The courts have been active but inconsistent in this area. Most recently, a court in Massachusetts concluded that MassMutual was a fiduciary because it had the ability to set its own compensation, but last year, two other courts found that American United Life Insurance and John Hancock Life Insurance were not fiduciaries. (The facts and issues in each case differ, but the same general question--"when is a third party that is providing administration and investment products to a plan a fiduciary?"--is a common thread.)
We're reporting on the case because, if more courts find that the vendors are fiduciaries, in-house fiduciaries will need to be more active in the contract terms that are required from the vendors (and will need to monitor their activities accordingly). In-house fiduciaries will also need to consider how ERISA's co-fiduciary liability provisions would apply to the arrangement.