In Sikora v. UPMC, No. 1288 (3rd Cir. 2017),  the Third Circuit Court of Appeals (the “Court”) noted that a so-called “top-hat” plan is “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.” 29 U.S.C. §§ 1101(a)(1), 1051(2), 1081(a)(3). These plans need not comply with many of the substantive provisions of ERISA.  In this case, when Paul F. Sikora sought to recover pension benefits under ERISA, the district court held that he was not entitled to obtain such relief because he sought benefits under a top-hat plan.

Sikora appeals, arguing that the district court should have required defendants, the University of Pittsburgh Medical Center and its Health System and Affiliates Non-Qualified Supplemental Benefit Plan (collectively, “UMPC”), to prove that plan participants had bargaining power before concluding that he participated in a top-hat plan. However, the Court said that plan participant bargaining power is not a substantive element of a top-hat plan. Therefore, the Court affirmed the District Court’s judgment.

In Micha v. Sun Life Assurance of Canada, Inc., No. 16-55053 (9th Cir. 2017), a panel for the Ninth Circuit Court of Appeals (the “Panel”) reversed the district court’s denial of appellate attorney’s fees under 29 U.S.C. § 1132(g)(1) and remanded to the district court for calculation of a reasonable award of fees and costs in an ERISA case.

The Panel held that in analyzing a party’s request for appellate attorney’s fees under the Hummell test (enumerated by the Ninth Circuit in Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (1980)), a court must consider the entire course of the litigation, rather than focusing exclusively on the prior appeal.  Weighing the five Hummell factors in light of all of a defendant’s conduct, from its wrongful denial of the plaintiff’s claim for ERISA benefits to its filing of a petition for a writ of certiorari, the Panel held that the moving party was entitled to attorney’s fees for the prior appeal, in which the Panel had affirmed an award of litigation attorney’s fees.

The Panel declined to consider the issue, not raised before the district court, whether fees-on-fees should be automatically awarded, without application of the Hummell test.

In Owings v. United of Omaha Life Insurance Company, No. 16-3128 (10th Cir. 2017), plaintiff Greggory Owings (“Owings”) sustained a disabling injury on the job and was afforded long-term disability benefits by defendant United of Omaha Life Insurance Company (“United”), under the terms of a group insurance policy issued by United to Owings’ employer.  Owings disagreed with, and attempted without success to administratively challenge, the amount of his disability benefits.  He then filed suit against United in Kansas state court, but United removed the action to federal district court, asserting that the federal courts had original jurisdiction over the action because the policy was governed by ERISA.  The district court ultimately granted summary judgment in favor of United on the amount of the disability benefits.  Owings then appealed.

Upon reviewing the case, the Tenth Circuit Court of Appeals (the “Court”) concluded that United was arbitrary and capricious in determining the date that Owings became disabled (since United did not correctly interpret the plan language, in particular the definition of “Disability”) and, in turn, in calculating the amount of his disability benefits. Consequently, the Court reversed the district court’s grant of summary judgment in favor of United, and remand the case back to the district court, with directions to enter summary judgment in favor of Owings.

The IRS has issued a memorandum (TE/GE-04-1017-0033) which directs EP examiners not to challenge a qualified plan as failing to satisfy the required minimum distribution (“RMD”) standards under Internal Revenue Code (“IRC”) § 401(a)(9) in the circumstances it describes.  The memorandum is helpful to practitioners, as it indicates what the IRS will do (or not do) in specified circumstances, and therefore provides guidance on actions that a plan should be taking.

The memorandum states that it addresses only the application of IRC §401(a)(9) to certain circumstances involving a plan’s action related to a benefit of a participant or beneficiary whom the plan is unable to locate, and does not address the application of any other qualification requirements or other applicable law, including Title I of ERISA. The memorandum then says the following:


In Morrissey v. United States, No. 17-10685 (11th Cir. 2017), the Eleventh Circuit Court of Appeals (the “Court) was called on to determine whether the IRS properly denied a taxpayer’s claimed deduction on his 2011 tax return.  In making this determination, the Court had to decide two questions.  First: was the money that a homosexual man paid to father children through in vitro fertilization (“IVF”)—and in particular, to identify, retain, compensate, and care for the women who served as an egg donor and a gestational surrogate—spent “for the purpose of affecting” his body’s reproductive “function” within the meaning of Code Section 213 (and therefore deductible under that Section)?  Second: in answering the first question “no,” and thus in disallowing the taxpayer’s deduction of his IVF-related expenses, did the IRS violate his right to equal protection of the laws either by infringing a “fundamental right” or by engaging in unconstitutional discrimination?

Upon analyzing the case, the Court held that the costs of the IVF-related procedures at issue were not paid for the purpose of affecting the taxpayer’s own reproductive function—and therefore are not deductible under Code Section 213—and that the IRS did not violate the Constitution in disallowing the deduction.

In Secretary, U.S. Department of Labor v. Preston, No. 17-10833 (11th Cir. 2017), the Eleventh Circuit Court of Appeals (the “Court”) faced the issue of whether a defendant may expressly waive the six-year statute of limitations contained in ERISA Section 413(1), or whether instead, the protection provided by Section 413(1), being so essential and fundamental, that is inherently indefeasible and unwaivable.

Section 413 of ERISA provides that:

No action may be commenced under this subchapter with respect to a fiduciary’s breach of any responsibility, duty, or obligation under this part, or with respect to a violation of this part, after the earlier of—

In Thole v. U.S. Bank, No. 16-1928 (8th Cir. 2017),  plaintiffs James Thole and Sherry Smith (together, the “plaintiffs”) brought a putative class action against U.S. Bank, N.A. (“U.S. Bank”) and others (collectively, the “defendants”), challenging the defendants’ management of a defined benefit pension plan of U.S. Bank (the “Plan”) from September 30, 2007, to December 31, 2010.

The plaintiffs alleged that the defendants violated Sections 404, 405, and 406 of ERISA by breaching their fiduciary obligations and causing the Plan to engage in prohibited transactions with a U.S. Bank subsidiary.  The plaintiffs’ complaint asserts that these alleged ERISA violations caused significant losses to the Plan’s assets in 2008 and resulted in the Plan being underfunded in 2008.  The plaintiffs sought to recover Plan losses, disgorgement of profits, injunctive relief, and other remedial relief pursuant to ERISA Sections 409 and 502(a)(2).  They also sought equitable relief pursuant to ERISA Section 502(a)(3).

In response, the defendants moved to dismiss the plaintiffs’ complaint, arguing that the plaintiffs lacked standing to bring the suit, the ERISA claims were time-barred or had been released, and the pleading otherwise failed to state a claim on which relief could be granted.  During the litigation, the factual backdrop of the case changed. In 2014, the Plan became overfunded; in other words, there was more money in the Plan than was needed to meet its obligations.  The defendants, alleging that the plaintiffs had not suffered any financial loss upon which to base a damages claim, moved to dismiss the remainder of the action for lack of standing. The district court agreed and dismissed the case as moot.  It concluded that, because the Plan is now overfunded, the plaintiffs lack a concrete interest in any monetary relief that the court might award to the Plan if the plaintiffs prevailed on the merits.  The Eighth Circuit Court of Appeals (the “Court”) affirmed the district court’s decision to dismiss the plaintiffs case as moot.  The Court also found that the case should be dismissed because, as argued by the defendants, the claims were time-barred and failed to state a claim for which relief could be granted.


The Guidance Provided.  In Technical Memorandum 201736022, the IRS provides guidance on how a cure period, as described in § 1.72(p)-1, Q&A-10(a), is applied for a participant who fails to make installment payments required under the terms of a plan loan.  This guidance consists of a description of two situations, one in which a later single large loan payment is applied to cure loan payments that are missed, and one in which a replacement loan from the plan is applied to cure to missed loan payments, with the cures in each situation occurring during the regulation’s period during which cures can be made.

Here is the guidance:

Assumptions. In presenting the two situations, the IRS makes the following assumptions:

In Notice 2017-61, the IRS announces an increase in PCOR Fees generally for years ending on or after October 1, 2017 and before October 1, 2018.  Here is what the Notice says.


The Notice provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of the fee (commonly called the “PCOR Fee”) imposed by §§ 4375 and 4376 of the Internal Revenue Code (the “Code”), for policy years and plan years that end on or after October 1, 2017, and before October 1, 2018.

The Proposed Delay Of The Effective Date Of The Final Rule.  The U.S. Department of Labor (the “DOL”) has proposed a delay for ninety (90) days – through April 1, 2018 – of the applicability of the Final Rule which amends the requirements in the ERISA claims procedure regulations that apply to claims for disability benefits.  The proposal is here.

The Final Rule was published in the Federal Register on December 19, 2016.  It is currently scheduled to apply to claims for disability benefits under ERISA-covered employee benefit plans that are filed on or after January 1, 2018.

Expanded Requirements.  The expanded requirements pertaining to disability claims include: