Avoiding Unanticipated Risks as a Fiduciary for ERISA-Regulated Plans

Sometimes an overview of developing case law can reveal commercial risks that may not be apparent from the individual cases themselves. Life and health insurers may find such risks in the case law concerning fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA).

The U.S. Courts of Appeals, for example, have been deferential to insurers that both fund employee welfare plans regulated by ERISA and assume responsibility as fiduciaries in determining whether claims against such plans are valid. Where the courts of appeals have considered what standard of review the district courts should apply when asked to consider a decision to deny benefits made by an insurer in this circumstance, they have held that a deferential standard should be applied, even where they see a conflict of interest between the insurer’s self-interest and its duty to the plan beneficiary.¹