In Lockheed Corp. v. Spink, the Supreme Court extended the rule of Curtiss-Wright to pension benefit plans. 517 U.S. 882, 890 (1996). In Hughes Aircraft Co. v. Jacobson, the Supreme Court again extended its conclusions in Curtiss-Wright and Lockheed Corp., finding that the decisions applied “with equal force to persons exercising authority over a contributory plan, a noncontributory plan, or any other type of plan.”
See Siskind, 47F.3d at 506. Since the time of these decisions, the Supreme Court issued a number of rulings concerning the distinction between settlor and fiduciary functions in the single‑employer setting, including:Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995), which, in connection with a welfare plan, noted that employers and plan settlors are "generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans";Lockheed v. Spink, 517 U.S. 882 (1999), which extended the ruling of Curtiss-Wright to include pension plans and found that plan sponsors amending the terms of a plan "do not fall into the category of fiduciaries," and are analogous to "settlors of a trust"; andHughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999), which concluded that the holding in Lockheed applied to plans funded by both employer and employee contributions and added that "without exception" plan settlors that amend plan terms do not act as fiduciaries. Plaintiffs contended that the Second Circuit's prior pronouncements in Chambless and Siskind were still controlling since the Supreme Court had not specifically ruled on the settlor/fiduciary issue in connection with multiemployer plans.
These decisions were based on the Court’s prior holdings that a plan sponsor is not acting as a fiduciary when it adopts or amends an ERISA plan. See, e.g., Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 443 (1999); Lockheed Corp. v. Sping, 517 U.S. 882, 891 (1996). The Court’s Dudenhoeffer holding rejects the extension of its settlor line of cases to shield ERISA fiduciaries from imprudence claims simply because the plan mandates an employer stock investment.
as the right to first dollar reimbursement from any third-party recovery or settlement, and the Plan language also deals with attorney fees and costs associated with such a claim.The Plan should require that the participant notify it within 30 days of any claim that may give raise to a claim for subrogation or reimbursement.The Plan should require that the participant execute a reimbursement agreement that requires 21 days advance notice to the Plan before there is a disbursement of proceeds.Also, one approach to avoid the asset tracing requirement of Montanile would be to modify the Plan and the reimbursement agreement to require that the participant contractually personally guarantees the reimbursement from the participant’s general assets.Plaintiffs may attempt to argue that such an agreement is unenforceable or a prohibited transaction, but the Plan will argue that it is merely enforcing a contractual guarantee that does not implicate ERISA.The Supreme Court, in Lockheed v. Spink, 517 U.S. 882, previously approved the payment of early retirement benefits conditioned on an employment release, so there is authority for adding additional conditions before a distribution is made.Finally, the Plan should work closely with its claims administrator to ensure that:(i) subrogation claims are identified; (ii) reimbursement agreements have been executed; (iii) notice of the claim has been given to all parties; and (iv) liens have been filed or the Plan has joined the lawsuit.
Reprinted with permission.Lockheed Corp. v. Spink, 517 U.S. 882 (1996). Subsidized coverage may be available to those making less than 400% of the federal poverty level ($45,960 for an individual or $94,200 for a family of four), depending on whether "affordable" coverage is available from an employer.