Benefits Blast

In Cunningham v. Cornell University, the U.S. Supreme Court rejected efforts by plan fiduciary defendants, previously endorsed by several courts of appeals, to require plaintiffs to allege more than the mere existence of a contract with a service provider to withstand early motions to dismiss prohibited transaction claims in excessive fee lawsuits. The decision appears likely to lead to increased litigation, and plan fiduciaries should review their processes and procedures to ensure plans are only paying reasonable fees for necessary services.

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.   

Effective January 15, 2025, the United States Department of Labor increased its ERISA health and welfare civil penalties for noncompliance. 

Since late 2023, there has been a surge in litigation challenging the use of forfeitures in retirement plans.

On October 4, 2024, the U.S. Supreme Court agreed to resolve a three-way circuit split regarding the pleading standard for alleged prohibited-transaction claims under the Employee Retirement Income Security Act of 1974, as amended (ERISA).

On April 3, 2024, the U.S. Department of Labor (Department) published its final amendment (the Final Amendment) to Prohibited Transaction Class Exemption 84-14 (the QPAM Exemption or Exemption). 

On April 25, 2024, the U.S. Department of Labor’s Employee Benefits Security Administration (the Department) published the Retirement Security Rule: Definition of an Investment Advice Fiduciary (the 2024 Fiduciary Rule). The 2024 Fiduciary Rule defines when a person is considered a fiduciary under Title I and Title II of the Employee Retirement Income Security Act of 1974 (ERISA) in connection with providing investment advice or making an investment recommendation to a retirement investor. In addition to the 2024 Fiduciary Rule, the Department also finalized amendments to certain Prohibited Transaction Exemptions (PTEs) to reflect the Department’s updated definition of an investment advice fiduciary.

Effective January 15, 2024, the United States Department of Labor increased its ERISA health and welfare civil penalties for non-compliance

On February 13, 2023, a Florida federal district court (the Court) partially invalidated the U.S. Department of Labor’s Employee Benefit Security Administration’s (the Department’s) interpretation of its rule that described when a financial adviser who helps participants roll over some or all of their 401(k) assets into an individual retirement account (IRA) or an annuity is providing investment advice and acting as a fiduciary under the Employee Retirement Income Security Act of 1974, amended (ERISA).

After repeated back-and-forth linked to changes in Presidential administrations, the Department of Labor attempts to establish a “principles-based approach” intended to provide “appropriate regulatory neutrality.”

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The Consolidated Appropriations Act, 2021 (the Act) provides additional funding for mental health and substance abuse services and also provides guidance and imposes additional reporting and compliance obligations on group health plans and health insurance issuers that provide mental health (MH) and/or substance use disorder (SUD) benefits.

The Consolidated Appropriations Act, 2021 (CAA) includes rules requiring brokers and consultants to disclose compensation that those service providers receive to steer health plan sponsors to certain insurance carriers, benefits administrators, and other vendors. These new comprehensive disclosure rules add a layer of transparency to what has otherwise been a gray area for many employer plan sponsors and are more comprehensive than limited disclosures in effect today on the Form 5500.   

Section 201 of the No Surprises Act, recently enacted as part of the Consolidated Appropriations Act, 2021 (CAA), prohibits group health plans, health plan insurers, and issuers of health insurance coverage (together, Covered Parties) from entering into contracts that restrict a plan from accessing and sharing certain information.

The Consolidated Appropriations Act, 2021 (CAA) includes relief for plan sponsors offering Health Care and/or Dependent Care Flexible Spending Accounts (FSAs). These voluntary rules will benefit participants who have FSA funds left over due to medical care provider and school/daycare closures and remote work arrangements in 2020 as a result of the pandemic.

The Consolidated Appropriations Act, 2021 (CAA), adds a new annual reporting requirement that requires every group health plan and every health insurance issuer that offers group or individual health insurance to submit an informational report on pharmacy benefits and drug costs with the Secretary of Health and Human Services (HHS), the Secretary of Labor, and the Secretary of the Treasury. Church plans are exempt from this reporting requirement.

On August 31, 2020, the Department of Labor (DOL) closed its active summer by issuing proposed rules for plan fiduciaries with respect to voting proxies on behalf of a retirement plan. The DOL’s explanation of the reason for the proxy rules dovetails with the rationale behind its recent proposed rules on environmental, social, and governance (ESG) investments. s.

ERISA applies to a wide range of employee benefit plans, including retirement plans, health plans, and severance plans. The broad application of the statute can create pitfalls for plan administrators, employees acting as fiduciaries, and counsel when investigating and responding to a claim for payments or other benefits under an ERISA-covered plan.

On June 29, 2020, the U.S. Department of Labor issued a Notice of Proposed Class Exemption that introduces a new standard to replace the Department’s prior “Fiduciary Rule” that was promulgated in 2016, but vacated by the Court of Appeals for the Fifth Circuit in 2018. The Notice has two significant components. 

On June 23, 2020, the Department of Labor (DOL) updated its “investment duties” guidance for Employee Retirement Income Security Act of 1974, as amended (ERISA), fiduciaries to address environmental, social, and corporate governance (ESG) investments.