Compliance February 25, 2021

BBVA Compass Bancshares Loses Second Attempt to Get ERISA Suit Dismissed

Since there were no clear administrative remedies for fiduciary breaches spelled out in plan documents, a federal judge rejected the firm’s claim that the plaintiffs failed to exhaust them.

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A federal judge has denied BBVA Compass Bancshares’ motion to dismiss an Employee Retirement Income Security Act (ERISA) lawsuit accusing it of failing to monitor investments and remove imprudent ones in its 401(k) plan. This is the second time the court has rejected the firm’s motion to dismiss.

The original complaint accuses BBVA of mismanaging a $100 million money market fund “that was the investment equivalent of stuffing cash into a mattress” and failing to properly monitor investments and remove imprudent ones, “including high-cost mutual funds whose performance did not justify their increased costs.”

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BBVA argues that the court must dismiss the plaintiffs’ claims for failure to exhaust administrative remedies. However, Judge Madeline Hughes Haikala of the U.S. District Court for the Northern District of Alabama, found that the plaintiffs were never given clear instructions for how to exhaust their administrative remedies.

Looking at the plan’s summary plan description (SPD) and the plan document, Haikala found that neither contains an express provision concerning administrative procedures for claims for breach of fiduciary duty. “Because the SPD makes the language regarding ‘General Claim Procedure’ in the ‘Applying for Benefits’ section subordinate to an initial request for payment of benefits, a reasonable plan participant would not understand from the SPD that the claim procedure applies to a claim for breach of fiduciary duty in which no payment is sought,” she wrote in her opinion.

Haikala noted that the “Plan Administration” section of the SPD does not mention an administrative process for claims for breach of fiduciary duty. However, it does state that employees with questions should address them in writing to the plan administrator, and, as Haikala pointed out, that is what at least one plaintiff did.

Through her attorney, the plaintiff asked the plan administrator to tell her plainly what administrative procedure was available to her to pursue her concerns about the management of the plan and plan investments. She also asked for “all documents related to the administrative process.”

According to the court opinion, the plan administrator replied that her request for information was “unclear” and “overly broad” and did not appear to be within the scope of the information to which she was statutorily entitled. Haikala pointed out that the “ERISA Rights” section of the SPD states: “If a claim for benefits is denied or ignored, in whole or in part, suit may be filed in a state or federal court.”

Benefits February 24, 2021

Taking a Fresh Look at Health Benefits Will Be Important Throughout the Pandemic

Specific benefit offerings and increased communications are needed to help employees and to keep costs down.

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A review of the most recent open enrollment period found more employees purchased hospital indemnity and voluntary life insurance offerings, according to Benefitfocus, a benefits technology platform. The firm says the increased selection of these benefits is believed to be driven by the health impacts of COVID-19.

“With COVID-19 affecting millions of Americans, employers sought additional benefits to help employees confront the impact of a pandemic that often led to hospitalization,” the firm notes.

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The review also found more employers used multi-channel communications to reach employees, reflecting the rise in remote working and an increased acceptance of digital forms of communications.

Communications to employees are an important need highlighted in the 2021 DirectPath broker report—both communications to help employees understand their benefits and to help them reduce costs. Nearly all (95%) brokers indicated they are experiencing demand for benefits communications services, with 70% of brokers reporting that their clients are relying on them more than usual for benefits communications materials. Key to this trend has been increased demand in communications that get employees to take action—whether that means actively enrolling in their benefits or reading about a new regulation that will impact their coverage—versus simply providing educational content.

In a recent Voya survey, two-thirds of employees said they want their employer to help them understand their employee benefits throughout the year, not just at open enrollment.

DirectPath notes that as the COVID-19 pandemic shut down much of daily life across the globe, more than four in 10 Americans reported delaying or avoiding medical care because of concerns related to the coronavirus. “Now, as the world begins to reopen, it is more important than ever that employees are shopping for care to ensure they are receiving the best possible price for the necessary services—especially given that the savings can be in the thousands,” it says.

The DirectPath survey shows that 83% of brokers currently provide some sort of health care transparency and clinical advocacy services to help employers contain costs, and 23% of respondents reported they will be adding new advocacy and transparency-focused product and service offerings to meet this growing demand.

Two-thirds (67%) of respondents to a recent survey on health care literacy reported that they did not realize they could compare treatment or service costs before receiving care, according to DirectPath. “It is critical that brokers are bolstering these advocacy and transparency services by providing holistic benefits communications services,” it says.

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