Disclosure of minutes

[Guest]

Do investment committee minutes have to be disclosed to a plan participant appealing the calculation of his retirement benefit?

[Guest Cutfade]

Generally, I would say no. Minutes are not among the items that ERISA would require a plan administrator to provide to participants. You should check the language in your plan document/ spd/ trust agreement, though, to make sure they don't provide participant rights in addition to those afforded by ERISA, especially in claim appeals setting.

If this thing reaches the litigation stage, all bets are off. The Rules of Civil Procedure would allow for a broad array of document requests. For this reason, and if the minutes are not too controversial, you may want to disclose them now. That way it does not appear as though you were hiding a smoking gun. You should check with Fund Counsel regarding this matter, before you decide what you will do.

[Guest]

Thanks, that's what I thought. The plan is not operated under the minutes, so I wouldn't think they'd have to be provided.

[Guest Jeff Kropp]

I agree that minutes probably do not need to be disclosed.

However, I think there is some caselaw that addresses this issue directly (I looked at this issue for a client a while back). You may want to have your counsel look into this issue a bit further to confirm our thoughts.

[pjkoehler]

dislver, I don't follow your reasoning. If the plan doesn't operate in accordance with the decisions of fiduciaries with discretionary authority over plan assets, i.e. the investment committee, then how is it operating. I suspect that there is plan language that specifically designates the committee as the named fiduciary for this purpose. So, clearly, the plan should be operating in strict accord with the decisions of the committee, as memorialized in its minutes. If these minutes contain information relevant to the computation of the claimant's benefit that is not otherwise contained in the SPD or plan document, then you're in a very weak position to deny that, since the plan benefits are computed on the basis of such decisions, the minutes are de facto governing instruments of the plan for purposes of ERISA Sec. 104(a)(6) and the regs. Remember, if you're wrong, that's up to $100 per day in the discretion of the court for every day after that the minutes were not disclosed after the 30-day deadline.

In general, its bad litigation strategy for plan fiduciaries, subject to the ERISA fiduciary duties, based on common law principles of fidelity and loyalty, to take the position that the decisions they make, in the exercise of the discretionary authority that makes them fiduciaries, are privileged and none of the participants' business. If a participant cannot examine the computational methods and assumptions, how can he analyze the accuracy of the plan administrator's computation? While you don't have to accommodate the claimant's fishing expedition, withholding relevant minutes (properly redacted for irrelevant comments or information) is a practice that comes close to a denial of access to the claims procedure itself. Most courts take a dim view of plan fiduciaries that make participant's litigate the issue of whether or not they should have access to such relevant information. That's mother's milk to the plaintiff's bar.[Edited by PJK on 08-09-2000 at 05:05 PM]

[Guest Jeff Kropp]

It is unlikely that the minutes have any information relevant to calculating his benefit, but possible.

Sounds like the beginnings of the classic fishing expedition that serves no purpose. Nonetheless, I would provide the minutes anyway, as long as it is not too much trouble and does not waste too much time (does he want all the minutes?). I would have counsel review the minutes before releasing them to the claimant.

Of course, if the claimant continues to ask for more documents that are not relevant to his claim (and not required to be disclosed under ERISA), it may be necessary and appropriate to start denying requests. Fiducuary responsibities do not include responding to burdensome requests that serve no purpose.

[pjkoehler]

The initial question to this thread states that claimant is appealing a prior notice of denial of his claim. At this stage of review, he is entitled to "review pertinent documents" and "submit issues and comments in writing" under the minimum requirements of ERISA's claims procedure. 29 CFR Sec. 2560.503-1(g). It's axiomatic that the claimant can't do this in the dark.

The employer's burden on disclosure here is light relative to defending the affirmance of its previous denial of the claim in a "wrongful denial" law suit. We don't know enought about this plan or the function of the investment committee to say in the abstract whether or not some minutes may be "pertinent." But, even if they are not probative of any theory on which the claimant seeks a review of his claim, they might still be "pertinent," in the sense that everybody is better off with the disclosure of minutes when they help the claimant reach a better understanding of the operation of the plan, and, therefore, the accuracy of the plan administrator's computation. Denying disclosure invites the negative inference that the fiduciaries are hiding something, which only stimulates the impulse to litigate. If it turns out that a prior disclosure of the minutes would have chilled the claimant's filing of a law suit, and saved the parties, not to mention the court, the expense of litigating this further, in my experience courts are known to display considerable displeasure with the fiduciaries who unnecessarily played hardball with a plan participant filing a claim for benefits.

[Guest]

PJK, with all due respect I think people often go on fishing expeditions; I think the reg. is to help people get enough information to figure out their claim situation, and I don't see why investment decisions would be relevant.

[Guest Jeff Kropp]

I disagree with Phil, in some respects.

It is possible, yet unlikely, that the minutes may be pertinent to his claim, and should probably be given to the claimant if disclosure is not too burdensome.

However, I disagree that the plan should honor every request, no matter how burdensome, on the theory that the documents may somehow "shed light" on a claim. Under this analysis, any document could be viewed as pertinent and should be disclosed. This would allow claimants to go on fishing expeditions for documents that are not relevant, wasting the time and resources of employers. My experience has been that most claims are not complicated, and a quick look at the plan and SPD indicates the claim has no merit.

At some point, the administrator has to draw the line. If the claim clearly has no merit, then I would disclose information only until the requests become ridiculous. If the claimant wants to file suit, he can get the information at that point, under the discovery process.

[pjkoehler]

Jeff and dilver, you both raise valid points. Claimants are known to make baseless claims. But that's ok, they're allowed to do that. On the other hand, fiduciaries have onerous fiduciary standards to live up to under ERISA. Fiduciaries, who are also employees of the plan sponsor, are known to forget when to take off their employee's hat and put on their fiduciary's hat when they're making fiduciary decisions. Good plaintiff's lawyers will try to catch the fiduciaries making plan decisions wearing their employee's hat, illiciting as many poorly considered, badly documented, seat-of-the-pants decisions to build a record of conflict-of-interest that courts sometimes find sympathy with. Telling a claimant, in effect, "you're not entitled to the minutes because they don't contain any relevant information" focuses on the adversarial nature of the claim, with respect to which a good fiduciary should at least be completely neutral. As a practical matter, disclosing irrelevant minutes, i.e. ones with no probative value to the claimant, is actually helpful to the plan, in that it demonstrates good faith, a lack of prejudice against a claimant seeking administrative review and buttresses the plan administrator's prior denial. Good plaintiff's lawyers don't want to waste their time either. If there is no "there" there, they tend to go away. Denying access to information only baits the hook.

[KJohnson]

FYI, you might want to look at DOL Opinion Letter 87-10A--

"With regard to your request, it is the view of the Department that the trustees' minutes containing information concerning the trustees' review of the performance of an investment manager would not, solely because of the inclusion of such information in the minutes, constitute "other instruments under which the plan is established or operated" within the meaning of section 104(B)(4) and , therefore, would not be subject to disclosure purusant to that section"

You might also like to look at 82-21A and 82-33A.

I believe encompassing common law fiduciary duties into disclosure is the subject of some debate. I think there is a 4th Circuit case about 2 years back called Luddy or Lundy that basically said you don't have to disclose minutes and you should not incorporate common law into disclosure obligations. I think the Ninth Circuit also talked about common law disclosure in an en banc decision about four or five years ago in one of the Hughes cases and I believe there was another case called Acosta.

[pjkoehler]

KJohnson, the DOL Opinion Letters you cite address only the scope of the documents disclosable under ERISA Section 104(B)(4) on written demand. They don't address the broader issue of whether ERISA Sec. 404(a)(1)(A) may require the disclosure of documents that relate to the provision of benefits or the defrayment of plan expenses, but are not documents disclosable under Sec. 104(B)(4). In a split decision, the Ninth Circuit in Hughes Salaried Retirees Action Committee v. Hughes NonBargaining Retirement Plan, 72 F.3d 686 (9th Cir. 1995) cited this as a question of statutory construction that it explicitly did not decide in holding that participant address lists were not disclosable under Sec. 104(B)(4). The majority acknowledged the many amici that argued in favor of the plaintiff's more expansive view that ERISA fiduciary duties may require disclosure of information beyond the scope of 104(B)(4), but left it to Congress to make the call. In a scathing dissent, three members of the 11-member panel concluded that both sections of ERISA were intended to "equip beneficiaries with the necessary information to enforce their rights, particularly in securing benefits to which they may be entitled."

But even focusing on just documents disclosable under Sec. 104(B)(4), your reference, for example, to Op. Ltr. 87-10 didn't mention that the Department concluded that minutes of trustees' meetings may constitute disclosable documents, for example, if they are minutes of a meeting "which establishes a claims procedure or does any of the things described in section 402(B) [regarding the plan's "funding policy," "allocation of responsibilities for operation and administration of the plan," or "procedures for amending the plan"] and © of ERISA [identification of named fiduciaries and the appointment of investment managers]. . . ." It also states "We should note, however, that to the extent [a trustees' review of the performance of an investment manager is information that] is included as part of the plan's latest annual report, that information would have to be furnished under 104(B)(4) . . . ." It may be argued that any decision by the investment committee that effectuates an investment course of action is disclosable under this view. Accordingly, for example, if the investment committee minutes that are the subject of this thread contain information regarding (1) the termination and/or appointment of an investment manager, (2) the timing, parties or steps in a transaction involving plan assets or (3) the negotiation or payment of an investment expense, the disclosure of which is required by ERISA in the plan's annual report, such minutes are disclosable under 104(B)(4).

[KJohnson]

PJK, I think your points are valid. However, the 4th Cicuit, where I live and breathe, doesn't buy into the incorporation of general fiduciary duties into the disclosure obligation. In Lundy Packing 91 F3d 646 (4th Cir. 1996) the Court stated:

To accept the argument of the Appellants and the Amici we would have to hold that ERISA's general fiduciary duty provision, § 404(a)(1)(A), requires plan fiduciaries to furnish documents to participants and beneficiaries in addition to the documents that ERISA's specific disclosure provision, § 104(B)(4), requires the plan administrator to furnish. Such a holding would conflict with the principle that specific statutes govern general statutes. See > Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384, 112 S.Ct. 2031, 2037, 119 L.Ed.2d 157 (1992); > Farmer v. Employment Sec. Comm'n, 4 F.3d 1274, 1284 (4th Cir.1993). "However inclusive may be the general language of a statute, it 'will not be held to apply to a matter specifically dealt with in another part of the same enactment.' " > Clifford F. MacEvoy Co. v. United States, 322 U.S. 102, 107, 64 S.Ct. 890, 894, 88 L.Ed. 1163 (1944) (quoting > D. Ginsberg & Sons v. Popkin, 285 U.S. 204, 208, 52 S.Ct. 322, 323, 76 L.Ed. 704 (1932)). This principle "applies with special force with regard to a reticulated statute such as ERISA." > Bigger v. American Commercial Lines, 862 F.2d 1341, 1344 (8th Cir.1988); see also > Pension Benefit Guar. Corp. v. Alloytek, Inc., 924 F.2d 620, 626 (6th Cir.1991).

Of course, where you draw the line under 104 is also a subject of debate. I recall there was an uproar a few years back when DOL said that certain proprietary UCR schedules were instruments under which the "plan is operated"

I guess the upshot is that if you are going to deny documents, it is always best to have a very good reason and be sure to look at the law in your Circuit. Also, realize that once you get into litigation all bets are off, especially given what is out there on the fiduciary exception to the attorney client privilege.

[pjkoehler]

KJohnson, just an observation (having no basis in law). The ranks of plan fiduciaries that adjudicate benefit claims (including the decision to deny/release information) are overwhelmingly composed of employees of the plan sponsor; typically, HR staff. Too often they make no distinction between their HR role and their plan fiduciary role, responding to a participant's request for information in an employer-employee relationship mode; rather than fiduciary-participant relatioship mode. To use a hackneyed phrase, they should be making a paradigm shift (from the duty of loyalty to the employer to the duty to act as a prudent expert and for exclusive purpose to paying benefits) when analyzing a participant's request for information. My guess is the vast majority are clueless and most of the others are too conflicted to be able to accomplish this on a regular basis.