misstate coverage to providers with impunity would undercut ERISA's purposes. The court still affirmed dismissal of the companion promissory estoppel claim as preempted, and the panel's line falls almost exactly where the Sixth Circuit refused to draw one eight days later in La-Z-Boy.

another data point on where provider state-law claims survive plan-administration preemption.

In Healthcare Ally Management v. WSP USA, the Ninth Circuit held ERISA does not preempt an out-of-network surgery center's negligent misrepresentation claim based on an Aetna verification call, while affirming preemption of the promissory estoppel claim.

A Third Circuit panel held that ERISA preemption reaches a provider's state-law defamation claims against a Cigna subsidiary, another data point on how far plan-administration preemption extends beyond benefit denials.

Ajeti v. Life Insurance Company of North America, No. 26-3249, 2026 WL 2150163 (E.D. Pa. July 27, 2026), addresses whether ERISA governs, and preempts, state-law claims brought by foreign nationals seeking disability benefits under a plan established by their American employer.

Trade associations and unions challenged New York's fossil-fuel appliance bans as preempted by federal energy conservation law; the Second Circuit affirmed, finding EPCA's preemption clause does not extend to the state laws.