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This week’s notable decision is one from a wave of ERISA lawsuits against universities over allegations of imprudent investments and excessive fees.  In Divane v. Northwestern Univ., No. 18-2569, __F.3d__, 2020 WL 1444966 (7th Cir. Mar. 25, 2020), the Seventh Circuit Court of Appeals upheld the dismissal of claims alleging that Northwestern breached its fiduciary duty as a prudent investor.   

Plaintiffs, who are beneficiaries of the Northwestern University Retirement Plan and the Northwestern University Voluntary Savings Plan (“the Plans”), alleged that Northwestern, the Plans’ administrator and designated fiduciary, breached its duty to act as a prudent fiduciary and that they are entitled to relief under ERISA, 29 U.S.C. §§ 1132(a)(2) and 1109(a).  “In their amended complaint, plaintiffs specifically alleged that Northwestern failed to act as a prudent fiduciary when it included the Stock Account as a plan investment offering and allowed TIAA-CREF to serve as a recordkeeper for its funds (Count I); created a multi-entity recordkeeping arrangement (Count III); and provided investment options that were too numerous, too expensive, and underperforming (Count V). In Counts II, IV, and VI, plaintiffs claimed the above conduct also constituted prohibited transactions under ERISA. Id. § 1106.”  Divane, 2020 WL 1444966, at *5.

In upholding the district court’s dismissal, the Seventh Circuit made several key findings.  
Continue Reading Seventh Circuit Rules for Northwestern University in Retirement Plan Investment Dispute

Good morning, ERISA Watchers!  This has been an extraordinary week to say the least.  I’m currently writing this from under a “shelter-in-place” order in San Francisco.  While there is a lot going on in the world, there wasn’t a lot of excitement in the courts when it came to ERISA decisions this past week.  So, I chose to highlight two plaintiff-friendly decisions from district courts, one decided under de novo review and the other under the arbitrary and capricious standard.

The first case is Szabo v. Hartford Life and Accident Ins. Co., No. 18-CV-06258 (N.D. Ill. March 10, 2020). Plaintiff Szabo became disabled after he collapsed at work from syncope, orthostatic hypertension, and vertigo.  He applied for long-term disability (“LTD”) benefits from Hartford, and Hartford approved and paid his claim for two years before terminating them.  After an unsuccessful appeal, Szabo filed suit.  In the lawsuit, the main disputes were factual. The parties agreed Plaintiff suffered from syncope. They disagreed on (1) the frequency and severity of Plaintiff’s symptoms; (2) whether and to what extent Plaintiff needed to lie down to mitigate his symptoms; and (3) whether Plaintiff’s symptoms prevented him from working a sedentary job. 
Continue Reading District Courts Rule Against Hartford and Aetna in Long-Term Disability Disputes

This week’s notable decision is a district court order in Auwae v. Metro. Life Ins. Co., No. 19-CV-02504-RBJ, 2020 WL 996874 (D. Colo. Mar. 2, 2020), a matter challenging the applicability of an ERISA life insurance policy’s two-year suicide exclusion. 

On a motion to dismiss, the court was asked to decide if the following exclusion in a group life policy applied as written: 

“If a Dependent commits suicide within 2 years from the date Life Insurance for such Dependent takes effect, We will not pay such insurance….” 

While the date of enrollment was disputed, it was not after January 1, 2018. The dependent committed suicide on February 4, 2019—more than one year, but less than two years after the latest effective date. MetLife denied the claim applying the language as written. Plaintiff appealed, noting that MetLife violated Colorado law by not recognizing the applicability of Colorado Revised Statute § 10-7-109. MetLife upheld the denial of benefits. 
Continue Reading District Court Rules Colorado Law Turns Life Insurance Policy’s Two-Year Suicide Exclusion into a One-Year Exclusion