On the Human Element in Plan Governance, Officiating and other Human Endeavors

I have been thinking, more than is probably healthy, about all the hue and cry over refereeing errors in pro football, particularly on the questions of, first, whether there are more errors than there used to be (or whether instead it just seems that way) and, second, why I don’t really care, despite every other sports fan I know getting all up in arms about it. First off, lets set the stage, and narrow down what we are talking about here. The pro football world, from twitter to mainstream media, is all focused on officiating errors among pro football referees, and even more on the bizarre sight of endless, play stopping conferences among officials who are meeting to try to figure out the latest officiating faux pas (I have to say, judges decide complex evidentiary issues in the middle of a trial, on the fly, with much more of real meaning at stake, much quicker than it ever takes a bunch of football refs to figure out something that, once the game is over, really doesn’t have any lasting significance).

I don’t remember officiating being such an issue in the past, and I have been watching football since, well, never mind . . . Suffice it to say, I remember watching Mike Webster play center for the Steelers, long before he became the centerpiece of a professional interest, namely his central but extremely sad role in a fascinating piece of ERISA LTD litigation against the NFL over head trauma, which occurred long before head trauma in football became a national issue (you can find one of my posts on it here). Is officiating worse now? Is the game more complicated and the refs now can’t keep up without making endless errors and needing endless conferences? One would think so, from everything you read about it and all the truly absurd conferences among officials during games. But I don’t think that’s the case at all, and instead its more like what happens when the medical community begins to focus on, or develops a new test for, a particular illness – that illness doesn’t actually become more prevalent in the population as a whole, but instead is simply diagnosed more often. And I think that’s the story here – refs have become a focus of attention, and now everybody is paying endless attention to every mistake they make, whereas in the past most would have been ignored. (I mean, really, does anyone actually care that a game between the 3-7 Ravens and the 4-6 Jaguars ended on a blown call?)

When I played high school sports (as an ERISA geek, I feel obliged on occasion to remind people that I also have five high school letters in two sports), we were always told not to complain about the refs after a loss, that they had almost certainly fouled up calls against both teams, and that they were never the real reason for a loss. Today, with the obsession on trying to expand instant replay across sports to take the human element, along with its concomitant inevitable errors, out of officiating, we seem to have lost that belief, replacing it instead with an obsession over officiating, with the inevitable outcome that now, all we seem to talk about is the refs and all we seem to watch is refs meeting in the middle of the field to decide what the call should be. Perhaps we would all be better off if we just admit that sports are a human activity, that human error is therefore inevitable, and, since we are not talking about a moon launch here, that is just fine. Certainly, watching the games would be a lot more fun if the refs just ran over, made a call, didn’t worry about being overturned by the “eye in the sky” of instant replay, and then we all moved onto the next play, rather than stopping everything so we can all watch a bunch of zebras huddle up.

More importantly, though, I have been thinking about why this issue has been bothering me so much, like a little pebble stuck in my shoe, and last week, speaking at ACI’s Employee Benefits Plan conference in New York, the reason dawned on me: it’s the belief that, if we just impose enough technology – like instant replay – we can take human error out of human endeavor, which is nothing but a chimera. I was speaking at the conference on the subject of fiduciary liabilities that arise out of errors in plan governance (you can find my slides here), and I was discussing that the nature of fiduciary liability under ERISA in a lot of ways can be reduced, in plain English, to the question of whether an investment committee or other group running a plan had acted as a reasonable, intelligent, informed, experienced person would in running the plan. As I explained to the audience, which was made up of lawyers who counsel and run such plans, if the company officers involved in plan management think of their role this way, and apply this standard to themselves, they will significantly reduce the likelihood of being sued and, if sued, reduce significantly the likelihood of being found liable at the end of the case.

I also talked about the importance of accurate communications and never appearing to sandbag (whether intentionally or unintentionally) a participant, whether outside of a formal claim or as part of a claim process. I talked about the fact that errors in plan communications are becoming a cutting edge basis for imposing fiduciary liability to an extent previously unseen (see, e.g., Osberg, discussed here), and also that poor habits in this regard in plan governance can simply be the straw that breaks the camel’s back and provokes a participant to sue, in situations where the participant might otherwise have skipped going to court.

And at the end of the day, the central element of all of these (and many other) issues with regard to ERISA plans is that we are dealing with humans here, not robo-advisors or whatever else (like target date funds, for instance) that people want to think can take the messiness out of plan governance, pension investing, 401(k) decisions and the like. Instead, like officiating in sports, plan governance cannot help but have human error baked in, which is why, if you get to the heart of it, ERISA litigation doesn’t focus on the outcome of plan governance but instead on the process of how the outcome came about: was there too much human error, or was enough effort and thought put into the process that brought about the outcome? Fiduciary liability under ERISA resides right at the heart of that question, and in the answer to it in any given case.

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