A federal district court in Ohio concluded that internal communications between a plan administrator and in-house counsel about a beneficiary’s first-level benefit claim remained protected by the attorney-client privilege, and that ERISA’s fiduciary exception to the attorney client privilege did not apply. In so ruling, the court explained that once the beneficiary’s counsel submitted a
It is generally understood that communications between clients and lawyers are privileged and that the substance of those conversations may not be divulged to third parties except in the rarest of circumstances. In the employee benefits world, however, plan sponsors and fiduciaries are often surprised to learn that this cardinal rule does not always apply. In fact, many communications between plan fiduciaries and plan counsel must be divulged to plan participants and beneficiaries.
The reason for different treatment of the attorney-client privilege in employee benefits matters is the so-called “fiduciary exception,” pursuant to which communications between an attorney and a plan fiduciary are not shielded from disclosure to plan participants. There are two explanations for the exception: first, because the participants, rather than the plan fiduciaries, are viewed as the “real” clients of plan counsel; and second, because plan participants are entitled to disclosure of all information pertaining to the administration of their claims for benefits.
While the fiduciary exception doctrine is well established, its application may differ depending on the particular facts and circumstances presented. This article highlights ten principles that generally are determinative of whether the exception will apply.
A recent opinion from a federal district court in Massachusetts provides plan sponsors and fiduciaries with a reminder that plan service providers should be excused from meetings where their attendance is not needed to assist in the provision of legal advice. If they are not, whatever attorney-client privilege that may have protected the confidentiality of…
Under ERISA, plan participants and beneficiaries have the right to obtain information pertaining to their benefit entitlements and the operation of the plans in which they participate. Sometimes these rights compromise the protections of the attorney-client privilege. Under the fiduciary exception, “an employer acting in the capacity of ERISA fiduciary is disabled from asserting the attorney-client privilege against plan beneficiaries on matters of plan administration.” U.S. v. Mett, 178 F.3d 1058, 1063 (9th Cir. 1999). Although courts have recognized that there are circumstances where the fiduciary exception is inapplicable, it is often difficult to predict in advance whether and when attorneys can provide advice that will be immune from disclosure, and there is an ever-present risk that advice to fiduciaries regarding plan administration will be subject to the fiduciary exception. For example, in Stephan v. Unum Life Insurance Company of America, 697 F.3d 917 (9th Cir. 2012), the Ninth Circuit recently analyzed the fiduciary exception and held that attorney-created memoranda were subject to the fiduciary exception because they were created upon request of the benefits claim decision maker before the final benefit appeal, and dealt with matters of plan interpretation.