Bidwell v. Univ. Med. Ctr., Inc., No. 11-5493 (6th Cir. 2012)Annotate this Case
Plaintiffs participated in UMC’s self-administered retirement contribution plans. UMC provided participants with a variety of investment choices. Plaintiffs elected to locate 100 percent of their investments in the default investment for participants who failed to elect preferred investments. The 2007 Pension Protection Act created “safe harbor relief from fiduciary liability” for plan administrators that directed automatic-enrollment investments into Qualified Default Investment, “capable of meeting a worker’s long-term retirement savings needs.” The regulation grandfathered in stable-value funds that employers used as default investments prior to PPA’s enactment. In 2008, UMC sought to harmonize its practices with new DOL regulation by transferring investments in the prior default fund, the Lincoln Stable Value Fund, into the Lincoln LifeSpan Fund. Because UMC did not have records of which participants chose the fund and which were investors by default, UMC sent notice to all participants with 100 percent in the Fund. Plaintiffs claim that they never received the notice. They suffered financial losses. After exhausting administrative procedures, they sued for breach of fiduciary duty under ERISA. The district court ruled that Lincoln was not a fiduciary under the plan and that UMC was immune from liability under the DOL Safe Harbor regulation. The Sixth Circuit affirmed.