Webinar – Church Plan Update: It’s a Changing World -What Church Plan Sponsors Need to Know

On Monday, February 24, 2014, the Drinker Biddle Employee Benefits & Executive Compensation Team will present a free one hour webinar on hot topics that church plan sponsors should be considering for 2014.  The webinar will be led by Chicago partners David L. Wolfe and Mark E. Furlane.  Some of the topics to be covered during the webinar include:

  • An update on church plan litigation, including the recent ruling against Dignity Health and what this means for your church plan;
  • How church plan sponsors can best position themselves to defend against such an attack;
  • What church plan sponsors need to know about maintaining their church plan status in 2014;
  • Pros and cons for various employee benefit plans.

To register click the RSVP button:

Date: Monday, February 24, 2014
Time: 1:30 – 2:30 pm central

David L. Wolfe
David is a partner and member of the Employee Benefits & Executive Compensation Practice Group.  He represents clients in a full spectrum of industries with an emphasis on tax-exempt organizations.  He is a co-founder and member of the Steering Committee for the development and continuing sponsorship of the HR/Hospital Advisory Board (co-sponsored by Deloitte) for senior HR executives in tax-exempt health care systems.

Mark E. Furlane
Mark is a partner in the Labor & Employment Practice Group. Before joining the firm in 1979, Mark spent nearly five years as a lawyer for the U.S. Marine Corps where he gained extensive trial experience.  In Mark’s 30 years of private practice, he has represented employers in nearly all labor and employment issues confronting today’s employer.  He focuses his practice on employment law, with an emphasis on employment, benefits and fiduciary litigation and employment counseling.

See LaborSphere’s prior coverage of recent church plan litigation here.

Court Rules In First of Five Church Plan Retirement Plan Cases Rejecting Dignity Health Retirement Plan Church Plan Status

By: Mark E. Furlane and David R. Levin

Last spring five complaints were filed against hospital systems challenging the church plan status of one or more of their plans.  The Hospital systems were Dignity Health, San Francisco; Ascension Health Alliance, St. Louis; Catholic Health Initiatives, Englewood, Colo., Catholic Health East, Newtown Square, Pa.; and Saint Peter’s Healthcare System, New Brunswick, N.J.  They all operated their pension plans under church plan status.  Motions to dismiss were filed and fully briefed in four of those cases and oral argument was heard in two of them.

On December 12, 2013, the district court for the Northern District of California ruled in one of them, Rollins v. Dignity Health, agreeing with Plaintiff that the Dignity Health retirement plan was not a church plan.  The suit claimed Dignity Health is “not a church or a convention or association of churches” nor does it meet any of the other criteria necessary to be considered a church plan sponsor under federal regulations.

In reaching its ruling that the retirement plan was not a church plan, the court rejected Dignity Health’s argument that its Pension Fund Sub-Committee met the committee approach to church plan status under 29 U.S.C. §1002(33)(C)(i).  The court ruled that under 29 U.S.C. §1002(33)(A), only a church or convention of churches can establish a church plan.  The court then rejected Dignity Health’s argument that the Plan met an alternative means of establishing a church plan found in 29 U.S.C. §1002(33)(C)(i).  According to Dignity Health, that section allows church plan status for plans not established by a church or convention or association of churches so long as they are “maintained” by an “organization” controlled or associated with a church, where the “organization’s” principal purpose is the administration of benefits.  The court rejected that argument, stating that it violates a cardinal rule of statutory construction, and concluding that the organization itself must have a principal purpose of benefit plan administration, not its Retirement Plan Sub-Committee.

The Dignity Health suit and the other four lawsuits demand that the pension plans be brought into compliance with ERISA and that the plans make whole any losses to participants; pay civil penalties and pay attorney fees and expenses to the plaintiff.  If the Dignity Health ruling is followed in the other cases or affirmed on appeal it will have a significant impact on the plans, both operationally and financially.  The financial implications of a binding ruling that upholds the position of the district court may include funding the plans to meet minimum funding levels, payment of PBGC premiums, and losses to participants harmed by plan terms and operations less favorable than those required by ERISA.

Inside the Beltway Audiocast to Discuss the State of the Retirement Income Industry

Please join us for the Inside the Beltway Audiocast on Thursday, December 5, 2013.

On Thursday, December 5 at noon eastern our colleagues Fred Reish, partner in the firm’s Los Angeles office, and Bradford Campbell, Counsel in the firm’s Washington, DC office,  will give a free audiocast discussing developments in Washington that directly impact the retirement income industry.  Topics to be discussed during the audiocast include:

  • End of the year review of what happened, and what it means
  • Budget negotiations and impact on plans
  • DOL proposal for 408(b)(2) guide
  • DOL Target date fund disclosure final regulation
  • Update on the fiduciary advice proposal
  • Update on projections of retirement income
  • The latest developments in retirement plan litigation
  • Other recent developments

Date:  Thursday, December 5, 2013

Time:  Noon to 1:00 PM (ET)

How:   Click the above “RSVP Online” button to register for Inside the Beltway

 

Cheryl Orr to Speak at Drinker Biddle’s 2013 ERISA Insurance Symposium November 12 & 13, 2013

Cheryl Orr, partner in the San Francisco office, will be speaking on two panels at Drinker Biddle’s upcoming 2013 ERISA Insurance Symposium.  This complimentary symposium, which will be held in the firm’s Chicago office on November 12 & 13, 2013, is intended for in-house counsel and those with ERISA compliance responsibility.  It will feature panel discussions and breakout groups with a practical focus on developments and challenges for the recordkeeping divisions and affiliated broker-dealers of insurance companies operating in the qualified retirement plan market.  Topics to be discussed include:

  • Regulatory developments at the DOL and IRS
  • Retirement income guarantees
  • ERISA litigation and DOL investigations of service providers

Cheryl’s first panel, Technology Issues for Insurance Companies, will discuss data security issues, cyber risks, FINRA privacy concerns and the impact of the ADA on websites.  Her second panel, Odds and Ends: Breakout Discussion of Issues and Problems, will include discussion for Broker-Dealers/RIAs on several topics, including: (i) Conflicts of interest issues; (ii) Ongoing challenges for broker-dealers arising under previously-sold variable annuity contracts; (iii) Employee vs. independent contractor challenges and mitigating risk; and (iv) Pension factoring.

To register for the symposium please visit the registration page here.

 

Seventh Circuit Joins Ranks of Courts Holding that Internal Grievances about Employer Fiduciary Duty Breaches is Actionable Under ERISA Section 510

By: Mark E. Furlane

In Victor George v. Junior Achievement of Central Indiana Inc., decided September 24, 2012, the Seventh Circuit joined the Fifth and Ninth Circuits in holding that Section 510 of ERISA applies to unsolicited, informal grievances to employers.  The courts of appeals have disagreed about the scope of §510, and the Second, Third and Fourth Circuits have permitted Section 510 retaliation claims only where the person’s activities were made a part of formal proceedings or in response to an inquiry from employers (i.e., §510’s language does not protect employees who make “unsolicited complaints that are not made in the context of an inquiry or a formal proceeding.”).  Concluding that the language of Section 510 of ERISA was “ambiguous” and “a mess of unpunctuated conjunctions and prepositions,” the Seventh Circuit concluded that, “an employee’s grievance is within §510’s scope whether or not the employer solicited information.”  The court did, however, reiterate the high threshold to prevail on a Section 510 claim:  “It does ‘not mean that §510 covers trivial bellyaches—the statute requires the retaliation to be ‘because’ of a protected activity…. What’s more, the grievance must be a plausible one, though not necessarily one on which the employee is correct.”

Section 510 of ERISA prohibits retaliation “against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to this [Act].”  Remedies for violation of that section are limited to “injunctive and other ―appropriate equitable relief,” which would not include back pay typically, but could include an injunction and reinstatement.  Attorney’s fees are also possible.  In the case, Victor George was a former vice president of Junior Achievement who sued his former employer alleging he was terminated after complaining that money withheld from his pay was not being deposited into his retirement and health savings accounts.  He complained to management, outside accountants, the board, the Department of Labor (although he did not file a complaint).  The District Court dismissed the case on summary judgment, holding George’s informal complaints to his employer did not constitute an “inquiry” under ERISA.  The appellate court reversed holding that George’s informal proceedings do trigger the statute’s protections.