Justia ERISA Opinion Summaries

Plaintiffs participated in UMC’s self-administered retirement contribution plans. UMC provided participants with a variety of investment choices. Plaintiffs elected to locate 100 percent of their investments in the default investment for participants who failed to elect preferred investments. The 2007 Pension Protection Act created “safe harbor relief from fiduciary liability” for plan administrators that directed automatic-enrollment investments into Qualified Default Investment, “capable of meeting a worker’s long-term retirement savings needs.” The regulation grandfathered in stable-value funds that employers used as default investments prior to PPA’s enactment. In 2008, UMC sought to harmonize its practices with new DOL regulation by transferring investments in the prior default fund, the Lincoln Stable Value Fund, into the Lincoln LifeSpan Fund. Because UMC did not have records of which participants chose the fund and which were investors by default, UMC sent notice to all participants with 100 percent in the Fund. Plaintiffs claim that they never received the notice. They suffered financial losses. After exhausting administrative procedures, they sued for breach of fiduciary duty under ERISA. The district court ruled that Lincoln was not a fiduciary under the plan and that UMC was immune from liability under the DOL Safe Harbor regulation. The Sixth Circuit affirmed. View "Bidwell v. Univ. Med. Ctr., Inc." on Justia Law

Stokes owned 1Point, which managed employee-benefits plans and 401(k) retirement plans as a third-party administrator (TPA). Most were governed by the Employee Retirement Income Security Act, 29 U.S.C. 1002. TPAs generally provide record-keeping and assist in transferring money, but do not handle money or securities. Stokes directed clients to send funds to accounts he had opened in 1Point’s name. Cafeteria plan clients deposited $45 million and 401(k) clients deposited $5.7 million in accounts at Regions. Because the accounts bore 1Point’s name, Stokes was able to transfer money. Between 2002 and 2006, Stokes stole large sums. Regions failed to comply with the Bank Secrecy Act, 31 U.S.C. 3513, requirements to report large currency transactions, file suspicious-activity reports, verify identities for accounts, and maintain automated computer monitoring. In 2004, the U.S. Financial Crimes Enforcement Network assessed a $10 million fine against Regions. In 2006, Stokes and 1Point filed for bankruptcy. The Trustee filed suit against Regions in bankruptcy court on behalf of victimized plans for which he assumed fiduciary status. The suit was consolidated with plaintiffs’ suit. The district court withdrew the Trustee’s case from bankruptcy court, dismissed ERISA claims, and found that ERISA preempted state law claims. The Sixth Circuit affirmed. View "McLemore v. Regions Bank" on Justia Law

A class of retirees who had worked under a collective bargaining agreement and their survivors and dependents obtained monetary damages and declaratory and injunctive relief requiring that defendants provide vested lifetime healthcare benefits to the class members depending on the relevant date of retirement (Employee Retirement Income Security Act of 1974, 29 U.S.C. 1132(a)(1)(B); Labor-Management Relations Act, 29 U.S.C. 185). The Sixth Circuit affirmed, holding that defendant Newell Window is bound as a successor liable under earlier collective bargaining agreements to which it was not a party; that members of the plaintiff class had vested rights to company-paid health insurance and/or Medicare Part B premium reimbursements; and that the claims were not barred by the applicable six-year statute of limitations. View "Bender v. Newell Window Furnishings, Inc." on Justia Law

Plaintiffs are 225 current or former employees of steel mills that have changed ownership many times. Calculation of retirement benefits changed with the changes in ownership. The employees claim that their union, employer, and plan administrator violated the Employee Retirement Income Security Act, 29 U.S.C. 1001-1461, and Ohio common law by intentionally misleading them regarding how pension benefits would be calculated, inducing some to retire early. The district court dismissed, concluding that certain ERISA claims were time-barred, that the others failed to state a claim for relief, and that the common-law claims were preempted by federal law. The Sixth Circuit affirmed. The district court properly applied a three-year limitations period to promises allegedly made in 2003. Plaintiffs did not adequately allege fraud underlying breach of fiduciary duty, nor did they establish that the union was a fiduciary. The court rejected a variety of equitable theories. View "Cataldo v. U.S. Steel Corp." on Justia Law

The collective bargaining agreement was scheduled to expire. During negotiations, the union disclaimed representation of the company's employees and terminated the collective bargaining process. The company then withdrew from the multiemployer pension plan. The pension fund imposed withdrawal liability and assessed $57,291.50, 29 U.S.C. 1399. The company demanded indemnification from the union pursuant to the collective bargaining agreement, which stated: "The Union shall indemnify the Company for any contingent liability which may be imposed under the Multiemployer Pension Plan Amendments Act of 1980." The district court concluded that an arbitration provision was enforceable. The arbitrator ordered the union to pay. The district court upheld the award. The Sixth Circuit affirmed, rejecting an argument that it would violate public policy for a union to indemnify an employer for any contingent liability to a pension plan established under the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1381-1461. View "Shelter Distrib., Inc. v. Gen. Drivers, Warehousemen & Helpers Union Local No. 89" on Justia Law

GM offered separate defined-contribution 401(k) plans. Benefits were based on the amount of contributions and investment performance of an individual's separate account. The plans offered several investment options, including mutual funds, non-mutual fund investments, and the General Motors Common Stock Fund. Participants could change the allocation in any investment on any business day. The plans invested, by default, in the Pyramis Fund, not the GM Fund. In 2008, the fiduciary suspended purchases of GM and began selling the stock. Plaintiffs filed suit under the Employee Retirement Income Security Act, 29 U.S.C. 1109(a), alleging breach of fiduciary duty in allowing investment in GM after its financial trouble was the subject of reliable public information. The district court dismissed. The Sixth Circuit reversed, holding that plaintiffs sufficiently pleaded that "a prudent fiduciary acting under similar circumstances would have made a different investment decision." The fiduciary cannot escape its duty simply by asserting that the plaintiffs caused the losses by choosing to invest in the GM Fund. Such a rule would improperly shift the duty of prudence to monitor the menu of investments to participants. The fact that a participant exercises control over assets does not automatically trigger section 404(c) safe harbor.View "Pfeil v. State Street Bank & Trust Co" on Justia Law

Debtors were eligible to participate in their employers' ERISA 401(k) qualified retirement plans, but were not making contributions to those plans when they filed Chapter 13 petitions, but were repaying 401(k) loans to the plans. Proposed Chapter 13 plans called for a five-year commitment period under 11 U.S.C. 1325 and for repayment of 401(k) loans before completion of the commitment periods. Rather than calling for an increase in plan payments to the Chapter 13 trustee for the benefit of unsecured creditors once that repayment was complete, the plans proposed that debtors begin making contributions to their 401(k) retirement plans. The trustee filed objections. The bankruptcy court held that because 11 U.S.C. 541(b)(7) excludes contributions to a 401(k) plan from property of the estate and disposable income, debtors were allowed to exclude proposed 401(k) contributions from disposable income. The Bankruptcy Appellate Panel ruled in favor of the Trustee. The Sixth Circuit affirmed. Post-petition income, available to debtors after 401(k) loans are fully repaid, is "projected disposable income" that must be turned over to the trustee for distribution to unsecured creditors under 11 U.S.C. 1325(b)(1)(B) and may not be used to fund voluntary 401(k) plans. View "Seafort v. Burden" on Justia Law

In 1992 a brokerage firm established a nonqualified defined benefit plan for a select group of highly compensated executives. The plan contains provisions that, if triggered, result in discontinuance of payments and forfeiture of benefits accrued, regardless of how long a participant has been enrolled. Plaintiffs are executives who left the firm and went to work for a rival company, triggering provisions that forfeited benefits. After exhausting their claims before the plan's administrative committee, they filed suit under the Employee Retirement Income Security Act, 29 U.S.C. 1053(a)(2), claiming improper denial of benefits. The district court granted summary judgment to plaintiffs. The Sixth Circuit reversed. The existence of an ERISA plan is not a jurisdictional issue and defendants waived their argument that the plan was not an ERISA plan by neglecting to raise it until after summary judgment, but the district court should have remanded the issue of whether the plan is qualifies as a top-hat, deferred-compensation plan under section 201(2) of ERISA: a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.View "Daft v. Advest, Inc." on Justia Law

Patient, insured by defendant, diagnosed with end-stage renal disease, and received dialysis at plaintiff's center. Three months after diagnosis, she became entitled to Medicare benefits (42 U.S.C. 426-1). Her plan provided that coverage ceased at that time, because of her entitlement to Medicare, but the insurer continued to pay for two months. Under the 1980 Medicare Secondary Payer Act, a group health plan may not take into account that an individual is entitled to Medicare benefits due to end-stage renal disease during the first 30 months (42 U.S.C. 1395y(b)(1)(C)(i)), but the insurer terminated coverage. Plaintiff continued to treat and bill. The insurer declared that termination was retroactive and attempted to offset "overpayment" against amounts due on other patients' accounts. The outstanding balance after patient's death was $210,000. Medicare paid less than would have been received from the insurer. The center brought an ERISA claim, 29 U.S.C. 1132(a)(1)(B), and a claim for double damages under the 1980 Act. The district court granted plaintiff summary judgment on its ERISA claim but dismissed the other. The Sixth Circuit affirmed on the ERISA claim and reversed dismissal. A healthcare provider need not previously "demonstrate" a private insurer's responsibility to pay before bringing a lawsuit under the 1980 Act's private cause of action.View "Bio-Medical Applications of TN, Inc. v. Cent. States SE & SW Areas Health Plan" on Justia Law

The district court certified a class action and a proposed class in an action under the Employee Retirement Income Security Act, 29 U.S.C. 1001. The suit claimed that Blue Cross breached its fiduciary duty by imposing and failing to disclose an other-than-group subsidy and that the OTG subsidy violated Mich. Comp. Laws 550.1211(2). The state insurance commissioner took the position that state law allows the assessment and that revenue it generates funds Medigap coverage. The Sixth Circuit reversed, holding that the class action is not the superior method of adjudication (Federal Rule of Civil Procedure 23(b)(3)) and prosecuting separate actions does not present the risk of inconsistent adjudications (FRCP 23(b)(1)(A)). ERISA fiduciary status is a crucial threshold factual issue specific to every class member, requiring the court to make individualized determinations. Resolution of the legality of the subsidy before that determination would also mitigate the state's concerns about stopping collection of the fee. Potential awards at stake would not preclude individual class members from seeking relief and there was no evidence that individual litigation would create a risk of inconsistent adjudications that would establish incompatible standards of conduct for the defendant. View "Pipefitters Local 636 Ins. Fund v. Blue Cross Blue Shield of MI" on Justia Law