Benefits Blast

Amid a recent resurgence in litigation targeting pension risk transfer (PRT) transactions, plan sponsors and fiduciaries should take extra care in selecting annuity providers to ensure compliance with fiduciary duties. Read on for a summary of recent developments and insights.   

In a recent Fourth Circuit case, Dawson-Murdock v. Nat’l Counseling Grp., Inc. 2019 WL 3308535 (4th Cir. July 24, 2019), the Court of Appeals has allowed a beneficiary to sue her deceased husband’s employer for breach of fiduciary duties because of its status as the plan administrator and because of its vice president’s statements regarding her claim for insurance benefits.

On February 19, 2019, the Supreme Court of the United States denied certiorari in Munro v. University of Southern California, a closely watched ERISA case in the Ninth Circuit. 

Questions constantly arise as to whether certain expenses incurred by an employee benefit plan can be paid from the assets of the plan or by the plan sponsor. Expenses incurred by an employee benefit plan fall into two broad categories: settlor expenses and fiduciary expenses. Fiduciary expenses can be paid from plan assets; however, settlor expenses cannot be paid from plan assets. Improperly paying expenses with plan assets could constitute a breach of fiduciary duty. It is, therefore, important for plan sponsors to correctly identify which expenses can be charged to the plan and which cannot.

Yesterday, in Field Assistance Bulletin No. 2018-02, the Department of Labor’s Employee Benefit Security Administration  issued a temporary non-enforcement policy with regard to the ERISA Fiduciary Rule.

The Supreme Court recently held that ERISA health plans cannot recover amounts paid on behalf of an injured participant who later receives settlement proceeds from third parties if the participant has spent the proceeds on non-traceable items (for example, on services or consumable items).