I really enjoyed writing this week’s Five Favorites for Friday post. It brought me down the nostalgia trail all the way back to my days defending insurance companies against LTD claims and then routed me back to the future with stories about the latest class action theories against plan fiduciaries and the future of benefit administration once AI is fully integrated into it.

Hope you enjoy the trip as well.

1. This is an excellent article on another voluntary benefits class action that has been filed, again by Schlicter Bogard. The article raises the interesting question of whether plan sponsors and fiduciaries may not have paid that much attention to the cost of the benefit or to vendor compensation because the benefits are paid for solely by employees and not by the employer itself. It may be human nature to be profligate when someone else is footing the bill, but the obvious purposes of the fiduciary duties imposed by ERISA is to require fiduciaries to act as though it’s their money at stake, even if it isn’t.
2. This is an incredibly well-researched story on long term disability coverage, the standards that control disputes, the role of physician reviewers and the issues raised by long COVID. (It may be behind a paywall, but if this subject is of interest, the article is worth the subscription). My entree to ERISA litigation, which eventually led to everything from breach of fiduciary duty litigation to class action cases and more, was a decade or more of defending LTD cases, including winning a number of appeals at the First Circuit. I always thought my insurer clients in that context did a pretty good job of trying to fairly decide claims, and I never really bought into the demonization of either carriers or claimants that can often characterize that line of litigation. With long COVID claims, just as was the case with chronic fatigue claims or fibromyalgia claims years ago, the complexity of the syndrome, combined with the subjective nature of some aspects of the illness, can often make it hard for the LTD system to process the claims. Over time, as the legal standards and approaches to such claims become more established, the processing of the claims becomes more routine – I suspect you will see the same with long COVID. But it’s worth remembering that this is likely of cold comfort, at best, to people currently suffering from long COVID and having LTD claims denied.
3. There’s really no question that the large scale RIFs across major tech companies have been driven by the need to free up capital and spending for AI projects. I see it in my practice and it’s now being well reported in the business media. But now we are seeing stories, such as this one, of the elimination of 401(k) matches by tech companies to free up cash for AI investments. There’s an awful lot to be said about this story, but at a minimum, I am not sure beggaring the retired to make the world safer for AI is exactly the right course of action.
4. Last week’s Five Favorites for Friday post ran very heavily towards ERISA and so I promised that this week the post would skew back more towards insurance. Here’s a nice article about fiduciary liability insurance and the push to add alternative investments to 401(k) plans that meets that goal by checking both the ERISA and insurance boxes. One of the things I do a lot in my practice is counsel employers and plan sponsors on their fiduciary liability insurance, including reviewing it for coverage gaps and to determine whether, as written, the coverage fits the specific types of claims they are concerned about facing. What I like about this article in particular is that it discusses the extent to which adding alts into a plan may change the complexion of the risk and of the policy, possibly raising new coverage issues for a plan. Don’t sleep on that issue if you are a plan sponsor or fiduciary who allows alts into a plan. As the article point out, the coverage impacts of adding alts to a plan may not be obvious, and may instead show up as adjustments to “policy limits, retentions, premiums, and policy wording for fiduciaries.”
5. We tend to think about AI in discrete increments, such as what would happen if AI were relied upon in picking the investment menus in a 401(k) plan, or if hallucinated data or information ended up in plan communications drafted with AI involvement. But ERISA lawyer Samuel Krause has gone meta on the question, asking – and writing this excellent article on – what it will look like for AI to weave its way into all aspects of benefit plan operations. I think he’s right when he looks at the integration of AI as a universal and system wide question for benefit plan operations, rather than as a series of discrete issues.