Courts continue to apply the fiduciary exception to the attorney-client privilege to the fiduciaries of ERISA-governed plans. Under the fiduciary exception, plan participants and the Secretary of Labor can obtain testimony or documents relating to confidential communications between plan fiduciaries and their lawyers regarding plan administration.
Although the Third Circuit has ruled that the fiduciary exception does not apply to an insurer when making benefit claims decisions in a fiduciary capacity, the Ninth Circuit recently decided not to follow the Third Circuit’s decision, ruling that there was “no principled basis for excluding insurers from the fiduciary exception.” Compare Stephan v. Unum Life Ins. Co., 2012 U.S. App. LEXIS 19139 (9th Cir. Sept. 12, 2012), with Wachtel v. Health Net, Inc., 482 F.3d 225 (3d Cir. 2007).
The Ninth Circuit reached this conclusion with little discussion and without referring to the Supreme Court’s recent ruling in United States v. Jicarilla Apache Nation, 131 S. Ct. 2313 (2011). In Jicarilla, the Supreme Court ruled that because specific statutory and regulatory provisions define the Government’s disclosure obligations to Indian tribes, the fiduciary exception does not apply to the fiduciary relationship between the United States and the Indian tribes. (The parties in Stephan submitted their briefs to the Ninth Circuit before the Supreme Court decided Jicarilla.)
It remains to be seen whether Unum will ask the Supreme Court to resolve the circuit split and, if it does, whether the Court will agree to review the case. Stephan might not be an ideal vehicle for resolving the fiduciary exception issue for a variety of reasons, including the disparaging remarks in the Ninth Circuit’s opinion about Unum’s track record: “Numerous courts, including ours, have commented on Unum’s history of erroneous and arbitrary benefit denials, bad faith contract misinterpretations, and other unscrupulous tactics” (internal quotation marks omitted).
For an in-depth analysis of the fiduciary exception, see John M. Vine, The Fiduciary Exception, 40 Compensation Planning Journal 31 (Feb. 3, 2012).