I recently visited Monticello, a place, being a history buff, I had always meant to tour; suffice it to say, it did not disappoint. Among other things, it was an interesting reminder of an oft-forgotten point, namely that for many years, the American “frontier,” for all intents and purposes, is what is now modern day Pittsburgh or Chicago. I both think of and mention this because it reminds me of what I now consider the “new” frontier in ERISA litigation, but one that shouldn’t actually be new – the imposition of potential liability for errors in plan administration, as opposed to simply for failing to pay benefits or underpaying benefits or not funding benefits that were all otherwise covered under a plan’s terms. For many years, benefits that were instead lost, or never qualified for, because of communication or management errors on the part of plan administrators and sponsors often had a “sorry, but you are out of luck” aspect to them: there wasn’t any effective way to consistently target those problems and prevail in litigation for participants who had suffered from them. Sure, there were occasional wins for participants, driven by clever thinking on how to prosecute such claims, for instance by attacking the problem through the tool of reformation, but for the most part, doctrinal barriers – such as a begrudging reading of the scope of remedies authorized under ERISA itself, and legal fictions assigning greater knowledge and understanding of a plan to participants than all involved know they actually hold, and numerous others too tedious to list – made recovery based on those types of errors unlikely.

Meanwhile, though, in my experience, it is and has always been the case that administrative and other plan management errors deprive more participants of more benefits more often than anything else, and as I mentioned in an earlier post, one of the great developments in ERISA litigation is the development of remedies and judicial approaches that allow for the remediation of those problems. I should note that when I refer to this as a “great development,” I mean this point objectively, in terms of it creating remedies for issues that, in the past, could not be remediated by the courts; for decades, courts would depict these types of claims as provoking the sympathy of the court, but as nonetheless constituting a loss for which there was no judicial remedy available. I have nothing to say today on whether this change in the ERISA regime is a great development for plan sponsors, or in terms of creating an environment that encourages employers to provide benefits, but only in terms of this development plugging a hole in the system whereby certain types of losses simply could not previously be remediated.

This (relatively) new frontier we are witnessing involves courts finally recognizing, and revising fiduciary duty case law as needed to do so, that much of the management and administration of a plan is, in fact, fiduciary conduct, and that losses caused by errors in that type of activity can therefore be remedied by means of the equitable relief authorized under ERISA. The Eighth Circuit decision I discussed in an earlier blogpost is an excellent example of this trend in the case law, and one of my colleagues has written an excellent client alert on this decision. Another, slightly earlier example can be found in this decision in one of my cases, which maps out the parameters of fiduciary responsibility for errors in the operation of a plan, independent of whether or not benefits themselves were due under the express terms of the plan under the circumstances at issue; that case is discussed in detail in this Lawyers Weekly article.

Those two cases aren’t the only recent ones to this effect, and it would be interesting – but far beyond the scope of a blog post – to compare these types of cases to the manner in which similar circumstances were typically analyzed by courts ten years ago, or even more specifically, before the Supreme Court’s decision in Amara opened the door to litigators and courts rethinking their approaches to obtaining relief for operational errors. We will leave that discussion for another day, but with the final note that it is in the shift from those older cases to these newer ones that you see the rise of a new frontier, not just in litigation, but in the rights and protections open to participants.

Here’s an interesting question – what is the territorial reach of claims against insurers alleging violations of Massachusetts’ insurance claims handling statute, Chapter 176D, and seeking recovery for such violations under Massachusetts’ consumer protection statute, Chapter 93A? Massachusetts’ well-regarded Business Litigation department gave the statutes a broad territorial reach, finding that they apply to an action brought by a New York resident, concerning his long term disability benefits; the Court held that Massachusetts law, not New York law, applied under the applicable choice of law test, and therefore the plaintiff could bring those Massachusetts statutory claims. But here’s the interesting part – the Court found that the key factor giving rise to application of Massachusetts, rather than New York, law was that the allegedly wrongful claims handling by the insurer occurred in Massachusetts. (For the uninitiated, claims under Chapters 93A and 176D are essentially assertions that an insurer acted wrongly in claims administration, such as settlement efforts or the decision to try the action). The logic of this case, though, would mean that Chapters 93A and 176D have extraterritorial reach anytime an insurer has a claim office in Massachusetts, and the dispute is over the handling of that claim, no matter where the plaintiff resides, or the insured loss was located, or the claims handling allegedly caused injury; the simple fact that the claim adjustment occurred in Massachusetts would be enough to make that claim subject to those Massachusetts statutes.

Seems to me that cannot really be the rule, and there must be some type of limiting principle, reflecting the idea that, at some point, the mere fact that the claims adjustment occurred in Massachusetts can be overcome for purposes of this analysis by far more extensive involvement in the claim of events in other states. So for instance, a chemical explosion at a property in California, giving rise to multiple claims and lawsuits situated in California courts, would be too extensively connected to California for Massachusetts’ claims handling statutes to properly apply, even if the claims were processed out of an office in Massachusetts. That kind of counterweight to the application of Massachusetts law, and its powerful statutory claims against insurers, was absent in the fact pattern before the Business Litigation department when it reached its ruling, but, it seems to me, is the limitation on the territorial reach of Chapters 93A and 176D that is absent from, but nonetheless implicit in, the decision itself.

You can find the decision itself here, and an excellent write up on it by Massachusetts Lawyers Weekly’s Pat Murphy here.

I have returned to blogging after stepping away for awhile from regular posting for a number of reasons ; foremost among them, however, is wanting to talk regularly about the continuing evolution in this area of the law toward a more even playing field for both employees and employers, and away from the many structural barriers that have long handicapped employees pursuing relief.  This very recent Eighth Circuit decision on group life claims is a perfect example of this phenomenon.  It wasn’t that long ago that various limitations on prosecuting denial of benefit and equitable relief claims under ERISA made these types of claims – where the administration of the group life program resulted in someone being unenrolled, contrary to their belief, in the coverage they thought they had purchased – nearly impossible to prosecute successfully. Now, however, as this decision reflects, the growing recognition by the courts that ERISA’s equitable relief remedies are flexible enough to address a multitude of scenarios makes these types of claims – where an administrative error involving both the employer and the group life carrier resulted in the life insurance coverage for a particular employee never coming into existence under a strict reading of the terms of the plan – not just viable but winnable for the beneficiary of the deceased employee.

I was being interviewed by a reporter the other day and casually noted that I keep my twitter open on my computer all day for no other reason than to follow Bloomberg BNA’s nearly instantaneous reporting of important new court decisions in the ERISA field. True to form, this morning I came into work to an article on, and a copy of the decision by, the Second Circuit yesterday in the long running pension class action case, Osberg v. Foot Locker, which concerns a claim for reformation of a pension plan to provide employees with the benefits they believed were promised in plan communications, rather than those actually provided under the plan’s express terms themselves. You can find the Bloomberg BNA article on it here, and the decision itself here.

Continue Reading Reflections on the Second Circuit’s Decision in Osberg v. Foot Locker

Is there a more hyped sporting event with less substance than the NFL Draft? Does everyone on the internet drive traffic to their sites by linking to the draft if at all possible? Well, of course the answer to both questions is yes, and so I too will link a post to the NFL Draft.

Continue Reading At the Intersection of the NFL Draft, ERISA, Divorce, Venue and Spousal Benefits

There is a lot of discussion on whether lawyers should be required to have at least a certain degree of competency with technology as a core skill set, on a par with, for instance, the rules of evidence. Personally, I am not convinced of the need for any formal requirement: technology is so embedded in any efficient provision of legal services to a client and in any interaction with essentially any business client of any size, that simple economics are going to eventually drive to the margins any lawyer who cannot, on a day in, day out basis, engage with technology on an at least marginally competent level. In other words, there is no need to regulate the profession to ensure such competence, as the marketplace for legal services will do it for state bars and any other regulator: slowly but surely, lawyers who are not technologically proficient will be sidelined by the invisible hand of the market, regardless of what any professional licensure group does or does not do with regard to ensuring professional competence in the area of technology.

Continue Reading Uber, Behavioral Economics, Choice Architecture and Trial Work

I have used this anecdote before, so you can jump ahead if you have either read something where I have written it before or heard a talk of mine where I have said it, but if you haven’t, I have always thought it is a good lead in to any discussion of the church plan litigation. A long time client of mine was hired by his employer as an in-house staff lawyer in 1975, and was told that there is a new law, ERISA, and he is in charge of it. He once told me that, in the early years of ERISA, they used to operate by gut, analogy, metaphor and instinct in deciding what some of the terms meant and how they should be applied, given that much of the statute and its structure was, one, novel and, two, had not yet been interpreted by the courts. In those early years, he often had to decide whether a particular plan should be viewed as a governmental plan – which, much like church plans, are exempt from ERISA – and the test they applied was this: if it looked like it was run by a governmental type entity, quacked like it was run by one, and waddled like it was run by one, than it was a governmental plan, as far as he and his team were concerned.

Continue Reading Notes (and a Prediction) on the Supreme Court Argument on Church Plans

There may be nothing more fun than ERISA to a lawyer who likes to maneuver among innumerable rules, dodge endless traps, and work out the interaction of numerous potentially inconsistent statutory, regulatory and judge-made requirements. I stand guilty as charged. Indeed, if you were going to create a Myers-Briggs Inventory for the job heading “ERISA Lawyer,” the first question you would put in would ask if you liked civil procedure in law school, because if you don’t like substantive issues like standing, procedural issues like venue, or more run of the mill issues like the scope of discovery, you will never like being an ERISA litigator. Beyond that, if you don’t like a rules based environment, you almost certainly won’t like being a non-litigation ERISA lawyer, with its heavy engagement with express statutory requirements, a million or more regulations from multiple agencies, and constant engagement with the tax code.

Continue Reading How Not to Sue an ERISA Governed Plan: Thoughts on the Ninth Circuit’s Ruling in DB Healthcare

So, Kevin O’Keefe of LexBlog has long preached that the key to effective blogging and other social media professional marketing is to provide actual information that people can use, rather than putting out, under the guise of blogging, marketing materials. In my own blogging and in my own practice, I routinely prefer to, and do in fact chose to, work with legal and other professionals who follow this same mantra: they simply think the way I do, and the knowledge they share is useful to both me and my clients.

Continue Reading CapTrust and Target Date Funds

All men, who after all are all just overgrown 12 year olds, admire Johnny Depp to some degree – a grown man who becomes fabulously wealthy by playing pirate??? Sign me up! But what’s not to emulate, as this article in the New York Times points out, is his sheer malfeasance in handling his own finances. Depp is now involved in litigation with his management company over who is responsible for the financial disaster he finds himself in, and it looks clear that there is more than enough blame to go around for all parties involved.

Continue Reading What Happens When the Pirates of the Caribbean Go Looking for a Financial Advisor to Help Invest Their Treasure?