State Law Waivers

  • The U.S. Supreme Court previously held that an ERISA plan administrator must distribute benefits to the beneficiary named in the plan, regardless of any state law waiver purporting to divest that beneficiary of his right to the benefits. That case explicitly left open the question of whether, once the benefits are distributed by the administrator, the decedent's estate can enforce a waiver against the plan beneficiary. The Fourth Circuit in Andochick v. Byrd, 2013 WL 781978 (4th Cir. Mar. 4, 2013), held that allowing post-distribution suits to enforce state law waivers does nothing to interfere with any of the ERISA objectives indentified by the Supreme Court, namely, simple administration, avoiding double liability for plan administrators, and ensuring that beneficiaries get what's owing to them quickly.

Health Care

  • In Grote v. Sebelius, 2013 WL 362725 (7th Cir. Jan. 30, 2013), the Seventh Circuit held that members of the Grote family, and their company, Grote Industries, were entitled to an order enjoining enforcement of the Affordable Care Act's requirements that non-grandfathered health plans cover certain preventative health services, including contraceptives, without cost-sharing. Plaintiffs sued the government, seeking declaratory and injunctive relief from the so-called contraception mandate, under the First and Fifth Amendments of the U.S. Constitution, as well as the Religious Freedom Restoration Act. Agreeing with a prior ruling from the Seventh Circuit, the majority concluded that plaintiffs established a likelihood of some success to warrant an injunction. In a dissenting opinion, Judge Rovner asserted that for-profit companies do not have "cognizable religious liberties independent of the people who animate them" and that there was no right to preliminary relief.

Employer Stock Fund Litigation

  • In Taveras v. UBS AG, 2013 WL 692535 (2d Cir. Feb. 27, 2013), the Second Circuit held the Moench presumption of prudence did not apply to fiduciaries of an eligible individual account plan where the plan document neither required nor "strongly" encouraged investment in the defendant's stock fund. The Court accordingly reversed and remanded a district dismissal of a stock drop lawsuit. In so ruling, the court reasoned that "it is not merely investment in employer stock that entitles a defendant to a presumption of prudence. Rather, 'judicial scrutiny should increase with the degree of discretion a plan gives its fiduciaries to invest. Thus, a fiduciary's failure to divest from company stock is less likely to constitute an abuse of discretion if the plan's terms require — rather than merely permit — investment in company stock.'"

Fiduciary Status

  • In Int'l Painters and Allied Trades Indus. Pension Fund v. Clayton B. Obersheimer, Inc., 2013 WL 594691 (D. Md. Feb. 13, 2013), a district court rejected plaintiffs' contention that company officers were acting as ERISA fiduciaries in connection with the company's delinquent contributions to a pension plan because they exercised discretionary control over the unpaid contributions. In so ruling, the court determined that discretion whether to pay debts owed to an employee benefit plan does not suffice to confer fiduciary status under ERISA.


  • In MHA, LLC v. Aetna Health, Inc., 2013 WL 705612 (D.N.J. Feb. 25, 2013), a district court held that a hospital lacked standing to bring a claim for benefits under ERISA because its patients had only authorized the payment of benefits, and had not assigned their rights to recover those benefits.


  • In Schafer v. Multiband Corp., 2013 WL 607910 (E.D. Mich. Feb. 19, 2013), a district court vacated the decision of an arbitrator who concluded that indemnification agreements executed in connection with the establishment of an employer stock ownership plan and an employee stock ownership trust violated ERISA § 410(a), 29 U.S.C. § 1110(a). The agreements indemnified the plaintiffs for losses arising from their acts as directors of the ESOP's sponsor and as trustees of the ESOP, but the agreements did not indemnify plaintiffs for losses caused by intentional misconduct or gross negligence. The court found that the arbitrator manifestly disregarded clearly established legal precedent. Indemnification agreements such as the one at issue are enforceable and do not violate ERISA Section 410's prohibition of exculpatory provisions because the agreements did not relieve plaintiffs of liability for any losses.

Exhaustion of Administrative Remedies

  • In McCay v. Drummond, 2013 WL 616923 (11th Cir. Feb. 20, 2013), the Eleventh Circuit held that deficiencies in a notice of denial of benefits did not excuse a participant's failure to appeal within a designated 180-day time period. In so ruling, the Court reasoned that plaintiff's allegations of defendant's noncompliance with ERISA's technical requirements – namely, that his denial notice did not include a statement of the need to obtain a favorable decision – was insufficient to excuse ERISA's administrative exhaustion requirement.


  • In In re: Nortel Networks Inc., No. 1:09-bk-10138 (Bankr. D. Del. 2013), Nortel Networks Inc. reached a settlement with over 3,000 of its retired employees for nearly $67 million. Nortel, a former telecom equipment maker, filed for bankruptcy in 2009. In the subsequent four years, Nortel sold off nearly all of its assets, but had been unable to reach a compromise with its retirees to terminate its benefit plans. According to a settlement motion filed on December 31, 2013 in Delaware bankruptcy court, Nortel will stop funding the benefit plans of its retirees as of May 31, 2013 in exchange for a one-time payment of almost $67 million to the official committee of retired employees.


  • In Gearlds v. Entergy Servs., Inc., 2013 WL 610543 (5th Cir. Feb. 19, 2013), the Fifth Circuit held in light of CIGNA Corp. v. Amara that plaintiff pled a plausible claim for relief for losses he claims to have suffered from foregoing benefits under his wife's retirement plan, and remanded to the district court to consider whether the circumstances of the case will warrant surcharge. The Court held that ERISA § 502(a)(3)'s text limiting remedies to "appropriate equitable relief" may – in some cases – include some forms of monetary relief because of the Supreme Court's recent ruling in Amara.