Workplace Prof Blog

Zelinsky on California Dreaming: The California Secure Choice Retirement Savings Trust Act

Edward A. Zelinsky (Yeshiva University - Benjamin N. Cardozo School of Law) has posted on SSRN is new piece forthcoming in the Connecticut Insurance Law Journal: California Dreaming: The California Secure Choice Retirement Savings Trust Act.

Here is the abstract:

Half of American workers are not covered by employer-sponsored retirement arrangements. The recently passed California Secure Choice Retirement Savings Trust Act seeks to solve this problem by mandating retirement savings arrangements for California employers, coupled with a public investment vehicle for investing these private retirement savings. The Act is important because of California’s size and status as a trendsetter for other states.

This Article is the first to examine the important legal questions the Act raises under the Internal Revenue Code and ERISA. Contrary to the drafters’ intent, the savings accounts authorized under the Act do not qualify as individual retirement accounts under the Code. Hence, employees participating in savings arrangements established under the Act will not receive the income tax benefits associated with individual retirement accounts.

If the Act were to be amended to make its accounts individual retirement accounts, the Act would survive ERISA preemption under New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645 (1995), though not under Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983). Since Travelers is the Court’s more recent and more compelling construction of ERISA preemption, the Act should survive ERISA preemption if the Act is amended to have true individual retirement accounts.

A final section addresses the choices other state legislatures (as well as Congress) confront if they elect to follow part or all of the path on which California has embarked to encourage private retirement savings. President Obama has recently proposed a federal mandate under which employers with more than ten employees would be required to maintain either retirement plans or IRA coverage. The President’s proposal ensures public debate about the appropriate function of government in encouraging retirement savings. The Golden State’s Act will play an important role in that debate. In that debate, I favor state-by-state experimentation rather than any single approach to the task of encouraging greater retirement savings.

As always, Ed wrties a comprehensive, easily-understandable explanation of the new California state-run pension plan for private employees. I have read this piece in full and agree with Ed that California has failed to set up IRAs for employees as they desired and instead have created an ERISA plan.  I also agree with Ed that such provisions should be amended so that this scheme is given a chance to work to provide an additional vehicle for retirement savings for California residents.

PS

Youngdahl on Investment Consultants and Institutional Corruption

Jay Yougdahl (Harvard University - Edmond J. Safra Center for Ethics) has recently posted on SSRN his new piece entitled: Investment Consultants and Institutional Corruption.

Here is the abstract:

Analyses of the financial crisis of 2007-2009 and the continuing effects of a difficult investing environment have largely focused on factors such as the roles of failed and complex financial products, inadequate credit rating agencies, and ineffective government regulators. Nearly unexamined, however, is a key group of actors in the financial landscape, investment consultants. Investment consultants stand as gatekeepers between large investors, such as private and public retirement funds, and those from “Wall Street” who design and sell financial products. Investment consultants hired by these asset owners practically control many investment decisions. Yet, as a whole the profession failed to protect asset owners in the recent financial crisis and has yet to engage in serious self-examination. Much of the reason for the failure can be traced to institutional corruption, which takes the form of conflicts of interest, dependencies, and pay-to-play activity. In addition, a claimed ability to accurately predict the financial future, an ambiguous legal landscape, and a tainted financial environment provide a fertile soil for institutional corruption. This institutional corruption erodes the confidence and effectiveness of the retirement and investment systems today. While not proposing a comprehensive system of reform, this article illuminates a way forward for those in the industry who have the desire to address and implement necessary corrective activity.

This is a timely and provocative contribution by Jay. In light of the increased movement from traditional pension to consumer driven defined contribution plans like 401ks, there is a very significant role being played by investment consultants in the pension world today, perhaps more than ever.

This role is largely misunderstood or ignored by many who practice ERISA law, and of course, by many plan participants and beneficiaries. It will be interesting to see what impact this paper may have on the increasing reliance on 401ks on the one hand, and the new trend among larger companies (like GM and Verizon) to derisk their pension obligations by purchasing group annunity contracts from large insurers (like Prudential) on the other.

PS

Investment Consultants and Institutional Corruption

Jay Youngdahl

Harvard University - Edmond J. Safra Center for Ethics

April 25, 2013

Edmond J. Safra Working Papers, No. 7

Abstract:     
Analyses of the financial crisis of 2007-2009 and the continuing effects of a difficult investing environment have largely focused on factors such as the roles of failed and complex financial products, inadequate credit rating agencies, and ineffective government regulators. Nearly unexamined, however, is a key group of actors in the financial landscape, investment consultants. Investment consultants stand as gatekeepers between large investors, such as private and public retirement funds, and those from “Wall Street” who design and sell financial products. Investment consultants hired by these asset owners practically control many investment decisions. Yet, as a whole the profession failed to protect asset owners in the recent financial crisis and has yet to engage in serious self-examination. Much of the reason for the failure can be traced to institutional corruption, which takes the form of conflicts of interest, dependencies, and pay-to-play activity. In addition, a claimed ability to accurately predict the financial future, an ambiguous legal landscape, and a tainted financial environment provide a fertile soil for institutional corruption. This institutional corruption erodes the confidence and effectiveness of the retirement and investment systems today. While not proposing a comprehensive system of reform, this article illuminates a way forward for those in the industry who have the desire to address and implement necessary corrective activity.

Monahan Receives ALI Young Scholars Medal

Congratulations to Amy Monahan (Minnesota), who is one of two law professors receiving American Law Institute's Young Scholar's Medal. Here are some excerpts from ALI's press release:

Justice Goodwin Liu of the California Supreme Court who chaired the Young Scholars Medal Selection Committee, said "Professor Monahan's work on public pension reform and employee benefits has contributed significantly to some of the most important debates now playing out at the local, state, and federal levels."

Professor Monahan's scholarship centers on the intersection of health care reform and public sector pensions. Her teaching and research focuses primarily on the topics of taxation and employee benefits. She has written 17 articles or book chapters since the beginning of her law teaching career. Professor Monahan holds a J.D. from Duke University School of Law and a B.A. in international studies from Johns Hopkins University.

"Amy has rapidly established herself as one of the country's top scholars in health policy and employee benefits law," said David Wippman, the dean of the University of Minnesota Law School. "She's also a terrific teacher and colleague and richly deserves the Young Scholars Medal."

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An ERISA Update: Some Thoughts on McCutchen and Heimeshoff

Last week was a momentous week for those of us who teach and practice employee benefits law under ERISA. 

First, the United States Supreme Court decided the reimbursement case of U.S. Airways v. McCutchen.  The syllabus is provided here in a post by Jeff from last week, but the long and the short is that U.S. Airways, a self-insured health plan provider, had provided medical benefits (some $67,000) to a participant (McCutchen) of their plan injured in a car accident.  Although U.S. Airways paid for the medicial expenses arising from the accident, when McCutchen received a settlement of his claim against the third-party tortfeasor (about $110,000), U.S. Airways exercised its rights under the plan's reimbursement clause to recover the amount it had already paid to McCutchen.  This would be mean that McCutchen would lose his full recovery because in addition to paying back U.S. Airways for the medical expenses, he owed a 40% contingency fee to his attorneys. He sought the use of two equitable doctrines - unjust enrichement based on double recovery and the common fund doctrine - to mitigate this harsh result.

The Court in McCutchen found that this was a contractual matter and that the plan terms overrode any possible equitable principles, as long as the terms of the plan were clear.  Although the reimbursement clause was clear with regard to U.S. Airways being able to collect the full amount it previously payed out in medical expenses and therefore equitable theories of unjust enrichment were unavailable, the plan was silent on how attorney fees should be split be McCuthchen and the company. Thus, the majorty five Justices applied the common fund doctrine to require U.S. Airways to ratably play its share of McCutchen's attorney fees.

Few take away points from McCutchen:

1) It would seem, a la Firestone, that plans henceforth could write their reimbursement clauses in their plans to make clear that the common fund doctrine does not apply and companies are not responsible for attorney fees. That would mean, without equitable principles available, participants like McCutchen could actually end up coming out behind after suing the third-party for their injures. As other have pointed out, however, companies may think twice before adding such language to their plans for fear that attorneys will not take such cases and/or participants will just not decide to sue the third-party since they would be worse off if they did.

2. It is strange that the Court that has gone previously out of its way to say that ERISA is imbued with trust law, would treat this issue as a purely contractual matter.  The Court, in deciding the standard of review in denial of benefit claim cases in Firestone and Glenn, came to the exactly opposite result and found that trust law principles applied.  Although Firestone was a 502(a)(1)(B) denial of benefit plan case and McCutchen is a 502(a)(3) claim for appropriate equitable relief under the terms of the pan, both provisions have been historically construed with trust law in mind, not contract law. Of course, trust law would have more likely provided the equitable remedies that McCutchen was seeking.

3. Applying contract principles seems particularly unfair in this context because employee benefit plans are essentially adhesion contracts.  Not only are participants unlikely to understand and know about such reimbursement clause provisions in their benefit plans, but even if they do, they would not be able to negotiate in any meaningful way with their employer over changing the terms of the plan. This is a true take-it-or-leave-it proposition.  This is why contract law is unsuited to 502(a)(3) for appropriate equitable relief and why trust law, given that the funds are placed in trust for the benefit of participants and beneficiaries, is the far better and appropriate model.

So, McCutchen seems wrong to me on many levels. What is depressing is not only that the usual Justices are aligned against ERISA plaintiffs, but normal allies of plaintiffs on the Court just don't seem to understand the consequence of their decision in a case like this.  In short, ERISA continues to baffles the Supreme Court. 

All this does not bode well for ERISA plaintiffs in the case the Supreme Court granted cert in last week, Heimeshoff v. Hartford.  This case concerns when the statute of limitations should begin to run in a case where a participant seeks disability benefits under an employer's welfare benefit plan.  ERISA only has a statutory SOL provision for breach of fiduciary claims, and courts usually look to state law analogs to find SOLs for denial of benefit claims like this one. However, the issue is not what the appropriate SOL is, but rather, when does that SOL begin to run?

Here is a summary of the case and the question presented from Proskauer's ERISA Practice Center Blog:

Heimeshoff had been a Wal-Mart employee for nearly twenty years. In 2005, she filed a claim for long term disability benefits as a result of various ailments caused by fibromyalgia. Hartford’s plan provided that its three-year limitations period ran from the time that proof of loss was due under the plan. Here, even accepting Heimeshoff’s arguments, the latest she could have filed a proof of loss was in September 2007, and she did not commence her lawsuit until November 2010.

The Second Circuit concluded that Connecticut law permits parties to an insurance contract to shorten the state-prescribed statute of limitations, and also permits the statute of limitations under an ERISA plan to begin before a claimant can bring a legal action. Accordingly, it held that the district court had properly dismissed Heimeshoff’s claim as untimely since she had filed her lawsuit several months after the three year period had expired.

The Supreme Court agreed to address the following question: “When should a statute of limitations accrue for judicial review of an ERISA disability adverse benefit determination?” According to the petition, the Circuits have not uniformly answered this question. 

This is really an interesting question from a number of different stand-points:

1.  From a preemption standpoint, it would appear that state law would apply, and override Hartford's insurance language to the contrary, since this is insured disability plan subject to state law insurance regulations since it is a law regulating insurance under ERISA Section 514(a)(2)(A) and saved from ERISA preemption.  In fact, it reminds one of the California notice-prejudice rule in the Court's UNUM v. Ward case from 1999 where the state law was found to be saved from preemption.  Yet, the Second Circuit concludes that under Connecticut insurance law, an insurer can shorten the statute of limitations in an insurance contract; but the Second Circuit then says the question of when a statute of limitations begins to run is a matter of federal law.

2. If federal applies, as the Second Circuit suggests, the federal law would appear to be based on the ERISA principles that generally written terms of the plan should be enforced as written. Of course, this is why the Court ends up deciding that Heimeshoff's disability claim must be dismissed under the applicable SOL. This conclusion also resonates with the contract-based analysis in McCutchen which says equitable principles cannot override a clearly written benefit plan provision.

3. On the other hand, if state law applied under the preemption analysis above, it could be possible that different insurance laws from different states might provide that such provisions like Hartford's violate laws that require insurance companies to explain to participants when their claims need to be filed in court to challenge the plan administrator's decision. No such law seems to exist in Connecticut, but of course there would be a host of different regimes that would then apply, seemingly inconsistent with the uniformity which is desired for such plans under ERISA. Perhaps a DOL regulation on this issue would helpful.

The Court could certainly go in a number of different directions here, but given recent precedent, a contract-based approach may seem the mostly likely scenario, which means the Second Circuit's decision would be upheld.

Also, as friend of the blog Don Bogan (Oklahoma) pointed out to me: "I have never heard of a contract, which requires internal appeals/exhaustion of administrative remedies, to also declare that the SOL begins to run even before internals appeals are exhausted—if Connecticut has no statute or case law on that issue, then perhaps the Supreme Court should certify the case to Connecticut Supreme Court for resolution of what Conn. insurance law is or would be on that question."

Perhaps so. Stay tuned.

PS

A Dau-Schmidt Duo

Ken Dau-Schmidt (Indiana-Bloomington) has just posted on SSRN a couple of new articles:

Promises to Keep: Ensuring the Payment of Americans’ Pension Benefits in the Wake of the Great Recession (forthcoming Washburn  L.J.):

In this essay, I examine the problem of designing a pension plan within the context of our larger public policy of encouraging workers to save for retirement. I discuss the various problems and risks inherent in encouraging workers to adequately save for retirement, invest those assets efficiently, and ensure the planned level of retirement consumption for the remainder of their lives. I also discuss the three major types of pension plans in the American retirement system, defined benefit, defined contribution, and hybrid, and assess how well each of these types of plans deals with the problems encountered in designing a pension plan. I then examine the particular problems that have arisen because of our relatively recent transition from defined benefit to defined contribution plans, and the funding problems caused by the Great Recession. I close with a section discussing policy changes that might be made to improve our pension system and help ensure that workers receive not only the pension benefits they were promised, but also adequate benefits to sustain them comfortably during their retirement.

The Employment and Economic Advancement of African Americans in the Twentieth Century (with Ryland Sherman, IU-Bloomington Dep't Telecomm.):

The African American experience in the American economy in the Twentieth Century has been a story of many successes, and more than a few unfulfilled promises. Brought in chains to the poorest region of the United States to do the least desirable work, and purposely denied education in order to preserve their subjugation, African Americans began the Twentieth Century on the lowest rung of the American economic ladder doing predominantly low-skilled, low-wage agricultural labor in the poorest region of our country. However, over the course of the century, African Americans were able to overcome express and implicit discrimination to climb the economic ladder and achieve success in new regions and new occupations and professions. African Americans still suffer many disadvantages that diminish their economic success, particularly males and particularly in education, but certainly in comparison with the previous three centuries, the Twentieth Century marked important advancements in African American economic opportunity and success.

In this essay, we will examine how African Americans achieved the economic progress they made during the Twentieth Century. We do this by examining their progress along four vectors of economic opportunity - geographical distribution, labor force participation, occupational distribution, and educational attainment - and then examine the resulting improvement in relative economic rewards. We will also examine the impact that the Civil Rights Movement, the Civil Rights Act and affirmative action policies have had on this progress. We will see that, from an economic perspective, the story of African American success in the Twentieth Century is one of overcoming discrimination by moving from a situation of relatively constrained economic opportunities, to gain access to, and success in, an ever larger and more rewarding set of opportunities across the country. It is hoped that the recounting of the success of African Americans in achieving greater economic success by using the law and their own initiative to gain access to new geographic, occupational, and educational opportunities will serve as an inspirational and educational lesson for India’s Dalits in their own struggle for equal opportunities.

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Supreme Court Holds That Plan Language Controls, But Equitable Doctrine Still Relevant

Today, the Supreme Court issued decisions in two employment-related cases.  I'll do a separate post on each.  This post is US Airways v. McCutchen, an ERISA case decided 5-4.  Because this is out of my range of expertise (Paul might chime in later), I'll just post the Court syllabus:

The health benefits plan established by petitioner US Airways paid $66,866 in medical expenses for injuries suffered by respondent McCutchen, a US Airways employee, in a car accident caused by a third party. The plan entitled US Airways to reimbursement if McCutchen later recovered money from the third party. McCutchen’s attorneys secured $110,000 in payments, and McCutchen received $66,000 after deducting the lawyers’ 40% contingency fee. US Airways demanded reimbursement of the full $66,866 it had paid. When McCutchen did not comply, US Airways filed suit under §502(a)(3) of the Employee Retirement Income Security Act of 1974 (ERISA), which authorizes health-plan administrators to bring a civil action “to obtain . . . appropriate equitable relief . . . to enforce . . . the terms of the plan.” McCutchen raised two defenses to US Airways’ request for an equitable lien on the $66,866 it demanded: that, absent over-recovery on his part, US Airways’ right to reimbursement did not kick in; and that US Airways had to contribute its fair share to the costs he incurred to get his recovery, so any reimbursement had to be reduced by 40%, to cover the contingency fee. Rejecting both arguments, the District Court granted summary judgment to US Airways. The Third Circuit vacated. Reasoning that traditional “equitable doctrines and defenses” applied to §502(a)(3) suits, it held that the principle of unjust enrichment overrode US Airways’ reimbursement clause because the clause would leave McCutchen with less than full payment for his medical bills and would give US Airways a windfall.

Held:

     1. In a §502(a)(3) action based on an equitable lien by agreement—like this one—the ERISA plan’s terms govern. Neither general unjust enrichment principles nor specific doctrines reflecting those principles—such as the double-recovery or common-fund rules invoked by McCutchen—can override the applicable contract. Pp. 5–11.

          (a) Section 502(a)(3) authorizes the kinds of relief “typically available in equity” before the merger of law and equity. Mertens v. Hewitt Associates, 508 U. S. 248 . In Sereboff v. Mid Atlantic Medical Services, Inc., 547 U. S. 356 , the Court permitted a health-plan administrator to bring a suit just like this one. The administrator’s claim to enforce its reimbursement clause, the Court explained, was the modern-day equivalent of an action in equity to enforce a contract-based lien—called an “equitable lien ‘by agreement.’ ” Id., at 364–365. Accordingly, the administrator could use §502(a)(3) to obtain funds that its beneficiaries had promised to turn over. The parties agree that US Airways can do the same here. Pp. 5–6.

          (b) Sereboff’s logic dooms McCutchen’s argument that two equitable doctrines meant to prevent unjust enrichment—the double-recovery rule and common-fund doctrine—can override the terms of an ERISA plan in such a suit. As in Sereboff, US Airways is seeking to enforce the modern-day equivalent of an equitable lien by agreement. Such a lien both arises from and serves to carry out a contract’s provisions. See 547 U. S., at 363–364. Thus, enforcing the lien means holding the parties to their mutual promises and declining to apply rules—even if they would be “equitable” absent a contract—at odds with the parties’ expressed commitments. The Court has found nothing to the contrary in the historic practice of equity courts. McCutchen identifies a slew of cases in which courts applied the equitable doctrines invoked here, but none in which they did so to override a clear contract that provided otherwise. This result comports with ERISA’s focus on what a plan provides: §502(a)(3) does not “authorize ‘appropriate equitable relief’ at large,” Mertens, 508 U. S., at 253, but countenances only such relief as will enforce “the terms of the plan” or the statute. Pp. 6–11.

     2. While McCutchen’s equitable rules cannot trump a reimbursement provision, they may aid in properly construing it. US Airways’ plan is silent on the allocation of attorney’s fees, and the common-fund doctrine provides the appropriate default rule to fill that gap. Pp. 12–16.

          (a) Ordinary contract interpretation principles support this conclusion. Courts construe ERISA plans, as they do other contracts, by “looking to the terms of the plan” as well as to “other manifestations of the parties’ intent.” Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101 . Where the terms of a plan leave gaps, courts must “look outside the plan’s written language” to decide the agreement’s meaning, CIGNA Corp. v. Amara, 563 U. S. ___, ___, and they properly take account of the doctrines that typically or traditionally have governed a given situation when no agreement states otherwise. Pp. 12–13.

          (b) US Airways’ reimbursement provision precludes looking to the double-recovery rule in this manner because it provides an allocation formula that expressly contradicts the equitable rule. By contrast, the plan says nothing specific about how to pay for the costs of recovery. Given that contractual gap, the common-fund doctrine provides the best indication of the parties’ intent. This Court’s cases make clear that the doctrine would govern here in the absence of a contrary agreement. See, e.g., Boeing Co. v. Van Gemert, 444 U. S. 472 . Because a party would not typically expect or intend a plan saying nothing about attorney’s fees to abrogate so strong and uniform a background rule, a court should be loath to read the plan in that way. The common-fund rule’s rationale reinforces this conclusion: Without the rule, the insurer can free ride on the beneficiary’s efforts, and the beneficiary, as in this case, may be made worse off for having pursued a third party. A contract should not be read to produce these strange results unless it specifically provides as much. Pp. 13–16.

663 F. 3d 671, vacated and remanded.

     Kagan, J., delivered the opinion of the Court, in which Kennedy, Ginsburg, Breyer, and Sotomayor, JJ., joined. Scalia, J., filed a dissenting opinion, in which Roberts, C. J., and Thomas and Alito, JJ., joined.

New Book: ERISA Litigation

Craig C. Martin & Amanda S. Amert, ERISA Benefits Litigation Answer Book (PLI 2013).  Here's the publisher's notes:

The 1974 enactment of [ERISA] brought to the federal courts an array of claims that had previously been decided under a patchwork of state and local laws. The many subsequent changes in employee retirement options and the resulting federal regulations have created a complex legal web for attorneys to navigate. The newly published ERISA Benefits Litigation Answer Book 2013 provides a comprehensive overview of this important area. Using a straightforward Q&A format, it describes the:

• Causes of action under ERISA
• Types of actions allowed in federal court, including class actions
• Fiduciary duties mandated under ERISA, and what constitutes a breach

ERISA Benefits Litigation Answer Book 2013 fully describes the legal requirements of, defenses to, and unique aspects of each of the following types of litigation that is brought under the Act: stock drop, ESOP, cash balance plan, prohibited transaction, fee, recovery of benefits due under a plan, multi-employer plan, managed care plan, and discrimination and interference with benefits rights. In addition, this comprehensive volume provides separate chapters discussing litigation of claims arising under federal common law, affirmative defenses to ERISA claims, and limitations on actions under ERISA.

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Kaplan on Taxing Retirement Income

Richard L. Kaplan (Illinois) has just posted on SSRN his article (32 Virginia Tax Review) Reforming the Taxation of Retirement Income.  Here's the abstract:

Legal and financial analyses abound about various means of saving for retirement and the tax advantages that they present, but very little attention has been paid to how retirement income is generated and the tax consequences that pertain to its generation. This article fills that void by examining the three major sources of retirement income: Social Security, employment-based retirement plans, and personal savings. For each of these sources, this article considers how retirement income is generated, sets forth the applicable federal income tax treatment, and proposes reforms to make the pertinent tax rules more sensible. Among its recommendations are simplifying how Social Security retirement benefits are taxed, bifurcating defined contribution plan withdrawals into capital gains and ordinary income components, repealing certain exceptions to the early distribution penalty, reducing the delayed distribution penalty and adjusting the age at which it is triggered, and changing the residential gain exclusion to avoid unanticipated problems with reverse mortgages.

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Sick Leave Updates

Earlier this month, Portland, OR became the fourth city to require employers to provide sick leave to workers. Leave is earned on an hourly basis up to five total days in a year. Employers of six or more employees must provide paid leave while smaller employers can provide the leave unpaid. 

New York City is poised to become the fifth. The city council approved a bill that would require employers with 20 or more employees to offer paid sick leaves next year. The requirement would extend to employers with 15 or more the following year. All employers would have to provide at least unpaid leave. Mayor Bloomberg has pledged to veto it, stating that it will hurt job growth, but there is enough support on the city counsel to override that veto. This is a particularly important development for workers and employers, coming on the heels of the state legislature having just raised the state minimum wage to $9.

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Michigan Employee Benefits Law Conference: Regulation of Benefit Plans: The Most Consequential Subject to Which No One Pays Enough Attention

On Friday, March 22, 2013, the University of Michigan Business School will host the Second Annual National ERISA Conference. This year's conference is entitled: Regulation of Benefit Plans: The Most Consequential Subject to Which No One Pays Enough Attention. 

Phyllis Borzi, head of the Employee Benefit Security Administration, is set to give remarks at lunch, and Joshua Gotbaum, head of the Pension Benefit Guaranty Corporation (PBGC), is set to moderate a panel and give closing remarks.

Here is what the rest of program looks like:

“Meta” Analysis of ERISA 8:45—10:10 AM

Moderated by: Sean M. Anderson, University of Illinois College of Law

Cultural Cognition Insights into Judicial Decision Making in Employee Benefits Cases
Paul Secunda, Marquette University Law School

Synthetic Common Law:  Reducing the Complexity of Employee Benefits Law
Andrew Stumpff, University of Michigan Law School

An Anatomy of ERISA Claims Administration
James A. Wooten, SUNY Buffalo Law School

Drivers of Benefits Policy Choices 10:20 AM—12:05 PM

Moderated by: Barry Kozak, The John Marshall Law School

Rethinking ERISA's Promise of Income Security in a World of 401(k) Plans
Lawrence A. Frolik, University of Pittsburgh School of Law

The Intersection of ERISA, ACA, and sub rosa Tort Reform
Brendan Maher, Oklahoma City University

Legislation by Fiat: The PPACA’s Approach to Health Care Coverage
Jayne Zanglein, Western Carolina University

A Comparative Lens 1:15—3:00 PM

Moderated by: Regina Jefferson, Columbus School of Law

The Cost of ‘Choice’ in a Voluntary Pension System
Jonathan Barry Forman, University of Oklahoma College of Law & G.A. (Sandy) Mackenzie, Editor, Journal of Retirement & Pension Consultant

The Role of the Employer in Health Care: A Comparison of the United States and France
Kathryn L. Moore, University of Kentucky College of Law

The Allocation of Regulatory Authority for Pensions: U.S. Experience and International Alternatives
John A. Turner, Pension Policy Center

Fiduciary and Governance 3:10—4:55 PM

Moderated by: Joshua Gotbaum, PBGC Director

A 2.4 Trillion Dollar Question: Do Public Pension Plan Governance Provisions Matter?
Thomas J. Fitzpatrick, Federal Reserve Bank of Cleveland, & Amy B. Monahan, University of Minnesota Law School

Two Hats, One Head, No Heart: The Anatomy of ERISA's Settlor/Fiduciary Distinction
Dana M. Muir, University of Michigan Ross School of Business & Norman P. Stein, Drexel University Earle Mack School of Law

Trust Variation and ERISA’s Misbegotten “Presumption of Prudence”
Peter J. Wiedenbeck, Washington University School of Law

Fiduciary Duty in Investment: ERISA's Empty Signifier Filled by Wall Street
Jay Youngdahl, Harvard University

Quite an impressive group of speakers; an ERISA's geek dream!

If you would like to register for the event, there is only limited space avaialble. Please email conference co-organizer, Dana Muir at dmuir@umich.edu if you would like to attend.

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Final FMLA Rule on Military and Flight Crews Expansion to Be Published Tomorrow

Kenneth Shiotani (National Disability Rights Network) gives us the news that the Department of Labor will be publishing its final rule on the recent amendments to the FMLA that expanded coverage to flight crews and family members of those in the military--for a refresher on those expansions, see here, here and here.

And here is the final rule itself. 

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Happy 20th Anniversary FMLA

The Family and Medical Leave Act was signed into law twenty years ago today. In celebration, here are some interesting links for your lunch hour:

The Family and Medical Leave Act, An Overview (Cong'l Res. Serv.)

Women and Low-Skilled Workers, Other Countries' Practices (Gov't Accountability Office)

Family and Medical Leave Act Regulations: A Report on the Department of Labor's Request for Information (DOL)

And for some reform links, from the add paid leave camp: National Partnership for Women and Families Agenda for the 113th Congress. And from the reform abuse of leave camp: The U.S. Chamber of Commerce's Absence abuse and Medical Leave.

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Secunda Named to DOL's ERISA Advisory Council

Congratulations to our own Paul Secunda (Marquette).  Today Secretary of Labor Hilda Solis announced his appointment to the 2013 Advisory Council on Employee Welfare and Pension Benefit Plans – known as the ERISA Advisory Council.  Here's a description; Paul will be representing the public:

The 15-member council provides advice on policies and regulations affecting employee benefit plans governed by the Employee Retirement Income Security Act. By law, members of the council serve for staggered three-year terms. Three members are representatives of employee organizations (at least one of whom represents an organization whose members are participants in a multiemployer plan). Three members are representatives of employers (at least one of whom represents employers maintaining or contributing to multiemployer plans). Three members are representatives of the general public. There is one representative each from the fields of insurance, corporate trust, actuarial counseling, investment counseling, investment management and accounting.

Congrats, Paul!

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Rosenberg on John Marshall Law Review's Special Edition on Supreme Court ERISA Jurisprudence

Friend of the blog, Steve Rosenberg, has an interesting post up on his blog, Boston ERISA and Insurance Litigation Blog entitled: Notes of The John Marshall Law Review's Special Edition on "The Past, Present, and Future of Supreme Court Jurisprudence on ERISA.

As Steve notes, "I think it is notable in this regard, and possibly causally related, that several of the authors are practicing lawyers who focus on ERISA litigation."  He points to articles dealing with the Moensch presumption (i.e., addressing fiduciary obligations with regards to holding employer stock in a benefit plan), the recent Supreme Court Amara court case concerning the scope of equitable remedies under ERISA, and the role of summary plan descriptions (SPDs) after Amara.

Steve is right that all of these topics are of current importance to ERISA litigation, and like Steve, I look forward to having the opportunity to read all of the John Marshall Law Review Articles in more detail.

PS

Call for News and Articles

Friends of the blog Angela Onwuachi-Willig (Iowa) and Rebecca Lee (Thomas Jefferson) write about the joint newsletter for the AALS sections on Employment Discrimination and Labor and Employment Law. Here is their call for submissions:

Dear Colleagues:

We are putting together a joint annual newsletter for the AALS Section on Employment Discrimination and the Section on Labor Relations and Employment Law, and we need your help as readers and section members.  Please forward this message to any and all people you know who teach or write in the Employment Discrimination, Labor Law, and Employment Law fields.

First, if you have news of any faculty visits, lateral moves, entry-level hires, or promotions and tenure not included here (http://lawprofessors.typepad.com/laborprof_blog/2012/04/workplace-prof-moves-for-2012-2013.html), please e-mail that news to Angela Onwuachi-Willig at angela-onwuachi@uiowa.edu.

Second, please e-mail Angela Onwuachi-Willig at angela-onwuachi@uiowa.edu with any information about  conference announcements and calls for papers, employment or fellowship opportunities, honors and awards, and reports on recent conferences or other events of interest to the two Sections' members.

Third, we want to include a list of  relevant employment or labor law-related publications published in 2012; please hold your forthcoming 2013 publications for next year's newsletter. These publications can be books, articles, and chapters.  Please also send a list of your published 2012 articles to Angela Onwuachi-Willig at angela-onwuachi@uiowa.edu.

Fourth and finally, we want to solicit anyone who would be interested in writing a brief description of a recent "big" labor and employment case or significant new labor or employment legislation. Your subject could be a Supreme Court decision (but it does not have to be), a significant circuit court decision (or emerging circuit split), a state supreme court decision, or an innovative and potentially influential new federal, state, or local law. The description should be fairly short (under 2 pages). If you're looking for an easy way to get your name out there or want a quick outlet for your ruminations about a case or new law, this could be a good opportunity. Just let us know what you are interested in writing on.  Please send submissions to Rebecca Lee at rlee@tjsl.edu.

Please send all submissions by November 18, 2012.

MM

Corbin on Contraception in Health Insurance Plans

Caroline Mala Corbin (Miami) has just posted on SSRN her article The Contraception Mandate (forthcoming 106 Northwestern U. L. Rev. Colloquy).  Here's the abstract:

Under the new health care regime, health insurance plans must cover contraception. While religious employers are exempt from this requirement, religiously affiliated employers are not. Several have sued, claiming that the “contraception mandate” violates the Free Exercise Clause, the Free Speech Clause, and the Religious Freedom Restoration Act. This essay explains why the contraception mandate violates none of them.

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More Recently Published Scholarship: Employee Benefits

The 10th Annual Employee Benefits Symposium: The Past, Present, and Future of Supreme Court Jurisprudence on ERISA

The John Marshall Law Review, volume 45 #3, spring 2012

Foreword

• Colleen E. Medill,The Past, Present, and Future of Supreme Court Jurisprudence on ERISA, p. xxv.

Articles

• José Martin Jara, What is the Correct Standard of Prudence in Employer Stock Cases?, p. 541.
• John D. Blum and Gayland O. Hethcoat II, Medicaid Governance in the Wake of National Federation of Independent Business v. Sebelius: Finding Federalism's Middle Pathway, from Administrative Law to State Compacts, p. 601.
• Albert Feuer, How the Supreme Court and the Department of Labor May Dispel Myths About ERISA's Family Law Provisions that Arise Thereunder, p. 635.
• Susan Harthill, The Supreme Court Fills a Gaping Hole: CIGNA Corp. v. Amara Clarifies the Scope of Equitable Relief Under ERISA, p. 767.
• David Pratt, Summary Plan Descriptions After Amara, p. 811.
• Kevin Wiggins, Medical Provider Claims: Standing Assignments, and ERISA Preemption, p. 861

Comments

• Lucas Walker, Purpose over Formality: Putting an End to the Catch-22 Preventing Workers from Speaking Up About ERISA Benefits Abuse, p. 893.

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Feuer on How the Supreme Court and the Department of Labor May Dispel Myths About ERISA’S Family Law Provisions

Friend of the blog, Albert Feuer, has recently posted his piece from the John Marshall Law Review on SSRN entitled: How the Supreme Court and the Department of Labor May Dispel Myths About ERISA’S Family Law Provisions and Protect the Benefit Entitlements that Arise Thereunder.

Here is the abstract:

This Article discusses the interaction between ERISA and family law (i.e., domestic relations law and estates law). The Supreme Court and the US Department of Labor (“DOL”) may improve the practice of both ERISA and family law by dispelling myths that they have reinforced.

First, the Court incorrectly asserted that the Retirement Equity Act of 1984 (“REACT”) “enhanced protection to the spouse and dependent children in the event of divorce or separation, and in the event of death the surviving spouse.” This assertion has encouraged plan administrators and other courts to find that domestic relations orders (“DROs”) govern an excessively broad class of ERISA pension and life insurance benefits. However, REACT, like ERISA, was a reaction to the inadequacies of state law and prior federal law pertaining to domestic relations and estate law. Thus, it similarly circumscribed the role of state law and increased substantive protections for ERISA participants and beneficiaries.

Second, the Court added a gloss to ERISA in non-family law contexts that emphasizes the importance of limiting the cost burdens imposed on employers by ERISA, which, if excessive, would discourage employers from establishing and maintaining employee benefit plans. This gloss has encouraged other courts to lose sight of the leitmotif of ERISA, protecting plan benefits of participants and beneficiaries. Thus, courts have wrongfully permitted individuals to use superseded (state family law or federal common law) ownership claims to obtain benefit entitlements from the recipients of those entitlements rather than the plans. Such holdings violate Supreme Court decisions extending over more than a hundred years, which consistently protected ERISA entitlements and other federal entitlements, before and after their distribution.

The DOL has created issues by both its actions and inactions. First, the DOL incorrectly asserted that the ERISA benefit claim provisions should not govern plan reviews of DRO for compliance with the pertinent ERISA requirements, the qualified domestic relations order (“QDRO”) requirements, but has failed to present an alternative set of review provisions for plans to follow. This has created unnecessary issues concerning the roles of plan administrators, participants, their families, and courts in such reviews Second, the DOL has provided only nonbinding, informal guidance to the general public rather than extensive DOL regulations with respect the QDRO requirements. This has created unnecessary issues for persons seeking to prepare a DRO that complies with the pertinent ERISA requirements, and for plan administrators responding to such requests.

This article is an important addition to scholarship in the area of domestic relations law and estates law as it concerns the the effectiveness of ERISA plan beneficiary designations.  This aspect of ERISA law has become quite muddled and Albert's suggested changes may indeed help courts and practitioners in the future when it comes to handling these types of issues.

PS

Health Care: Survey Says ...

Paul Fronstin (EBRI) has just posted on SSRN his article 2012 Health Confidence Survey: Americans Remain Confident About Health Care, Concerned About Costs, Following Supreme Court Decision.  Here's an excerpt from the abstract:

... This paper examines public opinion with respect to health care reform and other aspects of health care both before and after the Supreme Court decision, using data from the 2012 EBRI/MGA Health Confidence Survey (HCS), as well as from previous waves of the survey. ... Confidence about various aspects of today’s health care system has remained fairly level before and after the passage of the PPACA, and has not apparently been impacted by the June 2012 Supreme Court decision. Asked to rate the health care system, Americans offer a diverse perspective: 28 percent consider it to be “good,” 28 percent say “fair,” and 26 percent rate it “poor,” while 12 percent rate it very good and 5 percent say it is “excellent.” However, the 2012 Health Confidence Survey finds that the percentage of Americans rating the health care system as poor doubled between 1998 and 2004 (rising from 15 percent to 30 percent). In contrast with the ratings for the health care system overall, Americans’ rating of their own health plans continues to be generally favorable -- more than half of those with health insurance are extremely or very satisfied with their current plans, and a third are somewhat satisfied. Dissatisfaction with the health system appears to be focused primarily on cost. Among those experiencing cost increases in their plans in the past year, 31 percent state they have decreased their contributions to retirement plans, and more than half have decreased their contributions to other savings as a result.

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Reforming Benefits

Nevin Adams (EBRI) has just posted on SSRN an article with some fascinating practical findings.  The article is 'After' Math: The Impact and Influence of Incentives on Benefit Policy; here's the abstract:

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[T]he next Congress will, of necessity, address issues . . . proposals to modify or reduce existing tax preferences for health and retirement benefits. In that context, EBRI’s 70th policy forum focused on a range of topics, from tax policy and design incentives, to international trends and current drawdown rates, and how they might influence, and be impacted by, future events. This paper recaps the presentations and panel discussions at that event. Among the key points made at the policy forum:

• As important as retirement and health benefits are to Americans’ short- and long-term economic security, the sheer size of their tax preferences makes them vulnerable in the battles over deficit reduction and tax reform. Private-sector health benefits alone rank as the largest single “tax expenditure” in the federal budget.
• Retirement benefits are a tax deferral rather than an exclusion from income -- meaning the federal government will eventually recoup the forgone revenue. This distinguishes retirement plan deferrals from other tax exclusions.
• Because the tax expenditure on 401(k)-type plans is a deferral, rather than an exclusion, reducing the tax expenditure in the current period also reduces the positive stream of revenue in the future.
• The biggest difference between tax-expenditure estimates and revenue estimates for scoring tax reform is that the latter incorporates taxpayer behavior; tax expenditure estimates do not.
• Ten percent or fewer of those ages 55-60 are making withdrawals from their IRA, compared with 80 percent of those 71 and older.
• On a historical basis, depending on the period measured, pre-retiree balances in defined contribution retirement plans double about every eight to nine years.
• Employer match levels seemed to have a bigger impact on older workers, but automatic enrollment seems much more significant in terms of getting younger employees to participate in retirement plans.
• Common challenges for underfunded retirement systems worldwide include the need to increase the state pension age and/or “normal” retirement age for full benefits; to promote higher labor-force participation at older ages; to encourage or require higher levels of private saving; to increase retirement coverage of employees and/or the self-employed; and to reduce savings “leakage” prior to retirement.

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