120
HARRIS TRUST AND SAV. BANK Thomas, J., dissenting
tially to impose fiduciary duties on the management of the entire line of business. Although insurers in reaction to today's decision may be able to segregate their assets and allocate certain assets to free funds on specific contracts, that will not help insurers like Hancock in this case who now find themselves potentially liable for past actions.6
The Court's decision may also significantly disrupt insurers' transactions with companies whose pension plans they fund. The Court's interpretation of § 401(b)(2) will impose on insurers not only general fiduciary duties under 29 U. S. C. § 1104, but also restrictions on prohibited transactions under § 1106. The guaranteed benefit policy exception expressly applies to both. See § 1101(b) (applying subsections (b)(1) and (b)(2) "[f]or purposes of this part," that is, Part 4, which comprises §§ 1101-1114). Indeed, this case concerns alleged violations of both sections. Amended Complaint ¶ 40, App. 58. Among the previously innocent transactions now potentially prohibited will be an insurer's investment in stock issued by any of the employers whose pension plans the insurer funds, a lease of a building owned by the insurer to one of those employers, or the purchase of goods or services from any of those employers. See Hearings on Public Law 93-406 before the Subcommittee on Labor Standards of the House Committee on Education and Labor, 94th Cong., 1st Sess., 390-391 (1975) (testimony of the Assistant Secretary of Labor). Thus, large insurance companies that may have sold policies to thousands of pension plans could suddenly find themselves restricted in contracting with the corre-6 It will be especially difficult for the lower courts in this case to limit application of fiduciary duties to the free funds, as the Court appears to desire, because the pension plan claims that Hancock breached its fiduciary duty by understating the amount of the free funds. See Amended Complaint ¶¶ 29, 30, 40, App. 55-56, 58-60. Thus, it will not be possible to determine the extent of Hancock's fiduciary duty without first ascertaining whether Hancock violated it.
Page: Index Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: October 4, 2007