In a closely watched decision, Intel Corporation Investment Policy Committee v. Sulyma, Slip Op. No. 18-1116 (U.S. S. Ct., Feb. 26, 2020), construing ERISA’s three-year statute of limitations, see ERISA § 413(2), 29 U.S.C. § 1113(2), the Supreme Court held unanimously (J. Alito) that “actual knowledge” means “. . . when a plaintiff actually is aware of the relevant facts, not when he should be.”
Articles Discussing ERISA.
The Second Circuit recently considered for the first time whether the equitable remedy of reformation was available under the Employee Retirement Income Security Act (ERISA) where a court determined that the written terms of a retirement plan violated ERISA but no allegation of fraud, mistake, or inequitable conduct existed. In Laurent v. PricewaterhouseCoopers LLP, the court found that “terms violative of ERISA” may serve an independent basis justifying an award of a reformation remedy as to a plan, indicating that its decision is in line with a “hint” from the Supreme Court in its 2011 decision in CIGNA Corp. v. Amara1 (referred to as “Amara III”) that courts should broadly construe remedies in equity under ERISA § 502(a)(3).2
A U.S. District Court in Connecticut recently issued an order that highlights the importance of understanding exactly what the term “medically necessary” means in an ERISA health plan.1 This is another in a growing line of cases finding a disconnect between the term “medically necessary” in a health plan and the guidelines that third-party administrators use to determine whether treatment is “medically necessary.”
Section 104(b)(4) of ERISA provides that a plan administrator must respond to a written request for certain documents (including the plan documents and summary plan description) by a participant or beneficiary by providing the requested documents. Section 502(c)(1) of ERISA and Regulation § 2575.502(c)-1 provide that a plan administrator who fails to do so within thirty days is liable to such participant or beneficiary in an amount (as determined by the court in its discretion) of up to $110 per day.
In Bauwnes v. Revcon Technology Group, Inc., the U.S. Court of Appeals for the Seventh Circuit held that the trustees of a multiemployer pension plan could not agree to an employer’s installment payment plan of its withdrawal liability after the trustees had demanded full payment following the employer’s default. This “no good deed goes unpunished” decision will likely make trustees much less likely to agree to subsequent payment plans after finding an employer in default.
On August 20, 2019, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit issued an opinion in Dorman v. Charles Schwab Corp.,1 overturning its 1984 position in Amaro v. Continental Can Co.2 that lawsuits filed under the Employee Retirement Income Security Act (ERISA) are not arbitrable. The court found that subsequent U.S. Supreme Court decisions mean that Amaro “is no longer good law.”
The U.S. Court of Appeals for the Third Circuit joins the Second, Seventh, Eighth, Ninth, and Tenth Circuits in declining to impose liability on alleged de facto plan administrators. Under Section 502(c) of ERISA, a plan administrator may be liable and subject to penalties for failing to comply with a participant’s request for information which the administrator must provide within 30-days from the request. The Third Circuit addressed whether a participant could sue a “de facto plan administrator” for failing to provide information timely.
On July 15, 2019, the U.S. Court of Appeals for the Tenth Circuit touched on the new regulations governing what constitutes a “full and fair review” of a claim for benefits under the Employee Retirement Income Security Act.1 The important question at the root of the case was whether one can lose discretionary authority in administering a claim by engaging in “procedural irregularities.” To be sure, the new regulations answer that question in the affirmative.2 Unfortunately, however, the Tenth Circuit was not called upon to determine whether the regulations are binding and enforceable. The court did, however, determine that what the plaintiff claimed were procedural irregularities decidedly were not.
The list of the federal courts of appeals enforcing unambiguous anti-assignment provisions in ERISA health benefit plans continues to grow: almost exactly one year ago, the Third Circuit joined its sister circuits in holding “that anti-assignment clauses in ERISA-governed health insurance plans as a general matter are enforceable.” As the Third Circuit opinion noted, every circuit court to address the issue – seven to date (the First, Second, Third, Fifth, Ninth, Tenth, and Eleventh) – has reached this same conclusion of law.
The Sixth Circuit ruled that agents were properly classified as independent contractors in an Employee Retirement Income Security Act (ERISA) class action brought on behalf of thousands of current and former insurance agents in Jammal v. American Family Insurance Co., No. 17-4125 (6th Cir. Jan. 29, 2019).
The U.S. Court of Appeals for the Fifth Circuit recently addressed “the labyrinthine complexities of ERISA law and practice.” Manuel v. Turner Industries Group, LLC, et al., No. 17-30835 (5th Cir. Oct. 1, 2018). In this wide-ranging opinion, the Fifth Circuit highlighted the importance of identifying the underlying purported injury to understand whether an ERISA § 502(a)(3) claim (a claim for equitable relief) is duplicative of a claim that could have been brought under ERISA § 502(a)(1)(B) (a claim to recover benefits or enforce a right under the terms of a plan), in which case it should be dismissed.
Clients often are surprised to learn they are liable for ERISA statutory penalties associated with participant document requests even though they have retained an independent third party to administer their ERISA welfare benefits plans (such as disability, life, and health plans). It is fairly well established in most of the federal circuits that only the plan administrator, as defined by ERISA, can be penalized for failure to respond to document requests.
With its en banc decision in Ariana v. Humana Health Plan of Texas,1 the Fifth Circuit reconsidered the standard of review in an ERISA denial of benefits case.
New handling regulations for ERISA disability claims will go into effect on April 1, 2018, the Department of Labor (DOL) has announced. The agency confirmed that the regulations are final, without changes.
It always has been difficult to give a consistent answer as to whether informal severance arrangements have created an ERISA-covered severance plan. In Mance v. Quest Diagnostics Inc., 2017 WL 684711 (DC NJ 2017), the U.S. District Court held that Quest’s decision to provide some departing employees with severance benefits under a voluntary separation agreement (“VSA”) process was provided on such a discretionary basis that it did not establish a plan under ERISA.