One of the longest pension fund lawsuits in the annals of ERISA - in the courts for more than 15 years - is scheduled to finally come to trial July 22. At last, the original issues of the case will be argued.
But issues held in abeyance for so long are important, one in particular raises a disturbing aspect about the Employee Retirement Income Security Act and Congress, ERISA's ultimate overseer.
The issue is that pension money should be managed for the benefit of participants. No money manager, or in this particular case, no insurance company, should hold assets in excess of those needed to fulfill its contract. The pension plan always should have discretion in investing those assets.
The case - Harris Trust & Savings Bank vs. John Hancock Mutual Life Insurance Co. - involves the Unisys Corp. pension fund. The protracted litigation shows the tenacity of the parties in the lawsuit.
The case has gone all the way to the U.S. Supreme Court on a fiduciary issue and has come back to the lower courts to trial. The fiduciary issue from the case wound up in Congress.
Hancock argued it isn't an ERISA fiduciary. But the pension fund won, the Supreme Court in 1993 declaring the excess assets were subject to ERISA.
Congress, however, did much to undermind the high court's ruling. In 1996, Congress adopted the ERISA Clarification Act. The amendment, backed by the Department of Labor and tagged onto the administration's minimum wage legislation, was added without public hearings.
The congressional action was a measure of the lobbying ability of the insurance industry. The act effectively gutted the Supreme Court ruling, although it couldn't prevent the Unisys pension fund suit from proceeding.
Now the case will go to trial in U.S. District Court in New York. Harris Trust, a trustee for the plan, is seeking more than $50 million on behalf of the Unisys plan. The suit - filed in 1982, only seven years after ERISA became effective in 1975 - has been pending in the courts for 15 of ERISA's 22 years of existence.
It charges Hancock with mismanaging millions of dollars in assets of the plan.
The dispute is over a Hancock insurance contract, which covered - and still covers - some pension benefits of Unisys plan participants. The contract generated assets in excess of those needed to cover the benefits.
After some years of unsuccessful negotiations seeking recovery of those assets, representatives of the plan filed suit against Hancock, also charging the company with overcompensating itself and self-dealing in managing the money for the plan.
Hancock has continued to argue it isn't a fiduciary in regard to the excess assets and therefore not subject to charges made by the pension plan under ERISA.
But Judge Denny Chin of the U.S. District Court threw the most recent Hancock motion out, allowing the trial to finally proceed.
Whatever the decision in the trial, which is being conducted without a jury before Judge Chin, it won't become a landmark decision, because the congressional amendment quashed such suits.
Unfortunately, the only precedent the case set is for Congress to intervene precipitously in amending ERISA, without public debate, whenever other disputants seek some remedy. That is what happened in the 1996 ERISA amendment adopted by Congress. With this kind of precedent, the participants in general have been the losers.