Over $1 Billion Recovered For Past Clients

  1. Home
  2.  » Employee Benefits/ERISA

ERISA And Employee Benefits Litigation: Protecting Retirement Plans

Participants and beneficiaries in employee benefits plans covered by the Employee Retirement Income Security Act of 1974, known as “ERISA” sometimes need legal representation when their rights are violated. ERISA provides broad protections for participants in private (nongovernmental) employer-sponsored retirement plans, employee stock ownership plans (ESOPs), health insurance plans and disability plans. Fiduciaries responsible for managing those plans can be held accountable through civil legal action and/or criminal charges when they mismanage the funds and innocent people lose retirement funds that they should have received.

Edelson Lechtzin LLP in Philadelphia is a valuable source of information about employer-based insurance, wage and hour laws, and other employment law issues that affect employees’ financial well-being. Below we discuss the types of employee benefits cases that our firm prosecutes. We want you to understand the protections that ERISA provides so that you can determine if it’s time to hire a lawyer. Has your employer denied you the benefits you are entitled to by law or according to your employment contract? Consult with one of our lawyers to discuss your concerns.

We Don’t Get Paid Unless We Get A Recovery For Our Clients

In most ERISA cases, we represent our clients on a contingent-fee basis. This means that we will never ask you to pay our fees or litigation costs upfront. We are only paid if we get a monetary recovery for you and other participants in an ERISA benefits plan.

ERISA’s Protections For 401(k) And 403(b) Retirement Plan Participants

Defined contribution retirement plans, such as 401(k) and 403(b) plans, provide tax benefits to employees, giving them motivation to save for retirement. According to the Investment Company Institute, Americans held $7.9 trillion in all employer-based defined contribution retirement plans as of March 31, 2020, of which $5.6 trillion was held in 401(k) plans. See Investment Company Institute, Retirement Assets Total $28.7 Trillion in First Quarter 2020 (June 17, 2020).

In a 401(k) and 403(b) plan, retirement benefits are limited to the value of participants’ individual investment accounts, as determined by the market performance of the employer’s and employee’s contributions, minus expenses; see Tibble v. Edison Int’l, 575 U.S. 523 (2015). However, all risks related to high fees and poorly performing investments belong to the participants, so there is little incentive for an employer to minimize costs or to closely monitor such plans to ensure that investments are well-advised.

To safeguard 401(k) and 403(b) plan participants, ERISA requires employers and other fiduciaries to exercise loyalty and good judgment. 29 U.S.C. § 1104(a)(1). These fiduciary duties are “the highest known to the law.” Sweda v. Univ. of Pennsylvania, 923 F.3d 320, 333 (3d Cir. 2019) (emphasis added). Fiduciaries must act “solely in the interest of the participants and beneficiaries,” 29 U.S.C. § 1104(a)(1)(A), with “care, skill, prudence, and diligence.”. 29 U.S.C. § 1104(a)(1)(B). Unfortunately, many fiduciaries of 401(k) and 403(b) plans breach their duties of loyalty and prudence in the following ways:

  • Failing to review plan portfolios objectively and adequately to make sure that each investment option is justifiable and properly takes costs into consideration
  • Retaining investment options, like mutual funds, even when less expensive and identical or similar investment options are available, possibly with better performance histories
  • Failing to select the lowest cost share class for funds within the plan
  • Failing to consider collective investment trusts, commingled accounts or separate accounts as alternatives to mutual funds, despite their lower fees
  • Failing to obtain competitive bids for administrative services for the plan, like recordkeeping
  • Using more than one recordkeeper for a plan, which subjects the plan and its participants to unnecessary and duplicative expenses
  • Engaging in prohibited transactions with plan assets
  • Continuing to offer company stock as an investment option when the plan sponsor knows or recklessly disregards the fact that the price of the company’s shares is artificially inflated as a result of the company’s false and misleading statements and/or material omissions concerning the company’s financial results and future prospects

Has the sponsor of your 401(k) or 403(b) retirement plan wasted your retirement funds through negligent mismanagement? Let us investigate. Please contact us at 844-696-7492 or complete the form below for a free case evaluation.

ERISA’s Limits On Pension Plan Investments In Company Stock

ERISA has strict limitations on investments that can be made in stocks and other securities that are issued by the sponsor of a traditional pension plan or its affiliates. See 29 U.S.C.A. § 1107. Exceeding a limit of 10% is a breach of fiduciary duties and constitutes a fraud against participants. This limit does not apply to individual accounts in defined contribution retirement plans like 401(k) and 403(b) plans.

If you believe that the sponsor of your pension plan has improperly used company stock to fund your pension plan, please contact us at 844-696-7492 or complete the form below for a free case evaluation.

ERISA Disability Benefits Claims

In addition to protecting retirement benefits, ERISA provides protections for employees who are covered by employer-sponsored disability insurance policies. If you have been denied disability insurance benefits, you need an experienced lawyer to take on the insurance company and appeal their adverse determination.

Continuation Of Health Insurance Benefits Or COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), amended ERISA, requiring sponsors of group health plans – with more than 20 employees – to provide “each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event” to decide, within a certain time period, to continue coverage under the plan, 29 U.S.C. § 1161. Both employees and qualifying beneficiaries must receive notice of this option.

The COBRA notification requirement exists because employees and their family members are not expected to know instinctively of their right to continue their health care coverage.

Unfortunately, many employers cut corners to save money and fail to provide the required COBRA notice, using the prescribed Department of Labor forms, to all beneficiaries.

When a plan administrator fails to meet COBRA’s notice requirements under 29 U.S.C. § 1166 and 29 C.F.R. § 2590.606-4, the administrator is subject to statutory penalties of up to $110 per participant or beneficiary per day from the date of such failure. 29 U.S.C. § 1132(c)(1). In addition, the court may order such other relief as it deems proper, including payment of attorney fees and expenses pursuant to 29 U.S.C. § 1132(g)(1).

If you believe your former employer failed to provide you and your family the required COBRA notice, please contact us at 844-696-7492 or complete the form below for a free case evaluation.

Prominent Judgments And Settlements

  • Retirement Plans Committee of IBM v. Jander, 589 U.S. ____, 140 S. Ct. 592, 205 L. Ed. 2d 432 (2020) (co-author of amicus brief to the U.S. Supreme Court, which argued that the court should not alter the standard that requires the fiduciary to determine whether public disclosure would cause more harm than good to the plan by causing a drop in the stock price and a concomitant drop in the value of the stock already held by the plan).
  • Davis v. Washington Univ. in St. Louis, 960 F.3d 478 (8th Cir. May 22, 2020) (The U.S. Court of Appeals for the 8th Circuit partially revived an ERISA class action against the university, saying a lower court incorrectly dismissed claims that the school’s 403(b) retirement plan’s fees were too high. The appeals court ruled that Washington University workers and retirees convincingly argued that the fees were too high because of mismanagement on the university’s part).
  • Lechner v. Mut. of Omaha Ins. Co., No. 8:18-cv-22, 2018 WL 6920749 (D. Neb. 2018) (defeated motion to dismiss claims of fiduciary self-dealing that harmed the 401(k) plan).
  • Daugherty v. Univ. of Chicago, No. 17-3736, 2018 WL 1805646 (N.D. Ill. 2018) (defeated motion to dismiss ERISA claims alleging that defendants breached fiduciary duty of prudence when they incurred excessive expenses and retained funds that were not performing well; settled for $6.5 million).
  • Short v. Brown Univ., 320 F. Supp. 3d 363 (D.R.I. 2018) (defeated motion to dismiss as to claim against university retirement plan fiduciaries for breach of ERISA’s duty of prudence; settled for $3.5 million).

To Discuss Your Employee Benefits Concerns With An Attorney

If you believe that you may have suffered losses in your retirement plan due to corporate mismanagement, let us hear from you. We have helped other employees who were similarly wronged to recover compensation under such circumstances.

Please contact us at 844-696-7492 or complete our online form to request a free case evaluation. We may be able to help you initiate or join a class action lawsuit or pursue another appropriate legal remedy.