Supreme Court Provides More Guidance Regarding Health Plan Subrogation Claims

On January 20, 2016, the Supreme Court handed down yet another case addressing health plan subrogation.

From the Supreme Court’s earlier decision in Sereboff v. Mid Atlantic Medical Services, Inc. (547 U.S. 356) (2006), we know that a medical plan may use an “equitable lien” to recover on a subrogation claim as long as the plan can find a specific fund or asset traceable to the settlement upon which to place the equitable lien. On the other hand, Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002), teaches that a medical plan may not enforce a subrogation clause by simply pursuing a claim for monetary damages. Read More ›

Posted in Employee Benefits, Health & Welfare Plans

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Supreme Court Confirms that Plan Fiduciaries have a “Continuing Duty of Some Kind” to Monitor Investments

In Tibble v. Edison International, Justice Breyer held, for a unanimous Supreme Court, that “a fiduciary normally has a continuing duty of some kind to monitor investments and remove imprudent ones.” In so ruling, the Court reversed a decision from the Ninth Circuit, which held, in essence, that plan fiduciaries could not be held responsible for imprudent investment decisions made more than six years prior to the filing of the complaint.

In Tibble, the fiduciaries of the Edison 401(k) Savings Plan added three mutual funds to the plan’s investment lineup in 1999. The fiduciaries added an additional three investment funds to the fund lineup in 2002. Read More ›

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401(k) Plan Fiduciaries – Have you thought about your continued offering of the PIMCO Total Return Fund?

The abrupt departure of Bill Gross from PIMCO leaves many investors pondering their next move.  Should an investor stay the course and see how PIMCO’s new investment team performs?  Should an investor leave and follow Mr. Gross to Janus Funds?  Should an investor rush to find a new bond fund manager?

These questions are particularly important for fiduciaries of 401(k) and other qualified retirement programs that offer PIMCO Total Return Fund as an investment option.  Mr. Gross was the lead manager of the Total Return Fund, which reportedly is the second largest bond fund in existence and is a very common and popular choice for 401(k) and other defined contribution retirement plans. Read More ›

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Supreme Court Decision Changes Standards for Employer Stock in Retirement Plans

The Supreme Court recently decided a case that eliminates the “presumption of prudence” for plan fiduciaries relating to their investment in employer stock in retirement plans.  In Fifth Third Bancorp v. Dudenhoeffer, the Supreme Court determined that fiduciaries of an employee stock ownership plan (“ESOP”) are not entitled to a presumption of prudence.  Rather, the ESOP fiduciaries must comply with same standard of prudence that applies to all ERISA fiduciaries, except that an ESOP fiduciary is under no duty to diversify the ESOP’s investments.

In its decision, the Supreme Court provided a roadmap for the lower courts in applying the pleading standard.  Read More ›

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