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

There is no question that ERISA provides many litigation benefits. But it doesn’t provide them as a boon to employers, administrators and their lawyers. Instead, the preemption of state laws, limited litigation, flexible plan design, and (especially) the availability of deferential review, are direct results of the careful balancing act that Congress engaged in when

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

There are always plaintiffs’ attorneys who live to push the envelope in ERISA benefit litigation. You know who they are. When opposing one of these attorneys, you may feel that he or she is more concerned with chipping away at ERISA procedures than in achieving a quick, favorable result for the client. Such attorneys will fight for as much discovery as possible (even if it has no value in a particular case); they may routinely argue for a de novo review (even where a deferential standard clearly applies).  They may argue, repeatedly, that courts should routinely conduct trials in ERISA matters when any fact is in dispute.  They may even argue that jury trials are permissible in ERISA claims. If such lawyers can get one judge to agree, even a little, with one of their positions, they will take that decision to the next judge, and argue for another little push to the envelope.

There is no question that arguments like these have to be met head on, and on the merits. But the opposition can be made more powerful by framing it in the context of congressional policy.Continue Reading Using Congressional Policy – Part 4 – Litigation Procedures

Plaintiffs’ attorneys often will attempt to assert state law claims against an ERISA plan administrator. It’s possible they don’t know any better. It’s also possible, though, that they try to hammer the same point in case after case, and hope to find a judge who will agree with them. The most likely state law claims are for bad faith or unfair claim practices. Though it is easy enough to cite the broad preemption provisions in ERISA – and they are very broad –  it can only help to explain the policy underlying the preemption:

[T]he detailed provisions of [ERISA] set forth a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans. The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan  participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA.

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987).Continue Reading Using Congressional Policy – Part 3 – Preemption

In the 1950s, Congress began studying welfare and pension funds covered by collective bargaining agreements. After years of hearings, it concluded its studies and investigations with the following:

The most serious single weakness in this private social insurance complex is … the too frequent practice of withholding from those most directly affected, the employee-beneficiaries, information which will permit them to determine (1) whether the program is being administered efficiently and equitably, and (2) more importantly, whether or not the assets and prospective income of the programs are sufficient to guarantee the benefits which have been promised to them.

S.Rep.No. 1440, 85th Cong., 2d Sess., 12 (1958); see Malone v. White Motor Corp. 435 U.S. 497, 5061 (1978).Continue Reading Using Congressional Policy – Part 2 – What Policies Did Congress Have?

You’re standing in a room, holding a book in your hands. Another person walks in, and shouts, “Put that book down immediately!” You turn and ask the reason for the demand. Which reason would you find more persuasive: “Because I said so!” or “It’s a rare first edition and you must wear gloves when handling