Employee benefit plans are governed by a federal framework that imposes fiduciary duties and preempts most state law claims relating to them.
Fiduciary status attaches functionally to anyone exercising discretionary authority over plan management or assets, or giving investment advice for a fee — not only to those named in the document. Employers frequently are fiduciaries without having designated anyone.
Duties. Loyalty solely in the interest of participants; prudence measured by the conduct of a prudent person familiar with such matters; diversification; and adherence to plan documents insofar as consistent with the statute.
Prohibited transactions with parties in interest, subject to statutory and administrative exemptions.
Plan documents and summary descriptions must exist, be current, and be provided to participants. Inconsistency between them is a recurring source of litigation.
Claims procedures. Required for benefit denials, with prescribed timelines, a full and fair review, and disclosure of the basis. Exhaustion is generally required before suit, and the standard of judicial review is deferential where the plan confers discretion.
Preemption displaces state law claims relating to covered plans, which frequently converts a state law bad faith or contract claim into a benefits claim with far more limited remedies.
Health plan compliance adds continuation coverage, parity, transparency and reporting obligations.