Is All Quiet On The Fiduciary Front? New Issues in Fiduciary Liability
• Sharon Goldzweig, Associate Counsel, • Consolidated Edison - Chief employee benefits counsel responsible for all union and non-union employee benefit matters • • Rhonda Prussack, EVP – Fiduciary Liability, AIGOversight of production, marketing, pricing and underwriting of fiduciary liability insurance
What to Expect • Be up-to-date on the latest developments from the Employee Retirement Income Security Act (ERISA) plaintiffs’ bar • Formulate strategies to reduce exposures • Assess the adequacy of your fiduciary liability insurance coverage.
Which Of These Issues Are You Worried About? • Pension Plan De-risking? • 401(k) Fees? • Affordable Care Act? • Stock Drop Litigation? • Church Plan Litigation? • None of the Above
Pension Plan De-Risking • If annuity vendor was engaged, was the “safest available” provider selected? • Did the plan pay too much to the annuity provider? • Were appropriate interest rate assumptions used in the calculation of future liabilities? • Were future liabilities of the plan undervalued? • What happens to federal protection (by the Pension Benefit Guaranty Corporation)?
Pension Plan De-Risking Cont’d. • Other ERISA protections • Notice • Disclosure • PBGC review • Protection from creditors • Concerns about lump-sum distributions to retirees already in pay status • Which party is responsible to correct past mistakes?
401(k) Fees • Tussey v. ABB • March 19, 2014 – 8th Circuit Court of Appeals mixed decision • If plan grants fiduciaries discretion to construe the plan, then fiduciaries’ interpretations are entitled to deference • “Float” is not a plan asset • Record-keeping fees deemed excessive
401(k) Fees Cont’d. • Kruger v. Novant Health, Inc. (M.D. North Carolina, Mar. 12, 2014) • Beesley v. International Paper Company (S.D. Illinois) • Jan. 31, 2014 - $30 million settlement • Nolte v. Cigna Corp. (C.D. Illinois) • Dec. 18, 2013 - $35 million settlement
Affordable Care Act • Myriad plan changes already in effect • Prohibition against pre-existing condition exclusions • No lifetime or annual limits on “essential health benefits” • Mental health parity • Department of Labor audits of ACA compliance well underway • Required notice of availability of healthcare exchanges • Was additional advice provided about the exchanges? • Termination of coverage or change in employee status from full-time to part-time – ERISA 510?
Stock Drop Litigation • Fifth Third Bancorp v. Dudenhoeffer • Supreme Court considered this question: • Did the Sixth Circuit err by finding that in a stock drop matter, the investment in employer stock within an ESOP may be entitled to a presumption of prudence, but only after plaintiffs have the opportunity for discovery, not at the outset of a case?
Church Plan Litigation • Kaplan v. Saint Peter’s Healthcare System, (D.N.J. Mar. 31, 2014) • Stapleton v. Advocate Health Care Network, (N.D. IL. Mar. 17, 2014) • Rollins v. Dignity Health, (N.D. Cal. Dec. 12, 2013) • Overall v. Ascension Health, (E.D. Mi. Mar. 28, 2013) • Chavies v. Catholic Health East (E.D. Pa., Mar. 28, 2013)