With such intense focus on a single communicable illness, it is easy to forget that we, as human beings, suffer from other illnesses.  Some medical journals are concerned that rates of serious medical conditions may rise as many would-be patients did not seek preventative care during much of 2020. And the trend continues.(https://healthcostinstitute.org/hcci-research/the-impact-of-covid-19-on-the-use-of-preventive-health-care.)

“Work from Home” will not affect occupational disability situations.  Obviously, people will still have to confront illness or injury even if they are working from home.  The risk for injury may be reduced somewhat since there is less travel, driving, and going in and out of public places, but illness still shows up.  Just think of how many people you may know who have passed away or become sick from something other than Covid-19 over these past months.

“Work from Home” may affect the manner in which insurers evaluate “Essential Duties” or “Main Duties” but not right now. Group disability plans and insurance contracts are often provided without comprehensive underwriting as in the case of individual disability insurance policies.  When an individual applies for disability insurance coverage, the insuring company typically requires blood tests, electrocardiograms, and body-mass index (BMI) measurements. The company reviews medical records, tax returns, and then issues the contract for a premium.  Group disability contracts, by contrast, typically insure occupational titles, not specific people.

The question arises now that people can work from home, will insurers claim that ill or injured workers are able to perform their jobs more easily with at-home accommodations. For the immediate future, insurers may be on the wrong end of this one. Since group insurance contracts often insist that a job must be evaluated on how it is performed – nationally as opposed to specifically – the impact of WFH may not be available as a defense to denying or terminating a disability claim.

The “Essential Duties” or “Substantial Duties” clauses of those contracts have not yet been updated to look at those jobs as they are being performed at home versus a standard work environment.  Furthermore, the guides for those jobs – like the Dictionary of Occupational Titles or ONET – have not yet been updated to account for this WFH period in our work history.  For a while, the insured stands to benefit.

Bottom Line: Work from Home (WFH) should not aid insurers in the short-term.  Group contracts may be re-thought if WFH is a trend that continues and as the work requirements for occupational titles is updated.

In Thole v. U.S. Bank N.A., No. 17-1712, 2020 U.S. LEXIS 3030 (June 1, 2020), the U.S. Supreme Court ruled, 5-4, that defined pension plan participants lacked constitutional standing to sue over a $750 million loss to their plan because they had not yet missed a benefit payment. Justice Kavanaugh, writing for the majority, brought a new approach.  He analyzed the dispute as if it were a simple contractual matter involving an un-breached contract– i.e., no damages at present, no case at present. This might strike some ERISA practitioners as unusual since the last three decades of ERISA jurisprudence has focused on analyzing fiduciary actions under the law of equity. Under an equitable analysis, a fiduciary would, arguably, have a duty to protect a trust fund, like a pension fund, from preventable erosion.

Justice Clarence Thomas’ Concurrence was, perhaps, the most honest assessment of the Court’s ruling where he wrote, effectively, ‘did we really want to spend so much time in the law of equity?’ Thomas has been on the Court for 30 years – about two-thirds of ERISA’s statutory existence.

Now the Court’s newest members, Justices Kavanaugh and Gorsuch, are giving ERISA a look through new legal eyes. Justice Kavanaugh wrote that a pension shortfall, alleged to be the result of fiduciary mismanagement, was not an actual case because:

“Win or lose, they would still receive the exact same monthly benefits they are already entitled to receive.”

Given the Court’s broad ruling, it may be that pension funds have to be squandered and lost before there is a “case or controversy” under Article III of the U.S. Constitution.  The opinion details several of ERISA’s regulatory protections and discusses the backup insurance provided by the Pension Benefit Guaranty Company as a potential safety net to retirees.  (Although it should be noted that the PBGC has announced it will be insolvent by 2025).

In the dissent, Justice Sonia Sotomayor said:

“The Court holds that the Constitution prevents millions of pensioners from enforcing their rights to prudent and loyal management of their retirement trusts. Indeed, the Court determines that pensioners may not bring a federal lawsuit to stop or cure retirement-plan mismanagement until their pensions are on the verge of default. This conclusion conflicts with common sense and longstanding precedent.”

One fact that was obscured from the Court’s majority opinion, that figured prominently in the lower court decisions, was the important and operative fact that U.S. Bank transferred money into the plan to effectively overfund it during the litigation.  U.S. Bank’s self-corrective measure seemed persuasive to the judges below.  The move, which a healthy plan sponsor can pull off, may be more challenging for struggling plans. For those plans, the pensions may erode, and there is seemingly little that can be done under ERISA to remedy this after Thole.  The Court’s holding of the case is considerably broader than what was happening factually in Thole.

As the Court’s majority continues to emphasize texts, not the history behind the texts, it was not thinking about the Studebaker Automobile Company bankruptcy or other abuses that led to ERISA’s passage.  (ERISA took nearly ten years to pass after Studebaker went bankrupt and its workers lost everything in their retirement).  The Court, at least for the moment, seems content to let the federal government mop up any pension plan problems through its taxpayer supported pension insurance program.

On February 26, 2020, the U.S. Supreme Court issued its unanimous decision in Intel Corporation Investment Policy Committee v. Sulyma, Case No. 18-1116. https://www.supremecourt.gov/opinions/19pdf/18-1116_h3cj.pdf.  The decision resolves a split in the Circuits concerning the appropriate date by which to measure the shortened statute of limitations for breach of fiduciary duty claims.  The triggering event for the three-year statute is based on the ERISA participant’s “actual knowledge.” The Court held that there is a proof requirement when a plan or fiduciary seeks to invoke a claim of “actual knowledge” under 29 U.S.C. §1113(2).  Previously, courts around the United States (including the Sixth Circuit) had applied a quasi-constructive notice standard.  Under that low threshold, if there was proof of sufficient disclosure, the ERISA participant could be held to the shortened period of limitations.  No longer.

In Sulyma, the Court held:

This is the reason for ERISA’s requirements that disclosures be written for a lay audience. See, e.g., 29 U. S. C. §1022(a). Once plan administrators satisfy their obligations to impart knowledge, petitioners say, §1113(2)’s knowledge requirement is satisfied too. But that is simply not what §1113(2) says. Unlike other ERISA limitations periods—which also form §1113(2)’s context—§1113(2) begins only when a plaintiff actually is aware of the relevant facts, not when he should be. And a given plaintiff will not necessarily be aware of all facts disclosed to him; even a reasonably diligent plaintiff would not know those facts immediately upon receiving the disclosure.

This is a significant development in ERISA litigation. The decision also signals that the Supreme Court is taking a strict construction approach to the statute.