We are please to welcome Katherine M. Katchen as counsel in Robinson+Cole’s Managed Care + Employee Benefits Litigation Group. Kate has more than 20 years of litigation experience representing clients in complex commercial litigation matters, particularly in the area of managed care and insurance. She will be
The Ninth Circuit recently issued two decisions in Dorman v. Charles Schwab Corp.: the first overrules the decision in Amaro v. Continental Can. Co., 724 F.2d 747 (9th Cir. 1984) (Dorman, – F.3d –, No. 18-15281, 2019 WL 3926990 (9th Cir. Aug. 20, 2019) (slip op.) (“Dorman I”)); and the second concludes that an individual’s ERISA claim may be subject to the plan’s arbitration provision (Dorman, — F. App’x –, No. 18-15281, 2019 WL 3939644 (9th Cir. Aug. 20, 2019) (slip op.) (“Dorman II”)).
Dorman, a former Schwab employee, filed a putative class action under ERISA §502(a)(2) and (3), alleging that defendants violated ERISA and breached their fiduciary duties by including poorly performing Schwab-affiliated investment funds in the defined contribution 401(k) retirement plan to generate fees for Schwab. Dorman I, 2019 WL 3926990 at *1-*2.
In December 2014, the plan was amended to require that “[a]ny claim, dispute or breach arising out of or in any way related to the plan shall be settled by binding arbitration.” Id., 2019 WL 3926990 at *2.
Continue Reading Irreconcilable Differences: In Dorman v. Charles Schwab Corp., Ninth Circuit Overrules 35-Year-Old Authority; Concludes ERISA Claims Subject to Mandatory Arbitration.
The U.S. Department of Labor (DOL) has filed a proposal with the Office of Management and Budget (OMB) to delay implementation of the following exemptions under the fiduciary rule from January 1, 2018 to July 1, 2019:
- Best Interest Contract Exemption (PTE 2016-01)
- Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries
As a result of my joining the Robinson+Cole Employee Benefits and Compensation Group in January 2017, the ERISA Claim Defense Blog has been added to the firm’s Thought Leadership offering. In addition to new posts, the blog has all of the same content it did from when I started it in 2012. For those of…
Back in December, we reported on the Sixth Circuit’s “unprecedented and extraordinary step to expand the scope of ERISA coverage” in Rochow v. LINA, 737 F.3d 415 (6th Cir. 2013). In that case, the court held that it was appropriate to require a disability claim administrator to disgorge $3,800,000 in profits it allegedly…
Hartford moved to dismiss the action because it was filed after the expiration of the policy’s contractual limitation period. The plain language of the Policy gave her until December 8, 2005 to submit proof of loss: she alleged that her disability began on June 6, 2005; the ninety-day Elimination Period would ordinarily end on September 6, 2005, but her Elimination Period lasted two days longer because Wal-Mart made salary continuation payments to her until September 8, 2005; the start of the period for which Hartford would owe payment (if Heimeshoff had proven disability) was September 9, 2005; proof of loss was due ninety days later, or December 8, 2005. The deadline for taking legal action was therefore three years after that, or December 8, 2008.
Continue Reading Heimeshoff v. Hartford – Motion to Dismiss
Wal-Mart established an employee benefit plan to provide disability benefits to its employees, which it funded through a group disability policy issued by Hartford. The policy contained a contractual limitation provision specifying the deadline for lawsuits: “Legal actions cannot be taken against the Hartford … after … 3 years after the time written proof of loss is required to be furnished according to the terms of the policy.” Written proof of loss was due 90 days after the end of the Elimination Period; since the Elimination Period was 90 days, proof of loss was due 180 days after the claimed date of disability, and the deadline for any suit would be roughly 3-1/2 years after the claimed date of disability.
Continue Reading Heimeshoff v. Hartford – Facts and Chronology
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. Amgen, Inc., — F.3d –, 2013 WL 2397404 (9th Cir. June 4, 2013).
Continue Reading Presumption that Plan Administrator Acted Prudently Does Not Apply in Stock-Drop Case
Privately held companies that have pension plans which own some of the company’s own stock (employee stock ownership plans, or ESOPs), have been concerned about publication of private information about their finances. The problem stemmed from the Department of Labor’s publication of annual filings by ESOPs that included the private financial information.
In a very…
One of the great things about writing this blog is learning something new. I sometimes fall into the trap of determining the law on a particular issue in the circuit in which I practice most (the Second), and assume that other circuits are the same. Sometimes, though, it turns out that one circuit is not in step with the others, and one case can throw a monkey wrench into my world view.
The case that drew back the curtain for me on vesting of welfare benefits (an exciting topic, I know!), is Price v. Bd. of Trustees of Indiana Laborer’s Pension Fund, — F.3d –, 2013 WL 561354 (6th Cir. Feb. 15, 2013) (“Price II”). Price II held that an ERISA fiduciary could enforce a plan amendment shortening the length of time disability benefits would be payable against a participant who was on claim at the time of the amendment.
At first read, the decision seemed bizarre, because I knew (or thought I knew) that welfare benefits like disability benefits could not be changed for a participant who was “on claim.” As the Second Circuit held: “as a matter of law[,] …absent explicit language to the contrary, a plan document providing for disability benefits promises that these benefits vest with respect to an employee no later than the time that the employee becomes disabled.” Feifer v. Prudential Ins. Co. of Am., 306 F.3d 1202, 1212 (2d Cir. 2002). This rule means that you look to the plan language when the disability allegedly began, and subsequent amendments are irrelevant.
Though on re-reading Feifer, it was clear that the court recognized that other circuits approached this issue differently, that kind of caveat was not something that stuck with me. Then along came Price II and caused me to revisit the issue.
Continue Reading Vesting of Employee Welfare Benefits – Who Knew It Was So Complicated?