Court Dismisses Proposed ERISA Health Plan Class Action for Lack of Standing

The Supreme Court’s standing decision in Thole v. U.S. Bank N.A., 140 S. Ct. 1615 (2020) continues to have consequences in the lower courts. Applying Thole, a New York federal court recently dismissed a putative class action because the health plan in question was overfunded, so the plaintiffs suffered no injury.

In that case, a group of healthcare workers filed a putative class action against their employer. They alleged that their employer used complex transactions involving their health plan in a manner that violated ERISA and siphoned millions of plan benefits to the employer and its affiliates.

The court held that, under Thole, the ERISA claims had to be dismissed for lack of Article III standing. Even if the corporate transactions violated ERISA and siphoned off plan assets, the plan was overfunded by $23 million. The plaintiffs acknowledged they had received all the benefits they were entitled to receive, and any harm to the plan did not affect them. Though the plaintiffs alleged that they had not been paid as required by New York law, that was not a cognizable harm under ERISA. The court therefore dismissed the ERISA claims and did not exercise jurisdiction over the state-law claims.

The case is: De Fuente v. Preferred Home Care of N.Y. LLC, No. 18-cv-06749 (AMD) (PK), 2020 U.S. Dist. LEXIS 187681 (E.D.N.Y. Oct. 9, 2020).