Monica Novak, John W. Fogarty, Emily Kile-Maxwell, Author at Spotlight on Benefits

Plan Fiduciaries Continue to Defeat BlackRock Target Date Fund Class Actions

A series of cases against fiduciaries of 401(k) plans that offer BlackRock Target Date Funds (TDFs) have been dismissed by district courts in recent months. In three recent cases, the district courts held that plaintiffs failed to allege any facts about the plan fiduciaries’ process for selecting and monitoring the BlackRock TDFs and that plaintiffs’ reliance on the BlackRock TDFs’ alleged underperformance alone was insufficient to state a claim for breach of fiduciary duty.

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PBGC Announces Proposed Rule on Interest Rate Assumptions for Multiemployer Plan Withdrawal Liability

On October 14, 2022, the Pension Benefit Guaranty Corporation (PBGC) proposed a new regulation under ERISA Section 4213(a)(2) setting forth actuarial assumptions that a multiemployer pension plan may use in calculating an employer’s withdrawal liability. A PDF of the proposed rule can be found here.

Background on Withdrawal Liability

Under ERISA § 4213(c), an employer withdrawing from a multiemployer pension plan must pay the plan its proportional share of the plan’s unfunded vested benefits, which is the difference between the present value of the plan’s nonforfeitable vested benefits and the value of the plan’s assets. The plan’s actuary must employ a variety of assumptions to calculate the withdrawing employer’s liability, such as how long employees will work and how long retirees will live (both of which affect the value of the benefits the plan must pay in the future).

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ERISA Litigation Roundup: Seventh Circuit Confirms DOL’s Broad Subpoena Power

In Walsh v. Alight Solutions, LLC, — F.4th —, 2022 WL 3334450 (7th Cir. Aug. 12, 2022), the Seventh Circuit affirmed a district court order requiring Alight Solutions to produce documents in response to a Department of Labor (“DOL”) subpoena, confirming that the DOL has broad authority to issue subpoenas to investigate possible ERISA violations, even against non-fiduciaries.

Alight provides recordkeeping services for employers who sponsor ERISA-governed health and welfare and retirement plans. In 2019, the DOL began investigating Alight on the basis of alleged cybersecurity breaches that resulted in unauthorized distributions of plan benefits from plans for which Alight provides recordkeeping services. The DOL served Alight with an administrative subpoena duces tecum requesting 32 categories of documents dating back to 2015.

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Federal District Court Invalidates Some Surprise Billing Rules: What It Means for the No Surprises Act

On February 23, 2022, the United States District Court for the Eastern District of Texas invalidated portions of Part II of the interim final rule (“IFR”) issued by the U.S. Departments of Health and Human Services, Labor, and Treasury (“Tri-Agencies”), implementing the dispute resolution provisions of the No Surprises Act (“NSA”). While the ruling in the case, Texas Medical Association v. U.S. Department of Health & Human Services, may impact medical plan costs, it does not substantively affect the consumer protections against surprise medical billing added by the NSA, which took effect in 2022.

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Thinking ESOPs: Court Rejects DOL Claims of ESOP Overpayment

The board of directors of Bowers + Kubota Consulting, Inc. recently won an employee stock ownership plan (ESOP) fiduciary/breach case brought against them by the Department of Labor. See Walsh v. Bowers, et al., No. 1:18-cv-00155-SOM-WRP (D. Haw. Sept. 17, 2021). After a full trial on the merits, the district-court judge entered judgment in favor of the defendants, largely based on the court’s rejection of the DOL’s critiques of the valuation upon which the trustee relied. What is perhaps most interesting about the court’s decision is the contrast between the discussion in this case of fundamental ERISA and valuation concepts, on the one hand, and the discussion of fundamental ERISA and valuation concepts in two other cases in which courts entered judgment against the defendants.

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ERISA Litigation Roundup: The DOL Determines That Audio Recordings Must Be Produced Under ERISA’s Claim Regulations

On June 14, 2021, the Department of Labor (DOL) issued an information letter stating that plan fiduciaries have a duty under ERISA’s claim regulations to produce upon request recordings or transcripts of phone calls between benefit claimants and plan representatives regarding their benefit claims. The DOL letter is a call for plan administrators to revisit and potentially refine their processes for recording and storing such conversations.

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ERISA Litigation Roundup: Federal District Court Finds ERISA Plan Participants Lack Standing to Challenge Cross-Plan Offsetting

A federal judge in the U.S. District Court for the District of Minnesota dismissed breach of fiduciary duty claims against UnitedHealth Group, holding that participants in ERISA-governed, employer-sponsored health plans lack standing to challenge UnitedHealth Group’s practice of cross-plan offsetting because they have not been denied any benefits and have not been individually injured. The decision underscores the Supreme Court’s ruling that plaintiffs must demonstrate individual injury in order to assert breach of fiduciary duty claims under ERISA.

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ERISA Litigation Roundup: Another Court Finds 401(k) Plan Participant Data Is Not a Plan Asset

The Southern District of Texas is the latest court to reject breach of fiduciary duty claims based on a party’s use of participant data.

For the full alert, visit the Faegre Drinker website.

COVID-19 Joint Agency Relief Part 2: Guidance for Implementing Claim-Related Deadline Extensions

As described in our May 1 blog post, in response to the COVID-19 pandemic, the Employee Benefits Security Administration, the Department of Labor (DOL), and the Internal Revenue Service, the Department of the Treasury (Agencies) recently issued guidance (Extension Guidance) providing emergency relief to employee benefit plans, participants, and beneficiaries for complying with certain deadline and notice requirements under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. As part of this guidance, the Agencies released a notification of relief (Joint Notice), which significantly affects administration of all ERISA-governed health, welfare and retirement plans by tolling certain claim-related deadlines throughout the duration of the National Emergency declared by President Trump. This alert, which can be read in its entirety on the Faegre Drinker website, describes the impact of those deadline extensions and provides practical guidance for plan sponsors and fiduciaries to consider in complying with the Joint Notice. For analysis of the Extension Guidance’s implications on retirement plans, see part one of this series of alerts.