In DOL Advisory Opinion 2017-01A, the U.S. Department of Labor (the “DOL”) was asked for an advisory opinion, on behalf of the Health Transformation Alliance (the “HTA”), on whether a program of administrative services created by HTA (the “Program”) is an “employee welfare benefit plan” within the meaning of ERISA section 3(1) or a “multiple employer welfare arrangement” (a “MEWA”) within the meaning of section 3(40).

In the Advisory Opinion, the DOL concluded that the Program is not an employee welfare benefit plan.  It said that such a plan does not include a program maintained by an employer (or group or association of employers) which -like the Program here- has no employee participants and does not provide covered benefits to employees or their dependents.  Rather than being established or maintained for the purpose of providing welfare benefits to participants and beneficiaries, the Program operates so as to facilitate the efficient establishment and operation of employee benefit plans by employer-members.

The DOL concluded, further, that the Program is not a MEWA.  This obtains because no component of the Program “offers or provides” any welfare benefit described in section 3(1) of ERISA to the employees of its member-employers.  In addition, the Program does not operate as a MEWA under ERISA section 3(40) because no component of the Program: (1) underwrites or guarantees welfare benefits, (2) provides welfare benefits through group insurance contracts covering more than one employer, (3) pools welfare benefit risk among participating employers, or (4) provides similar insurance or risk spreading functions.  Thus, although section 3(40), unlike section 3(1), does not condition MEWA status on the arrangement being established or maintained by any particular party, in the DOL’s view, offering employer-members the bundle of administrative services the ATA describes does not result in the Program constituting a MEWA, as defined by the statute.

In Hitchcock v. Cumberland University 403(b) DC Plan, No. 16-5942 (6th Cir. 2017), the Plaintiffs were appealing the order entered by the district court, granting the motion of the Defendants (namely, Cumberland University and its 403(b) plan) to dismiss their ERISA claim.  The Sixth Circuit Court of Appeals reversed the district court’s judgment, and remanded the case back to the district court.

In this case, the Plaintiffs were employees of Cumberland University (the “University”), and were participants in its 403(b) plan (the “Plan”).  The Plan is a defined contribution 403(b) plan.  In 2009, the University adopted a five percent matching contribution, whereby the University would match an employee’s contribution to the Plan, up to five percent of the employee’s salary.  On October 9, 2014, the University amended the Plan, retroactive to January 1, 2013, to replace the five percent match with a discretionary match, whereby the University would determine the amount of the employer’s matching contribution on a yearly basis (the “Amendment”).  The University also announced that the employer matching contribution for the 2013-14 year, and for the 2014-15 year, would be zero percent.

With regard to amending the Plan, the 2009 Summary Plan Description (the “2009 SPD”) states that an Employer cannot amend the Plan to take away or reduce protected benefits under the Plan.  That SPD also promises that all Plan Participants shall be entitled to obtain, upon request to the Employer, copies of documents governing the operations of the Plan, including an updated Summary Plan Description.  As of the date of oral argument in this case, January 25, 2017, the University had not produced a summary plan description subsequent to the 2009 SPD, despite Plaintiffs’ repeated requests, and had not provided formal written notice of the Amendment.  The Plaintiffs filed a class action against the Defendants, alleging among other things, an impermissible cutback of benefits and a breach of fiduciary duty, both in violation of ERISA.

In Tussey v. Abb, Inc., No. 15-2792, No. 16-1127 (8th Cir. 2017), a class of employees who participated in ABB, Inc.’s retirement plans-specifically, the “401(k) defined contribution savings plans”- accuse ABB and its agents (collectively, the “ABB fiduciaries”) of managing the plans for their own benefit, rather than the participants’. In an earlier appeal, the Eighth Circuit Court of Appeals (the “Court”) had directed the district court to “reevaluate” how the participants might have been injured if the ABB fiduciaries breached their fiduciary duties under ERISA when they changed the investment options for the plans.

Because the district court apparently mistook that direction for a definitive ruling on how to measure plan losses, and as a result entered judgment in favor of the ABB fiduciaries despite finding they did breach their duties, on this appeal, the Court vacated the judgment on that claim and remanded the case back to the district court for further consideration regarding whether the participants can prove losses to the plans. Because the Court reopened one of the participants’ substantive claims, the Court also vacated and remanded the district court’s award of attorney fees.

In Mayes v. Winco Holdings, Inc., No. 14-35396 (9th Cir. 2017), plaintiff Katie Mayes (“Mayes”), among other matters, was seeking COBRA benefits from defendant Winco Holdings, Inc. (“Winco”).  The district court granted summary judgment against Mayes, denying the benefits.  However, upon reviewing the case, a panel of the Ninth Circuit Court of Appeals (the “Panel”) found that there was a genuine dispute of fact regarding the true reason for the Mayes’ termination by Winco.  The Panel held that the district court therefore erred in granting summary judgment, because if Winco had fired the Mayes for discriminatory reasons, rather than gross misconduct, then Mayes could be entitled to COBRA benefits.

In this case, Mayes had worked at Winco, an Idaho Falls grocery store, for twelve years.  During her final years at Winco, Mayes supervised employees on the night-shift freight crew.  On July 8, 2011, Mayes was fired for taking a stale cake from the store bakery to the break room to share with fellow employees and telling a loss prevention investigator that management had given her permission to do so.  Winco deemed these actions theft and dishonesty.  It also determined that Mayes’ behavior rose to the level of gross misconduct under the store’s personnel policies.  Winco denied Mayes and her minor children benefits under COBRA and this suit was filed.

In deciding the case, the Panel noted that generally, COBRA entitles an employee with employer provided health insurance to elect continued coverage for a defined period of time after the end of employment. See 29 U.S.C. § 1161(a).  An employee is not entitled to this benefit if she is terminated for “gross misconduct,” but the statute does not define “gross misconduct.”See 29 U.S.C. § 1163(2).  In this case, said the Panel, Mayes presented both direct and indirect evidence that the reasons stated for her termination were pretextual, and the Panel concluded there is a genuine dispute of material fact regarding the true reason for her termination.  It said that, if Winco fired Mayes for discriminatory reasons, Mayes may be entitled to COBRA benefits, and concluded that the district court therefore erred in dismissing Mayes’ COBRA claim at summary judgment.  The Panel remanded the case back to the district court.

In Rodriguez-López  v. Triple-S Vida, Inc., No. 15-2413 (1st Cir. 2017), the plaintiff, Nilda Rodríguez-López (“Rodríguez”), appeals from the district court’s grant of summary judgment in favor of defendant, Triple-S Vida, Inc. (“Triple-S”). The district court reviewed and sustained the denial of Triple-S, the claims administrator, of Rodríguez’s claim for long-term disability (“LTD”) benefits (from an ERISA covered plan) under the deferential arbitrary and capricious standard.  Because the plan contained no clear delegation of authority to Triple-S, the First Circuit Court of Appeals (the “Court”) held that Triple-S’s decision was not entitled to deference. Accordingly, the Court reversed and remanded the case back to the district court to decide the case under the de novo standard of review.

In Williams v. FedEx Corporate Services, No. 16-4032 (10th Cir. 2017), Steven Williams (“Williams”) alleges that his former employer, FedEx Corporate Services (“FedEx”), violated the Americans with Disabilities Act (the “ADA”) by discriminating against him based on his actual and perceived disabilities, and by requiring his enrollment in the company’s substance abuse and drug testing program.  Williams further alleges that Aetna Life Insurance Company (“Aetna”), the administrator of FedEx’s short-term disability plan, breached its fiduciary duty under ERISA when it reported to FedEx that Williams filed a disability claim for substance abuse.  Both FedEx and Aetna filed motions for summary judgment, which the district court granted.

Upon reviewing the case, the Tenth Circuit Court of Appeals (the “Court”) acted as follows. As to the district court’s  grant of summary judgment on the ADA claim, the Court  affirmed the judgment in part, and reversed it in part, thereby remanding the case back to the district court on the matter.  As to the district court’s grant of summary judgment on the ERISA claim, the Court concluded that Williams has not established that Aetna failed to act with the care required by ERISA fiduciaries. Accordingly, the Court affirmed the district court’s judgment in favor of Aetna on the ERISA matter.

In Ohio v. U.S., No.16-3093 (6th Cir. 2017), the Sixth Circuit Court of Appeals (the “Court”) was faced with the question of whether one of the Affordable Care Act’s tax provisions applies to state government employers with the same force that it applies to private employers.  The plaintiffs are the State of Ohio, and several of its political subdivisions and public universities (the “State”).  The plaintiffs filed suit against, inter alia, the United States Department of Health and Human Services (“HHS”), alleging that the Federal Government illegally collected certain monies from the State in order to supplement the Affordable Care Act’s Transitional Reinsurance Program (the “Program”).

Arguing that the Program’s mandatory payment scheme applies only to private employers and not to state and local government employers, the State sought a refund of all payments made on its behalf and a declaration that the Program would not apply to the State in the future.  The State also argued that application of the Program against the State violated the Tenth Amendment to the United States Constitution and principles of intergovernmental tax immunity.  The district court, in a thorough and reasoned opinion, granted a motion to dismiss filed by the United States, and denied a motion for summary judgment filed by the State. The district court ruled that the Program applies to state and local government employers just as it applies to private employers, and that the Program as applied to the State does not violate the Tenth Amendment.  The Court affirmed the district court’s rulings.


In Summa Holdings, Inc.v. Comm’r, No. 16-1712 (6th Cir. Feb. 16, 2017), the Commissioner of the Internal Revenue Service had denied relief to a set of taxpayers who complied in full with the printed and accessible words of the tax laws.  The Benenson family, to its good fortune, had the time and patience (and money) to understand how a complex set of tax provisions could lower its taxes.  Tax attorneys advised the family to use a congressionally innovated corporation—a “domestic international sales corporation” (DISC) to be exact—to transfer money from their family-owned company (“Summa Holdings”) to their sons’ Roth Individual Retirement Accounts.  When the family did just that, the Commissioner balked.  He acknowledged that the family had complied with the relevant provisions.  And he acknowledged that the purpose of the relevant provisions was to lower taxes.  But he reasoned that the effect of these transactions was to evade the contribution limits on Roth IRAs and applied the “substance-over-form doctrine,” to recharacterize the transactions as dividends from Summa Holdings to the Benensons followed by excess Roth IRA contributions, resulting in tax and penalties. The Tax Court upheld the Commissioner’s determination.

In analyzing the case, the Sixth Circuit Court of Appeals (the “Court”) said that each word of the “substance-over-form doctrine,” at least as the Commissioner has used it here, should give pause.  If the government can undo transactions that the terms of the Code expressly authorize, it’s fair to ask what the point of making these terms accessible to the taxpayer and binding on the tax collector is. “Form” is “substance” when it comes to law.  The words of law (its form) determine content (its substance).  How odd, then, to permit the tax collector to reverse the sequence—to allow him to determine the substance of a law and to make it govern “over” the written form of the law—and to call it a “doctrine” no less.

As it turns out, said the Court, the Commissioner does not have such sweeping authority.  And neither do we.  Because Summa Holdings used the DISC and Roth IRAs for their congressionally sanctioned purposes—tax avoidance—the Commissioner had no basis for recharacterizing the transactions and no basis for recharacterizing the law’s application to them.  Accordingly, the Court reversed the Tax Court, refusing to support the Commissioner’s determination.

In Prime Healthcare Services-Landmark LLC, No. 16-1161(1st 2017), the First Circuit Court of Appeals (the “Court”) had to decide whether a dispute between employees and their successor employer- relating to an alleged violation of the applicable collective bargaining agreement by changing the terms of, and ceasing contributions to, a defined benefit plan- should be resolved in arbitration or in the courts. The parties agreed to arbitrate this dispute. The district court, however, refused to compel arbitration; it found that ERISA preempted arbitration of this dispute, and reasoned that this, in turn, presented an issue of arbitrability properly decided by a judge, not an arbitrator. The Court found that the issue of ERISA preemption in this case is not an issue of arbitrability, but rather one that is squarely for the arbitrator to decide, and therefore reversed the district court’s ruling.

In Prince v. Sears Holdings Corporation, No. 16-1075 (4th Cir. 2017), alleging that his employer improperly administered life insurance benefits, an employee brought suit for misrepresentation, constructive fraud, and infliction of emotional distress. The district court dismissed the employee’s case, and the employee appealed.  The Fourth Circuit Court of Appeals (the “Court”) ruled that, because, ERISA completely preempts these state law claims, the Court affirms the district court’s dismissal of the complaint.

In this case, in November 2010, Billy E. Prince (“Prince”) submitted an application to his employer for $150,000 in life insurance coverage for his wife, Judith Prince. The employer, Sears, sponsored and administered the life insurance program through The Prudential Insurance Company of America. In May 2011, Sears sent an acknowledgment letter to Prince and began withholding premiums from his pay shortly thereafter. Later in 2011, Mrs. Prince learned she had Stage IV liver cancer. Almost a year after Mrs. Prince’s initial diagnosis, Prince checked his online benefits summary, which confirmed his election to purchase life insurance coverage for his wife in the amount of $150,000. Another year passed, and Sears sent Prince a letter advising him that Mrs. Prince’s coverage had never become effective because no “evidence of insurability questionnaire” had been submitted. Sears explained that Prudential had sent a notice to Prince in January 2011 advising that unless a completed insurability questionnaire was submitted, Prudential would terminate his application for the life insurance coverage. Prince claims that he has no record of receipt of that notice but does not dispute that Prudential sent it to him.

On May 26, 2014, Mrs. Prince died. Because Prince did not receive the $150,000 in life insurance, he filed a complaint against Sears in the Circuit Court of Marion County, West Virginia. The complaint asserted one count of “constructive fraud/negligent misrepresentation” and one count of “intentional/reckless infliction of emotional distress,” based on Sears’s alleged misrepresentations regarding the life insurance policy and the harm thereby inflicted on Mr. and Mrs. Prince. Sears removed the case to federal district court, which dismissed the case on the basis of complete ERISA preemption.