In simple terms, ERISA is the federal law within the Employee Retirement Income Security Act of 1974 which established legal guidelines for private pension plan administration and investment practices. The Act sets minimum standards for areas relating to welfare, such as disability and life insurance, as well as apprenticeship schemes, retirement and health plans.
ERISA was originally signed by President Gerald Ford to address issues relating to corporate pension plans after the Studebaker Motor Company went bankrupt and left its employees without money and remedy. In the past 35 years ERISA has been amended over 40 times, with most changes taking place within the pension provisions of the Act. Two of the more significant modifications have been the Consolidated Omnibus Budget Reconciliation Act in 1985 and the Health Insurance Portability and Accountability Act in 1996.
The Act is administered by a division of the US Department of Labour (DOL), namely the Employee Benefits Security Administration (EBSA). ERISA law is, however, only relevant to private employers or non-governmental entities which proffer employer-subsidised health insurance coverage and related benefit schemes to their employees. But what has to be understood is that ERISA does not necessitate that employers propose these schemes; it only lays down regulations for the possible benefits employers can offer their workforce.
ERISA necessitates that any employee benefit plan has to be put in writing. The result of this is the creation of plan documents, which can be any instrument under which the scheme is set up and preserved. It is the norm for there to be a trust document which may be referred to as a master plan but this is not always the case. ERISA also sets out that the employer needs to issue a summary of the plan, which can range between 20 and 100 pages and has to entail all key terms of the proposed plan. This is likely to include the official title of the scheme or plan, names of those administering it, information on how to submit a claim and what kind of processes is required concerning internal petitions.
ERISA law is an enormously multifaceted and ever-changing area, with various regulations that could be confusing to a layperson. It cannot be emphasised enough that ERISA’s rules, constitutional make up and even case law are highly expansive. This point, coupled with the fact that ERISA is a continuously growing area, means that lawyers who advise in general employment matters may not be adequate to deal with up-to-date changes within the law. In short, ERISA litigation is open to interpretation; it is therefore advisable to retain a solicitor who is solely dedicated to ERISA, rather than a generalist.
EBSA has published an internal manual for its employees on ERISA enforcement and, although not intended to serve as an interpretation of law or regulation, it does still provide a good starting point on the key facets such as provisions, violations and enforcement accomplishments. For a more in-depth proficiency on provisions and violations an employer is advised to seek ERISA litigation expertise from a leading law firm that provides counsel in ERISA related matters.
Typically, EBSA establishes that employers fall foul of civil violations within ERISA under the following circumstances:
A large proportion of the Act relates to matters specific to pensions and very little targets areas such as health, disability, life or medical benefits. It is essential to seek out legal counsel if concerned about any particular facets of the law. This will help to avoid any confusion that may later lead to an expensive trial.
A good solicitor will try to help avoid costly litigation by trial but every so often one will end up in court. There are a handful of steps that will be followed during an ERISA claim:
In simple terms there exist two kinds of major pension plans; defined contribution and defined benefit plans. The latter is set up in a manner which delivers to the employee a specific monthly benefit by the time they retire. This can be done by either stating an exact amount to be paid out per month after retirement or an amount which is calculated via a plan formula that takes in service and salary.
Meanwhile, the defined contribution plan does not specify a concrete figure. What happens here is that both the employer and employee pay in contributions defined under the plan at a set rate by the percentage of annual earnings. This means the amount is based on contributions plus or minus the losses or growth achieved through investments.
Another key term encountered in ERISA litigation is 401(k).
The 401(k) plan received its name from the section number and paragraph within the Internal Revenue Code that it relates to. It is a part of a group of retirement plans that are often referred to as ‘defined contribution’ plans. They are generally set up as either a cash agreement or a deferred arrangement. This implies that an employee can elect to defer a part of their salary which will then be contributed towards the 401(k) plans.
ERISA controls and lays down measures and obligations that need to be adhered to. These include rules on conduct, which means the act regulates the behaviour for managed care and other fiduciaries such as the person or entities financially answerable for the plan’s administration. Moreover, ERISA litigation necessitates detailed exposure and accountability to the federal government. This is a significant element, as transparency becomes a key component in financial dealings within pension plans. Relevant disclosures need to be made to employees about the plan at all stages of ERISA litigation.
Employers are bound by law to provide detail in writing about the elementary facts of the pension plan. This includes a summary plan description, or SPD, which lists what benefits employees are entitled to under the scheme and how exactly the plan operates. It also records the commencement date, details when the benefits actually become vested, provides the calculation of services and benefits, and informs employees when the payment is due and in what form. This shows that the provision of a clear-cut SPD, one which gives guidance to employees on plan limitations, is of paramount importance. ERISA serves to preserve the plan while assuring that its funds are guarded and distributed in the best interest of plan members. The Act moreover disallows any discriminatory practices in acquiring and collecting plan benefits for qualified individuals.
A legal expert who specialises in ERISA-specific regulations will be a good starting point and could effortlessly deal with any uncertainties an employer may have concerning the phrasing or the implementation of the plan. Employers, under ERISA, are also required to follow a procedural safeguard. This particularly calls for employers administering the plan to present a written policy as to the procedure of how claims should be filed. Additionally, it needs to incorporate an appeal process guideline in writing for claims that are denied.
There is also an obligation under ERISA that claims and appeals be performed in a fair and timely way. Law firms would be able to offer solid advice on what constitutes reasonable time for claims.
The long-anticipated Supreme Court opinion Cigna Corp. vs Amara dealt specifically with reliance principles and Summary Plan Description (SPD) language. On the SPD it was found to mislead participants into believing that their benefits were formed of a frozen benefit in addition to a new cash balance plan method, rather than the greater of the two methods. In effect, the Supreme Court established that there are significant differences between the plan and an SPD, and that therefore the terms of an SPD should not be enforceable as a plan document. Yet the court concluded, regardless, that an equitable relief was in order here under ERISA 502(a)(3) bearing in mind surcharge, estoppels and reformation. The court held in conjunction with the facet of relief that a plaintiff is required to illustrate harm causation and damages.
This case will provide guidance to both plaintiffs and defendants for the future, setting precedents for ERISA litigation. Defendants will be able to look to the fact that equitable relief requires the illustration of reliance, causation and harm. They will moreover be able look to the condition of harm and causation to counteract unity and typicality for class documentation. Plaintiffs, meanwhile, can challenge that remedies under ERISA 502(a)(3) have now expanded further.
The Dukes case, on the other hand, is not an ERISA case per se but a major landmark case concerning employment discrimination; it will regardless have important effects in class certification cases. But how could this case be possibly relevant to ERISA litigation? It is likely that plaintiffs may argue that Dukes will be irrelevant as class actions are brought under ERISA 502 (a)(2) on behalf of the plan and that they may be endorsed under Fed R. Civ. P. 23 (b)(1) or (b)(3). Defendants, on the other hand, may recognise that the decision will now mean that more guarded judicial trends may emerge with regard to class certification. The judgement in Dukes, when seen in conjunction with Amara’s harm and causation prerequisite, could give defendants the upper hand in defeating class claims based upon communications to an alleged class and a purported ERISA violation which entails some type of reliance, harm or causation, particularly as these claims involve a specific plaintiff behaviour.
Undoubtedly, CIGNA Corp. vs Amara will incite the most jurisprudential deliberation. It will be left to the courts to deliberate the nature of a remedy for an ERISA 502(a)(3) claim. They will also have to mull over which levels of reliance, causation, and harm are essential to establish such a claim. This is particularly so as the Supreme Court has not presented adequate direction as to the application of such concepts.
So, in summary, it is not yet clear what the ultimate result of Amara will be, but what is known is that it underlines the need for cautious deliberation of the terms of SPDs and any other notices that are given to ERISA beneficiaries concerning the terminology of their benefit schemes.
When looking for advice in areas relating to ERISA litigation, it is advisable to opt for a law firm that offers specialist advice rather than generalist counsel in the field. Clients have increasingly been looking to Whyte Hirschboeck Dudek’s ERISA litigation group for consummate ERISA-specific expertise. Individuals within the firm’s ERISA team are tremendously knowledgeable, and have the ability to take that knowledge and turn it into highly practical advice. The group is wholly on top of its subject matter and knowledgeable on what is going on nationally as well as regionally. The firm offers its clientele a broad array of legal proficiency in federal ERISA matters, and in addition can draw experience from the professional relationships it holds with key offices and individuals that allow it to better serve its clientele. Beyond these high profile clients it also represents the Office of the Commissioner of Insurance of Wisconsin for non-ERISA insurance cases.
Most importantly, however, WHD’s thorough understanding of ERISA litigation and law permit the group of experts to consult with its clientele on how to arrange and create welfare and pension benefit plans which are considered and systematically analysed to be secure and in compliance with the ERISA regulations. WHD continually emphasises the importance of preventing ERISA litigation, as it is one of the most cost-effective routes an employer or insurer can take.
WHD, which was founded in 1943, works out of two offices – Milwaukee and Madison. The full service firm employs 136 solicitors and 23 paralegals, and covers the whole legal spectrum thanks to around 52 practice areas and industry teams which are available to deal with anything thrown at them. Clients reach out to the firm for their advice in areas relating also to general litigation issues and it is able to use its outstanding trial lawyers to handle even the most intricate of cases. A handful of highly-specialised solicitors and some paralegals focus particularly on ERISA litigation. These include John Tuffnell, Pamela Schmidt, Bruce Arnold, and Karen Tidwall.
Leader of the pack, John Tuffnell is a partner within Whyte Hirschboeck Dudek and one of the top trial lawyers within the team. He concentrates his legal practice on health, life and disability claims on group health policies funding insured employee benefits plans. An advantage is also his extensive consulting experience with health insurance corporations, which is coupled with his ability to provide assistance and manage national health insurance litigation. He moreover advises clientele in regulatory issues involving insurance claim procedures, in addition to fiduciaries of ERISA-defined benefit and defined contribution plans. Most recently he acted in Reliastar Life Insurance Company vs Keddell, where he represented the insurer of life insurance benefits in an ERISA inter-pleader action.
Clients of the firm include names such as UnitedHealthcare of Wisconsin, Acuity and Mutual Insurance Company. More specifically, representative ERISA litigation engagements have included counsel to employers, insurers and third-party administrators in disputes over coverage under existing ERISA-regulated benefit plans. It moreover regularly consults with nationally recognised health insurance companies on litigation work within Wisconsin. Moreover, the group acts on behalf of clients on regulatory compliance in matters before the Wisconsin OCI. It is also seen offering lead counsel on dozens of ERISA cases, while it consults on hundreds of others within the federal court.
ERISA litigation is an area that presents employers and their insurers with a multifaceted web of regulations that cover employees’ health plans and pension benefits. The difficulty is here that the law set out in ERISA may not be clear cut to a layperson. It is because of this that disputes over coverage regarding plan documents and benefits emerge as a regular threat and employers often find themselves in a situation they could have avoided if they had sought out appropriate counsel.
The team at Whyte Hirschboeck Dudek (WHD) has years of experience in ERISA litigation and related areas, which has enabled the group to provide skilled litigation counsel and offer thorough and knowledgeable advice regarding the complex issues within this area of law.
WHD’s solicitors advance the interests of their clients by resolving issues quickly or by embarking upon potential matters before they occur.
The firms’ experience encompasses the gamut within ERISA litigation. The extremely service-oriented law firm houses a significant amount of specialists with expansive experience in ERISA litigation, who have dealt with high-stakes, high-profile issues on behalf of employers, trustees, and administrators in courts nationally. The areas of expertise include litigation relating to 401(k) plan and ESOP class actions, fiduciary duties, health and welfare benefits, and also include retiree benefits. The WHD team also assists with plan document interpretation, contribution and indemnification matters. Services on offer include the following:
The team at Whyte Hirschboeck Dudek is aware that ERISA benefits-related lawsuits can be extremely pricey, but a lingering case that is near-impossible to win can be even more so. The legal team at the firm knows that for an employer, an insurer or a third-party benefits administrator, to comprehend when to fight a case and when to comply will save a lot of time and money.
Clients turn to WHD’s ERISA litigation group for their familiarity and specialist knowledge with the nuances of ERISA-related complexities. The group has the capability of swiftly assessing the likelihood of prevailing in any given court case. Years of experience has helped its team to recognise when to fight and when to mediate. It is also aware of the process and can cut right through to the essence of a lawsuit by promptly identifying whether a case fittingly falls under ERISA or other federal or state laws.