ERISA plan fiduciaries charged with responsibility for selecting, monitoring or removing plan investment options should pay close attention to the U.S. Supreme Court’s recent ruling in Tibble v. Edison Intl., 135 S. Ct. 1823 (2015). In that decision, the Court ruled that ERISA’s duty of prudence involves “a continuing duty to monitor investments and remove imprudent ones.” Although the Court did not elaborate on what it viewed to be the scope of an ERISA plan fiduciary’s duty to monitor, the plaintiffs’ bar is already seizing on the ruling as a potential basis for asserting new claims based on a failure to monitor prudently plan investments and other plan functions. Thus, plan fiduciaries are advised to establish a thoughtful and appropriate procedure for monitoring plan investment options, to diligently follow that procedure when monitoring plan investment options, and to make and preserve a written record reflecting that they followed their procedure in every regard. Taking these steps will put fiduciaries in a favorable position should emboldened plan participants file lawsuits challenging whether fiduciaries fulfilled their duty to monitor plan investment options based on the perceived plaintiff-friendly Tibble ruling.
Supreme Court
King v. Burwell – Supreme Court Upholds Premium Subsidies under Federally-Run Marketplaces; ACA Remains (Mostly) Unfazed
On June 25, 2015, the United States Supreme Court released its much anticipated King v. Burwell decision regarding the validity of premium assistance issued by Federally-run Marketplaces. Chief Justice Roberts, writing for the 6-3 majority, agreed with the Internal Revenue Service’s (IRS) interpretation that premium assistance under the Patient Protection and Affordable Care Act of 2010 (the “ACA”) is available to individuals who purchase coverage on both State-run and Federally-run Marketplaces. With the Supreme Court’s King ruling, the provisions of the ACA have prevailed in two of four key challenges (the Court upheld the individual mandate, but rejected a requirement that states expand Medicaid, in National Federation of Independent Business v. Sebelius and rejected the contraceptive mandate in Burwell v. Hobby Lobby Stores, Inc.).
SCOTUS Invites Solicitor General to Submit Its View on ERISA Venue Selection Provisions
We previously reported that a split Sixth Circuit panel enforced a venue selection clause in an ERISA plan. In so ruling, the Court rejected the U.S. Department of Labor’s attempt to regulate by amicus brief and reasoned that the Department’s brief was “an expression of mood.” The Department, according to the Sixth Circuit: (i) had…
SCOTUS to Review Subsidy Issue
On November 7, the U.S. Supreme Court announced it was going to review King v. Burwell. At issue in the case is whether Fourth Circuit correctly determined that the IRS did not exceed its authority when it released a rule in 2012 providing that federal subsidies under the Affordable Care Act are available in both state and federally operated exchanges, but rather was simply clarifying the statute by also providing subsidies in federal exchanges.
High Court Employee Benefits Cases: A Review and Look Ahead
Having settled into the new year, we reflect on decisions from the U.S. Supreme Court in 2013 that are likely to have a significant impact in the world of pension and welfare employee benefits and, in some cases, already have had such an impact. The issues addressed by the Supreme Court are wide ranging and are both substantive and procedural.
They include same sex marriage benefits, welfare plan reimbursement provisions, statute of limitations and class certification. Looking ahead into 2014, we see that the Supreme Court has already agreed to decide several significant benefits issues, including issues pertaining to Employee Retirement Income Security Act stock-drop litigation, the so-called “contraceptive mandate” under the Affordable Care Act and whether the Federal Insurance Contributions Act tax applies to reduction in force related severance pay.
Supreme Court Affirms Enforceability of Plan Limitations Provision
Resolving a split among the Courts of Appeal, the United States Supreme Court affirmed the Second Circuit in finding enforceable a limitations provision in a long term disability ERISA plan that set forth the length of the limitations period as well as when the period commenced. The plan at issue required participants to file suit …
USSC to Consider Presumption of Prudence in Employer Stock Litigation
On Friday, the US Supreme Court agreed to consider Fifth Third Bancorp v. Dudenhoeffer (U.S. No. 12-751, cert. granted 12/13/13). The Supreme Court stated that it will consider the following issue: “Whether, to state a claim that a fiduciary of an employee stock ownership plan violated the duty of prudence by continuing to invest plan…
Supreme Court to Resolve Circuit Split in Health Care Reform Cases
The Supreme Court will review two of the numerous lawsuits challenging the Affordable Care Act’s (ACA) requirement that group health plans and insurers cover, without cost-sharing, contraceptives and/or abortifacients (the “Contraceptive Mandate”). The plaintiffs in these suits are secular, for-profit corporations and their owners, and they assert that being forced to comply with the Contraceptive…
Proskauer Webinar on Supreme Court DOMA Decision
Section 3 of The Defense of Marriage Act has been ruled unconstitutional. Please join Proskauer’s DOMA Task Force on Wednesday, July 17th at 1:00pm EST for a webinar discussing the impact of the Court’s decision on employer-provided benefits. Registration details are listed below.
Please follow these steps to register for the webinar or webinars you…
The Supreme Court’s Decision to Affirm An Arbitrator’s Decision Compelling Class Arbitration May Be Most Notable For What Was Not Said
ERISA plan sponsors, and employers more broadly, have been anxiously awaiting two rulings from the U.S. Supreme Court that they hope would clarify the ability to enforce class action waivers in arbitration agreements. Yesterday, the Court issued the first of these decisions in Oxford Health Plans LLC v. Sutter, a case in which Sutter…