Recent lawsuits filed against the group health plans (GHPs) of two large U.S. employers underscore the importance of implementing formal welfare benefit plan governance structures that include fiduciary committees comparable to the governance structures that employer sponsors of retirement plans routinely adopt.
The origins of this trend for retirement plans are not hard to trace: In the fall of 2003, a federal district court in Texas denied motions to dismiss the Employee Retirement Income Security Act (ERISA) claims in Tittle v. Enron Corp. The 300-page opinion caught plan sponsors by surprise. The lawsuit included claims against Enron’s board and senior management, as well as its retirement plan committee.
Had Tittle v. Enron Corp. been an isolated incident, plan sponsors may have forgotten about it. But in 2006, 13 lawsuits were filed against major companies, claiming that these employers violated their fiduciary obligations under ERISA by selecting funds for their 401(k) plans that charged allegedly excessive fees. These lawsuits were just the beginning of a burgeoning cottage industry among plaintiffs’ law firms against 401(k)—and later 403(b) —plans that continues to this day. Fiduciary plan committees have become a first line of defense as plan sponsors and fiduciaries seek to insulate themselves from liability.
The ERISA fiduciary standards that are at the heart of 401(k) plan litigation apply equally to all welfare benefit plans, but until recently, employer...
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