employee benefits/ERISA

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In a recent decision, the Sixth Circuit held that, even though eliminating labor costs (and by implication, costs of retirement benefits) was an incidental factor in a plant-closure decision, the decision did not violate the Employee Retirement Income Security Act (ERISA) because the motivating factor in the employer’s decision was production overcapacity.
Continue Reading Sixth Circuit Holds that Plant-Closure Decision Did Not Interfere with ERISA-Protected Pension Rights

In the first federal appellate decision addressing the new breed of ERISA “excess fee” cases, the U.S. Court of Appeals for the Seventh Circuit last week held, in Hecker v. Deere & Co that the Employee Retirement Income Security Act (“ERISA”) does not require an employer that sponsors 401(k) plans for its employees to disclose to plan participants that the plans’ investment advisor shared revenue with the affiliated plan trustee.
Continue Reading Revenue-Sharing of 401(k) Plan Fees Did Not Breach Fiduciary Duty Under ERISA

The Emergency Economic Stabilization Act of 2008 (“EESA” or the “bailout law”), which was enacted on October 3, 2008, contains significant amendments to the Mental Health Parity Act of 1996 (“MHPA”) that are pertinent to group health plans. For most plans, these changes will be effective January 1, 2010.
Continue Reading Mental Health Parity Provisions of the Bailout Law

In Kentucky Retirement Systems v. EEOC, No. 06-1037, 2008 WL 2445078 (U.S. June 19, 2008), the Supreme Court recently held that “where an employer adopts a pension plan that includes age as a factor” (in determining eligibility for retirement with pension benefits), and the employer subsequently “treats employees differently based on pension status,” the plan does not automatically violate the Age Discrimination in Employment Act (ADEA). Rather, the Court held that the plaintiff challenging such a policy must show that the differential treatment was “actually motivated” by age. In a 5-4 decision — with a rather strange alignment of the justices — the majority, which consisted of Justices Breyer (who authored the opinion), Stevens, Souter, and Thomas and Chief Justice Roberts, reversed the Sixth Circuit’s en banc ruling striking down the pension plan as facially discriminatory.

[This post serves as a follow up to my earlier posts on March 26, 2008 and January 2, 2008 regarding the decision in Erie County Retirees Association v. County of Erie by the Third Circuit upholding the EEOC’s rule allowing employers to coordinate retiree healthcare benefits with Medicare benefits, effectively resulting in equal total benefits between younger retirees and older Medicare-eligible retirees but unequal amounts spent on the two groups’ benefits because a portion of the Medicare-eligible retirees’ payments come from Medicare.]Continue Reading Supreme Court OKs Employer Use of Age as a Factor In Pension Plans

The Supreme Court recently issued a decision in Metlife v. Glenn, U.S., No. 06-923 where it considered: (1) whether a plan administrator has a conflict of interest when it both evaluates a claim for benefits and pays that benefit claim; and (2) how that conflict of interest should be taken into account by a court reviewing a discretionary benefit determination.

To answer the first question, the Court relied on its decision in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). The Court noted that in Firestone it held that a conflict of interest exists where the administrator “is the employer that both funds the plan and evaluates the claims” because “every dollar provided in benefits is a dollar spent by the employer; and every dollar saved is a dollar in the employer’s pocket.” Continue Reading The Supreme Court Upholds the Sixth Circuit in ERISA Conflict of Interest Case

The IRS issued Revenue Ruling 2008-13 to clarify what constitutes “performance-based” compensation under Internal Revenue Code Section 162(m).  This classification is important because Code Section 162(m) generally prohibits public companies from deducting compensation in excess of $1 million to the CEO and certain named executive officers.  If the compensation is performance-based, however, this deduction limitation…

As we noted in our recent discussion of LaRue v. DeWollf, Boberg & Assoc., Inc., the Supreme Court’s highly anticipated decision avoided the troubling issue of what constitutes equitable relief for purposes of ERISA Section 502(a)(3) claims. On March 3, 2008, the Supreme Court signaled that it may be willing to address this issue by inviting the Solicitor General to file briefs in Amschwand v. Spherion Corp., 505 F.3d 342 (5th Cir. 2007). Amschwand v. Spherion Corp., U.S., No. 07-841, request for solicitor general brief 3/3/08. Continue Reading Supreme Court Signals It May Address Whether “Make-Whole” Remedy Constitutes Equitable Relief Under ERISA

As we mentioned in our recent post regarding the Sixth Circuit’s decision in Tullis v. UMB Bank, the U. S. Supreme Court agreed to resolve a circuit split regarding the viability of ERISA lawsuits that seek damages for individual – as opposed to plan – injuries. Just yesterday, the Court issued its ruling and, in so doing, endorsed the approach taken by the Sixth Circuit in Tullis.

In particular, the Court ruled in LaRue v. DeWollf, Boberg & Assoc., Inc. that, although ERISA Section 502(a)(2) does not provide a remedy for individual injuries distinct from plan injuries, that provision does authorize recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual account.  In reaching this decision, the Court needed to reconcile its 1985 holding in Massachusetts Mutual Life Ins. Co. v. Russell – i.e. that a disability plan participant entitled to a specified benefit could not bring suit under 502(a)(2) to recover consequential damages arising from delay in processing her claim. In doing so, the Court noted that the "landscape has changed." Specifically, the Court explained that individual participant account balance plans have become prevalent and, regardless of whether a fiduciary breach diminishes plan assets payable to all participants or only to a particular individual account, such a breach creates the kind of harm that concerned the draftsmen of ERISA’s fiduciary breach provisions.Continue Reading U.S. Supreme Court Weighs In Regarding Suits for Individual Injuries Under ERISA