Seventh Circuit Finds that Unsolicited, Informal Complaints Constitute a Protected “Inquiry” under Section 510.

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An employee filed suit alleging employer terminated his employment in retaliation for complaints he made about the employer not funding his retirement account and health savings account. The Seventh Circuit held that “as a matter of first impression, employee’s conversations with employer regarding his retirement account complaints involved an ‘inquiry’ under ERISA.”  The Court concluded that ‘the best reading of …

U.S. Supreme Court holds that Statements in an SPD Cannot be Enforced as Terms of the Plan; but Plan Can be Reformed, in the event of a fiduciary breach, as a form of Appropriate Equitable Relief.

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The terms of statutorily required plan summaries (or summaries of plan modifications) may not be enforced (under Section 502(a)(1)(B)) as the terms of the plan itself.  The plan’s sponsor (e.g., the employer), like a trust’s settlor, creates the basic terms and conditions of the plan, executes a written instrument containing those terms and conditions, and provides in that instrument a …

A Participant Who Achieves “Some Degree of Success on the Merits” May Be Entitled to an Award of Attorneys’ Fees.

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In a long-term disability denial of benefits case, the U.S. Supreme Court held that a participant or beneficiary who sues under ERISA need not be a “prevailing party” to be eligible for an award of attorneys’ fees. A court may award fees and costs under the statute as long as the claimant has achieved “some degree of success on the …

District Court Orders ChevronTexaco to Pay Benefits to Misclassified Employees.

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In a class action filed in 2000 on behalf of former Texaco employees who had been hired by and through third-party staffing agencies, Judge Parker initially dismissed claims for benefits as time-barred, but found that breach of fiduciary duty claims could proceed. [127 F.Supp.2d 443 (S.D.N.Y. 2001)] Electing to proceed on the merits first, the parties submitted cross-motions for summary …

Fifth Circuit Vacates Denial of Benefits for Failure to Employ Appropriate Claim Review Process.

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After suffering a heart attack, the plaintiff was placed in a nursing home. Initially, Blue Cross agreed to pay the costs, but then later changed its mind. The plaintiff’s claim for continued benefits turned on whether his care at a nursing home qualifies as Skilled Nursing Care, which is covered, or Custodial Care, which is not. Addressing the plaintiff’s Substantial …

Second Circuit Court of Appeals Refines Abuse of Discretion Standard in Light of Glenn.

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The Second Circuit had the opportunity to clarify and apply the Glenn standard in a denial of benefits case. In determining that the defendant’s decision was arbitrary and capricious, the Court noted that the insurance company not only operated under an inherent conflict of interest, but also (i) clung unreasonably to a single piece of evidence despite the availability of …

Third Circuit Allows Employee to Maintain Equitable Estoppel Action for Restitution of Promised Benefits under Section 502(a)(3).

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Plaintiff was asked to permanently transfer from Consol to DuPont, which had merged. Plaintiff was concerned that his salary would decrease, but believed that DuPont’s more generous pension plan would offset the lower salary. Pell’s DuPont manager and supervisor both assured him that his Consol service time would be counted under the DuPont pension plan. Similar representations regarding the service …

Seventh Circuit Affirms Trial Court’s Rejection of Breach of Fiduciary Claims by Trust Against Third-Party Administrator.

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The Trust presented no evidence on summary judgment “that Benefit Actuaries, despite its name, promised to act as an actuary for the Trust. Instead, the evidence showed that Benefit Actuaries undertook to act as the third-party administrator, insurance broker, and advisor for the Trust, and nothing suggests that these services required actuarial expertise. At most, the Trust’s evidence established that …

U.S. Supreme Court Addresses the Role of Inherent Conflict in Level of Deference to be Accorded Plan Administrator.

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The answer is clear “where it is the employer that both funds the plan and evaluates the claims. In such a circumstance, every dollar provided in benefits is a dollar spent by the employer; and every dollar saved is a dollar in the employer’s pocket. The employer’s fiduciary interest may counsel in favor of granting a borderline claim while its …

U.S. Fourth Circuit Affirms Both Statutory and Article III Standing of Former Cashed Out Employees Who Remain “Participants” in Defined Contribution Benefit Plans.

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Former employees who maintained accounts in defined contribution 401(k) retirement plans voluntarily sought and obtained full distribution of the vested benefits in their respective accounts brought suit against the fiduciaries of their respective retirement plans based on the fiduciaries’ knowing investment in mutual funds that allowed investors to practice market timing, an abusive form of arbitrage activity that favored the …