Compliance April 1, 2025

District Courts Issue Split Rulings on PRT Lawsuits

A lawsuit against Lockheed Martin over pension risk transfers it conducted with Athene will continue, whereas a similar lawsuit against Alcoa Corp. was dismissed.

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District courts issued contrasting opinions on lawsuits against companies for conducting pension risk transfers with insurance company Athene Holding Ltd. or its subsidiaries.

Lockheed Martin Corp.’s motion to dismiss a lawsuit related to two PRTs it conducted with Athene, in 2021 and 2022, was denied by the U.S. District Court for the District of Maryland on Friday. Meanwhile, a lawsuit against Alcoa Corp., also regarding PRTs it conducted with Athene, was dismissed by the U.S. District Court for the District of Columbia on Friday.

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Schlichter Bogard LLP represents the plaintiffs in both cases.

Lockheed Martin

Lockheed Martin transferred its pension liabilities to Athene Annuity and Life Co. and Athene Annuity & Life Assurance Co. of New York on two occasions: on August 3, 2021, when the company transferred $4.9 billion in pension obligations and plan assets for 18,000 beneficiaries, and again on June 27, 2022, when it transferred an additional $4.3 billion in obligations for 13,600 beneficiaries.

The plaintiffs in Konya et al. v. Lockheed Martin, participants in the company’s plan, alleged that Lockheed retained Athene as the annuity provider “in violation of their strict fiduciary responsibilities … [because] Athene was not the safest available option.”

Several of the PRT lawsuits involving Athene, including the one against Alcoa Corp., accuse the insurer of investing in “lower-quality, higher-risk assets” and having “questionable creditworthiness,” posing a risk to retirees. Athene is not named in any of the lawsuits.

In a motion to dismiss, Lockheed argued that the plaintiffs lacked Article III standing and could not point to any concrete, imminent injury that they have suffered as a result of the PRTs. Lockheed also characterized the plaintiffs’ harm as an “inchoate fear” unsupported by adequate facts, but U.S. District Judge Brendan Hurson wrote that the plaintiffs pointed to the collapse of Executive Life Insurance Co. in the early 1990s, which shows the “very real possibility” that Athene’s allegedly high-risk insurance practices pose an imminent harm to retirees.

“The court believes that at this early stage, plaintiffs have adequately alleged facts, if only barely so, sufficient to conclude there is ‘a substantially increased risk’ that Athene will fail and plaintiffs will suffer harm because of it,” Hurson’s opinion stated.

The plaintiffs requested relief by disgorging the sums involved in the “improper transactions,” which the court found would serve their ability to receive their vested retirement benefits. As a result, the court found that the plaintiffs showed sufficient injury-in-fact to establish standing.

The court also noted that while it is rejecting Lockheed’s injury-related challenge at this early stage, subject matter jurisdiction may be challenged “at any time.”

Alcoa Corp. Case

In Camire et al. v. Alcoa USA Corp., et al., the U.S. District Court for the District of Columbia found that the plaintiffs’ monthly annuity payments have not been affected by the PRT transactions with Athene, and they did not suffer actual harm that would confer standing.

“Plaintiffs cannot escape the requirement to show that they have suffered an actual harm by framing their claim as a violation of contractual rights; they must still show that the transfer of their contractual rights concretely harmed them in some way,” U.S. District Judge Loren Alikhan’s opinion stated.

A spokesperson from Athene commented, “As we have consistently maintained, these are frivolous claims without merit, driven by predatory trial lawyers targeting the pension risk transfer industry as a whole. We believe that the court in Alcoa got it right – that the plaintiffs’ claims have no merit. A judge in a separate decision repeatedly called into question whether the plaintiffs would ultimately succeed on their claims. Independent insurance experts recognize the facts: Athene is a safe and secure annuity provider with a fortress balance sheet with $31 billion of regulatory capital and strong credit ratings.”

Lockheed Martin and Alcoa Corp. did not immediately respond to requests for comment.

Earlier this year, the ERISA Industry Committee, American Benefits Council and the Committee on Investment of Employee Benefit Assets Inc. filed an amicus brief, encouraging the dismissal of a similar lawsuit against Bristol-Myers Squibb Co. over a PRT it conducted in 2019 with Athene.

The industry groups argued that the plaintiffs lack standing and the continuation of the case threatens a “surge in frivolous litigation.”

The case against Bristol-Myers Squibb is still ongoing, and many industry groups continue to file amicus briefs in support of the company’s motion to dismiss.

Benefits April 1, 2025

Removal of ACA Tax Credits May Cause Millions to Lose Health Coverage

Without these tax credits, the Urban Institute estimated that enrollment in ACA policies would decline by more than 7 million.

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Since Congress approved tax credits for people buying health insurance on the Affordable Care Act marketplaces in 2021, enrollment in ACA policies has doubled to a record 24 million and individuals’ monthly premiums have dropped by hundreds of dollars. While the Inflation Reduction Act of 2022 extended the subsidies through the end of this year, the ACA tax credits may not be renewed under some budget proposals being considered in the House of Representatives, according to the Center for Retirement Research at Boston College.

With rising costs of health insurance, the threat of millions losing health coverage due to the expiration of ACA tax credits highlights the importance of employer-sponsored health benefits and issues that can add to employees’ and retirees’ financial stress.

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In an attempt to reform the ACA, the administration of President Donald Trump on March 10, amending regulations governing insurance coverage standards subject to the ACA. Public comments on the proposed rule will be accepted for consideration until April 11.

The first Trump administration tried to repeal the ACA in 2017, but no repeal was approved by Congress. It is unclear if Trump will try to repeal it again.

The proposed rule contains a variety of changes, including allowing insurers to deny coverage to individuals who have past-due premiums for prior coverage, thereby allowing insurers to consider past-due premium amounts as the initial premium for new coverage.

The proposed rule also eliminates the ability of an individual to certify their income when applying premium tax credits and cost-sharing reductions, instead requiring income determinations to be reconciled with tax filings or other information, which could create delays and administrative barriers.

Without these tax credits, the Urban Institute estimated that enrollment in ACA policies would decline by more than 7 million and that 4 million of those people would not be able to find an affordable alternative source of insurance.

Because insurers receive these tax credits directly from the federal government, they pass them on to consumers in the form of lower premiums. However, this does not impact deductibles, so policyholders are still often paying high out-of-pocket costs for physician visits, tests, surgeries and treatments, according to the CRR.

The Urban Institute found that both lower-income workers and middle-class workers would suffer from the removal of the tax credits. If the credits expire at the end of this year, premiums would increase $1,500 per month on average for a 60-year-old couple earning $85,000, according to an estimate by the health care nonprofit KFF. A large share of the people receiving credits are self-employed workers, small business owners and people older than 50 but still too young for Medicare.

According to the CRR, Black and Hispanic Americans disproportionately rely on the ACA tax credits and would be adversely affected if the credits expire.

In addition, if young adults drop their coverage because they feel the cost is too high, it could possibly destabilize a market that benefits from a higher enrollment rate among younger, heathier people.

“But here’s the rub about the tax credits: they are a more than $10 billion budget item,” wrote Kimberly Blanton at the CRR. “The question facing Congress is whether they’re willing to allow a sharp rise in millions of constituents’ monthly insurance premiums.”

Many Republicans in Congress are also considering, as part of their federal budget legislation, cuts to Medicaid, which currently covers more than 72 million people.

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