2022 was a busy year for federal benefits litigation. Here are seven landmark court rulings of 2022 for employers and benefits plan administrators.
Dobbs et al. v. Jackson Women’s Health Organization et al., Case Number 19-1392, U.S. Supreme Court
The U.S. Supreme Court issued a bombshell decision on June 24, 2022, that overturned its 1973 decision in Roe v. Wade and women’s constitutional right to abortion. Although the ruling was no surprise, it caused immediate disruption to health plan administration for many employers. As a result, some employers rushed to ensure that their employees still had access to abortion in states where abortion suddenly became – or shortly would become – illegal.
April Hughes et al. v. Northwestern University et al., Case Number 19-1401, U.S. Supreme Court and Laura Divane et al. v. Northwestern University et al., Case Number 18-2569, U.S. Court of Appeals for the Seventh Circuit
In another closely watched federal benefits case, the U.S. Supreme Court revived a class action in which former workers allege 403(b) plan mismanagement by Northwestern University. The Court ruled that the Seventh Circuit erred in dismissing the suit by reasoning better options in two retirement plan fund lineups precluded claims over worse ones among the options in each plan. To the dismay of benefits attorneys, the Court stopped short of clearly explaining the pleading standard applicable to motions to dismiss in ERISA class actions.
Yosaun Smith v. CommonSpirit Health et al., Case Number 21-5964, U.S. Court of Appeals for the Sixth Circuit
The Sixth Circuit issued a June 2022 opinion applying Hughes that acted as a bellwether decision for later appellate decisions. In its decision, the court affirmed the district court’s dismissal of a proposed class action suit alleging mismanagement of 401(k) plans. In addition, the court found that the plan administrator did not breach its fiduciary duty under ERISA to act prudently by offering actively managed mutual funds with higher fees and lower returns as opposed to passively managed funds. Since the publication of the Sixth Circuit’s decision, the Seventh and Eighth Circuit Courts have adopted similar reasoning in considering suits involving ERISA fee allegations.
Martin Walsh v. Alight Solutions LLC, Case Number 21-3290, U.S. Court of Appeals for the Seventh Circuit
A three-judge panel of the Seventh Circuit affirmed an Illinois federal district court’s decision compelling a company to comply with a subpoena from the U.S. Department of Labor (DOL). The subpoena related to the DOL’s investigation into whether cybersecurity breaches at the company led to ERISA violations. The opinion constitutes a hallmark decision for benefits attorneys to understand the broad range of DOL’s subpoena power. The decision serves as a reminder to companies to follow DOL guidance on cybersecurity and review agreements with service providers to ensure that they follow all relevant guidance.
Danielle Forman et al. v. Trihealth Inc. et al., Case Number 21-3977, U.S. Court of Appeals for the Sixth Circuit
The Sixth Circuit overturned a decision of a lower court dismissing a class action against Trihealth Inc. that former employees had filed alleging mismanagement of its 401(k) plan. Although the court affirmed the dismissal of most claims, it allowed a claim about offering more expensive share classes of mutual funds in place of cheaper institutional funds to proceed. The three-judge panel based its ruling on its previous decision in CommonSpirit Health.
Andrew Albert v. Oshkosh Corp. et al., Case Number 21-2789, U.S. Court of Appeals for the Seventh Circuit
In August 2022, the Seventh Circuit affirmed the dismissal of a 401(k) excessive fee lawsuit against a subsidiary of Oshkosh Corp. The court ruled that the plaintiffs’ allegation that they were paying an average annual record-keeping fee of $87 per participant instead of an average of $40 per participant was insufficient to sustain the claim.
The Religious Sisters of Mercy et al. v. Xavier Becerra et al., Case Number 21-1890, U.S. Court of Appeals for the Eighth Circuit
A three-judge panel of the Eighth Circuit upheld an injunction granted by a North Dakota federal court concerning the intersection between the protection of religious rights and government nondiscrimination policies. The injunction at issue allows a group of Catholic healthcare providers and employers to permanently block a federal government agency rule that requires them to provide gender-confirmation surgery. The court ruled that the nondiscrimination policy of the U.S. Department of Health and Human Services (HHS) and the U.S. Equal Employment Opportunity Commission (EEOC) threatened the rights of religious healthcare providers and employers under the Religious Freedom Restoration Act (RFRA).
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