Firestone deference – Many ERISA plans use plan document language stipulating the plan administrator has the authority to interpret plan terms and resolve any ambiguities. The United States Supreme Court has held that when a plan contains this language, courts must show deference to the administrators and review their decisions under an arbitrary and capricious standard…………….
How to Defend an ERISA Lawsuit
MyHealthGuide Source: Hall Benefits Law, LLC, 11/5/2018
Plan administrators who are sued may be relieved to learn there are ways to defend an ERISA lawsuit.
Motions to Dismiss or for Summary Judgment
A defendant typically begins by assessing the claims contained in the lawsuit, then begins the process of defending against those claims. One of the earliest actions taken may be the filing of a motion to dismiss. Some of the reasons a motion to dismiss might be granted include:
- Administrative Exhaustion. ERISA does not specifically require that a plaintiff exhaust all administrative remedies before filing suit. However, most courts seem to prefer that plaintiffs proceed through all administrative channels before filing suit.
- Lack of Standing. In this instance, “standing” refers to a plaintiff’s reasons for filing suit. Typically, a plaintiff must have been harmed in some way. In addition, there must be a connection between the injury and the defendant. Federal and state laws vary on standing, so a lawsuit filed in state court likely will be determined by state law.
- Statute of Limitations. A plaintiff may have a limited time in which to file suit. ERISA itself does not impose a statute of limitations for ERISA claims, but contracts related to benefits may contain statute of limitations language.
- Improper Venue – Plaintiffs occasionally engage in forum shopping, which means choosing the most favorable jurisdiction in which to file their lawsuit. Defendants may claim a lawsuit is invalid because it was filed in the wrong court.
- Preemption. ERISA generally trumps state laws relating to most employee benefit plans. Defendants may remove litigation from state courts to a federal court, where the case will proceed. Defendant may then seek to have the case dismissed with a motion for summary judgment.
Resist Class Certification
Benefit plans typically affect more than one employee. Litigation based on ERISA, then, may become a class action lawsuit. Class actions can be more difficult and expensive to defend. Fortunately, it is possible to resist class certification using Rule 23(b)(3). Among other things, class certification may be denied when there are no questions of law or fact common to the class.
Pre-Emptive Action
Some of the defenses to an ERISA lawsuit start well before the complaint is filed. It is crucial to make sure your plan documents include language about forum selection, fiduciary duties, and Firestone deference. Once your plan is set up, it is important to maintain clear documentation of your decision-making process.
About Hall Benefits
At Hall Benefits Law, we work extensively with plan administrators and sponsors to both avoid and defend against ERISA claims—including fiduciary, ESOP, health and welfare benefit and retirement plan claims. From our home office in Georgia, we assist clients throughout the United States, from New York to California. Call 678-439-6236 and visit HallBenefits.com .
