May 10, 2021 Issue: Spring 2021

As We Go to E-Press

Since the Winter 2021 edition of the newsletter, there have been a number of other developments in the wonderful world of benefits that the editors believe are worth highlighting. While these developments are certainly worthy of their own spotlight articles, the publication timeline for the newsletter makes it difficult to publish articles on topics that are just hitting the press. However, because we believe that the issues below are likely to have a lasting impact, you should not be surprised to see a more thorough article analysis on these topics in a future edition of the newsletter.

If you have been to the newsletter’s website recently, you may have seen our new Mission Statement. The editors and the Section Co-Chairs felt that it was important to develop a Mission Statement to provide transparency and so that the EBC membership understood the goals of the newsletter. As the Mission Statement provides, the purpose of the newsletter is to publish articles of professional interest to the membership of the EBC, which include practitioners on all sides of the spectrum. While the editors do their best to stay apprised of material developments, employee benefits covers an incredibly broad array of topics. As such, we acknowledge that there may be topics of interest to you that are not being adequately covered. This is your newsletter, and we want to make sure we are publishing anything that interests you. So please let us know if there are topics of interest that you would like us to cover. Please also let us know if you (or someone you know) would be interested in writing an article for an upcoming edition of the newsletter. It sounds cliché, but the success of this newsletter absolutely depends on EBC members who are willing to contribute their time, effort and perspectives.

Without further ado, here are some interesting new developments in the benefits space since the last edition of the newsletter.

  • Choice-of-Law Provisions: In April 2021, a plan participant renewed his request that the U.S. Supreme Court rule on the validity of choice-of-law provisions in ERISA benefit plans because he argues that there is a “clear multi-circuit split” on the issue. The participant would like the Supreme Court to determine when a choice-of-law provision can override a state law that would otherwise apply. He argues that the Tenth Circuit’s decision to enforce the plan’s choice-of-law provision and apply insurer-friendly Pennsylvania law rather than Colorado law created a circuit split with the Sixth and Ninth Circuits. It remains to be seen whether the Supreme Court will grant the petition for certiorari or let the Tenth Circuit’s decision stand. Regardless, this is an issue that will likely be addressed by the Supreme Court at some point. See Ellis v. Liberty Life Assurance Co. of Boston, Case No. 20-953 (reply brief in support of petition for certiorari filed April 8, 2021).
  • Forum Selection Clauses: In April 2021, the Ninth Circuit became the third Court of Appeals to enforce a forum selection clause in an ERISA benefits plan (following the Sixth and Seventh Circuits). The plaintiff brought a putative class action against Wells Fargo and other defendants alleging breaches of fiduciary duties with respect to the administration of Wells Fargo’s 401(k) plan. Over the plaintiff’s objection, the district court granted Well Fargo’s motion to transfer the case from the Northern District of California to the District of Minnesota pursuant to the plan’s forum-selection clause, which required all plan-related disputes to be brought in that district. The plaintiff petitioned the Ninth Circuit for a writ of mandamus to overturn the transfer order, which rejected her request. The Ninth Circuit explained that forum-selection clauses are presumptively valid and that ERISA does not preclude benefit plans and its participants from agreeing on a forum for litigating their disputes. The Court’s decision was also noteworthy because it re-affirmed the Ninth Circuit’s prior decision upholding the arbitrability of ERISA disputes in Dorman v. Schwab by emphasizing that, “as this court’s decision in Dorman v. Charles Schwab Corp., 934 F.3d 1107, 1109 (9th Cir. 2019), makes clear, a federal court is not even required. Wells Fargo might have foreclosed access to any federal court through an arbitration clause.” See Becker v. Wells Fargo & Co., Case No. 20-72805 (decided April 1, 2021).
  • DOL Fiduciary Rule Guidance: In April 2021, the U.S. Department of Labor (“DOL”) issued separate guidance for investors and advisers regarding the late Trump-era prohibited transaction exemption for investment advice fiduciaries with respect to employee benefit plans and individual retirement accounts (PTE 2020-02). The DOL adopted PTE 2020-02 on December 18, 2020, and it took effect on February 16, 2021. While the DOL guidance states that the DOL intends to revisit PTE 2020-02 and other prohibited transaction exemptions relating to advice, it emphasized that the “fundamental investor protections” in PTE 2020-02 “should not be delayed while the Department considers additional protections or clarifications.” Consistent with that approach, the guidance advises investors to ask their advisers targeted questions before receiving any investment advice, including whether the adviser is acting as a fiduciary, when the adviser will put the answer in writing, and whether the adviser and their firm has any conflicts of interest and is complying with PTE 2020-02.
  • MHPAEA Amendments: In December 2020, Congress amended the Mental Health Parity and Addiction Equity Act of 2008 in a number of ways, including an express requirement that where group health plans and health insurance issuers impose nonquantitative treatment limitations (“NQTLs”) on mental health and substance use disorder benefits, they perform and document comparative analyses of the design and application of those NQTLs. On April 2, 2021, the Departments of Labor, Health and Human Services, and the Treasury (the “Departments”) jointly issued a set of FAQs to help stakeholders understand these amendments, addressing questions such as when plans and issuers must make their analyses available, who is entitled to those analyses, the role of the Departments in reviewing the analyses, and the information that must be made available to the Departments in connection with that review.
  • Preemption: In March 2021, the Ninth Circuit upheld a City of Seattle ordinance against a preemption challenge from the ERISA Industry Committee (ERIC). The ordinance was designed to improve low-wage hotel employees’ access to health care by requiring large hotel employers to make fixed monthly expenditures for each employee. ERIC alleged that ERISA preempted the ordinance through both a “reference to” and “connection with” ERISA plans. The district court granted the City’s motion to dismiss, likening the ordinance to the San Francisco ordinance upheld by the Ninth Circuit in Golden Gate Rest. Ass’n v. City & Cty. of San Francisco, 546 F.3d 639 (9th Cir. 2008). On appeal, the Ninth Circuit affirmed dismissal and held that the City of Seattle ordinance was not meaningfully distinguishable from the ordinance in Golden Gate. See ERIC v. City of Seattle, 840 F. App’x 248 (9th Cir. 2021). We expect to see more preemption challenges in the future as state and local governments attempt to fill gaps in health care and retirement benefits through legislation.