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The Western Pension & Benefits Council Portland Chapter ERISA Litigation Update Presented by: Walter W. Miller Schwabe, Williamson & Wyatt October 8, 2014 www.schwabe.com | Bend, OR | Eugene, OR | Portland, OR |

SLIDE 1

The Western Pension & Benefits Council Portland Chapter ERISA Litigation Update Presented by: Walter W. Miller Schwabe, Williamson & Wyatt October 8, 2014

SLIDE 2

ERISA §404 Fiduciary Duties

A fiduciary shall discharge his duties with respect to a plan

solely in the interest of the participants and beneficiaries, and

– (A) for the exclusive purpose of (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan; – (B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct

f an enterprise of a like character and with like aims;

– (C) by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and – (D) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of [ERISA].

SLIDE 3

Presumed Innocent Nevermore

Fifth Third Bancorp v. Dudenhoeffer

– Issue: Are ESOP fiduciaries presumed to be in compliance with the ERISA prudence standard in regard to company stock investments? – Takeaway: Never presume

ESOPs are subject to prudence standards
Be careful with hardwired clauses

SLIDE 4

ERISA §502 Civil Enforcement

A civil action may be brought:

– (1) by a participant or beneficiary— *** – (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan

SLIDE 5

Time’s Up!

Heimeschoff v. Hartford Life & Accident

Insurance Co.

– Issue: Does a time limit for filing a lawsuit set forth in a plan document override ERISA? – Takeaway: Include reasonable time limit in plan documents

SLIDE 6

29 CFR §2560.503-1 Claims Procedure

The plan administrator shall provide a claimant

with written or electronic notification of any adverse benefit determination

The notification shall set forth, in a manner

calculated to be understood by the claimant—

(iv) A description of the plan's review procedures

and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under [ERISA] following an adverse benefit determination on review.

SLIDE 7

Time Stands Still

Moyer vs. Metropolitan Life Insurance

Company

– Issue: Is the imposition of a contractual time limit conditioned upon disclosure in the claim denial notice? – Takeaway: Include time limit in SPD and claim denial notice

SLIDE 8

Could Have or Would Have

Tatum v. RJR Nabisco Investment

Committee

– Issue: Can blind luck prevail? – Takeaway: Be thorough and prudent

SLIDE 9

ERISA §510 Interference with Protected Rights

It shall be unlawful for any person to

discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan… or [ERISA] or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan…

SLIDE 10

ERISA’s Blind Eye

Roe v. Empire Blue Cross Blue Shield

– Issue: Does ERISA protect same-sex spouses? – Takeaway: ERISA is not the answer, but relief may possibly be found elsewhere

SLIDE 11

Excess Fee Decision – Round Two

Tussey vs. ABB

– Issue: Why do they let these groups play with

ur money?

– Takeaway: Be smart about it

1 1

SLIDE 12

ERISA §(21)

(A) A person is a fiduciary with respect to a

plan to the extent (i) he… exercises any authority or control respecting management or disposition of its assets

1 2

SLIDE 13

So You Thought You Weren’t A Fiduciary

Golden Star v. Mass Mutual Life Insurance

Company

– Issue: Does having the ability to set fees make you a fiduciary? – Takeaway: Require consent to fee increases

1 3

SLIDE 14

You, Too, Thought You Weren’t A Fiduciary

Perez vs. Geopharma

– Issue: How little does it take to become a fiduciary? – Takeaway: The DOL is casting a wide net

1 4

SLIDE 15

ERISA §514 Other Laws

The provisions of [ERISA] shall supersede

any and all State laws insofar as they may now or hereafter relate to any employee benefit plan

1 5

SLIDE 16

ERISA Preemption. Where Hath Thou Gone?

Gray vs. FedEx Ground Package System,

Inc.

– Issue: Is every loss of benefits claim covered by ERISA? – Takeaway: Be wary of state law claims

1 6

SLIDE 17

The Western Pension & Benefits Council Portland Chapter ERISA Litigation Update Presented by: Walter W. Miller Schwabe, Williamson & Wyatt October 8, 2014

ERISA §404 Fiduciary Duties

solely in the interest of the participants and beneficiaries, and

Presumed Innocent Nevermore

– Issue: Are ESOP fiduciaries presumed to be in compliance with the ERISA prudence standard in regard to company stock investments? – Takeaway: Never presume

ERISA §502 Civil Enforcement

– (1) by a participant or beneficiary— *** – (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan

Time’s Up!

Insurance Co.

– Issue: Does a time limit for filing a lawsuit set forth in a plan document override ERISA? – Takeaway: Include reasonable time limit in plan documents

29 CFR §2560.503-1 Claims Procedure

with written or electronic notification of any adverse benefit determination

calculated to be understood by the claimant—

and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under [ERISA] following an adverse benefit determination on review.

Time Stands Still

Company

– Issue: Is the imposition of a contractual time limit conditioned upon disclosure in the claim denial notice? – Takeaway: Include time limit in SPD and claim denial notice

Could Have or Would Have

Committee

– Issue: Can blind luck prevail? – Takeaway: Be thorough and prudent

ERISA §510 Interference with Protected Rights

ERISA’s Blind Eye

– Issue: Does ERISA protect same-sex spouses? – Takeaway: ERISA is not the answer, but relief may possibly be found elsewhere

Excess Fee Decision – Round Two

– Issue: Why do they let these groups play with

– Takeaway: Be smart about it

ERISA §(21)

plan to the extent (i) he… exercises any authority or control respecting management or disposition of its assets

So You Thought You Weren’t A Fiduciary

Company

– Issue: Does having the ability to set fees make you a fiduciary? – Takeaway: Require consent to fee increases

You, Too, Thought You Weren’t A Fiduciary

– Issue: How little does it take to become a fiduciary? – Takeaway: The DOL is casting a wide net

ERISA §514 Other Laws

any and all State laws insofar as they may now or hereafter relate to any employee benefit plan

ERISA Preemption. Where Hath Thou Gone?

Inc.

– Issue: Is every loss of benefits claim covered by ERISA? – Takeaway: Be wary of state law claims

Questions?