9th Circuit Holds That Release In Plaintiff’s Wrongful Termination Lawsuit Bars Subsequent ERISA Benefits Claim

In Thomas A. Gonda, Jr., M.D. v Permanente Medical Group, Inc., et. al., plaintiff Thomas Gonda, a thoracic surgeon for The Permanente Medical Group, Inc., suffered double vision, headaches, memory loss, and difficulty focusing on and completing tasks following an accident in which he was hit by a car while riding a Segway. The accident also caused an exacerbation in Dr. Gonda’s long standing problems with alcohol abuse. Following completion of a substance abuse treatment program, LINA, which provided LTD insurance coverage for The Permanent Medical Group, Inc. Long Term Disability Plan for Physicians (the “TMPG Plan”), informed Dr. Gonda it would no longer pay LTD benefits. Dr. Gonda twice appealed the denial of his LTD benefits claim, but LINA denied both appeals. Following the initial denial of LTD benefits, Dr. Gonda filed a wrongful termination lawsuit against TPMG in state court, which settled prior to Dr. Gonda filing his ERISA lawsuit.

Settlement Agreement Provisions

The Settlement Agreement in the Wrongful Termination action clearly and unambiguously released all of Dr. Gonda’s ERISA claims against TPMG and related parties. Dr. Gonda agreed to release “all…causes of action of whatever kind or nature, whether known or unknown, suspected or unsuspected, which Dr. Gonda now owns or holds or has at any time owned or held…based on…any federal…statute…including, without limitation, all rights conferred upon Dr. Gonda pursuant to…the Employee Retirement Income Security Act….”

ERISA Lawsuit For Denial Of LTD Benefits

Following the denial of his LTD appeal, Dr. Gonda filed suit to reinstate benefits under ERISA. LINA argued that the release in the Wrongful Termination lawsuit barred Dr. Gonda from pursuing his claim for disability benefits. The court agreed and entered summary judgment in LINA’s favor. Dr. Gonda appealed to the 9th Circuit Court of Appeals.

The 9th Circuit held that the record “clearly shows that Dr. Gonda knowingly and voluntarily signed the settlement agreement and that it was supported by consideration.” Dr. Gonda is highly educated, was given 21 days to review the settlement agreement, and was ably represented by legal counsel. Dr. Gonda has also failed to produce any evidence that Defendants-Appellees engaged in improper conduct or otherwise failed to communicate to him the material facts of the settlement. The settlement agreement was therefore enforceable in barring Dr. Gonda’s ERISA action, and the district court properly relied on his release in granting summary judgment to Defendants-Appellees.

Although this is an unfortunate, and seemingly unjust, result, claimants/plaintiffs must trust that their attorneys and representatives understand and consider all the terms and provisions in settlement agreements and, more frequently, severance agreements when providing counsel. Unfortunately, this is not always the case. Here, although Dr. Gonda argued that the settlement agreement was not intended to cover his ERISA LTD benefits claim, the facts and circumstances compelled the court to implement the agreement’s “plain and unambiguous language” and further noted, “any reading of the contract that includes an exception for the claims Dr. Gonda brings in this case would contradict the explicit language of the Settlement Agreement.” In sum, if the ERISA disability benefits claim was intended to be excluded, Dr. Gonda and his counsel had ample opportunity to make that clear prior to executing the agreement.

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