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Just a day after Ed Asner’s death at 91-years-old, it seems a lawsuit he lead against the SAG-AFTRA Health Fund will survive a motion to dismiss filed by the plan and its trustees.
The suit was filed in December by a group of actors including Asner who claimed the Health Fund and its board of trustees breached their fiduciary duty and violated the Employee Retirement Income Security Act (ERISA). The suit said “draconian” changes were made amid the COVID-19 pandemic causing premiums to skyrocket and medical coverage to stripped from elderly guild members. They allege this all happened because the 2017 merger of the SAG and AFTRA health plans was poorly executed and union negotiators were kept in the dark about the plan’s dire financial situation and estimate at least 10 percent of the 33,000 participants, and nine percent of the covered dependents, will lose coverage — including more than 8,000 seniors.
The health fund in February filed a motion to dismiss the complaint, arguing the plan and its trustees act as a settlor, not a fiduciary, and it had no responsibility under ERISA to make financial disclosures to union negotiators.
U.S. District Judge Christina A. Snyder on Monday morning heard arguments on the motion via Zoom after issuing a tentative ruling to the parties that would allow the claims to proceed.
SAG-AFTRA Health Plan attorney Myron Rumeld began by addressing the unfortunate timing of the hearing, “I think we all regret this argument ended up taking place the day after Mr. Asner’s passing.”
Rumeld continued to emphasize the plan’s position that it acted as a settlor in decisions related to the merger. He argued, “If the decision itself is not a fiduciary decision there need not be an investigation before a decision.”
The plaintiffs’ attorney Robert J. Kriner Jr. argued the fact that there was a merger involved doesn’t divorce the trustees from their administrative duties. “What trustees did in this case was plan administration,” he said, arguing it doesn’t track that they would be “immune from fiduciary duty” when the stated goal was to “strengthen the plan and ensure benefits.”
Snyder said the plaintiffs have sufficiently alleged claims for relief and it’s premature to rule on the settlor-fiduciary issue at the motion to dismiss stage. “The nuance between a settlor fictional and a fiduciary function is fact-driven,” she said. “The time to bring it is on a motion for summary judgment when we have a more developed record.”
In her tentative ruling, which was obtained by The Hollywood Reporter, Snyder notes, “Although decisions concerning plan design are normally ‘settlor’ in nature, and therefore not subject to ERISA fiduciary duties, the implementation of decisions concerning plan design can be subject to ERISA fiduciary duty.” She also explains that the U.S. Supreme Court has held “materially misleading” representations and employer-employee communications about a plan can trigger fiduciary responsibilities.
She also finds, “[T]he gravamen of plaintiffs’ claims is not the decision to amend the plan, but the allegedly inadequate pre-merger evaluation process, and the defendants’ allegedly materially misleading communications that pre-date and post-date the Health Plans merger.”
Snyder indicated she’ll consider the arguments before converting her tentative decision into a final one, but it seems she’s unlikely to be swayed too far.
“Generally, I would not expect a big change in the outcome,” Snyder said. She also added, “Just as it’s never too late to settle, it’s never too early.”
Following Asner’s death on Sunday, the remaining named plaintiffs include guild members Michael Bell, Raymond Harry Johnson, Sondra James Weil, David Jolliffe, Robert Clotworthy, Thomas Cook, Deborah White and Donna Lynn Leavy, as well as surviving spouse Audrey Loggia.
A spokesperson for the SAG-AFTRA Health Plan sent The Hollywood Reporter this statement following the hearing: “Last year, responding to continually skyrocketing healthcare costs and in the midst of the unprecedented economic realities of a global pandemic, the SAG-AFTRA Health Plan Trustees responsibly planned for the future while ensuring high-quality benefits for as many as possible. The Court’s stated intention to allow the case to proceed does not address the legality of the changes made by the Trustees, and we look forward to proving in court that the Trustees acted in the best interests of the participants in adopting these changes. We are confident that the courts will ultimately reject this meritless litigation.”
Aug. 30, 3:07 p.m. Updated to include a statement from the SAG-AFTRA Health Plan.
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