While the term “co-pay” might suggest a sharing of costs between patients and their health plans, a recent study by the University of Southern California Schaeffer Center found that almost a quarter of patients are paying more than the full price for their prescription drugs under their insurance plans due to “clawbacks.” A prescription drug
A California federal district court dismissed a plan fiduciary’s equitable indemnity claim because such claims are not available to a breaching fiduciary under ERISA. Plaintiff William Brown commenced a putative class action for long-term disability benefits.
In Golden Star Inc. v. MassMutual Life Ins. Co., 2014 WL 2117511 (D. Mass. May 20, 2014), a district court addressed two issues that have become hotly contested in 401(k) plan fee litigation: (1) whether and when a plan provider’s possession or exercise of discretion over fees confers fiduciary status; and (2) whether, to be a fiduciary with respect to plan investments, a plan provider must not only possess, but actually exercise discretion over the investment options offered by the plan.
MassMutual offered plaintiff Golden Star (the plan sponsor and named fiduciary) recordkeeping and other services for its 401(K) plan. MassMutual defined the menu of investment options offered, and Golden Star selected the options to be offered in its plan from that menu. The mechanism for these investments was separate accounts owned by MassMutual as an insurer; MassMutual would pool the investments of several 401(K) plans investments into these separate accounts and then invest the accounts into mutual funds, or other selected investment options. The group annuity contract between Golden Star and MassMutual allowed MassMutual to assess management fees on the separate accounts of up to 1% of the market value.
The Third Circuit recently found that while a life insurance company acts as a fiduciary in choosing to use a retained asset account to distribute benefits, it did not breach its fiduciary duties in making that choice. When an insurer creates a retained asset account as the method by which it will distribute benefits, it does not initially deposit any funds; rather, it credits the account with the benefits. The insurer does not transfer funds into the account until a beneficiary writes a check, at which point the insurer transfers funds to cover the check. Prior to payment, the beneficiary’s balance earns interest at a predetermined rate, but the insurer is free to invest the retained assets for its own benefit.
In Int’l Painters and Allied Trades Indus. Pension Fund v. Clayton B. Obersheimer, Inc., 2013 WL 594691 (D. Md. Feb. 13, 2013), a district court rejected plaintiffs’ contention that company officers were acting as ERISA fiduciaries in connection with the company’s delinquent contributions to a pension plan because they exercised discretionary control over the…