This class action, now over 13 years old - with a liability finding against CIGNA and its pension plan under ERISA for cutting back and misrepresenting benefits under an amended plan - returns from the U.S. Supreme Court to determine what kind of relief should be ordered. The Second Circuit affirms, holding that the district court properly reformed the pension plan to preserve all of the benefits earned under the pre-amended plan, up to the date of the amendment. The court also upholds the class certification order.
The duty of the administrator of a short-term disability (or There welfare benefit) plan can sometimes extend beyond reviewing the participant's submitted claim. The Fourth Circuit holds that it can also be an abuse of discretion for the administrator to disregard "readily available material evidence of which it was put on notice." Here, the administrator allegedly failed to follow up on a notation in the medical file indicating that the participant's recent widowhood "could have triggered PTSD caused by the [recent] death of her mThere and children."
The crafters of the 1974 ERISA statute intended participants to have the broadest range of access to federal court, including a special venue statute and national service of process. Under ERISA, venue is proper in "the district where the plan is administered, where the breach took place, or where defendant resides or may be found." 29 U.S.C. § 1132(e)(2). But a 2-1 decision in the Sixth Circuit - four decades after ERISA's passage - threatens that accomplishment, holding that a plan choice-of-forum clause that limited venue to a single district in Iowa five hundred miles from the plan participant could be enforced.
The U.S. Supreme Court in Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010), held that ERISA plan participants who must sue to obtain review of a benefit denial can be awarded attorney's fees under 29 U.S.C. § 1132(g)(1) by achieving "some degree of success on the merits," regardless of whether they ultimately win the whole case. The First Circuit today, in a 2-1 decision, issues the first precedential appellate-level opinion in holding that fees may be awarded even if the participants' entire victory is having their cases remanded back to the plan administrator for reweighing under the correct standard of review.
A hidden difficulty many American employees face is that a huge amount of their retirement income - an estimated $4 trillion - is in 401(k) plans, too many of which are managed by individuals indifferent to (or not competent to advance) the interests of future retirees. In this Fourth Circuit case, the district court found the fiduciaries of the retirement plan in breach of their duty of prudence by their arguably poor timing in liquidating a company-stock fund when its shares were in a trough, without performing a reasonable investigation, but excused them from paying any relief to the participants. The court holds (2-1) that the judge erred in insulating the fiduciaries from remedying that breach, concluding that the fiduciaries had the burden of proving that a prudent fiduciary would have made the same decision.
When a retirement plan manages employees' money, it also has a responsibility to keep an eye on the expenses that can quietly erode away earnings. The Eighth Circuit affirms an ERISA breach of fiduciary duty judgment against two retirement plans for allowing its recordkeeper to overcharge the fund for services, and orders the return of $13.4 million. The court nonetheless vacates for further proceedings a claim for inappropriate investment options, and reverses (over a dissent) a judgment that the plan recordkeeper converted short-term funds (a "float") to non-plan purposes.
After three trips to the district court - and a side visit to the U.S. Supreme Court - the Second Circuit issues a liability judgment in this ERISA matter, dating back to 1989. It holds the Xerox retirement plan liable as a matter of law for miscalculating retirement benefits and for misinforming class of their rights under the summary plan description (SPD). The case is remanded yet again to the district court for entry of remedy. Notably, the Second Circuit puts real teeth in the ERISA requirements in 29 U.S.C. §§ 1022 and 1054(h) that a plan must accurately inform participants of plan terms and of any amendments.
The Supreme Court today - in a unanimous opinion authored by Justice Thomas - lays a trap for the unwary ERISA plan participant. It holds that an ERISA plan sponsor can impose its own limitations period and accrual rule for claims under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), different from what is provided by state or federal law, provided that it is not "unreasonably short" (and remains subject to equitable exceptions). This post explains the significance of Monday's opinion and sets out three things that participants and beneficiaries must do to protect themselves from these legal landmines.
The Sixth Circuit, in a 2-1 opinion, issues an important remedies ruling under the Employee Retirement Income Security Act (ERISA). The majority holds that a disability plan participant who was wrongfully denied benefits was entitled to both recovery of the benefit and disgorgement of the plan's profits from the delay of payment. The disgorgement remedy - affirmed by the panel majority - was $3.8 million, based on the finding that the plan treated the withheld benefit as general equity and earned 11 to 39% annually on the money.
Seven years into litigation, plaintiff James Killian is a little closer to achieving justice for his late wife. After litigating an ERISA case unsuccessfully before two federal district court judges and a Seventh Circuit panel, the full Seventh Circuit today holds that Mr. Killian may pursue a claim for himself and his spouse's estate against her health care plan. He alleges that the plan misled them about whether Ms. Killian's end-stage care was within network, in breach of the duty of prudence under 29 U.S.C. § 1104(a)(1)(B). The court affirms that the ERISA duty of prudence requires complete disclosure by the plan administrator, "even if that requires conveying information about which the beneficiary did not specifically inquire."