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 rights.
Continue Reading Supreme Court Emphasizes that ERISA Plans Are Not Always Pre-Eminent

I imagine that, for a federal judge, getting reversed is not pleasant, even though it’s part of the job. Well, pity poor Judge Larimer of the Western District of New York, who has now been reversed three times in the same case – twice by the Second Circuit and once by the Supreme Court.
Continue Reading Frommert v. Conkright: The Saga Continues, or “Strike Two for Xerox”

Every so often a bit of legal synchronicity seems to occur. Sometimes its personal, like when you have several cases with the same uncommon issue, or multiple cases in the same rarely visited court. In 2013, there appears to be a larger force at work that has caused three circuits to address the question whether a plan that requires proof to be satisfactory to the insurer confers discretion.

It has long been clear that a plan document must give discretionary authority to an insurer in order to require courts to conduct an arbitrary and capricious review. It is also well-established that no “magic words” are required to give discretion. However, the vast majority of plans intending to grant discretion use the magic words anyway, and say that the insurer has “discretionary authority to determine claims and construe the plan” or some variant.

But what happens when a plan does not use the magic words?  
Continue Reading Effect of Requiring “Satisfactory” Proof Is A Popular Issue in the Circuits This Year

In 2011, the Supreme Court clearly held that a summary plan description cannot trump the terms of an ERISA plan, overturning the rule in many circuits. Instead, the Amara rule provides that the plan itself governs over a summary of the plan when the two conflict.

This does not mean that an SPD is meaningless. The continued importance of preparing and distributing SPDs is nicely illustrated by Liss v. Fidelity Employer Servs. Co. LLC, 2013 WL 677280 (6th Cir. Feb. 26, 2013).Continue Reading Sixth Circuit Explains Why SPD is Still Important After Amara

Plan Design

Claimants or their attorneys sometimes will complain that specific plan provisions are unfair. They may argue that a plan is not generous enough because it contains offset provisions that serve to reduce the benefits paid by the plan. This type of provision is common in disability plans, for example, where Social Security disability benefits are routinely offset against plan benefits.

Or they may complain about the employer’s decision to grant discretionary authority to the administrator. Perhaps no aspect of plan design is more important in claim disputes than discretionary authority. Claim decisions by administrators with discretionary authority are given some level of deference by the courts. Plaintiffs’ attorneys will often attack the notion of this deference. They may argue that it is inappropriate for a court to have to defer to the decisions of a private entity.Continue Reading Using Congressional Policy – Part 5 – Plan Design