At one time, employers referred to an employee’s fringe benefits as their ‘ hidden paycheck.’ This meant that up to 32% of an employee’s compensation is paid out in the form of benefits. Healthcare coverage, retirement matching funds, as well as life and disability insurance are critical components of an employee’s financial security. Good employee benefit plans have three pillars of financial security: immediate, short-term, and long-term. These pillars all play a role in an employee’s present and future financial wellbeing.

 

The Pillars

 

Your Immediate Financial Security

The most important aspect of an employee’s immediate financial security is having a good healthcare plan. Since the passing of the Affordable Care Act, there are now “essential health benefits” that protect an employee and their dependents from any surprise charges. Under this act, health plans provide pre-existing condition coverage. Without proper healthcare coverage, expensive medical treatments can cause real financial harm, sometimes even bankruptcy. Having the right health plan is crucial for a family’s quality of life. 

 

Your Short-Term Financial Security

A good employee benefits plan should have a disability and life insurance plan with reputable insurance companies. The financial protection of your income and assets is critically important especially if you have dependents. If something unexpected happens, the ability to earn an income could be lost, and there should be a disability contract to help replace that income. If there is an untimely death, then an employee’s family should be protected by having adequate levels of life insurance coverage. Having a good disability and life insurance can help when the unexpected occurs.

 

Your Long-Term Financial Security

This is the third pillar of a benefit plan that should help you plan for the future when you no longer want to work (or not work full-time). A good benefit plan makes it easy for you to save for retirement through a 401(k) plan or other savings vehicle, by building up your net worth paycheck after paycheck. A good plan should have solid investment offerings, low fees, and be properly managed.

 

Because the cost of employee benefits does not typically show up in an employee’s W-2, it is easy to forget that they are a significant part of the overall compensation package. They should be taken seriously when an employee looks at his or her overall compensation.

 

Every good benefits plan should consist of these three pillars. These pillars should provide for immediate, short-term, and long-term financial security. If your benefit plan is not performing in one of these key aspects, there is likely a problem. If you have concerns or are denied benefits for which you are entitled, call us, we are here to help

 

Occasionally, someone will ask, ”why is there a mountaintop in your logo,” or “where did the trademark ‘Conquer Tomorrow’ come from?” The spirit behind our brand comes from a desire to help our clients conquer their legal challenges. In helping our clients reach their goals, we take some inspiration from the mountains.  

 

Looking to the mountains for inspiration

The mountains provide a kind of wisdom that comes through reflecting upon the unarguable laws of nature. For years, I have been fortunate enough to escape to the mountains for a little perspective and reflection. When you climb in the mountains, you spend a lot of time thinking. You think of how to navigate and overcome obstacles. Mountain climbing is sometimes called a ‘thinking person’s sport’ because it involves such intense concentration.

 

So many lessons of the mountains are transferable to a litigation setting.  A successful summit requires plenty of advanced training, just as a case requires significant preparation. Our clients and firm share a common goal, to be successful in litigation, which when you look at it, is similar to obstacles you overcome when you summit a mountain. as in the mountains, in litigation, nothing ever goes exactly the way you hope. Obstacles will appear, some you expect, and some you do not. Yet, you have to keep climbing if you want to reach the top. The same is true in litigation, you just have to keep pressing forward. 

 

Called to climb

My first trip to the summit was in East Africa to the top of Mount Kilimanjaro. ‘Kili’ is called the ‘Roof of Africa’ because it is the highest mountain on the continent and the highest freestanding mountain in the world. It was a great introduction to the sport. I enjoyed being around the local guides and learned a great deal from them about professionalism. Mountain guides refer to visiting climbers as “clients” and treat them with the utmost care. In addition to other lessons from mountain climbing, I learned just as much by watching how professional mountain guides care for their climbers. I try to emulate that same level of care when it comes to working with my clients. 

 

Mountain climbing takes people to places around the world and brings them together with many cultures. Years ago, I had the privilege of traveling to Nepal to climb in the Khumbu region, home to Mount Everest. Like so many, I went to Nepal to see its many mountains, but I returned home mostly remembering all the wonderful people I met along the way. I spent a lot of time with my Sherpa guides where I was invited into their homes and met their families. When an opportunity to join a charity climb to raise funds to support Nepali schools presented itself, I wanted our law firm to be a part of this effort. 

 

Becoming part of our mission

In August of this year, I participated in a charity climb to the top of Mount Baker in Washington state. Our law firm was a sponsor of the Alpine Ascents Foundation’s Third Annual Nepali Charity Climb. The climb to the top of Mount Baker in the Northern Cascades was led by an all-Sherpa guide team headed by Lakpa Rita Sherpa. He is an acclaimed veteran of Mount Everest. He summited 15 times, along with two other accomplished Sherpa climbers, Dawa Yangzum Sherpa and Jangbu Sherpa, each having summitted Mount Everest several times.

 

The charity climb raised tens of thousands of dollars to fund the education of Nepalese school children, where the law does not require attendance in public education. The entire group reached the summit after a 12-hour climbing day under challenging weather conditions. The opportunity to climb with an elite team of Sherpa guides was a remarkable experience. More importantly, reflecting on the educational needs of a country that has given us so much was even more remarkable.

 

At J.J. Conway Law, we continue to incorporate the wisdom we gain from mountain climbing into the work we do for our clients. Whether it be unexpected challenges or taking time to reflect, the lessons we learn are applicable.

 

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.