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The ERISA Edit: Thole Extended to Welfare Plans

Employee Benefits Alert

Ninth Circuit Applies Thole v. U.S. Bank, N.A. to Deny MEWA Participants Standing

Plaintiffs receiving welfare plan benefits through their employer's participation in a multiple employer welfare arrangement (MEWA) lack standing to pursue ERISA fiduciary breach claims against the administrator of the MEWA, the Court of Appeals for the Ninth Circuit has held. Winsor v. Sequoia Benefits & Ins., No. 21-16992 (9th Cir. Mar. 8, 2023). Like the district court, the Ninth Circuit rejected both theories of injury offered by the plaintiffs as insufficiently pled and too speculative. Plaintiffs claimed Sequoia breached its fiduciary duties by receiving and retaining commission payments from insurers and by negotiating allegedly excessive fees with insurers. This caused them harm, they claimed, because the commissions and fees caused them to pay higher contributions for their insurance benefits. The Court found that plaintiffs' amended complaint did not allege facts to establish that their contribution rates were higher due to the commissions and fees, as those contribution rates were independently set by their employer. Plaintiffs also asserted that as beneficiaries of the MEWA's trust fund, they had an equitable interest in trust assets and that, under trust law, their interest in the trust was harmed by Sequoia's self-dealing with trust assets, even if they failed to suffer any out-of-pocket injury. The Court ruled that this theory of injury was foreclosed by the Supreme Court's holding in Thole v. U.S. Bank, N.A., 140 S. Ct. 1615 (2020), which held that participants in a defined benefit plan lacked standing to bring ERISA claims alleging that plan fiduciaries breached their duties of loyalty and prudence by poorly investing the plan's assets. Like the defined benefit plan participants in Thole, the Winsor MEWA participants were not injured by the alleged fiduciary misconduct because their promised benefits were not impacted by it. This case is likely a harbinger of further application of Thole outside the defined benefit plan context. 

Proton Beam Therapy Class Settlement Receives Preliminary Approval

The parties to a class action lawsuit alleging ERISA fiduciary breach violations against Aetna Life Insurance Co. and Aetna, Inc. (collectively, Aetna) for denying coverage of proton beam therapy to treat certain cancers have reached a preliminary agreement to settle the case for $3.4 million. According to the plaintiffs, the coverage denials were based on outdated medical policies and guidelines that wrongfully characterized proton beam therapy as experimental. The plaintiffs, who filed their claims under ERISA section 502(a)(3), sought to enjoin Aetna from applying the allegedly faulty policies and guidelines and require it to retract the coverage denials. The terms of the proposed settlement, which will be presented to the 142 settlement class members, must receive approval from the district court. Molloy v. Aetna Life Ins. Co., Inc., No. 2:19-cv-03902 (E.D. Pa. Mar. 3, 2023).

DOL Performing Cybersecurity Audits in All Retirement Plan Investigations

In recent public comments, a Department of Labor (DOL) official confirmed that the Employee Benefit Security Administration (EBSA) is examining cybersecurity in all its retirement plan audits. In April 2021, EBSA published guidance for plan sponsors, plan fiduciaries, record keepers, and plan participants on best practices for maintaining cybersecurity, including tips on how to protect retirement benefits from cybersecurity threats and hire and monitor qualified cybersecurity service providers. Sample document requests that the agency issues in these types of investigations can be found here.  

Upcoming Speaking Engagements and Events

Joanne Roskey will discuss legal developments in employee benefits law with members of the ERISA Industry Committee on March 15.

On March 21, Joanne Roskey will present "Behind the Scenes at the Employee Benefits Security Administration: Priorities and Enforcement" to members of the ERISA Industry Committee.

Joanne Roskey and Dawn Murphy-Johnson will present, "No Surprises Act Enforcement: How to Prepare for a DOL Audit," a PLI webinar on March 30, 2023, at 1 p.m. ET, discussing the NSA and how it impacts ERISA plans and their administration.

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