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Extreme Couponing: How Manufacturer Coupons Impact Health Plans

"[C]onflicting rules could be read to require a plan administrator to credit coupons for brand-name drugs without a therapeutically equivalent generic drug available as required by HHS while simultaneously requiring a plan administrator not to credit coupons for brand-name drugs without a therapeutically equivalent generic available as required by the IRS.... [Recent] FAQs provide that the Departments intend to undertake rulemaking regarding the Notice and its possible implications for 2021. In the interim, the Departments will not initiate any enforcement action[.]"

Plan Service Provider Contracts: To Provide or Not to Provide to Plan Participants

"Several courts don’t require disclosure of service provider contracts because they simply don’t govern the relationship between the plan participant and the provider.... Other courts have avoided determining as a matter of law that a service provider’s contract is not subject to disclosure because the terms of the contract could affect the plan participant’s rights.... The tension in these decisions leads to one conclusion -- you probably should read the service provider contract before determining whether disclosure is required."

Cybersecurity Considerations for Retirement Plan Fiduciaries

"[P]lan administrators should ensure that the technical, physical, and administrative safeguards they have implemented to protect the confidentiality and integrity of plan assets satisfy basic legal requirements and meet industry security standards. Here are five areas that can serve as a starting point for a cybersecurity review in the retirement plan context[.]"

A Peek Inside Brokerage Windows: Industry Provides Input on DOL Advisory Committee's Study

"In 2014, the DOL issued a Request for Information to increase its understanding of the prevalence and role of brokerage windows in self-directed individual account plans, including why and how often brokerage windows are offered and used in ERISA-covered plans.... In connection with the Advisory Council's June 2021 meetings, various industry participants provided input on brokerage windows in participant-directed individual account retirement plans."

Citing 'Endless Risk,' District Court Disqualifies Law Firm from 401(k) Case

"A New York district court judge earlier this month disqualified a firm representing hundreds of 401(k) plan participants based on a conflict of interest. The judge called the risks posed 'endless,' and requested additional briefing on whether the firm would be allowed to remain as counsel in related arbitration proceedings in Missouri. The ruling spotlights the sometimes-thorny conflict issues that can arise in ERISA litigation." [Canfield v. SS&C Technologies Holdings, Inc., No. 18-8913 (S.D.N.Y. Jul. 10, 2020)]

ERISA Claims for Cross-Marketing Participant Data Hit a Snag

"The district court below had refused to allow plaintiffs to proceed with breach of fiduciary duty and prohibited transaction claims based on the recordkeeper's use of participant data for purposes of 'cross-marketing' non-plan services to plan participants.... In affirming the district court decision, the Seventh Circuit agreed that the allegations based on cross-marketing were untimely and 'failed to state claims for relief.' This is the first time the issue of cross-marketing participant data has been decided at the circuit court level. Going forward, this precedent will pose a significant obstacle for plaintiffs who wish to pursue cross-marketing claims." [Divane v. Northwestern Univ., No. 18-2569 (7th Cir. Mar. 25, 2020)]

ERISA Settlements: The Non-Monetary Concessions Continue to Mount

"In recent months ERISA class action settlements were announced involving MIT and Duke University... [who] agreed to pay $18.1 million and $10.65 million, respectively, to settle those cases.... But that's just the tip of the iceberg. As with Johns Hopkins and others, MIT and Duke also agreed to 'substantial non-monetary terms,' which the parties claimed materially added to the total value of their settlements."

Recent Decisions Cast Doubt on Stock Drop as a Basis to State a Claim Against ESOP Trustee

"Despite the differing conclusions of the Courts, the complaints in Lee and Choate are largely indistinguishable -- allegations of post transaction drops in value resulting from the debt taken on by the company sponsoring the ESOP to facilitate the transaction. However, because of the misplaced application of the shifting burden of proof, the results between the two matters vary widely."

Jander v. IBM: An Aberration or the Start of a Plaintiff-Friendly Trend in Stock-Drop Cases?

"[T]he more specific factual allegations in IBM highlight a potential roadmap for plaintiffs: [1] Allege that plan defendants knew that the company stock was overvalued due to a failure to disclose some adverse information.... [2] Allege that the plan fiduciaries had the power to disclose the truth and correct the artificial inflation, but did not.... [3] Allege that the company stock traded on an efficient market ... and that earlier disclosure of the accounting fraud ... would have reduced the risk of over-correction.... [4] Allege that the plan fiduciaries knew that disclosure of the truth was 'inevitable.' " [Jander v. Retirement Plans Committee of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018; cert. pet. granted Jun. 3, 2019)]

Yes, Health Plans, Too: DOL Clarifies Scope of Cybersecurity Guidance

"Citing resistance from health and welfare plan service providers, the DOL updated its 2021 cybersecurity guidance to clarify that it 'generally applies to all employee benefit plans, including health and welfare plans.' This clarification is the only material change in the update. Despite that, the update serves as a useful impetus for employers to survey their current cybersecurity practices with respect to their benefit plans. Why? Security breaches are becoming more common, larger in scope, and resulting in larger liability"