ERISA lawsuits are not at all uncommon. Most such lawsuits allege that the managers of the plans have committed some form of breach of fiduciary duty. Fiduciary duty means that people who have control or authority over the plan or its assets or provide investment advice for a plan have the responsibility to act solely in the best interests of the plan participants and beneficiaries.
Furthermore, fiduciaries, which can include plan trustees, plan administrators and members of the plan's investment committee, must act prudently, must diversify the plan's investments and must avoid conflicts of interest. Conflicts of interest are situations in which transactions benefit the plan's sponsor (for example, the employer) but do not benefit plan participants.
Lawsuits are being filed alleging that plan managers are not acting in the best interests of the plan participants. A frequent allegation is that plan managers invested the plan in the employing company's stock, even when it was not prudent to do so. A follow-up allegation is frequently that plan fiduciaries gave false or misleading statements about the value of the employing company's stock.
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In fact, ERISA gives participants the right to sue for benefits in cases of breach of fiduciary duty. ERISA also gives participants the right to have grievance and appeals processes in place where they feel their benefits plan has been mismanaged.
ERISA does not cover group health plans established by government entities or churches. It also does not require employers to establish pension plans or that employers provide health insurance. However, if employers choose to provide such benefits plans, they are obligated to follow ERISA. Failure to do so can result in plan participants filing lawsuits to uphold their rights.