The lawsuit involves a Florida based hospital provider that hired Aon to terminate its $100+ million DB plan which included lump sum election services. Things went awry when the take-up rate for the lump sum choice came up less than Aon had advertised…
By Steve Richards
The Aon PRT case is more than a little complicated. Therefore, we need to peel back the onion a layer or two. The lawyers added many layers, but the magistrate pierces them all and exposes fiduciary risks.
The decision’s name gives an inkling of just how many layers there were to peel back:
The decision by a magistrate judge out of the U.S. District Court for the Middle District of Florida was meant to clear up a murky set of esoteric regs from various sides of the PRT mountain of rules and conventions such that no one (even the judge that called for the analysis) could make decisions about the particulars of the case. The analysis was needed by the court to get to the bottom of things.
The decision recommended the rejection of the dismissal of the lawsuit called for by Aon and Alight.
Here’s how Plan Sponsor’s John Manganaro put it in his article about the decision. (Magistrate Judge Says Aon, Alight Can’t Evade PRT Lawsuit | PLANSPONSOR)
Technically, the report recommends four things. First, it suggests that Aon Hewitt Investment Consulting’s motions to exclude the expert reports and testimony of two of the plaintiffs’ lead witnesses should be denied. Second, it recommends that the plaintiffs’ motion for partial summary judgment declaring that Aon Hewitt Investment Consulting is a fiduciary to the plan in question should be granted. Next, it denies the Aon defendants’ dismissal motion, and, finally, it denies a related dismissal motion filed by Alight…The report then details what plaintiffs in the case say are Aon’s failures to live up to its contractual agreements.
Lump sum election communications often get short shrift in PRT cases. But there are many reasons why this is a risky approach, and we have addressed some of those in the past. Now, in addition, it seems clear that things like lump sum election communications and take-up rates now carry the specter of potential lawsuits and carry a previously underappreciated impact on fiduciary exposure.