Cite as: 510 U. S. 86 (1993)
Thomas, J., dissenting
standing, insurers have set up general account contracts with pension plans and have managed assets theoretically attributable to those policies, not in accordance with ERISA's fiduciary obligations, but in accordance with potentially incompatible state-law rules. See Mack Boring, 930 F. 2d, at 275, n. 17. Most States treat the relationship between insurer and insured as a matter of contract, not a fiduciary relationship. See, e. g., Benefit Trust Life Ins. Co. v. Union Nat. Bank of Pittsburgh, 776 F. 2d 1174, 1177 (CA3 1985) (generally, relationship between insurer and insured is "solely a matter of contract"); New Hampshire Ins. Co. v. Foxfire, Inc., 820 F. Supp. 489, 497 (ND Cal. 1993) (implied covenant of good faith and fair dealing does not create fiduciary relationship between insurer and insured under California law). And state law generally requires that the insurer not discriminate among its policyholders. See, e. g., N. Y. Ins. Law § 4224(a)(1) (McKinney 1985). ERISA, on the other hand, will require insurers to manage what the Court deems plan assets "solely in the interest of the participants and beneficiaries" of the plan, 29 U. S. C. § 1104(a)(1), and will impose a host of other requirements. These conflicting demands will place insurers in a difficult position: "Whenever an insurance company takes actions to ensure that under state law, it is treating its policyholders fairly and equitably, it runs the risk of violating ERISA's fiduciary requirements." Mack Boring, supra, at 275, n. 17.
Although the Court attempts to limit the fiduciary duty to the free funds—it dubs only the free funds " 'plan assets,' " see ante, at 106—the duty it imposes on insurers extends much farther. The free funds are not identifiable assets at all, but are simply an accounting entry in Hancock's books. The amount of the free funds, and hence their "management," ibid., depends on the management of all of the assets in Hancock's Group Pension line of business. See Agreed Statement of Facts ¶ 43, App. 91. To impose fiduciary duties with respect to the management of the free funds is essen-
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