ERISA & Employee Benefits Litigation Blog

Continuing Duty To Monitor? Yes. Scope of That Duty? Wait And See…

Posted in Uncategorized

By: Amanda A. Sonneborn and James Goodfellow

In a case we have blogged about before, the Supreme Court in Tibble v. Edison International unanimously has concluded that an ERISA fiduciary has a continuing duty to monitor investments made in an ERISA governed savings plan. Therefore, claims related to the duty to monitor are not barred by ERISA’s six year statute of limitations even if the initial selection of the allegedly imprudent fund took place outside of that period.

By way of background, in 2007, beneficiaries of the Edison 401(k) Savings Plan sued the plan’s fiduciaries to recover damages for alleged losses suffered because of the alleged breach of the fiduciary duty to monitor the investments in the 401(k) plan, among other claims. The district court and the Ninth Circuit concluded that ERISA’s six year statute of limitations was triggered when the investment in the allegedly offending funds initially was made, and that the beneficiaries had not established a change in circumstances that might trigger an obligation to conduct a full due diligence review of the funds within the six-year period.

A unanimous Supreme Court vacated the Ninth Circuit’s judgment. Writing for the Court, Justice Breyer pointed out that ERISA’s fiduciary duty is derived from the common law of trusts. The common law of trusts, in turn, provides that a trustee has a continuing duty to monitor investments made on behalf of trustees, and that this duty is separate and distinct from the duty to act prudently when making an initial investment or selecting an investment on behalf of trustees. Thus, according to the Supreme Court, so long as a claim alleging a breach of the duty to monitor occurred within six years of suit, that claim is timely. The Court remanded the matter to the Ninth Circuit to consider claims that the fiduciaries breached their duties within the relevant six year statutory period. So any claim regarding the initial decision to offer the offending funds is barred by the six year statute of limitations, but claims related to monitoring the investment would remain, so long as that duty to monitor allegedly was breached within six years of filing suit.

So, left for another day is the scope of the duty to monitor. While claims related to initial investments likely will not survive a statute of limitations claim, plan fiduciaries should be sure to engage in an established monitoring process as those claims will now survive.

In sum, stay tuned; this one is not over yet.

The Future Of ERISA Litigation — Sleeper Supreme Court Case is Worth Watching Carefully

Posted in Uncategorized

By: Mark Casciari and Ian Morrison

ERISA sets forth complex reporting, disclosure, vesting and funding rules for most private sector employee benefit plans. It also provides a private claim upon which relief may be granted in federal court for violations of these rules. For example, if a covered plan fails to provide participants with a proper summary plan description, under current law, a participant can sue, perhaps as a class representative, and ask a court to order the plan fiduciary to comply with disclosure rules. That participant could then seek an award of up to $110 per day in penalties, plus substantial attorney’s fees.

On April 20, 2015, over the objection of the Solicitor General, the Supreme Court agreed to decide, in Spokeo, Inc. v. Robbins, No. 13-1339, whether Article III of the Constitution allows Congress to permit lawsuits over a statutory violation where the violation does not necessarily result in a plausible claim of concrete injury. Our sister blog has described the case [here], and, to be sure, it arises under the Fair Credit Reporting Act, not ERISA. But the Constitutional question presented to the Supreme Court has equal applicability to ERISA claims.

If the Supreme Court finds that private plaintiffs cannot sue to enforce statutory obligations when they have not yet been harmed by violations of those obligations, that would mean that an ERISA plan participant would have no access to the federal courts to enforce the myriad of ERISA reporting, disclosure, vesting and funding rules. The participant who fails to receive a compliant summary plan description, for example, could not sue unless she could show that the failure caused her concrete injury. Alleging a possible injury down the road, or merely alleging that no fiduciary should be able to flout ERISA rules, would not suffice. The participant would need to allege that the statutory violation caused her to suffer real harm, such as purchasing a house in reliance on a false representation of benefit amounts. That type of allegation is not an easy one to make in good faith, as is required by Rule 11 of the Federal Rules of Civil Procedure. Any plaintiff lawyer contemplating a lawsuit pays close attention to Rule 11 in order to avoid sanctions for violation of the rule.

What’s more, if the Supreme Court eliminates the right to sue for enforcement of statutory rights, it might curtail a relatively new decision from the Court thought to allow more ERISA remedies. In Cigna Corp. v. Amara, the Court stated that a participant could sue a fiduciary for an ERISA disclosure violation without having to allege detrimental reliance injury. It would be tougher to make a non-reliance-based Amara fiduciary claim of “actual harm” if the Court finds that a desire to vindicate statutory rights is not Constitutionally sufficient to allow access to the federal courts.

ERISA funding rules also may become harder to enforce. Underfunding in violation of statutory rules would not provide access to the federal courts even if the plan is closing in on insolvency, as long as there are sufficient funds now to pay vested benefits. A Supreme Court decision requiring concrete injury may strengthen the cases of the defendants in the ongoing church plan litigation.

While it would surely cut back on private ERISA lawsuits, a Supreme Court ruling against a claim to vindicate statutory rights absent an allegation of plausible concrete injury could lead to more ERISA lawsuits by the Department of Labor or the Pension Benefit Guaranty Corporation to make up the shortfall. In a time of limited government funds, however, increased government litigation may not be in the cards.

We or our sister blogs certainly will advise you of developments in Spokeo, including the oral argument in the case, which probably will take place in the Fall of 2015.

Same-Sex Marriage Bans As Sex Discrimination: The potential impact on plan sponsors

Posted in Plan Administration Litigation, Uncategorized

By: Sam Schwartz-Fenwick and Amanda Sonneborn

In last week’s oral argument on the constitutionality of same-sex marriage bans, Chief Justice Roberts asked the following question:

Counsel, I’m ­­ I’m not sure it’s necessary to get into sexual orientation to resolve the case. I mean, if Sue loves Joe and Tom loves Joe, Sue can marry him and Tom can’t. And the difference is based upon their different sex. Why isn’t that a straightforward question of sexual discrimination?

Whether the Court addresses this rationale in its decision is an open question that will not be known until the Court issues its decision.  Nevertheless, it is worth considering the impact that a sex-discrimination rationale would have on employers and plan-sponsors.

Under Federal law, claims of sex discrimination against employers and plan sponsors arise under Title VII, not the Fourteenth Amendment of the Constitution. Title VII was passed pursuant to the Commerce Clause of Article 1, Section 8, Clause 3 of the U.S. Constitution.

Nonetheless, a ruling by the Court that in certain instances sexual orientation discrimination constitutes sex discrimination under the Constitution would likely lead many courts to employ this reasoning in analyzing claims under Title VII.  Indeed, this rationale is already the official position of the EEOC and the Obama administration. The EEOC believes that LGBT employment discrimination is sex discrimination, because it sees both sexual orientation and transgender discrimination as impermissible forms of sex-stereotyping. Similarly, the EEOC argues that ERISA governed health plans that only provide spousal coverage to opposite sex spouses to be engaging in sex-discrimination. While ERISA does not require benefit plans to provide benefits to opposite sex spouses to provide equivalent coverage to same-sex spouses, the EEOC believes that failure to provide such benefits is sex discrimination under Title VII.  The EEOC’s theorizes that entitlement to coverage turns on the sex of the employee’s spouse. Likewise, the EEOC appears willing to take an aggressive stance on transgender related benefits coverage (i.e. arguing that it is sex discrimination to refuse to consider transgender related medical procedures and treatments as medically necessary, and thus, they are covered under a plan unless specifically excluded).

A ruling that same-sex marriage bans constitute sex-discrimination could buoy these arguments.  Courts might be more willing to view claims of Title VII discrimination by  LGBT individuals, not as a new type of discrimination (i.e. sexual orientation or gender identity discrimination), but rather as sex discrimination.

While a sex-discrimination rationale could encourage certain courts to extend Title VII to LGBT individuals, a dispute would surely remain between jurists as to whether such a broad reading of Title VII is appropriate. After all, courts are much less willing to interpret the terms of a statute in the same broad manner in which they interpret the Constitution. Indeed, Title VII on its face does not reference LGBT discrimination, and it is clear that when this Act was passed in 1964, Congress did not intend to extend its protection to LGBT individuals.  In addition, since the early 1990s every Congress has considered passing an LGBT non-discrimination law (ENDA). Each and every Congress has failed to pass ENDA. For Courts to extend protections to LGBT individuals when Congress has refused to do so would for many jurists constitute a grave overstep in the limited role of courts to interpret (not make) the law.

As is clear, the Supreme Court’s ruling in the upcoming gay-marriage decision may have a significant impact on employers and plan sponsors. Stay tuned for our update on this analysis once the opinion is issued, which will likely come near the end of June.

Fifth Circuit Finds Out-Of-Network Medical Provider Has Standing To Sue Health Plan

Posted in Plan Administration Litigation

By: Amanda Sonneborn and Meg Troy

The Fifth Circuit recently addressed an out-of-network provider’s right to sue and whether coverage may be conditioned on collections of patient’s out of pocket costs. North Cypress Medical Ctr. Operating Co., et al. v. Cigna Healthcare, et al., No. 12-20695.

North Cypress owns and operates a hospital in Houston. It was unable to agree to a network agreement with Cigna and therefore provided services to Cigna’s member as a non-participating provider. At the time that it opened, North Cypress notified Cigna of a “prompt pay discount” policy. Cigna alleged that, under this policy, North Cypress would only bill its patients a reduced charge in exchange for prompt payment at the time the patient was discharged. Specifically, Cigna alleged that North Cypress charged its patients a discounted coinsurance based on the Medicare fee schedule, whereas the charges it submitted to Cigna for the patient’s care were several times that amount.

Because of the prompt pay discount policy, Cigna routed the claims to its special investigations unit, which delayed payment by several months. It also frequently discounted payments to North Cypress to minimal levels. Alleging that Cigna had underpaid thousands of its claims, North Cypress sued Cigna under ERISA as its patients’ assignee under each patient’s particular health benefit plan. The district court granted summary judgment in Cigna’s favor, agreeing with Cigna that North Cypress did not have standing to seek payment from Cigna under the patient’s health benefit plan because the patient was not at risk of owing North Cypress any additional payment, even if Cigna denied the claim.

The Fifth Circuit reversed. Relying heavily on the Ninth Circuit’s 2014 decision in Spinedex Physical Therapy U.S. Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, the Fifth Circuit explained that courts “look to the rights of the patient at the time of assignment.” It reasoned that participants have the right to be reimbursed by CIGNA for medical costs incurred at an out-of-network provider, and the fact that participants assigned that right to the hospital “does not cause [the right] to disappear.” As an express assignee of the patients’ rights, the hospital had standing to sue for underpayment of benefits. According to the Court, any argument that the hospital’s billing and discounting practices reduces or eliminates CIGNA’s payment obligations under the terms of the plans is a merits-based contention that does not affect the hospital’s standing to sue. The Fifth Circuit instructed the district court to consider that issue on remand.

This decision illustrates one of the compelling issues facing plans, insurers, administrators, out-of-network patients and providers. It remains to be seen whether this decision has cleared the way for these claims to make their way through the federal court system.

No Cover-Up Needed: Tenth Circuit Rules That Fraudulent Concealment Not Required To Toll the General Limitations Period For Fiduciary Breach Claims

Posted in General Fiduciary Breach Litigation

By Kathleen Cahill Slaught and Michelle Scannell

In the latest chapter in a long-running battle about retiree health and life insurance benefits, the Tenth Circuit recently brought retiree Plaintiffs’ fiduciary breach claims back to life.  In doing so, the Tenth Circuit sided with the Second Circuit in a circuit split on the applicable statute of limitations for ERISA fiduciary breach claims.  Fulghum v. Embarq Corp, No. 13-3230 (10th Cir. 2/24/15).

Our sole focus today is the Tenth Circuit’s interpretation of ERISA Section 413, which provides that a fiduciary breach claim must be brought within 6 years of the last alleged breach, or the latest date the fiduciary could have cured the breach, whichever occurs first.  In cases of “fraud or concealment,” however, a claim may be brought within 6 years of discovery of the breach.  Here, Plaintiffs argued that their claims were timely because they were filed within 6 years of plan amendments that led to discovery of the alleged fraudulent breaches.  The core dispute was whether the “fraud or concealment” exception to the general limitations period requires proof of concealment by the fiduciary, or applies in all cases of alleged fraudulent breach.

The district court ruled that the “fraud or concealment” exception requires proof of the fiduciary’s affirmative concealment of the alleged breach and was thus inapplicable.  On appeal, the Tenth Circuit acknowledged the circuit split on the issue.  The majority view, shared by several circuits including the First, Seventh, and Ninth, is that the “fraud or concealment” exception requires concealment of an alleged breach.

On the other hand, the Second Circuit has refused to “fus[e] the phrase ‘fraud or concealment’ into the single term ‘fraudulent concealment.’”  It therefore applies the exception when a breach claim is based on fraud or there is proof of fiduciary concealment.  Here, the Tenth Circuit adopted the Second Circuit’s interpretation of the scope of the exception.  The Tenth Circuit reasoned that its interpretation remedies “what would otherwise be a harsh result in situations where a fiduciary has engaged in prohibited conduct that cannot readily be discovered.”  According to the court, this is consistent with ERISA’s goal of ensuring adequate disclosures to plan participants.  The court noted that because Plaintiffs did not allege concealment of the breach, on remand Plaintiffs’ fiduciary breach claims would be found timely only if the alleged breach was based on a theory of fraud.

Now that the Tenth Circuit has driven a further wedge into this circuit split, it would be nice to get some clarity from the Supreme Court on the issue.  For now, the Second and Tenth Circuits will remain plaintiff-friendly venues for more tenuous fiduciary breach claims that would be untimely in most other jurisdictions.

The EEOC Targets Benefit Plans

Posted in Plan Administration Litigation

By: Sam Schwartz-Fenwick, Nick Clements and Ian H. Morrison

The EEOC issued an internal memo entitled an “Update on Intake and Charge Processing of Title VII Claims of Sex Discrimination Related to LGBT Status” on February 3, 2015.  The memo, sent to the EEOC’s District Directors, seeks to “reiterate the importance of proper handling of LGBT-related discrimination claims and to update the internal coordination process for such cases.”  As most employers and plan-sponsors know, Title VII does not explicitly prohibit discrimination on the basis of sexual orientation, transgender status, or gender identity.  However, the EEOC has recently used Title VII’s prohibition on sex-based discrimination and harassment in the workplace to investigate claims of discrimination and harassment based on sexual orientation, gender identity, and transgendered status.  In highlighting recent enforcement efforts and developing case law (as well as the public’s rapid shift in attitude towards the LGBT community), the memo instructs District Directors on ways to handle and investigate discrimination charges based on sexual orientation, gender identity, or transgendered status that are levied against employers.  The memo also instructs District Directors to report all such charges to the EEOC headquarters for tracking purposes.  For more information about recent EEOC initiatives see Seyfarth’s Workplace Class Action Blog and Seyfarth’s annual Workplace Class Action Litigation Report 2015 (which can be ordered here).

Of note to plan sponsors and administrators, the memo states that the EEOC is interested in litigating charges regarding issues of “first impression” such as benefit coverage for same-sex couples and insurance benefits afforded to transgender individuals. While ERISA (and other current federal law) does not require benefit plans that provide benefits to opposite sex spouses to provide equivalent coverage to same-sex spouses, the EEOC clearly believes that such a right is found Title VII. The EEOC will likely argue that failure to provide such coverage constitutes sex discrimination because entitlement to coverage turns on the sex of the employee’s spouse. Similarly, the EEOC appears willing to take an aggressive stance on transgender related benefits coverage. This will likely involve arguing that refusal to consider transgender related medical procedures and treatments as medically necessary (and thus covered under a plan unless specifically excluded), constitutes sex discrimination. A claim of this sort could come up if a plan refuses to cover hormonal therapy (e.g., estrogen) to a transgender woman, or refusing to cover a prostate examination for a transgender man.

Strong arguments exist to counter the EEOC’s position.  Neither the text or the intent of Title VII covers claims of sexual orientation, gender identity, and transgendered status and employers cannot be required to provide benefits that run counter to their closely held religious beliefs. Lower courts, even those that accept the EEOC’s position that Title VII extends to the LGBT community, are sure to disagree on whether anti-discrimination policies can trump the defense of religious freedom. It is likely that only Congress passing the Employment Non-Discrimination Act (ENDA), or a ruling on this issue from the Supreme Court will settle the law in this area.

In the meantime, employer and plan administrators should be on the lookout for signs that the EEOC is investigating their plan or benefit policies.  An employer or plan administrator that is contacted by the EEOC regarding these matters would be well advised to seek the advice of counsel experience in dealing with the EEOC.

How to Trace Under ERISA — Supreme Court To Resolve How A Fiduciary Can Identify And Recover Plan Assets Wrongly In Participant Hands

Posted in General Fiduciary Breach Litigation

By Mark Casciari and Jim Goodfellow

Once again, the Supreme Court will opine on how to write ERISA plans to maximize the right of fiduciaries to sue to recover monetary relief.

On March 30, 2015, the Supreme Court agreed to review the decision of the Court of Appeals for the Eleventh Circuit in Board of Trustees of the National Elevator Industry Health Benefit Plan v. Montanile. The issue that will be presented to the Supreme Court is:

Does a lawsuit by an ERISA fiduciary against a participant to recover an alleged overpayment by the plan seek “equitable relief” within the meaning of ERISA section 502(a)(3), 29 U.S.C. § 1132(a)(3), if the fiduciary has not identified a particular fund that is in the participant’s possession and control at the time the fiduciary asserts its claim?

The Eleventh Circuit answered this question in the affirmative, stating that plan terms allowed the settlement funds received by the plaintiff to be “specifically identified.” The Court also said that the plan provided a first priority claim to all payments made by a third party to plaintiff, even though the plaintiff no longer possessed the settlement money.

The dispute arose when the plan paid the plaintiff’s medical expenses after the plaintiff was injured in a car accident. The plaintiff received a settlement from the other driver, and the plan sought from the settlement funds reimbursement of plan medical expenses.

Affirmance of the Eleventh Circuit’s decision would represent a practical solution to a common problem faced by fiduciaries who attempt to recover from non-fiduciary plan participants or service providers asserting a right to plan benefits based on assignment. Often times, overpaid funds have been spent by the recipients. Should the Supreme Court reverse, non-fiduciary recipients of plan funds would be provided with a perverse incentive to spend plan money immediately upon receipt so as to avoid any repayment obligations set forth by plan terms.

Montanile may have implications in the provider fraud context, where fiduciaries routinely sue providers to recoup overpayments. The decision also may affect reimbursement claims that fiduciaries often assert to recover overpaid benefits.

Montanile also could address an open question after the Supreme Court’s decision in Cigna Corp. v. Amara, 131 S.Ct. 1866 (2011), which has been interpreted by the Fourth and Ninth Circuits to mean that SPDs are not plan documents for the purposes of determining enforceable plan terms. The Eighth and Eleventh Circuits have reached the opposite conclusion, creating a Circuit split.

Rochow Revisited: No Multi-Million Dollar Disgorgement Award

Posted in Plan Administration Litigation

By, Amanda Sonneborn and James Goodfellow

Following up on a post we wrote back in January 2014, the Sixth Circuit en banc reversed its prior decision affirming an award of disgorgement as an equitable remedy for an insurer’s allegedly improper failure to pay benefits.  By way of reminder, the issue before the Court was whether the plaintiff was entitled to recover unpaid benefits under ERISA § 502(a)(1)(B) and equitable relief in the form of disgorgement of profits earned on the unpaid benefits under ERISA § 502(a)(3), both of which were based on the insurer’s arbitrary and capricious denial of long-term disability benefits. On en banc review, the Sixth Circuit concluded that to allow the plaintiff to recover unpaid benefits under ERISA § 502(a)(1)(B) and disgorged profits under ERISA § 502(a)(3), absent a showing that the remedy available under § 502(a)(1)(B) was inadequate, resulted in an impermissible duplicative recovery and thus was contrary to clear Supreme Court and Sixth Circuit precedent.

The Sixth Circuit cited to the Supreme Court’s decision in Varity Corp. v. Howe, 516 U.S. 489 (1996), and stated that § 502(a)(3) claims function as a “safety net, offering appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere adequately remedy.” The Sixth Circuit continued that the Supreme Court in Varity “limited this expansion of ERISA coverage” because “where Congress elsewhere provided adequate relief for a beneficiary’s injury, there will likely be no need for further equitable relief, in which case such relief normally would not be appropriate.” Thus, the problem with the initial panel decision, as well as the district court’s opinion, was that it focused not on whether the plaintiff was made whole by receiving relief available under § 502(a)(1)(B), but rather on whether the insurer wrongfully gained something by way of its conduct. The Sixth Circuit stated that there was “no showing that the benefits recovered by [the plaintiff], plus the attorney’s fee awarded, plus the prejudgment interest that may be awarded on remand, are inadequate to make [the plaintiff] whole.” As such, there was “no trigger for further equitable relief under Varity.”

The Sixth Circuit also noted that equitable relief only is available where the claim is based on an injury that is separate and distinct form the denial of benefits. The Court found that in Rochow the claim for benefits and the claim for equitable relief were premised upon the denial of benefits.

This case is a big win for insurers and plan administrators. It sets a clear line prohibiting duplicative recovery and provides guidance as to what constitutes “separate and distinct” injuries that would give rise to equitable relief. In addition, it makes clear that equitable relief is available only when relief available elsewhere in ERISA is insufficient, thus reinforcing the usual reading of Varity that § 502(a)(3) is a catch-all provision, and not one that provides relief in conjunction with § 502(a)(1)(B). Finally, it eliminates as a remedy recovery that could have made ordinary benefits decisions prohibitively expensive.

Supreme Court Vacates Seventh Circuit Ruling on Contraceptives

Posted in Uncategorized

By Ben Conley, Sam Schwartz-Fenwick and Amanda Sonneborn

The Obama administration’s Affordable Care Act experienced a potential setback on Monday when the Supreme Court vacated a Seventh Circuit ruling denying a preliminary injunction requested by the University of Notre Dame against the Affordable Care Act’s contraceptive mandate. The Court remanded the matter to the Seventh Circuit for reconsideration in light of the Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751 (2014).

As a non-profit faith-based institution, the University of Notre Dame could seek an exemption from the ACA’s free contraceptive mandate.  To obtain this exemption, however, the University would be required to submit to HHS a one-page form requesting the accommodation.  Upon receipt and verification of this notice, HHS arranges for employees of the non-profit faith-based institute to obtain cost-free contraceptive coverage elsewhere (through an insurer or a third-party health plan administrator).

The University objected to filling out the notice, as it deemed the notice obligation to be effectively the same as offering the contraceptives. The University claims that this violates the University’s fundamental religious beliefs. The University sought a preliminary injunction.  The U.S. District Court for the Northern District of Indiana denied the injunction request in January of 2014, and the Seventh Circuit Court of Appeals affirmed the decision in February of 2014.

Since that time, the Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751 (2014) created a new, narrow exemption from the contraceptive mandate for certain privately held, for-profit organizations.  (The Supreme Court’s decision in Hobby Lobby did not create an exemption to the alternative to the contraceptive mandate — the HHS notification requirement — for such organizations.)  Even so, the Supreme Court’s remand will require the Seventh Circuit to reconsider its previous injunction denial in light of the Hobby Lobby decision.  The ensuing ruling will be significant for employers and plan sponsors, to the extent it provides insight into how broadly lower courts are willing to allow a claim of religious freedom to exempt entities (non-profit or otherwise) from generally applicable laws.

Ninth Circuit Concludes Beneficiary Designation Form Not a Plan Document and Telephone Call Changed A Beneficiary

Posted in Plan Administration Litigation

By: Ada Dolph and Jim Goodfellow

In Becker v. Mays-Williams, No. No. 13–35069 (9th Cir. Jan. 28, 2015), the Ninth Circuit was confronted with the issue of determining whether decedent Asa Williams, a long-time participant in his employer’s ERISA governed retirement savings plans, effectively changed his beneficiary designation from his ex-wife to his son from an earlier marriage. The Court concluded that to resolve the question, it would have to address a matter of first impression for the Ninth Circuit — whether beneficiary designation forms are plan documents.

Telephone call logs documented that after divorcing his ex-wife in 2006, the decedent had called each of the plans to instruct them to designate his son instead of his ex-wife as beneficiary. The decedent was sent and received beneficiary designation forms requesting that he confirm his selection of his son as beneficiary, but he did not return them. Following his death in 2011, both the ex-wife and the son filed competing claims for benefits. Before making any payment, the plans’ fiduciary filed an action interpleading the two parties and seeking a determination as to the proper beneficiary. The ex-wife moved for summary judgment, arguing that because the decedent failed to fill out and return the beneficiary designation forms, he did not designate his son as his beneficiary. The district court agreed, concluding that the beneficiary designation forms constituted plan documents that needed to be signed in order to change the beneficiary. The son appealed to the Ninth Circuit, which reversed.

To determine whether the beneficiary form constituted a “plan document” that dictated the beneficiary, the Ninth Circuit drew on its case law interpreting ERISA § 1024(b)(4), which governs which documents must be produced by plan administrators upon the request of a participant or beneficiary. ERISA §1024(b)(4) identifies specific documents that must be provided, such as the plan and summary plan description, and also requires that plan administrators provide “other instruments under which the plan is established or operated.” The Ninth Circuit has interpreted this catch-all category as including only those documents that “elucidate exactly where the participant stands with respect to the plan–what benefits [the participant] may be entitled to, what circumstances may preclude [the participant] from obtaining benefits, and what procedures [the participant] must follow to obtain benefits.” The Ninth Circuit noted that circuit precedent rejected a broader interpretation that included “all documents that are critical to the operation of the plan.” The Court reasoned that because the beneficiary designation forms provide no information as to where a participant stands with respect to the plan, but instead simply confirm the participant’s attempt to change the beneficiary, they are not plan documents that would govern an administrator’s award of benefits. (Interestingly, the Court made no mention of Cigna Corp. v. Amara, 131 S. Ct. 1866 (2011) in which the Supreme Court made a distinction between what constitutes the governing plan and other documents — such as a summary plan description — which contain only statements “about the plan”).

The ex-wife attempted to argue that the plan fiduciary had exercised its discretion — to which the Court should defer — to require participants to sign and return beneficiary designation forms, pointing to the forms’ language that in order to “finalize” and “validate” the beneficiary designation, the forms must be returned. The son argued that there was no indication that the third party administrator had such discretion, and there was also no evidence that the plan administrator actually required participants to return the forms to finalize a beneficiary designation. For its part, the Ninth Circuit concluded that even if there was discretion, the plans’ fiduciary failed to exercise it by instead filing an interpleader action. Accordingly, the Ninth Circuit concluded that the claim would be reviewed under a de novo standard of review.

The Ninth Circuit then evaluated de novo whether the decedent complied with plan documents to change his designation from his ex-wife to his son. The Court noted that the plan documents did not require non-married participants to make their designations in writing. Indeed, the summary plan descriptions invited non-married participants to change beneficiary designations by telephone or by visiting a website. Because the evidence indicated that the decedent had called to change his beneficiary, and the plan documents did not preclude him from changing his beneficiary by telephone, decedent substantially complied with the plan documents to effect the change in beneficiary from his ex-wife to his son.

Other Ninth Circuit opinions faced with sorting governing plan documents from other documents have relied upon Amara for guidance. See, e.g., Skinner v. Northrop Grumman Ret. Plan B, 673 F.3d 1162 (9th Cir. 2012); Opdoerp v. Wells Fargo & Co. Long Term Disability Plan, 500 F. App’x 575 (9th Cir. 2012). Here, the Ninth Circuit appears to have applied a broader definition of “plan document” to include summary plan descriptions and trust agreements, but nonetheless concluded that the definition did not go so far as to include a beneficiary form.