Some thoughts and notes from materials presented at the recent ALI-ABA seminar, “ERISA Fiduciary Responsibility Issues Update: Qualified Pension and 401(k) Plans and ESOPs in a Post-Enron World,” last week will be published here over the next week or so. . .

Karen L. Handorf, Deputy Associate Solicitor, Plan Benefits Security Division, of the Department of Labor, spoke on the recent case “Black & Decker Disability Plan v. Nord” which was reviewed here in a previous post. The recent U.S. Supreme Court case holds that ERISA does not require a plan administrator to use the “treating physician rule” for purposes of determining eligibility under a disability plan. Ms. Handorf said that the case resolved a split within the circuits on this issue and that the reasoning behind the Supreme Court’s decision were basically two-fold: (1) The court said there was no reason to take the Social Security Administration’s use of the “treating physician rule” and apply it to ERISA due to the differences between Social Security and ERISA; and (2) the 2002 DOL claims regulations had not included the “treating physician rule” and therefore the courts should not promulgate a rule in this area. An interesting issue that was left unresolved, she said, was: what standard of review should there be where a conflict of interest exists for the plan administrator? Ms. Handorf noted that the DOL had filed an amicus brief in the case and that the court had upheld the flexibility given to employers under ERISA in designing these types of plans.

She contrasted, however, the U.S. Supreme Court case of Kentucky Association of Health Plans v. Miller, decided April 2, 2003, in which she said flexibility for the plan sponsor and HMO gave way to the state’s interest in assuring broad based participation in these plans. In that case the court held that a state’s “any willing provider law” was not preempted by ERISA. The court rejected a test utilized in previous cases and adopted a new test for determining whether or not a law was held to “regulate insurance” and “saved” from preemption under the “savings clause” of ERISA. The court stated:

“Today we make a clean break from the McCarran-Ferguson factors and hold that for a state law to be deemed a “law . . . which regulates insurance” under §1144(b)(2)(A), it must satisfy two requirements. First, the state law must be specifically directed toward entities engaged in insurance. . . Second, as explained above, the state law must substantially affect the risk pooling arrangement between the insurer and the insured. Kentucky’s law satisfies each of these requirements.”

The panel of attorneys presenting at the seminar agreed that the case will mean a broadening of the “savings clause” under ERISA and fewer state laws being preempted under ERISA.