Feuer on AK Steel v. West ERISA Case

Albert Feuer has been good enough to provide us with his commentary on why the Solicitor General was incorrect in its reasoning for recommending denial of cert. in the ERISA case of AK Steel v. West:

The Solicitor General and Covington & Burling recently displayed confusion between plan documents and plan terms in the briefs they filed with the Supreme Court in AK Steel Corp. Retirement Accumulation Plan v. West that is similar to the confusion that they displayed in the briefs that they had filed in Kennedy v. DuPont Savings Plan Administrator.   In the former they disagreed about whether an ERISA Section 502(a)(1)(B) benefit claim under the terms of a plan is restricted to claims pursuant to the plan documents rather than pursuant to the plan terms.  In the latter, they had agreed that a waiver that violates the terms of a pension plan is not effective even if the plan document permits the wavier.

The Solicitor General correctly asserted in its recently filed amicus brief that the plan terms of an ERISA plan must include the provisions that ERISA mandates that ERISA plan contain. The brief pointed to such a unanimous Supreme Court holding with respect to the ERISA mandate prohibiting pension forfeitures in Central Laborers’ Pension Fund v. Heinz, 541 U.S. 739 (2004). Covington & Burling by contrast implicitly argued that the phrase "plan terms" in ERISA Section 502(a)(1)(B) has the same meaning as the phrase "plan documents"

However, the Solicitor General succumbed in part to the Covington & Burling emphasis on "plan documents" by beginning its argument with a discussion of the ERISA Section 404 requirement that fiduciaries make benefit payments by following Title I of ERISA as well as plan documents.  A more extensive discussion of the significance of the phrase "plan terms" then follows.  The initial plan documents approach has three flaws, even though, as the Solicitor General observed, some Supreme Court decisions used the same approach.

First, the approach has no applicability to plans, such as a top hat plan that is not subject to the cited fiduciary sections. However, ERISA Section 502(a)(1)(B) gives participants and beneficiaries of such a plan the right obtain their benefits under the terms of the plan.

Second, the approach focuses on the wrong fiduciary sections. ERISA Section 503 and the regulations there under impose fiduciary responsibilities on persons who make benefit determinations, whether or not the cited fiduciary provisions are applicable. In particular, all ERISA plans must have claims fiduciaries who decide entitlements under plan terms, which include ERISA mandates, in accord with procedural requirements set forth in 29 C.F.R. § 2560.503-1.

Third, the approach focuses on administrator payment obligations rather than the benefit entitlements at issue. ERISA does not always require plan administrators to pay persons the plan benefits to which they are entitled. For example after a distress termination, benefit payments may be limited to the applicable maximum guarantee benefits.

As normal, Albert appears to be operating on a different level  and understanding than those who appear to merely dabble in this area. Here's hoping that the Supreme Court gets wind of Albert's considered opinion.

PS