Archives: Fiduciary Duties

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It May Be Time to Start Thinking About Equitable Claims Again

A recent decision by the Eighth  Circuit Court of Appeals, Jones v. Aetna Life Ins. Co., No. 16-1714, 2017 U.S. App. LEXIS 8112 (8th Cir. May 8, 2017), provides another signal that those of us defending against benefit claims increasingly may have to contend with simultaneous equitable claims for breach of fiduciary duty. Though the law … Continue Reading

Lawyer’s Role in Challenged ESOP Transaction May Have Caused Him to be an ERISA Fiduciary

A court in the Western District of Virginia held that a lawyer working as a Senior Trust Officer for a fiduciary to an Employee Stock Ownership Plan could be personally liable to workers who claim they overpaid for their employer’s stock purchased by the employer’s ESOP. Hugler v. Vinoskey, 2017 BL 145574, W.D. Va., No. … Continue Reading

Second Circuit Upholds Dismissal of ERISA Claims Against Plan Defendants for Alleged “Cross-Subsidization” Scheme

In Hannan v. Hartford Financial Services, Inc., (2d Cir., April 25, 2017), the Second Circuit Court of Appeals affirmed dismissal of a potential ERISA class action against Family Dollar Stores, its employee benefits plan, and the plan’s group life insurance provider (Hartford), rejecting allegations by plan participants that the plan defendants had engaged in a … Continue Reading

Insurer Did Not Breach Fiduciary Duty by Disclosing Substance Abuse Claim to Employer

In Williams v. FedEx Corporate Servs., 849 F.3d 889 (10th Cir. 2017), plaintiff sued FedEx for violating the Americans with Disabilities Act (ADA) by requiring him to enroll in the company’s substance abuse and drug testing program. He also sued Aetna, FedEx’s STD insurer, for breach of fiduciary duty for reporting to FedEx that plaintiff … Continue Reading

ERISA Plan Administrator’s Failure to Notify Beneficiary of Life Insurance Conversion Rights Breaches Fiduciary Duty

In Erwood v. Life Ins. Co. of N. Am., Civil Action No. 14-1284, 2017 U.S. Dist. LEXIS 56348 (W.D. Pa. 2017), a Federal Judge ruled after a bench trial that WellStar Health System Inc., the plan administrator of a Group Life Insurance Program (“Plan”), breached its fiduciary duty “by misrepresenting and failing to adequately inform … Continue Reading

DOL Issues Final Rule Delaying Fiduciary Rule until June 9, 2017

As ordered by President Trump in a presidential memorandum (the “Memorandum”) on February 3, 2017, the U.S. Department of Labor (DOL) proposed a 60-day delay to the “fiduciary rule,” which revised the definition of “fiduciary” for retirement investment advice purposes. The rule was originally set to become effective on April 10, 2017; however, after receiving … Continue Reading

DOL Calls For Delay of the Fiduciary Rule

As ordered by President Trump in last month’s presidential memorandum (the “Memorandum”), the U.S. Department of Labor (DOL) proposed a 60-day delay to its conflict of interest rule (commonly referred to as the “fiduciary rule”). The effective date of the fiduciary rule, which revised the definition of a “fiduciary” for retirement investment advice purposes, is currently … Continue Reading

Extra-ERISA contractual obligation regarding pension plan is enforceable

Hunter v. Berkshire Hathaway, Inc., 829 F.3d 357, 358 (5th Cir. 2016), involved the interpretation of parties’ rights and obligations regarding a pension plan following a corporate acquisition. Its discussion of the extent to which an employer can obligate itself not to change a plan, even when benefits are not vested, is noteworthy.… Continue Reading

Mutual fund redemptions payable to participants are not plan assets, and broker can retain interest earned while holding the cash

In re Fid. ERISA Float Litig., 829 F.3d 55 (1st Cir. 2016), held that Fidelity did not breach fiduciary duties to the plans at issue by allegedly earning interest on cash on its way to participants after a redemption had been made. The case involved a number of 401(k) plans that had hired Fidelity as … Continue Reading

On Tibble remand, court finds plaintiffs forfeited continuing-duty-to-monitor argument

Tibble v. Edison Int’l, — F.3d –, 2016 WL 1445220 (9th Cir. Apr. 13, 2016) (“Tibble II”), marks the Ninth Circuit’s second review of the case after its earlier decision was vacated by the Supreme Court. Tibble v. Edison Int’l, 135 S.Ct. 1823 (2015) (“Tibble I”). Tibble I concerns the commencement of the statute of … Continue Reading

ERISA preempts state-required “all payer claim databases” (APCD)

About twenty states, including Vermont, have passed laws requiring all entities that provide health care services to report information to a state agency; these are called “all payer claims databases” or APCDs. Though they may have many purposes, they all generally are intended to enforce a universal and consistent (within the particular state, at least) … Continue Reading

Unpaid employer contributions cannot be plan assets; debt is dischargeable in bankruptcy

Bos v. Bd. of Trustees, 795 F.3d 1006 (9th Cir. 2015), involved the owner of a company that participated in a multi-employer pension plan. Because the owner had full control over the company finances, he was personally responsible for making the required contributions. Moreover, he signed a promissory note for some $360,000 in payments that … Continue Reading

Plan Manager Was Not a Fiduciary For Purposes of Subrogation Claim Standing

In Humana Health Plan, Inc. v. Nguyen, 785 F.3d 1023 (5th Cir. 2015), Humana entered into a Plan Management Agreement (“PMA”) with the API Enterprises Employee Benefits Plan. The PMA stated that API had the right to make all discretionary decisions about the plan’s administration and management. The PMA authorized Humana to provide “subrogation/recovery services” … Continue Reading

Sixth Circuit Rules Plan Terms are “Irrelevant” When Considering Equitable Claim

The Sixth Circuit is fast making itself the center of case law on equitable remedies under ERISA. In Pearce v. Chrysler Group LLC Pension Plan, 2015 WL 3797385 (6th Cir. June 18, 2015), the court held that a material conflict between an SPD and the plan permits a claim for equitable relief, apparently without any … Continue Reading

Sixth Circuit At it Again: Orders Make-Whole Relief in Disability Benefit Claim

In Stiso v. Intl. Steel Group, 2015 WL 3555917 (6th Cir. June 9, 2015), the court reversed a ruling by the district court that dismissed a claim for make-whole relief, and directed the district court “to grant an equitable remedy [against the employer and insurer] equivalent to the promised increase in benefits to plaintiff.” The … Continue Reading

Ninth Circuit Replaces Gabriel Decision On Equitable Remedies; Modifies Interpretation of Amara

We previously reported on Gabriel v. Alaska Electrical Pension Fund, 755 F.3d 647 (9th Cir. 2014), which addressed limits on make-whole relief under 1132(a)(3), and affirmed judgment for the plan fiduciary. That decision was a divided one, with a partial dissent by Judge Berzon. In December, the panel withdrew its earlier decision, and replaced it … Continue Reading

Second Circuit Affirms Reformation Judgment in Amara v. Cigna; Reformation Governed by Contract Rules, Not Trust Rules

In 2011, the Supreme Court issued a major ERISA decision, Cigna Corp. v. Amara, 131 S.Ct. 1866 (2011), holding that courts could not reform an ERISA plan as part of a claim for benefits under 29 U.S.C. 1132(a)(1)(B), but could do so as an equitable remedy under 29 U.S.C. 1132(a)(3). The case involved a situation … Continue Reading

Court Requires Nexus Between Alleged Fiduciary Duty and Alleged Damage

In Santomenno ex rel. John Hancock Trust v. John Hancock Life Ins. Co. (U.S.A), — F.3d –, 2014 WL 4783665 (3d Cir. Sept. 26, 2014), the plaintiffs, who were participants in employer-sponsored 401(k) benefit plans, claimed that John Hancock, an administrator that provided investment services to plans, breached its fiduciary duty by allegedly charging the … Continue Reading

Ninth Circuit Discusses Limits On Make-Whole Equitable Remedies for Breach of Fiduciary Duty

In Gabriel v. Alaska Electrical Pension Fund, 755 F.3d 647 (9th Cir. 2014), a venal claimant met a not-very competent plan administrator, and the result was a helpful discussion of limits on make-whole equitable claims. [Note, on December 16, 2014, the Ninth Circuit panel withdrew this opinion, and replaced it with a new one, at … Continue Reading

Supreme Court Emphasizes that ERISA Plans Are Not Always Pre-Eminent

In a recent decision involving fiduciary duties in Employee Stock Ownership Plans (ESOPs), the Supreme Court emphasized an important limit on the pre-eminence of the plan document. Recent Supreme Court decisions, primarily in the welfare benefit plan context, have emphasized the primary importance of the plan document in establishing a fiduciary’s obligations and a participant’s … Continue Reading

New York Times article: Breach of fiduciary duty to fail to monitor and reduce fees

It’s not often that an ERISA issue gets prominent play in the press, but a recent article by Gretchen Morgenson is an exception. A Lone Ranger of the 401(k)’s  began: The arithmetic could not be simpler. The more fees you pay in your 401(k) plan, the less cash you’ll have for retirement. Still, fees hidden … Continue Reading

Disgorgement of $3,800,000 ordered for failure to pay $900,000 in disability benefits

The Sixth Circuit has just taken an “unprecedented and extraordinary step to expand the scope of ERISA coverage” (in the words of the dissent) by affirming a judgment directing a disability insurer to pay about $900,000 in improperly denied benefits plus disgorge an additional $3,800,000, representing profits it allegedly made on the benefits. I agree … Continue Reading

Presumption that Plan Administrator Acted Prudently Does Not Apply in Stock-Drop Case

ERISA requires fiduciaries to follow a prudent person standard regarding investment decisions. For plans requiring investment in the employer’s stock, often called Employee Stock Ownership Plans, or ESOPs, courts have developed a presumption that the investment in employer stock is prudent. A recent 9th Circuit case has addressed the limits of that presumption. Harris v. … Continue Reading
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