On Monday, the US Supreme Court agreed to review the Second Circuit’s decision in Jander v. Retirement Plans Committee of IBM, a “stock drop” lawsuit against IBM’s benefit plan fiduciaries. The Second Circuit’s decision marked one of the few times a federal court permitted a “stock drop” lawsuit to survive dismissal since the Supreme Court’s decisions in Fifth Third Bank v. Dudenhoeffer (2012) and Harris v. Amgen (2016). (more…)
The House recently passed the most significant piece of proposed retirement plan legislation in more than a decade: the SECURE Act. Although the Senate must also approve the bill before it becomes law, its proposed changes have considerable bipartisan support in Congress. Plan sponsors should start considering how changes included in the SECURE Act could impact their retirement plans. Employers who do not currently offer retirement plans should also review the new retirement plan incentives included in the proposed legislation.
A recent summary-judgment decision explains how individual releases can bar the individual from pursuing ERISA fiduciary-breach claims on behalf of the plan. A plan, employer or fiduciary that wants to ensure a release that includes ERISA claims on behalf of a plan should consider language that addresses the court’s areas of inquiry in the case, which are outlined in this article.
In a presentation for the National Center for Employee Ownership (NCEO) Conference, Emily Rickard presented on ESOP plan design, operation and administration. She, along with the other presenters, identified ERISA compliance watchdogs including the plaintiff’s bar, Department of Treasury and Department of Labor, and what attracts their attention when it comes to audits. Emily also identified common mistakes employers make during the entire ESOP lifecycle (e.g. lack of employee communication, distribution strategy and planning) and provided guidance on how to correct those mistakes.
The US District Court for the District of Colorado granted partial summary judgment to 401(k) fiduciaries, holding that ERISA’s six-year statute of repose barred some claims and rejecting challenges to the plan’s fees.
In a presentation at McDermott’s Employment and Employee Benefits Forum, Ted Becker and Chris Scheithauer explored the various ways that disgruntled employees file lawsuits with plaintiffs’’ lawyers. Lawsuits have been brought in cases alleging, imprudence in the management of plans, challenging fees, involving company stock, actuarial equivalence and more. They used recent cases such as, NYU, American Century Services and IBM, as examples of the various types of lawsuits and the important lessons employers can take away from them. In addition, they provided attendees with key strategies to minimize exposure to lawsuits, including demonstrating a thoughtful and deliberative decision-making process.
Looking ahead to 2019, they touched on ERISA issues to watch for including, venue/forum selection clauses in plan documents, arbitration agreements and impact on fiduciary duty claims, statute of limitations and burden of proof issues.
The District of Massachusetts court struck the plaintiffs’ jury-trial demand in their ERISA complaint for damages and equitable relief against 401(k) plan fiduciaries. The court followed the “great weight of authority” in ruling that there is no right to trial by jury in ERISA actions for breach of fiduciary duty.
Join us on March 7 in Chicago for our annual Benefits Emerging Leaders Working Group, which provides benefit professionals with tools to better serve employees in an ever-changing benefits landscape.
Our presentations will tackle the latest benefits hot topics and best practice solutions and will be supplemented with important networking opportunities aimed to connect tomorrow’s benefit leaders with a broad network of professionals.
Speakers from The Art Institute of Chicago, Alera Group Inc. and McDermott will lead interactive discussions around a range of topics, including:
A recent Eighth Circuit decision regarding “cross-plan offsetting” serves as an important reminder of how ERISA’s fiduciary duties impact both employers and fiduciaries who handle claims.
The case involved the common practice of cross-plan offsetting, which occurs when a claims administrator resolves an overpayment to a provider by refusing to pay that provider for a future claim (or reducing the amount paid for that future claim)—even if the latter claim was made by a participant in an unrelated plan. Cross-plan offsetting allows claims administrators to quickly recover overpaid benefits without the time and expense associated with one-off recovery actions against providers. Defendant UnitedHealth Group (UnitedHealth) initially applied this practice among its in-network providers, but then expanded cross-plan offsetting to non-network providers beginning in 2007. This practice was challenged by two out-of-network doctors in the case at issue, Peterson v. UnitedHealth Group, Inc.
Recently, the US District Court for the District of Columbia dismissed a proposed class action lawsuit brought by former Georgetown employees under the Employee Retirement Income Security Act of 1974 (ERISA) over fees and investments in its two retirement plans. Plaintiffs alleged that Georgetown breached its fiduciary duty of prudence under ERISA by selecting and retaining investment options with excessive administrative fees and expenses charged to the plans, and unnecessarily retained three recordkeepers rather than one.
The court dismissed most of the claims on the grounds that plaintiffs had not plead sufficient facts showing that they had individually suffered an injury. Because they challenged defined contribution plans (as opposed to defined benefit plans), the plaintiffs had to plead facts showing how their individual plan accounts were harmed. In this case, the named plaintiffs had not invested in the challenged funds, or the challenged fund had actually outperformed other funds, or, in the case of the early withdrawal penalty from the annuity fund, the penalty had been properly disclosed and neither plaintiff had attempted to withdrawal funds – thereby suffering no injury. Moreover, in dismissing the allegations that the Plans included annuities that limited participants’ access to their contributed funds, the court rejoined, “[i]f a cat were a dog, it could bark. If a retirement plan were not based on long-term investments in annuities, its assets would be more immediately accessed by plan participants.” As to another fund, the court rejected the claim that the fiduciaries should be liable for the mere alleged underperformance of the fund, noting that “ERISA does not provide a cause of action for ‘underperforming funds.” Nor is a fiduciary required to select the best performing fund. A fiduciary must only discharge their duties with care, skill, prudence and diligence under the circumstances, when they make their decisions.
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