Fiduciary Status as an Employer's Shield: The Perversity of Erisa Fiduciary Law

Abstract

This article argues that current jurisprudence enables employers to rely on four spheres of fiduciary obligation to protect themselves from liability for benefit plan actions. It discusses those four spheres and shows how they intersect. The article also draws a distinction, not explicitly drawn before by courts or commentators, between asset administration and benefits administration. The distinction has currency in understanding the unexpected operation of ERISA's fiduciary regime in benefits administration and the way it contrasts with the generally effective nature of the fiduciary regime in asset administration.

The article also analyzes how and why the existing jurisprudence provides no significant incentive for appropriate decision-making by those responsible for benefits administration. It then offers a new, statutory-based argument that would increase the liability of benefit plan actors who engage in opportunistic decision-making. A thorough and careful review of the legislative history supports my interpretation of ambiguous statutory language. And, the article demonstrates that adoption of its suggested interpretation would discourage opportunistic decision-making and increase the quality of ex ante benefit determinations.