NAPA Net - Polling Places 072420 |
What's Your Policy on Participant Data Usage?
The issue of participant data – or more precisely the use of participant data – even more precisely the use of plan data for purposes beyond plan administration - has recently emerged in a handful of excessive fee lawsuits.
The litigation in question has (to date) revolved around the notion that participant data – garnered in conjunction with the administration of the plan – is a plan asset. Now, you won’t find that in ERISA’s text, and arguably that specific issue hasn’t been “fully” adjudicated to date, though there’s one recent case - Divane v. Northwestern University that spoke to the issue, and that district court found that the sponsor doesn’t have a fiduciary duty to manage the use of participant data by its recordkeeper.
Meanwhile, if they’ve not yet prevailed at court, the Schlichter law firm has been successful in in negotiating as part of a broader settlement, agreements in two cases that, for a period of three years, “it must not solicit current Plan participants for the purpose of cross-selling proprietary non-Plan products and services, including, but not limited to, Individual Retirement Accounts (IRAs), non-Plan managed account services, life or disability insurance, investment products, and wealth management services, unless in response to a request or expressed need by the Plan participant.”
The litigation in question has (to date) revolved around the notion that participant data – garnered in conjunction with the administration of the plan – is a plan asset. Now, you won’t find that in ERISA’s text, and arguably that specific issue hasn’t been “fully” adjudicated to date, though there’s one recent case - Divane v. Northwestern University that spoke to the issue, and that district court found that the sponsor doesn’t have a fiduciary duty to manage the use of participant data by its recordkeeper.
Meanwhile, if they’ve not yet prevailed at court, the Schlichter law firm has been successful in in negotiating as part of a broader settlement, agreements in two cases that, for a period of three years, “it must not solicit current Plan participants for the purpose of cross-selling proprietary non-Plan products and services, including, but not limited to, Individual Retirement Accounts (IRAs), non-Plan managed account services, life or disability insurance, investment products, and wealth management services, unless in response to a request or expressed need by the Plan participant.”
Your turn to weigh in...