Church Plan Sponsors Can Relax – SCOTUS Says They are NOT Subject to ERISA

By Sherry P. Porter

On Monday, June 5, 2017, the Supreme Court handed down a long-awaited decision on church plans in favor of the church plan sponsors.  The case revolved around whether plans that were maintained by church-affiliated entities (in this case, hospitals) met the exemption for church plans from compliance with the Employee Retirement Income Security Act of 1974 (ERISA).

ERISA governs, among other things, retirement plans sponsored by employers for their employees and contains rigorous requirements for these plans, including minimum funding and contributions for certain plans, reporting/disclosure requirements as well as coverage under the PBGC insurance program (a federal insurance-type program for defined benefit plans).  Church plans are generally exempt from ERISA, and many church plans have received opinion letters from the IRS and DOL over the past 40+ years stating such.  However, since many pension plans (church plans and non-church plans) have become underfunded over the past few years, some employees have

Supreme Court Approves of Contractual Limitation Period for Filing Suit Under ERISA

Supreme Court of the United States Seal (Photo credit: DonkeyHotey)

In a unanimous opinion issued December 16, 2013, and authored by Justice Thomas, the U.S. Supreme Court held in Heimeshoff v. Hartford Life & Accident Insurance Co.,  571 U.S. __ (2013), No. 12-729, that an appeal of a denial of disability benefits was untimely under the terms of the group long term disability plan.  The court noted that ERISA does not contain its own statute of limitations governing judicial review of plan determinations.  However, so long as the limitations provision in the plan is reasonable, and there is no controlling statute to the contrary, courts should enforce plan limitations periods. In this case, the limitations provision stated that any suit to recover benefits denied must be filed within three (3) years after the filing of the proof of loss. The plaintiff in this case filed suit well after the three (3) period.

401(k) Automatic Deferrals With a Safe Harbor Twist

By G. Alexander Hamilton

Memo to 401(k) Plan Sponsors —

Do you hate dealing with the ADP/ACP nondiscrimination tests each year?

Does your plan have trouble passing the tests?

Does the automatic enrollment/deferral feature that the government encourages interest you?

If the answer to any of these questions is “yes,” you may want to consider modifying your plan to make it a “Qualified Automatic Contribution Arrangement” or “QACA.” The QACA rules were enacted as part of the Pension Protection Act of 2006 (PPA) and are effective beginning in 2008. Final regulations were adopted in 2009. The QACA combines automatic enrollment/deferrals with certain minimum employer contributions — either across the board contributions or matching contributions — such that the annual ADP/ACP nondiscrimination rules are automatically satisfied and no testing is necessary. This is one of two “safe-harbor” design options that are available for 401(k) plan sponsors who want to avoid the annual ADP/ACP testing requirements.

“Some Degree of Success”: ERISA and Awards of Attorneys’ Fees

By Daniel E. Hancock

The general American rule is simply this: every party in an action is responsible for his or her own attorneys’ fees.  But there are statutes that provide for awards of attorneys’ fees in the context of specific actions.  Of course, the language of these provisions is far from uniform, though most only allow the prevailing party to recover such costs. 

The Employee Retirement Income Security Act, or ERISA, is not so specific.  ERISA provides that “the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.”  In Hardt v. Reliance Standard Life Insurance Co., issued May 24, 2010, the Supreme Court took up the issue of whether this statute means what it says, or whether it contains an implication that a party must prevail in order to receive such an award. 

The Genetic Information Nondiscrimination Act

By LaToi D. Mayo

GINA was first introduced in the House in 1995, finally passed in 2008 and signed into law by President G. W. Bush in May 2008.  GINA includes two titles. Title I amends portions of the Employee Retirement Income Security Act (ERISA), the Public Health Service Act, and the Internal Revenue Code, and addresses the use of genetic information in health insurance. Title II prohibits the use of genetic information in employment, prohibits the intentional acquisition of genetic information about applicants and employees, and imposes strict confidentiality requirements.