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Delegating Fiduciary Duties Under ERISA Plans

The recent decision in Hampton v. National Union by the U.S. District Court for the Northern District of Illinois highlights the importance of following the provisions in ERISA plan documents for delegating fiduciary duties to entities acting as plan fiduciaries, such as third-party service providers and insurers. Following the death of her husband, who was an employee of The Boeing Company (?Ç£Boeing?Ç¥), the plaintiff sought to recover accidental death and dismemberment benefits under insurance policies sponsored by Boeing, for which she was the sole designated beneficiary. After National Union, which underwrote and co-administered the policies with AIG Claims, Inc., denied the plaintiff?ÇÖs initial benefits claim, as well as her appeal of such denial, the plaintiff brought suit under ERISA. The plaintiff argued that the court should apply a de novo standard of review (i.e., no deference given to the plan fiduciary?ÇÖs prior decisions) because National Union did not have discretionary… Continue Reading

Cases Highlight Importance of Governing Law Clauses in ERISA Plan Documents

The U.S. Court of Appeals for the Tenth Circuit recently held that the choice of law provision contained in a long-term disability insurance policy (the ?Ç£LTD Policy?Ç¥) controlled when determining which state law applied to the case. The LTD Policy, which was subject to regulation under ERISA as an employee benefit plan, stated that it was governed by the law of Pennsylvania, where Comcast (the employer) was incorporated and had its principal place of business. The employee argued that Colorado law controlled, because Colorado is where the employee worked for Comcast and filed the lawsuit. This was important because Colorado insurance law prohibited granting discretion to the plan administrator to interpret the LTD Policy, whereas Pennsylvania law did not prohibit this deferential standard. Generally, a plan administrator?ÇÖs denial of benefits under an ERISA plan is reviewed by a court de novo (i.e., without deference being paid to the plan administrator?ÇÖs… Continue Reading

Fifth Circuit Defers to Plan Administrator?ÇÖs Claim Appeal Decision Involving Competing Medical Opinions

In Rittinger v. Health Alliance Life Insurance Company, the U.S. Court of Appeals for the Fifth Circuit, whose jurisdiction includes Texas, analyzed the claims decision-making process of a group health plan administrator that had been granted discretion under the terms of the employer?ÇÖs group health plan. The court determined that, based on such grant of discretion, the plan administrator?ÇÖs decision regarding a participant?ÇÖs benefits claim appeal was entitled to judicial deference, even with respect to the plan administrator?ÇÖs selection of competing medical providers?ÇÖ opinions. Background regarding Grant of Discretion under ERISA Under general standards, a court will consider denials of appealed benefits claims under an employer-sponsored employee benefit plan (including a group health plan) that is subject to ERISA on a ?Ç£de novo?Ç¥ basis, which means that the court will not give any deference to the plan administrator?ÇÖs prior decision on a benefit claim appeal, but instead can substitute its… Continue Reading

Eighth Circuit Holds that Failure to Follow the Plain Language of the Plan is Abuse of Discretion

Within three years following the acquisition of Anheuser-Busch Companies (the ?Ç£Company?Ç¥) which resulted in a change-in-control, the Company sold its entertainment division. The Company?ÇÖs pension plan provided that a plan participant ?Ç£whose employment with the Controlled Group is involuntarily terminated within three (3) years after the Change in Control?Ç¥ would be eligible for enhanced pension benefits. The Company determined that the employees of the entertainment division were not eligible for enhanced pension benefits because they continued working with the successor entity after the sale and therefore did not terminate employment. The district court and the Eighth Circuit disagreed. Applying a plain-text analysis to the plan, the Eight Circuit determined that because the employees were no longer employed with the controlled group, their ?Ç£employment with the Controlled Group?Ç¥ had terminated. Although the plan granted the Company discretion to interpret terms and decide benefits, it was an abuse of discretion to not… Continue Reading

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