You already know that ERISA imposes on employers the duty to provide a written plan document, and a Summary Plan Description (SPD) which states key plan terms.

And… Supreme Court precedent is clear that Summary Plan Descriptions “do not themselves constitute the terms of the plan for purposes of [ERISA].” CIGNA Corp. v Amara, 663 U.S. 421, 438 (2011)(Emph. in original).

Many employers with group life, health and disability plans assume materials provided by an insurer satisfy ERISA requirements.

BUT materials provided by insurers or third party administrators may not satisfy ERISA requirements. The Plan can be at a big disadvantage without a written plan or SPD when participants/beneficiaries sue seeking benefits.

Now a new Ninth Circuit case explains how “wrap documents” can establish plan terms required by ERISA, using the Summary Plan Description. Here’s the case of Mull vs. Bd. of Dir. Motion Picture Hlth Pln No. 1, __ F.3d __ (9th Cir. August 1, 2017).

FACTS. After a serious auto accident, Mull sought ERISA-governed health benefits from a self-funded plan. The plan paid over $147,000 in medical benefits and sought reimbursement after Mull secured a $100,000 tort settlement. Mull sued seeking to enjoin the plan from seeking reimbursement. The Plan counterclaimed for reimbursement.

ISSUE: Whether a wrap document, indicating that a trust agreement and Summary Plan Description should be read together, established the ERISA plan?

DISTRICT COURT HELD: NO. Reimbursement provisions contained only in the Summary Plan Description are NOT part of the ERISA plan and are not enforceable.

NINTH CIRCUIT REVERSES. The plan’s trust agreement, when read together with the Summary Plan Description, constituted an ERISA plan document.

  1. “Neither the Trust Agreement nor the SPD meets ERISA’s requirements for constituting a plan. But by clear design reflected in provisions of both documents, the two documents together constitute a plan.” Op. at 7. (Bold in original).
  2. “[Amara] did not address the situation…that a plan administrator seeks to enforce the SPD as the one and only formal plan document.” Op. at 8.
  3. The Plan “clearly intended” by statements in the wrap document that “‘the plan’ is comprised of two documents: the Trust Agreement and the SPD.” Op. at 6.
  4. “‘[A]n SPD may constitute a formal plan document, consistent with Amara, so long as the SPD neither adds to nor contradicts the terms of existing Plan documents.” Op. at 7.
  5. Since “there is no conflict between the SPD and the Trust Agreement[,] the SPD is part of the plan itself.” Op. at 8.


  1. The DOL explains what should be in your plan document: The named fiduciary who has authority and responsibility to administer the plan; procedures for amending and terminating the plan; the source of plan contributions; and the allocation of responsibilities for the operation of the plan between the employer and the insurance carrier or third-party administrator. Here is the Department of Labor’s Reporting and Disclosure Guide for Employee Benefit Plans.
  2. For what needs to be in the Summary Plan Description, see Department of Labor regulation (29 CFR 2520.102-3).
  3. A “wrap document” can help establish the ERISA Plan. The wrap document should expressly state that “the referenced documents are intended to constitute both the Plan document and the Summary Plan Description for the plan.”

You already know that ERISA gives plan beneficiaries a choice on where to bring suit seeking ERISA benefits. Section 1132(e)(2) allows plan beneficiaries to bring suit “in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found….”

But what happens when the plan has a forum-selection clause? Are forum selection clauses enforceable? YES.

Here’s the case of In re Mathias, __ F.3d __ (7th Cir. August 10, 2017).

FACTS: Plaintiff sued the Caterpillar ERISA Plan in federal court in Pennsylvania, where he had worked for years. But the ERISA plan included a form selection provision requiring suits to be filed in the federal court for the Central District of Illinois. Plaintiff argued, however, that the plan’s forum selection clause should not be enforceable because of ERISA’s broad beneficiary-protection purpose, which allows plan beneficiaries to choose a number of potential venues.

ISSUE: Was the ERISA plan forum-section provision enforceable? YES.


  1. The ERISA venue statute, Section 1132(e)(2), provides that a lawsuit “may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found….” Op. at 9.
  2. Only one circuit has addressed whether an ERISA plan’s forum selection clause is enforceable. The Sixth Circuit has held that an ERISA plan’s forum-selection clause “is enforceable even if it overrides the beneficiary’s choice of venue permitted by Section 1132(e)(2).” Op. at 2. (Emph. added).
  3. Generally the forum selection clause in an ERISA “plan is controlling unless ERISA invalidates it.” Op. at 9.
  4. “The forum selection clause in the Caterpillar plan chooses from among the venue options listed in Section 1132(e)(2), and nothing in the statute makes the choice invalid.” Op. at 13.

Have a good week…

What happens in Washington when your employee fails to take a meal break?

Is the employer “strictly liable” for a statutory wage/hour violation?  NO.

This new Washington Supreme Court gives helpful guidance on avoiding wage/hour liability for missed meal breaks. Brady v. Autozone Stores, Inc., _ Wn. 2d _ (June 29, 2017).

FACTS: This class action in federal court sought unpaid wages (under Washington law) for meal breaks allegedly “withheld from employees.” The Washington Court accepted review of certified questions.

Washington Supreme Court HELD/RATIONALE:

  1. Is an employer automatically liable if an employee misses a meal break? NO.
  • “Employees shall be allowed a meal period of at least thirty minutes which commences no less than two hours nor more than five hours from the beginning of the shift….No employee shall be required to work more than five consecutive hours without a meal period.” Op. at 3-4. (WAC 296-126-092).
  • “[E]mployees may choose to waive the meal period requirements….The Department ‘recommends,’ but does not require, obtaining a ‘written request’ from an employee who chooses to waive the meal period.” Op. at 4.
  • But “[e]mployees may not waive their right to a rest period.” Op. at 4 (Emphasis in original). (Admin Policy ES.C.6, Section 9).
  1. Does an employer have an affirmative duty to ensure employees take their meal breaks? YES.
  • Washington law “imposes a mandatory obligation on the employer…to provide meal periods and rest breaks and to ensure the breaks comply with [Washington law].” Op. at 5.
  • The Court rejected California’s more employer-friendly standard (of a similar provision) that an employer merely has to provide a  reasonable opportunity to take the meal break, without impeding or discouraging the employee from doing so. Op at 7.
  • Instead, under Washington law, an employee establishes a prima facie case of a meal break violation if the employee “did not receive a timely meal break.” Op. at 7.
  • Then, the employer has the burden to prove that “no violation occurred or a valid waiver exists.” Op. at 7.

KEY TAKE AWAY: Washington is tougher than California on meal breaks. Employers should continue to ensure that employees take required meal breaks. If an employee elects to waive that right, then the best practice is to obtain a written waiver signed by the employee.

Plaintiffs in ERISA employee benefit cases are frequently asserting breach of fiduciary duty claims, and then seeking broader discovery.

So, consider early motions to dismiss the breach of fiduciary duty claims.

One argument to use in seeking early dismissal of breach of fiduciary duty claims is the ministerial defense: That is because “[a] person who performs purely ministerial functions…for an employee benefit plan within a framework of policies, interpretations rules, practices and procedures made by other persons is not a fiduciary….” 29 C.F.R. Section 2509.75-8(D-2).

The recent case that highlights the point is Turner v. Volkswagen Group of America, Inc., 2017 WL 3037803 (S.D. West Virginia July 18, 2017)(“ERISA fiduciary status is conferred by the function performed—not the position of the entity performing the duty.”)

FACTS: Keith Turner sought ERISA-governed long term disability benefits, and after his death Karen Turner sued seeking ERISA-governed life and survivor benefits, and asserting a breach of fiduciary duty claim. Defendants moved to dismiss a number of claims, including the breach of fiduciary duty claim.

ISSUE: Whether the Court should GRANT Defendants’ Rule 12(c) motion to dismiss the breach of fiduciary duty claim.

HELD: Breach of Fiduciary Duty Claim Dismissed. (The Court ruled on other issues, including the fiduciary duty claim).

  1. “A person who performs purely ministerial functions…for an employee benefit plan within a framework of policies, interpretations rules, practices and procedures made by other persons is not a fiduciary because such person does not have discretionary authority or discretionary control respecting management of the plan, does not exercise any authority or control respecting management or disposition of the assets of the plan, and does not render investment advice with respect to any money or other property of the plan and has no authority or responsibility to do so.” (Emph. added). Op. at 16-17.
  2. “Plaintiff alleges that the defendants breached fiduciary duties by failing to advise her of her rights under the benefits plan, failing to advise Mr. Turner of his rights under the plan while he was alive, and sending the plaintiff and Mr. Turner erroneous statements that he continued to have life insurance under the plan. None of the conduct alleged by the plaintiff constitutes management or administration of the plan.” Op. at 17 (Emph. added).
  3. “[F]ailing to notify a claimant that he was no longer eligible for life insurance was a ministerial function.” Op. at 17.
  4. “Although the plaintiff argues that Volkswagen’s conduct constitutes a breach of fiduciary duty because it is both the payor and adjudicator of claims, ERISA fiduciary status is conferred by the function performed—not the position of the entity performing the duty.” Op. at 17-18 (Emph. added).
  5. “Here, the functions on which the plaintiff bases her breach of fiduciary duty claim are ministerial [and the breach of fiduciary duty claim is dismissed.]” Op. at 18.

You know that in typical ERISA disability benefit claims, the claim administrator first determines whether claimant’s disability prevents the claimant from performing claimant’s current, “own occupation.”

Then, after a period of time (52 weeks for example), the claims administrator assesses whether the claimant can perform “any occupation.” If the claimant can perform “any occupation,” then the disability benefits end.

So, what happens when a claimant’s physical restrictions render the claimant able to perform only part-time work?

Does the ability to perform only part-time work mean the claimant can perform “any occupation,” making the claimant ineligible for disability benefits? YES.

Here’s the case of Kott v. Agilent Technologies, Inc., 2017 WL 2903174 (N.D. Cal. July 7, 2017).

FACTS: Kott sought and was granted ERISA-governed disability benefits due to back and foot pain. Under the plan, after 270 days receiving disability benefits an assessment was made whether Kott could perform “any occupation.” An independent medical evaluation determined Kott could perform part-time work, up to 20 hours per week without accommodation, and could return to full-time work within six months with a work-station which accommodated her need to sit and stand.

ISSUE: Whether Kott’s ability to perform part-time work precludes entitlement to “any occupation” benefits.


  1. “[A] claimant capable of working 20 hours per week is not unable to work in ‘any occupation’ and thus not entitled to disability benefits beyond the ‘own occupation’ benefit.” Op. at 14 (Emph. Added).
  2. “While the Ninth Circuit has not finally decided the issue, most if not all other circuits are in accord.” Op. at 14.
  3. “[T]he Court need not reach the part-time work issue in this case because there is evidence in the record showing that Kott could return to full-time work as early as February 2016.” Op. at 15.

NOTE: Pay close attention to the definition of “disability” because many plans and policies include an income factor.

You already know that most ERISA plans allow the Plan to reduce or offset long term disability payments by amounts the disabled worker receives from workers compensation or Social Security.

But it is trickier when you try to offset payments received from lump sum personal injury settlements. Some ERISA Plans have “presumed allocation for offset” provisions that help determine how much of a lump sum settlement can be offset.

But some state statutes “conclusively establish” how to allocate lump sum personal injury settlements, which complicates things.

Here’s the case of Arnone v. Aetna Life Insurance Company, 2017 WL 2675293 (2nd Cir. June 22, 2017)(New York state statute, governing lump sum personal injury settlements, prohibited offset of ERISA-governed long term disability benefits.)

FACTS. Arnone, an account executive for Konica, obtained ERISA-governed disability benefits after slipping and falling in a puddle. Aetna then properly reduced benefit payments by worker compensation and Social Security benefits received, lowering his monthly payment to $114 per month.

But then Arnone received an $850,000 lump sum personal injury settlement. The ERISA plan contains a “50% provision,” which states that when a lump sum personal injury settlement is not apportioned between pain and suffering, medical expenses or lost income, then “50% will be deemed to be for disability.”

Aetna determined this provision reduced its obligation by $275,550. Arnone argued however, that New York Statute 5-535 (which presumes that personal injury settlements do NOT include loss of earnings) precluded Aetna from offsetting 50% of the settlement amount. When suit was filed, Aetna also brought a $40,000 counterclaim for overpayment.

DISTRICT COURT HELD: Summary Judgment for Aetna. The New York statute did not apply; Connecticut law governed.

SECOND CIRCUIT HELD: REVERSED: New York Statute Determined Allocation of Lump Sum Settlement; Offset Prohibited

  1. New York Statute 5-535 establishes a “conclusive presumption” that personal injury settlements “do not include…loss of earnings…” Op. at 13. (Emphasis added.)
  2. Section 5-335 is saved from express ERISA preemption. Op. at 15.
  3. The Plan’s Choice-of-law provision, which states that the Plan will be “construed” in accordance with Connecticut law, “does not encompass the matter at issue in this case…. Section 5-335 is not a statute of contract construction or of contract interpretation….and does not modify how benefit plans are ‘construed.’ It provides a rule to which all contracts between an insurer and an insured must adhere.” Op. at 16.
  4. The Court concluded “Aetna erroneously overlooked the law’s provisions when it acted on its conclusion that 50 percent of the net proceeds from Arnone’s personal injury settlement were “for disability” such that Aetna was permitted to reduce Arnone’s disability benefits in offset.” Op. at 21.

An issue dogging claims administrators is:

What effect do choice-of-law provisions have on the standard of review of ERISA benefit decisions?

And, what happens when the plain language of the ERISA plan confers abuse of discretion standard of review, but state law renders such language unenforceable, requiring de novo review?

Here’s the case of Kalnajs v. Lilly Extended Disability Plan, 2017 WL 2589445 (W.D. Wisconsin June 14, 2017)(choice-of-law provision required abuse of discretion standard of review contained in ERISA plan language).

FACTS: For nearly a decade, Kalnajs, a pharmaceutical sales representative, received ERISA-governed long term disability benefits due to Lyme disease. Under the plan terms, benefits could be discontinued if there was evidence she was “engaging in an occupation for profit.” In 2014 the claims administrator learned Kalnajs worked as an “internationally acclaimed dog trainer,” giving over 28 “lively” seminars nationally and internationally. Following review of multiple doctor’s reports, it was determined Kalnajs could perform “work in a job she is trained for,” and disability benefits were terminated. The plan conferred discretion.


  1. The Court rejected Plaintiff’s argument that de novo review should apply because Indiana law disfavors discretionary review. The Court looked to the ERISA plan’s choice-of-law provision and concluded: “The flaw in Kalnajs’s argument is immediately apparent: ERISA preempts ‘any and all State Laws insofar as they may now or hereafter relate to any employee benefit plan.’ 29 U.S.C. 1144(a)….Section 6.03 of the Disability Plan relates to an employee benefit plan, so ERISA, not state law, applies regardless of any choice-of-law provision. And even if the choice of law provision were relevant, the Welfare Plan adopts Indiana law only to the extent that it is not preempted by ERISA.” Op. at 16.
  2. Episodic surveillance sufficient to establish she was “engaging in an occupation for profit.” Plaintiff claimed that the surveillance only showed “isolated episodes” of activity and does not show that Kalnajs could engage in activity on a sustained basis. But the Court held “[t]he surveillance shows [she] is engaging in an occupation for profit consistent with her education, training, and experience: she earns money working as a dog trainer.” This met the plan terms which supported terminating disability benefits. Op. at 20.

NOTE: Courts are not consistent on what effect choice-of-law provisions have on the standard of review. Many courts have determined, for example, that state law prohibitions of discretionary clauses fall within ERISA’s savings clause and are not preempted by ERISA.

-Make sure early in the case you assess the applicability of state insurance regulations;

-Review your choice-of-law provisions to determine what state law may apply;

-Attempt to seek application of federal common law on choice-of law issues;

-Be prepared to address policy issues implicated by application of the choice of law provision.

On June 5, 2017, the U.S. Supreme Court expanded the scope of ERISA’s church-plan exemption in the case of Advocate Health Care Network v. Stapleton, — S. Ct. –, 2017 WL 2407476 (2017).  The unanimous decision adopted a broad reading of the exemption to apply not only to plans originally established by churches, but also to plans maintained by certain church-affiliated organizations.

Statutory Background

As a general matter, ERISA requires private employers that offer pension plans to follow an array of rules intended to ensure solvency and protect plan participants.  So-called “church plans,” however, are exempt from ERISA’s requirements.  29 U.S.C. § 1003(b)(2).

When originally enacted, ERISA defined a “church plan” as a plan “established and maintained” for its employees by a church.  29 U.S.C. § 1002(33)(A).  In 1980, Congress amended the statute to modify the definition, explaining that: “A plan established and maintained for its employees … by a church … includes a plan maintained by an organization … the principal purpose … of which is the administration or funding of a plan … for the employees of a church …, if such organization is controlled by or associated with a church[.]”  29 U.S.C. § 1002(33)(C)(i).  These types of church-affiliated organizations are referred to as “principal-purpose organizations.”

Under this definition, it was commonly understood that a “church plan” need not have been maintained by a church, but rather could also be maintained by a principal-purpose organization.  However, the parties differed about whether a plan maintained by a principal-purpose organization still had to have been established by a church to qualify for the church-plan exemption.  The U.S. Courts of Appeals for the Third, Seventh, and Ninth Circuits ruled that a pension plan must be established by a church to qualify for the church-plan exemption.  See, e.g., Rollins v. Dignity Health, 830 F.3d 900, 906 (9th Cir. 2016).

The Decision in Stapleton

In Stapleton, the U.S. Supreme Court resolved this question by holding that ERISA’s church-plan exemption applies to pension plans maintained by church-affiliated organizations—even if they were not originally “established” by a church.

In a colorful opinion written by Justice Kagan, the Court deployed canons of statutory construction to find the “best reading” of the statute: “Because Congress deemed the category of plans ‘established and maintained by a church’ to ‘include’ plans ‘maintained by’ principal-purpose organizations, those plans—and all those plans—are exempt from ERISA’s requirements.”  The result is that “a plan maintained by a principal-purpose organization therefore qualifies as a ‘church plan,’ regardless of who established it.”

New Questions

Although Stapleton provides church-affiliated organizations with more freedom from ERISA’s requirements, the decision raises new questions:

  • What organizations are sufficiently church-affiliated to qualify as principal-purpose organizations for the exemption? Following Stapleton, the next wave of litigation will likely focus on what qualifies as an organization controlled by or associated with a church for purposes of the church-plan exemption.  Courts will be called on to flesh out what degree of church control or association is sufficient and what is simply too attenuated.  Such lawsuits may be directed against not only religiously-affiliated healthcare providers like those involved in Stapleton, but also charities and relief organizations, educational institutions, and a diverse array of other entities with religious connections.
  • Will plaintiffs pursue alternative state-law claims against church plan? Since Stapleton will block plaintiffs from pursuing ERISA claims against many organizations, plaintiffs may instead attempt to pursue claims under state law, such as breach of fiduciary duty claims.
  • Will Congress take action to narrow the church-plan exemption?  In her concurrence, Justice Sotomayor agreed with the result, but highlighted her concern that the decision to exempt plans neither established nor maintained by a church would have a broad effect that Congress might not have intended.  Of particular concern, she noted that the exemption would apply to some of the largest health-care providers in the country that compete in the secular market with companies that must bear the cost of comply with ERISA.  Although any legislative change is unlikely, Justice Sotomayor’s discussion of this “current reality” was clearly intended to prompt legislators into considering whether Congress should “take a different path.”

This just in…

Today the U.S. Supreme Court broadened the application of the Employee Retirement Income Security Act’s religious exemption provision.

The exemption now applies to benefit plans maintained by church affiliates, regardless of whether an actual church established the plan. Advocate Health Care Network, Saint Peter’s Healthcare System and Dignity Health were before the U.S. Supreme Court seeking to overturn lower court rulings holding that the exemption applied only when actual churches established the benefit plan. The hospitals contended a 1980 amendment to ERISA clarified that church-affiliated organizations, not just churches, could maintain such a plan and still be exempt.

Justice Elena Kagan wrote the unanimous opinion.

The ruling provides hospitals with more freedom from ERISA’s plan requirements.

More analysis on the ruling will be provided in subsequent posts.

How do you respond to typical arguments by those seeking ERISA-governed disability benefits that the claim administrator:

         -“cherry-picked the record”;

         -ignored the social security disability determination;

         -improperly considered claimant’s vacation travel;

         -made inconsistent determinations?

Here’s the case of Chen v. CenturyLink, 2017 WL 219008 (D. Colo. May 18, 2017)(attached), with quick rebuttals to those arguments.

FACTS: Chen, an accounting analyst, sought ERISA-governed disability benefits for extreme fatigue following a kidney transplant. Standard Insurance, the claims administrator, determined Chen could perform a sedentary job and terminated benefits after 19 years. The plan vested discretion, and the court reviewed the claim denial under the abuse of discretion standard.

DISTRICT COURT HELD: Affirmed the Denial of Benefits.

  1. The Court rejected Plaintiff’s argument that Standard had made inconsistent prior decisions. “ERISA does not prevent a plan administrator from reversing course and finding a claimant no longer entitled to disability benefits…[so long as the changed decision] is supported by new medical or other information.” Op. at 12.
  2. The Court rejected Plaintiff’s argument that Standard had failed to consider the Social Security determination. “[A] plan administrator should not ignore a claimant’s eligibility for social security disability benefits….[But] the validity of a claim for benefits under an ERISA plan turns on the interpretation of the plan at issue, not on whether the claimant is eligible for social security benefits.” Plaintiff’s condition when Social Security determined eligibility in 1996 was significantly different from the benefit denial 20 years later. Op. at 14.
  3. The Court rejected Plaintiff’s argument that Standard “cherry-picked” the record. “[A] plan administrator is not required to ‘pore over the record’ picking out and addressing all evidence supporting payment or denial of a claim [but] …cannot shut her eyes to readily available evidence that suggests the claimant is entitled to benefits.” Op. at 15.
  4. It is OK to consider Claimant’s vacation travel to Europe, Hawaii in determining whether she is disabled. Plaintiff’s “inclination to travel [to Europe, Hawaii, Miami] was considered by medical experts in the context of her medical symptoms, particularly her persistent fatigue. Standard relied upon the medical opinions that Ms. Chen’s travel was inconsistent with her claims of debilitating fatigue.” Op. at 17.