DOL Holds Modest Sway With Courts on Benefits Issues

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

July 20 —The Obama administration's Labor Department has filed more than 100 amicus briefs attempting to influence how courts interpret the Employee Retirement Income Security Act.

How has the department fared in these cases?

Perhaps not as well as one might expect. Of the 77 cases that led to clear decisions on the questions raised by the DOL, the department has scored 44 victories and suffered 33 losses. That's a win rate of about 57 percent—only modestly better odds than a coin flip.

Although the department has filed ERISA-related briefs in all the federal circuit courts and several district and state courts, its win-loss record doesn't vary significantly by court. In most courts, the department has won about as many cases as it's lost.

Briefs by Court

The DOL's best record—7 wins and 5 losses—is in the Second Circuit, which is also where it has filed the most briefs. The department has been completely shut out in two circuits—the First Circuit and the D.C. Circuit—after filing a single brief in each court.

Despite this mixed record in the circuit courts, the department has had significantly more luck in the federal district courts. There, the department's 11 amicus briefs have resulted in seven victories.

Bloomberg BNA analyzed the DOL's ERISA-related amicus briefs filed in federal circuit courts, federal district courts and state courts throughout the Obama administration to get a sense of which issues the department has championed and how successful those efforts have been.

Help(?) From SCOTUS on Employer Stock

Throughout the Obama administration, the DOL's biggest preoccupation by far has been holding companies liable under ERISA for drops in company stock price that erode workers' retirement savings. The department has filed 20 amicus briefs on this topic during the Obama administration, 18 of which came during the president's first term.

Most of these briefs argued against the judge-made presumption of prudence that a number of courts once used to dismiss lawsuits against fiduciaries of employer stock plans. With the exception of the Sixth Circuit—which crafted a slightly more worker-friendly presumption—most courts were unpersuaded by the DOL's arguments.

The department's efforts appeared to be vindicated in 2014, when the U.S. Supreme Court struck down the judge-made presumption of prudence as unsupported by the text of ERISA.

Despite this apparent victory, workers have continued to face significant roadblocks when bringing ERISA lawsuits challenging drops in company stock price. Two recent briefs in cases against BP Plc. and Greatbanc Trust Co.—the department's first employer stock-focused briefs in nearly four years—suggest that the battle isn't over.

Help From SCOTUS, Part II

The DOL has seen a lot of success in cases involving ERISA's equitable remedies provision. In more than a dozen amicus briefs, the department argued that ERISA plan participants can win monetary awards in cases involving allegations of misconduct by plan fiduciaries.

The department had little success with this strategy at first, as many courts found ERISA's statutory text to foreclose monetary awards in these cases. The tide shifted dramatically in 2011, when the Supreme Court held in CIGNA Corp. v. Amara that monetary awards might be available to ERISA plan participants under certain equitable theories.

Since Amara, the DOL has filed 10 amicus briefs on the question of equitable relief and hasn't lost a single case.

Switching Strategies on Plan Fiduciaries

The DOL has made no secret of its desire to impose fiduciary status on those involved in managing workers' retirement savings. Before the Department finalized its controversial fiduciary rule in April, it used its amicus brief program to urge fiduciary status on 401(k) service providers like American United Life Insurance Co., John Hancock Life Insurance Co. and Principal Life Insurance Co.

Each of these efforts led to thorough defeats, with three appellate courts declining to impose fiduciary status on the service provider defendants.

These losses may have inspired the department to focus more attention on the regulatory process as a way to expand ERISA's fiduciary definition. In the two years prior to the fiduciary rule's release, the department sharply decreased the number of ERISA-related amicus briefs it filed. The DOL filed only five ERISA briefs in each of 2014 and 2015, compared to an average of 17 briefs in each of the preceding five years.


The interaction between the federal ERISA statute and various state laws has caught the department's interest on several occasions. Over the course of the Obama administration, the department filed 10 separate briefs on questions of ERISA preemption.

Surprisingly, none of the DOL's Obama-era amicus briefs have argued that a particular state law is preempted by the federal law.

Rather, the department has sought to save a number of laws from ERISA preemption, including state laws regulating health insurance and pharmaceutical benefit managers, laws governing sick and family leave for workers and laws facilitating government data collection efforts. In some cases, the challenged state law provided individuals with greater benefits or protections than those provided by ERISA.

The department has a modest winning record in these preemption cases, notching five wins and four losses with one appeal dropped. Notably, the department suffered a high-profile loss earlier this year, when the Supreme Court used ERISA's preemptive powers to throw a wrench into Vermont's efforts to create a database of medical claims data.

Mixed Results on Standing

Over the course of eight amicus briefs, the DOL has championed an expansive view of which individuals have standing to bring claims under ERISA.

Briefs by Subject Matter

The department has had no success convincing courts that pension plan participants have standing to sue over mismanagement regardless of how well their plan is funded. Both the Fourth and Eighth Circuits have denied standing to participants in well-funded pension plans over the department's objections, and other courts have come to similar conclusions.

Despite these losses, the DOL is continuing the fight. In June, the department filed a brief in the Second Circuit arguing that a recent Supreme Court decision under the Fair Credit Reporting Act strengthened the pension plan participants' claims to standing.

The department's standing arguments have been more successful in cases involving health insurance benefits. Both the Fifth and Ninth Circuits have followed the DOL's advice and allowed medical providers to bring ERISA claims against insurers even if the providers haven't sought payment from the insured patients in question.

Winning the Claims Procedure Battle

Some of the department's biggest successes have come in disputes over the proper handling of an individual's claim for benefits from an ERISA plan. The DOL has filed seven briefs seeking to hold plan administrators to high standards, and the department's only loss came when the Eighth Circuit declined to rehear a case in front of a full panel of judges.

One of the DOL's major victories came in the Ninth Circuit, which ruled in 2011 that an ERISA plan that doesn't have and follow reasonable claims procedures can't defeat a participant's lawsuit by alleging that the participant never exhausted the plan's internal remedies.

In another claims procedure case, the Fourth Circuit agreed with the DOL that a claims administrator abuses its discretion if it fails to obtain and consider readily-available information in the course of denying a claim for benefits.

Most recently, the department scored a partial win in a Second Circuit case involving Yale University's health plan.

Forum Selection Clauses

On four occasions, the DOL has taken up the issue of forum selection clauses, which are terms in an employee benefits plan that force participants to litigate their claims against the plan in the plan's preferred court. According to the DOL, these clauses are incompatible with ERISA's policy of allowing participants broad access to the federal courts.

Only one of those cases has led to a final judicial decision. In that case, the Sixth Circuit upheld an ERISA plan's forum selection clause over the department's objections. The Supreme Court declined to review that decision in January after the solicitor general pointed out that no other circuit court had ruled on forum selection clauses in ERISA plans.

Recently, the DOL urged the Eighth Circuit to part ways with the Sixth Circuit when it considers forum selection clauses in an upcoming case.

Whistleblower Protections

The department has had mixed results convincing courts that ERISA's whistleblower provision protects workers who make unsolicited complaints about benefits issues to management.

After notching losses in the Third and Sixth Circuits and a win in the Seventh Circuit, the DOL recently asked the Fourth Circuit to join its side of this debate in a pending case.

What Comes Next?

With six months left until Obama leaves office, the department's amicus brief program appears to be ramping up, rather than slowing down.

Briefs Over Time

In the first half of 2016, the DOL filed eight amicus briefs in ERISA cases—more than it filed in all of 2014 (5) and all of 2015 (5).

In these briefs, the department is revisiting a number of arguments that garnered little success in the past, like the unenforceability of forum selection clauses, the ability of participants in well-funded pensions to sue over mismanagement and the scope of ERISA's whistleblower protections.

To contact the reporter on this story: Jacklyn Wille in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

For More Information

Links to many of the department's benefits-related amicus briefs are available at the DOL website:

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