ERISA litigation

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Phishing, entrapment, piggy bank stealing...

With more and more retirement plan services moving online, a recent case arising in  the U.S. District Court for the Southern District of New York, Giannini v. Transamerica Retirement Solutions, LLC (“Giannini”),[1] highlights the importance of cybersecurity and anti-fraud considerations for plan fiduciaries and service providers alike. 

In Giannini, the plaintiff was a retirement plan participant who filed suit in a proposed class action against Transamerica Retirement Solutions, a third party administrator/recordkeeper, after the company notified him of a data breach exposing the plaintiff’s personally identifiable information (“PII”). The plaintiff alleged that the breach occurred because unauthorized parties were able to access PII due to a Transamerica system configuration change, which left sensitive information such as social security numbers and retirement fund contribution amounts exposed. The plaintiff also alleged this data breach affected over 11,000 retirement plan beneficiaries and caused spam emails, spam calls, fraudulent credit card and bank account inquiries, and fraudulent purchases made in his name. Continue Reading A Cautionary Tale for Plan Fiduciaries and Service Providers: Cybertheft, Fraud, and Potential Liability

On June 17, 2021, the Supreme Court in a 7-2 decision rejected a challenge to the individual mandate and the overall constitutionality of the Patient Protection and Affordable Care Act (the “ACA”) in the third major challenge to the law to reach the high court. The decision in California et. al. v. Texas et. al., 593 U. S. ___ (2021), was somewhat anticlimactic as the basis for the decision was that the plaintiffs did not have standing to bring the action. Accordingly, the Court did not address or provide guidance on the substantive constitutionality or severability issues raised in the lower courts. The decision does, however, signal that even a conservative Court is unlikely to overturn the ACA any time soon and so compliance with the various provisions of the ACA will be required. The decision has also been heralded as a victory for patients who are able to keep their health coverage as the country exits a year and half long pandemic. In addition, Democrats have expressed an intent to try to expand the ACA’s reach by adding provisions designed to make health care more affordable and accessible to the American people.
Continue Reading States Lack Standing – ACA Remains Standing

Gavel

On January 21, 2021, the United States District Court for the Northern District of California granted a motion by the Intel Corporation Investment Policy Committee to dismiss all ERISA claims brought against it by two plan participants representing a class of participants. The plaintiffs alleged, among other things, that the Committee acted imprudently by including private equity, hedge funds and commodities in a custom target date investment option in Intel’s 401(k) plan. The case was Anderson v. Intel Corp. Inv. Policy Comm., Case No. 19-CV-04618-LHK.
Continue Reading Court Rejects Plaintiffs’ Claims that Private Equity is Imprudent for 401(k) Plan

Plan sponsors and fiduciaries may have spent 2020 scrambling to amend their plans and operating procedures to accommodate breaking COVID-19 guidance, but the Department of Labor’s (“DOL”) and federal courts’ wheels continued to turn, churning out decisions and guidance on a variety of ERISA issues—and plan sponsors and fiduciaries should take note. Included in recent DOL guidance are rules for reviewing and selecting retirement plan investments, voting proxies, and distributing retirement plan notices. Meanwhile, various federal appellate court decisions should lead fiduciaries to review summary plan descriptions (“SPDs”) and the inclusion of single-stock fund investment options in defined contribution plan lineups. The following checklist sets out 2020 developments for plan sponsors and fiduciaries to consider in the new year.
Continue Reading 2021 Plan Sponsor/Fiduciary Compliance Checklist

The Tenth Circuit’s recent split decision in M. v. Premera Blue Cross, No. 18-4098 (July 24, 2020), poses a significant threat to the deferential standard of review typically applied to benefit plan claim determinations, and imposes a new burden on plan administrators.

More than 30 years ago, the Supreme Court held in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), that benefit denials are “reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Applying the Firestone doctrine, lower courts have consistently applied the substantially more deferential “arbitrary and capricious” or “abuse of discretion” standard of review to benefit denials when the plan at issue granted the plan administrator (or relevant fiduciary) discretionary authority consistent with the Firestone case.

The Tenth Circuit, in Premera, changes that standard.Continue Reading Tenth Circuit Decision Puts New Emphasis on Including Discretionary Authority Language in Summary Plan Descriptions

Background:  On August 20, 2019, a Ninth Circuit panel in Dorman v. Schwab, No. 18-15281, reversed the district court’s denial of Schwab’s motion

to compel arbitration and held that Schwab could force the plaintiff to individually arbitrate his fiduciary duty claims challenging the administration of Schwab’s 401(k) plan.  In 2017, plaintiff Michael Dorman filed a putative class action in federal court alleging that Schwab had breached its fiduciary duties under ERISA by adding allegedly poorly performing in-house investment funds to its 401(k) plan investment lineup.  In 2015 – two years before the lawsuit was filed – Schwab had amended its 401(k) plan document to include an arbitration clause stating that “[a]ny claim, dispute, or breach arising out of or in any way related to the Plan” had to be resolved by individual, rather than class or collective, arbitration.  Based on this 2015 plan amendment, Schwab filed a motion in the district court to compel individual arbitration.  The district court denied the motion because it concluded that the plan’s arbitration provision was unenforceable with respect to the plaintiff’s fiduciary duty claims.Continue Reading Mandatory Arbitration: The Next Frontier for ERISA Retirement Plans?