Given the continuing wave of ERISA litigation, this article has become a mainstay of The Speed Reader. Cases that were filed or for which courts issued rulings recently are outlined below, although please note that this list is not exhaustive.
- Laborers’ Pension Fund v. Miscevic (decided on January 29, 2018 by the U.S. Court of Appeals for the Seventh Circuit): This case presents a question not often seen in ERISA litigation. Namely, does ERISA preempt a state’s “slayer statute,” under which a person who intentionally and unjustifiably kills someone else cannot receive any property or benefit by reason of the death? The plaintiff in this case is the deceased participant’s employer, who sponsored a pension plan under which such participant had an accrued benefit. The defendant is the participant’s spouse, who intentionally killed the participant but who was found by a court to be not guilty by reason of insanity. In this case, the defendant cited the governing plan document, which stated that when a married participant dies before his or her benefit commences, the participant’s spouse receives a benefit (i.e. a life annuity). Also, the defendant argued that ERISA preempts the slayer statute or, alternatively, that the statute does not apply because she was found not guilty of the participant’s murder by reason of insanity. The court, however, ruled that ERISA does not preempt the slayer statute and thus the participant’s estate, rather than the defendant, is the beneficiary of the participant’s pension benefit. As support for that conclusion, the court stated that: (1) the slayer statute is an aspect of family law, which is a traditional area of state regulation; (2) to demonstrate ERISA preemption, the defendant must overcome the presumption that Congress did not intend ERISA to supplant this traditional area of state regulation; and (3) the defendant cannot overcome that presumption because “the axiom that an individual who kills a plan participant cannot recover plan benefits is a well‐established legal principle which predates ERISA,” and “Congress could not have intended ERISA to allow one spouse to recover benefits after intentionally killing the other spouse.”
- Starnes v. Universal Fidelity Administrators Company (decided on February 5, 2018 by the U.S. District Court for the District of South Carolina): The plaintiff here filed a claim for health insurance benefits pursuant to the terms of her employer’s ERISA plan, and the defendant (the claims administrator) denied the claim. The plaintiff appealed, but the defendant again denied the claim, via a November 11, 2014 final denial letter. The plaintiff filed this lawsuit on November 13, 2017. The defendant then filed a motion on January 3, 2018, asking the court to rule in its favor based on the contention that the plaintiff’s claim is time-barred by the plan’s one-year time limitation for filing lawsuits (i.e. participants and beneficiaries must file suit within one year after the claims administrator’s final decision). In denying the defendant’s motion, the court noted that the defendant’s claim denial notices did not mention that one-year time limit. The court then opined that because ERISA’s claims and appeals regulations required the defendant to inform the plaintiff of the plan’s one-year time limit, and the defendant failed to do so, the one-year time limit is unenforceable against the plaintiff. Thus, this case will continue to be litigated.
- Wilcox v. Georgetown University (filed on February 23, 2018 in the U.S. District Court for the District of Columbia): The plaintiffs in this case are participants in the defendant plan sponsor’s 403(b) plans. The other defendants are the plan sponsor’s former Senior Vice President and Chief Administrative Officer (who allegedly had discretionary authority and powers necessary to administer the plans) and his successor. The plaintiffs make allegations strikingly similar to those made in several other cases filed in approximately the past year against several major universities. Namely, the plaintiffs assert that: (1) instead of using the large plans’ substantial bargaining power to benefit participants and beneficiaries, the defendants failed to evaluate and monitor the plans’ expenses in a prudent manner; and (2) the defendants caused the plans to pay “unreasonable and excessive fees” for investment services and administrative services. More specifically, the plaintiffs contend that the defendants breached their ERISA fiduciary duties by engaging three companies to provide administrative and recordkeeping services to the plans, instead of one, and thereby failed to obtain reasonable pricing for those services. Further, the defendants allegedly allowed the plans’ investment menu to include mutual fund share classes that charged higher fees than other less expensive investment options offering the same investment strategies, or than less expensive share classes of the same investment funds. The plaintiffs seek several common ERISA remedies as a result of the alleged breaches of fiduciary duty. Those remedies include: (a) having the defendants “make good to the Plans all losses to the Plans resulting from each breach of fiduciary duties, and to otherwise restore the Plans to the position they would have occupied but for the breaches of fiduciary duty;” (b) requiring the plans to obtain bids for recordkeeping services and to pay only reasonable recordkeeping expenses; and (c) having the defendants reimburse the plaintiffs for their attorneys’ fees and litigation costs.
- U.S. v. Rossi (decided on March 6, 2018 by the U.S. District Court for the Northern District of California): DOL investigators found evidence that the defendant in this case, who was a profit sharing plan’s trustee, illegally and willfully removed assets from the plan and then used that money for unauthorized purposes. Also, she took those steps while knowing that the funds belonged to the plan’s participants. Consequently, she was charged with one count of theft from the employee benefit plan, and she pleaded guilty. In this case’s latest proceedings, the court ordered the defendant to pay $234,271 in restitution and to serve one year of probation for violating ERISA’s criminal provisions. She has also been barred from serving as a fiduciary or service provider to any ERISA plan for thirteen years.