Not everyone who has a role in the administration of an ERISA plan is a “fiduciary” under the Act’s special definition of that term. Even those who process claims and calculate benefits may be excluded from this category, so long as they do so within a framework of policies and procedures made by others. And not being a fiduciary is significant, because those on the outside of the fiduciary circle are not subject to the special obligations and personal liability that attaches to those on the inside.
Shortly after ERISA was enacted the Department of Labor issued regulations that carve out of the fiduciary definition some of the day-to-day functions associated with plan administration. This exception clarifies that individuals who perform purely “ministerial functions” necessary for plan operation, within a pre-established framework of rules, do not have discretionary authority or control over plan administration, and thus are not fiduciaries.
Although third-party administrators (“TPAs”) and others often rely on this exception from ERISA’s fiduciary reach to avoid liability, courts do not always accept this defense. For instance, courts have held that communicating with participants about their benefits is a fiduciary function, even though such communications could be considered “ministerial” under the regulation. Recent cases also have drawn a sharp distinction between the discretionary authority over plan administration that is the focus of the ministerial function exception, and the presence of any authority or control over plan assets. While a TPA may be performing only ministerial functions when processing claims, if it also has the authority to issue benefit payments out of plan assets it may still be a fiduciary. Thus, the entire scope of an individual’s responsibilities must be reviewed to determine whether her or she is protected by the ministerial function exception.