Category: Erisa

Mark Hamblett for the New York Law Journal via Law.com has this article on the very recent Second Circuit ERISA case of Burke v. Kodak Retirement Income Plan: “Deficient Benefit Plan Not Enough to Overcome Denial of Benefits.” More on this case later . . . (By the way the title to the article should likely read “Deficient Benefit Plan Description Not Enough to Overcome Denial of Benefits.”)

Reish Luftman McDaniel & Reicher provides this article: Taking Stock: Managing the Risk of Company Stock. The article provides some good suggestions for minimizing ERISA fiduciary risk where a 401(k) offers company stock as a match and/or as an investment option.

(Note: The article does not discuss plan governance structure or procedural prudence which, in my opinion, are also very important in minimizing ERISA fiduciary liability.)

Robert Ambrogi at Law Sites provides this wonderful column and great resource: “A Brief Summary: Free Briefs on the Web.”

Reish Luftman McDaniel & Reicher provides the unofficial views of the Employee Benefits Security Administration (Department of Labor) on mapping: “404(c) Protection Lost Where Funds are Mapped.“

It is always great to find some humor in the law, especially when U.S. Supreme Court Chief Justice Rehnquist calls your area of the law “dreary”. If you have some time, stop on over at Corp Law Blog for some law ha-has (some via lawhaha.com and others not).

“Employees vs. executives: BellSouth, Scientific-Atlanta sued over management of company retirement plans“: MSNBCNews reports that ERISA lawsuits have been filed against BellSouth Corp. and Scientific-Atlanta Inc. The article mentions the Enron and Worldcom lawsuits (which have been discussed here previously) and how all of these cases have brought an increased focus on the role of ERISA fiduciaries. The article also mentions the trend, particularly among the airline industry, of hiring independent fiduciaries to oversee plan investment decisions to avoid having the executives make these decisions “with all the conflict of interest that entails.”

This article–“Court Aces“–by Tony Mauro at Findlaw.com gives an interesting inside view of what U.S. Supreme Court Chief Justice William Rehnquist thinks of ERISA cases. The article quotes Rehnquist as saying, “The thing that stands out about them is that they’re dreary.” The comments came in his annual talk to the 4th U.S. Circuit Court of Appeals recently in which he spotlighted the little-noticed decisions of the term. One he picked out was Kentucky Association of Health Plans v. Miller, which held that Kentucky’s “any willing provider” law affecting HMOs was pre-empted by ERISA. You can read about the case in posts at Benefitsblog here, here, and here.

That is what today’s edition of the Wall Street Journal is reporting in an article by Joseph Pereira entitled: “To Save on Health-Care Costs, Firms Fire Disabled Workers: Policy Shift at Polaroid Leads to Scrimping, New Worries for Extremely Sick Employees.” (Subscription required.) The article contains some heart-wrenching stories of how the disabled have been impacted by what the Journal says is a trend among companies of dismissing the disabled to cut costs. The article refers to a Mercer Human Resource Consulting study last year which found that 27% of the 723 companies surveyed dismiss employees as soon as they go on long-term disability and that 24% dismiss them at a set time thereafter, usually six to 12 months, with only 15% of companies keeping the disabled on as employees with benefits until age 65. The article also refers to DOL statistics which show that there has been a 62% increase in those on long term disability since 1992 and suggests an “aging work force” could be the cause.

All of this is further complicated by the Ninth Circuit case last year “Lessard v. Applied Risk Management” in which the court held that a buyer and a seller in a corporate transaction violated Section 510 of ERISA where the buyer (in an asset sale) did not hire seller’s employees who were on extended leave of absence. Section 510 of ERISA provides:

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, this subchapter, section 1201 of this title, or the Welfare and Pension Plans Disclosure Act [29 U.S.C. 301 et seq.], or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this subchapter, or the Welfare and Pension Plans Disclosure Act.

You can read about the case in an article by BenefitNews.com and in an article by White & Case LLP. The Journal reports a lawsuit having been filed last week against Polaroid on the issue in federal court in Boston.

Gardner, Carton & Douglas provides a brief discussion of ERISA Advisory Opinion 2003-09A which was recently released. The Advisory Opinion provided guidance to ABN AMRO Trust Services Company (AATSC), a state-chartered trust company, regarding the receipt of 12b-1 fees and subtransfer agency fees from “proprietary” mutual funds.

The Philadelphia Inquirer has an article by Todd Mason–“Easing up on company stock“–which discusses the impact that class-action lawsuits are having on companies’ offering company stock as a match or an investment. (The article reports that Seattle-based Keller Rohrback has “18 class-action suits alleging fraud in 401(k) plans and company stock, including one filed in February against Cigna Corp.”)