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A federal District Court judge in Illinois sided with the U.S. Department of Labor (DOL) in ordering Alight Solutions, LLC, an ERISA plan services provider, to comply with an administrative subpoena seeking documents pertaining to alleged cybersecurity breaches. The Court’s order in the case, Walsh v. Alight Solutions, LLC, Dkt. # 20-cv-02138 (N.D. Ill.), is significant as it mandated production of a great deal of information concerning Alight’s cybersecurity practices, finding Alight’s objections on grounds of irrelevance and burdensomeness insufficient to overcome the DOL’s broad investigatory authority and the presumption that investigative subpoenas should be enforced.

According to the Court’s order, the DOL’s investigation of Alight began back in July 2019 based in part on its discovery that Alight had processed unauthorized distributions from its ERISA plan clients’ accounts as a result of cybersecurity breaches and, further, had failed to promptly report the breaches and restore the unauthorized distributions to the affected accounts. DOL’s subpoena sought documents on a number of topics, including Alight’s cybersecurity policies, procedures, assessment reports, and training of its workforce; its business continuity plans pertaining to information security; and communications or other documents regarding any cybersecurity incident pertaining to its ERISA plan clients, dating back to 2015.
Continue Reading District Court Enforces DOL Investigative Subpoena Against Plan Service Provider Concerning Alleged Cybersecurity Breaches

As we approach the end of the year and mid-term elections, expectations for meaningful policy from a lame duck Congress are at a record low. Surprisingly, however, the earlier passage of the Tax Cuts and Jobs Act (commonly referred to as “Tax Reform”) resulted in an unsettled desire among those in the U.S. House of Representatives and U.S. Senate to accomplish something rare – bipartisan legislation improving retirement and savings for millions of Americans.

The two pieces of legislation that have bipartisan support are the Retirement Enhancement and Savings Act (RESA) and the Family Savings Act of 2018 (FSA).
Continue Reading Could We See Retirement Reform in a Lame Duck Congress?

The Department of Labor’s (“DOL”) conflict of interest rule, informally coined the “fiduciary rule,” sparked much debate when the regulations were proposed in 2015, and finalized in 2016, to expand the definition of fiduciary under the Employee Retirement Income Security Act of 1974 (“ERISA”).  However, the fiduciary rule was continuously challenged in the courts, and appears to have met its final fate at the hands of the Fifth Circuit nearly 2 years later.
Continue Reading Fifth Circuit Reaffirms Decision to Vacate Fiduciary Rule

On May 22, 2017, Department of Labor (DOL) Secretary Alexander Acosta announced in an op-ed in the Wall Street Journal that the DOL would not issue another delay of the “fiduciary rule,” and that it was set to generally become effective on June 9, 2017. As we now know, certain provisions of the fiduciary rule went into effect on that date, with others being delayed until July 1, 2019. However, the fiduciary rule remains under attack in the courts. Two notable appellate court decisions were issued within days of one another, and both were decided by three judge panels. One case upheld narrow provisions of the fiduciary rule, and the other effectively completely invalidated the rule. Shortly after the second decision, the Department of Labor announced that it would not enforce the fiduciary rule “pending further review.”
Continue Reading The Fate of the Department of Labor Fiduciary Rule Could Be Uncertain

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

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On May 22, 2017, Department of Labor (DOL) Secretary Alexander Acosta announced in an op-ed in the Wall Street Journal that the DOL will not issue another delay of the “fiduciary rule,” set to become generally effective on June 9, 2017. Secretary Acosta stated on Monday evening that “[w]e have carefully considered the…

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. 6:16-cv-00062, 5/2/17. 
Continue Reading Lawyer’s Role in Challenged ESOP Transaction May Have Caused Him to be an ERISA Fiduciary

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 [plaintiff] of the need or the means to convert two group life insurance policies purchased by her now-deceased husband[.]”

Plaintiff initially asserted claims for benefits (under 29 U.S.C. § 1132(a)(1)(B)) against the Plan and Life Insurance Company of North America (“LINA”), and for breach of fiduciary duty (under 29 U.S.C. § 1132(a)(3)) against WellStar and LINA. The court granted summary judgment dismissing the benefits claim, but denied summary judgment on the fiduciary duty claim. Plaintiff and LINA subsequently settled, leaving WellStar the sole defendant for trial, with the sole claim of breach of fiduciary duty.

The Plaintiff is the widow of a neurosurgeon who was employed by WellStar. The Plaintiff’s husband purchased life insurance policies as part of the Plan. The Plaintiff’s husband was diagnosed with a malignant brain tumor, forcing him to take FMLA leave, which subsequently became an approved claim under WellStar’s long term disability (“LTD”) plan. While her husband was on disability, plaintiff told WellStar that she had questions about her husband’s benefits, and WellStar set up a meeting with a benefits representative familiar with the Plan. The Court found that WellStar repeatedly assured plaintiff and her husband that “all [of their] coverage [is] going to remain the same[.]” A subsequent mailing by WellStar disclosed that conversion of life insurance coverage would be necessary after 36 weeks of leave, but did not include forms or more information about conversion, or the date by which conversion was required. After plaintiff’s husband’s death, LINA denied her claim under the Plan on the ground that the coverage had lapsed.
Continue Reading ERISA Plan Administrator’s Failure to Notify Beneficiary of Life Insurance Conversion Rights Breaches Fiduciary Duty

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…