Supreme Court Declines Review of Fiduciary Breach Claims in Tussey v. ABB

The U.S. Supreme Court recently announced that it will not hear the case of Tussey v. ABB, despite encouragement from the Solicitor of Labor to hear the case. The Tussey case involved whether deference should be limited to fiduciaries’ decisions that relate to benefit claims. 

In Tussey, the plan participants alleged that the revenue sharing payments and other aspects of plan administration resulted in breaches of fiduciary duties. They claimed that the plan sponsor overpaid for recordkeeping services, which they said subsidized costs for services related to the plan sponsor’s other benefit plans as well as corporate matters. The terms of the plan document provided the fiduciaries with the discretion to determine eligibility regarding benefits and to take any other actions with respect to the plan, including interpreting of the terms of the plan. 

ERIC members and trial members can read more here.
The 8th Circuit’s decision is available here.
The Supreme Court’s denial of cert is available here.

U.S. Supreme Court Hears Oral Arguments in Retiree Health Case

The U.S. Supreme Court recently heard oral arguments in the case of M&G Polymers USA, LLC v. Tackett, which involves when retiree health benefits are considered to be vested. In M&G Polymers, certain collectively bargained retirees and their dependents who participated in M&G’s health plan sued when M&G required them to make contributions towards the cost of health benefits. They claimed that they had a contractual right to lifetime contribution-free health care benefits based on the language that was in the collective bargaining agreements (“CBAs”) when they retired. The CBAs do not explicitly address the duration of retiree health benefits and the company argues that they do not provide for vested lifetime benefits.

ERIC members and trial members can read more here.
The 6th Circuit’s decision is available here.

ERIC’s amicus brief is available here.
The transcript of the oral arguments is available here.
Additional information is available here.

Supreme Court to Hear ACA Subsidies Case

Scotusblog reports in "Court to rule on health care subsidies" that:

"The Supreme Court, moving back into the abiding controversy over the new health care law, agreed early Friday afternoon to decide how far the federal government can extend its program of subsidies to buyers of health insurance. At issue is whether the program of tax credits applies only in the consumer marketplaces set up by 16 states, and not at federally-run sites in 34 states."

To read more, click here.

ERIC members and trial members can read more here and here.

Sixth Circuit Allows Plan to Restrict Where Lawsuits Can Be Filed

The Sixth Circuit Court of Appeals recently held that a plan document can limit where participants can file suit. In Smith v. Aegon Companies Pension Plan, the participant retired in 2000 and began to receive benefits under the plan. In 2007, the company amended the plan to include a venue provision that required lawsuits to be brought in the District Court in Cedar Rapids, Iowa (where the plan administrator was located). In 2011, the plan notified the participant that they had been overpaying him and would eliminate his benefits until the overpayment was recouped. After his appeal to the plan fiduciaries was denied, the participant filed suit in Kentucky. The District Court concluded that the plan’s venue provision was enforceable and dismissed the case.

The court’s decision is available here.
ERIC members and trial members can read more here.

Supreme Court Agrees to Hear Case on Monitoring Plan Investments

The U.S. Supreme Court has indicated that it will hear the case of Tibble v. Edison International, which involves the selection and monitoring of plan investments and the amount of fees related to those investments.

The Supreme Court’s decision in this case will have a significant impact on how long participants have to sue regarding alleged fiduciary breaches in the selection and monitoring of plan investments. ERIC will closely monitor this case and separately reach out to members to determine if an amicus brief should be filed with the Supreme Court.

ERIC members and trial members can read more here.

The 9th Circuit’s decision in Tibble v. Edison International is available here.
For more information on the case, click here.
For case developments, click here.

Another Court Decides ACA Subsidies Case

In "Federal judge limits health care subsidies", SCOTUSblog reports that:

"Deepening the controversy over tax subsidies to help lower-income workers obtain health insurance, a federal trial judge in Oklahoma on Tuesday barred those credits for individuals who shop for coverage on marketplaces run by the federal government, not by a state.

That issue is already awaiting the Supreme Court’s attention, with the federal government due to file there on Friday a defense of the subsidies scheme that has so far helped nearly five million individuals to afford health coverage under the Affordable Care Act."

To read more, click here.

Mintz Levin Explores Recent Worker Classification Decision

In "Employment Law Summer Recap 2014: Part 1 of 11 – FedEx sings Nico & Vinz’s “Am I Wrong”…to Classify Our Drivers as Independent Contractors?'", Mintz Levin explains that:

"[A] decision handed down by a three-judge panel out of the 9th Circuit in Alexander v. FedEx Ground Package System, Inc. said that FedEx exercised too much control over these folks (and by folks, I mean more than 2,300 drivers operating in Oregon and California), and as a result, it should have classified them as employees rather than as independent contractors."

To read more, click here.

Court Revives Stock Drop Litigation

In "U.S. court revives Lehman employee lawsuit over retirement plan," Reuters reports that:

"U.S. appeals court has revived a lawsuit seeking to hold former CEO Dick Fuld and other former directors of Lehman Brothers Holdings Inc liable for losses suffered by the collapsed investment bank’s employee retirement plan."

To read more, click here.

ERIC Legal / Litigation FocusOn Call Scheduled for October 1

The ERISA Industry Committee (ERIC) will host a FocusOn Conference Call to update members (and trial members) on recent benefits litigation on fiduciary responsibilities, deference, and equitable remedies cases.

The call will discuss the recent decision by the Fourth Circuit on the requirements for fiduciaries when eliminating a plan investment, the Ninth Circuit’s holding on the abuse of discretion standard of review, and the principles set forth by the Supreme Court for evaluating a fiduciary’s decision to maintain an investment in company stock. The call will also address the deference that applies to fiduciary’s decisions. The speakers will also analyze the latest equitable remedies cases and their impact on benefit plans. 

ERIC members and trial members can register here.

Ninth Circuit Considers All Relevant Factors When Reviewing Fiduciary Decisions

The Ninth Circuit Court of Appeals, in Pacific Shores Hospital v. United Behavioral Health, recently examined the standard that applies when courts review a fiduciary’s benefit denial. The Court held that courts should consider “all of the relevant circumstances,” rather than upholding an administrator’s decision as long as it was reasonable.

ERIC members and trial members can read more here.
The Ninth Circuit’s decision is available here.
The Department of Labor’s brief is available here.

SOL Recommends That Supreme Court Decide Fiduciary Duty Case

The Solicitor of Labor ("SOL") recently recommended that the U.S. Supreme Court consider to what extent fiduciaries are required to monitor investments on an ongoing basis in Tibble v. Edison International. 

The SOL recently filed an amicus brief, which states that the Supreme Court should hear the first issue on monitoring investments, but not the second issue on deference. On the first issue, the SOL argued ERISA’s statute of limitations does not eliminate the requirement that fiduciaries prudently monitor a plan’s investments. The SOL said that the fiduciaries have a continuing fiduciary duty to review the plan’s investments and eliminate any that are imprudent. Furthermore, the SOL said that it appears as though the fiduciaries did monitor the investments and that the Court should evaluate whether they did so prudently.

ERIC members and trial members can read more here.
The Department of Labor’s brief in Tibble is available here.
The Ninth Circuit’s original decision in Tibble is available here.
The Ninth Circuit’s amended opinion in Tibble is available here.
Additional information about the Tibble case is available here.

Circuit Court of Appeals to Re-Hear ACA Subsidy Case

In "D.C. Circuit grants en banc rehearing in Halbig v. Burwell", the Washington Post reports that:

"[T]he U.S. Court of Appeals for the D.C. Circuit granted rehearing en banc in Halbig v. Burwell, one of four cases challenging the lawfulness of an IRS rule authorizing tax credits and cost-sharing subsidies for the purchase of health insurance in federal exchanges. According to the challengers, the IRS rule is illegal because, among other things, the PPACA only authorizes tax credits and subsidies for the purchase of insurance on exchanges “established by the State,” and the PPACA expressly defines “State” as one of the 50 states or the District of Columbia."

To read more, click here.

Fourth Circuit Examines Fiduciary Duties

The Fourth Circuit Court of Appeals recently ruled in Tatum v. RJR Pension Investment Committee on the requirements for fiduciaries when eliminating a plan investment.

In Tatum, Nabisco and R.J. Reynolds Tobacco had merged together. Fourteen years later, the companies decided to split apart and spun off R.J. Reynolds. The 401(k) plan had included stock in both Nabisco and R.J. Reynolds as investment options. After the spin-off, the RJR plan fiduciaries decided to eliminate the Nabisco stock as an investment option, even though the plan document provided that participants could remain invested in the Nabisco stock but prohibited additional investment in it. After the investment was eliminated and the participants forced to divest, the Nabisco stock significantly increased in value.

The Fourth Circuit’s decision in Tatum v. RJR Pension Investment Committee is available here.

ERIC members and trial members can read more here.

Mixed results from Courts of Appeals on ERISA preemption

In recent weeks, U.S. Courts of Appeals have provided mixed results when determining whether state laws were superseded (i.e., preempted) by ERISA. Several Circuit Courts of Appeals recently held that a number of state laws that impacted ERISA plans were not preempted by ERISA, while some courts held that other state laws were not.

A number of U.S. Courts of Appeals have recently examined when ERISA preempts state laws. The Sixth Circuit found in Self-Insurance Institute of America, Inc. v. Snyder that a state law imposing a tax on claims paid by plans, including self-insured plans, was not preempted by ERISA. Similarly, the Third Circuit held in New Jersey Carpenters v. Tishman that a state’s prevailing wage law was not preempted. The Second Circuit found in Wurtz v. The Rawlings Company that a state law that addressed subrogation and reimbursement was preempted for self-funded health plans, but not for fully insured plans. Finally, the First Circuit held in Merit Construction Alliance v. City of Quincy that a state law requiring the maintenance of an ERISA program was preempted.

ERIC members and trial members can read more here.
SIIA v. Snyder is available here.
New Jersey Carpenters v. Tishman is available here.
Wurtz v. The Rawlings Company is available here.
Merit Construction Alliance v. City of Quincy is available here.

Amici Weigh In on Supreme Court Retiree Health Case

In "ERIC Disagrees with Court About Vested Retiree Health Benefits", PlanSponsor.com states:

"The ERISA Industry Committee (ERIC) is urging the U.S. Supreme Court to reverse a federal court ruling that one company’s collectively bargained retiree health benefits are vested for life. In an amicus brief filed with the U.S. Supreme Court, ERIC asks the high court to reverse a decision by the 6th U.S. Circuit Court of Appeals in M&G Polymers v. Tackett."

To read more, click here.

Analysis of ACA Subsidy Cases

In "Key Component of Affordable Care Act Might Be Invalid," Amy Moore of Covington & Burling LLP explains:

"Yesterday two federal courts of appeal reached opposite conclusions on the question whether individuals in 34 states are eligible for federal subsidies when they purchase health insurance coverage. Depending on how this issue is resolved, it could have a significant impact on the future of the Affordable Care Act, including the employer mandate scheduled to take effect in 2015.

At the center of the controversy is the premium tax credit, which subsidizes the cost of health insurance for lower-income individuals. The statute says that the subsidy is available for coverage purchased on a health insurance exchange established by a state; but the statute is silent (at least in the view of some who seek to construe it) with respect to coverage purchased on an exchange established by the federal government. In 2012 the IRS issued a regulation confirming that the subsidy would be available for health coverage purchased on any exchange, state or federal."

To read more, click here.

ERIC members and trial members can also read more about the cases here.

ERIC Files Amicus Brief with Supreme Court in Retiree Health Vesting Case

The ERISA Industry Committee (ERIC), along with another trade association, filed an amicus brief filed with the U.S. Supreme Court in the M & G Polymers v. Tackett case. The brief was prepared jointly by Kirkland & Ellis LLP and Proskauer Rose LLP.

The brief urges the Court to overrule the Sixth Circuit decision that held that the company’s bargained for retiree health benefit was vested based on the Sixth Circuit’s long-standing presumption of vesting of such benefits despite the absence of any language in an agreement providing for such. (Other circuits have adopted a variety of approaches for evaluating the vesting issue, but none has applied the Sixth Circuit approach and the Third Circuit has essentially adopted a presumption that the benefit is not vested). The ERIC brief specifically argues that vesting should not be held to exist unless there is clear and unambiguous language providing for such.

A copy of the brief is available here.

Courts of Appeals Take Opposing Views on ACA Subsidies

In "D.C. Appeals Court Overturns Subsidies For Fed Exchange; Fourth Circuit Takes Different View", Kaiser Health News reports that:

"A three-judge panel for the U.S. Court of Appeals in Washington ruled Tuesday that subsidies may not be offered in the federal health exchange. The decision overturned a lower court ruling. Hours later the Fourth Circuit Court of Appeals offered its own decision, which upholds the Obama administration's arguments that subsidies can be applied in the federal exchange.

You can read the U.S. Appeals Court for the District of Columbia's decision here, and the decision from the U.S. Court of Appeals for the Fourth Circuit here."

To read more, click here.

ERIC and Epstein Becker Green Release Summer 2014 Edition of Benefits Litigation Update

The latest edition of the Benefits Litigation Update, a joint project of ERIC and the law firm of Epstein Becker Green, focuses on:

• The U.S. Supreme Court’s decisions in Fifth Third (and several non-ERISA security law cases affecting benefit plans), Hobby Lobby and Conestoga,
• The latest developments regarding equitable remedies after Amara v. Cigna,
• An update on M&G Polymers USA, LLC v. Tackett involving when retiree health benefits are considered to be vested, 
• Updates on several other important cases that are currently pending, and
• An editorial from Epstein Becker Green counsel that discusses a possible concern about judicial deference to plan administrative decisions. 

To read more, click here.

Don't Miss Upcoming Benefits Litigation Update Call!

The ERISA Industry Committee (ERIC) and Epstein Becker Green will be jointly distributing the latest issue of the Benefits Litigation Update in July, reviewing the latest developments in key litigation matters.

As part of the release of the Update, ERIC and Epstein Becker Green have scheduled a conference call so that ERIC staff and senior counsel from Epstein Becker Green can discuss in more detail key issues regarding each case or issue summarized in the Update and answer any questions you may have.

Some of the cases and issues that will be discussed in this latest edition will be the U.S. Supreme Court’s decisions in Fifth Third, Hobby Lobby and Conestoga, an update on judicial deference to administrative decisions, the latest developments regarding equitable remedies after Amara v. Cigna, and an update on M&G Polymers USA, LLC v. Tackett involving when retiree health benefits are considered to be vested, as well as updates on several other important cases that are currently pending.

ERIC members and trial members can register for the call here.