Employer Law Report

Tag Archives: employee benefits/ERISA

Health Care Reform Surprise: Obama Administration Delays Enforcement of Employer Mandate For One Year

Editors Note:  With the Obama administration’s recent surprise delay regarding the enforcement of the employer mandate under the Affordable Care Act, our colleagues at Employee Benefits Law Report have written this summary below.

In a surprising but generally welcome move, the Obama administration has moved to delay the enforcement of the employer mandate to provide health care coverage under the Affordable Care Act (the “ACA”), which otherwise was scheduled to go into effect in 2014. This delay in enforcement formally was announced in a statement released July 2, 2013 by Mark J. Mazur, Assistant Secretary for Tax Policy at …

U.S. Supreme Court decision: U.S. Airways, Inc. v. McCutchen

The United States Supreme Court issued an opinion earlier this week in an ERISA case regarding the breadth of Section 502(a)(3) relief, and the common-fund doctrine. While the decision was unanimous on the primary issues, the Court surprised us with a 5-to-4 split on a secondary issue. Overall, the decision in U.S. Airways, Inc. v. McCutchen is favorable for employers sponsoring health care plans. The decision is also favorable for health care plan participants in the aggregate because it allows for control of plan costs, and premiums, at a critical time when plans are gearing up for 2014 health care …

Sixth Circuit Decision Reminds Employers: Get Your Ducks in a Row at the EEOC Charge Stage and, for Goodness Sake, Know Your Own Policies

Gaglioti v. Levin Group, Inc. (6th Cir. Dec. 13, 2012), serves as a good reminder to employers to pin down their reasoning for terminating an employee at the start, and stick to it. In addition, all reasons for terminating an employee should be included in the termination meeting with the employee, or at the very least, at the EEOC charge stage, even if it might bruise the employee’s ego. Any change or supplementation to the original reason can make put the entire termination decision seem made up and send the employer to trial. It is also imperative that employers know …

Health Care Reform Survives Supreme Court Scrutiny – But Not Entirely Intact

Health care reform just got a clean bill of health from the United States Supreme Court. The Court today ruled on the constitutionality of the Patient Protection and Affordable Care Act ("PPACA"), and generally upheld the legislation in a 5-4 decision written by Chief Justice John G. Roberts. Roberts was joined in his opinion by the four justices who had been appointed to the Court by Democratic presidents. In an expected development, certain individual justices wrote and/or joined concurring and dissenting opinions as well. The Court upheld the individual mandate to purchase health coverage, concluding that the mandate is permissible …

The Fiduciary Exception to the Attorney-Client Privilege — “Document Everything” is a Best Practice, Except When It Isn’t

 The following was posted by our associate Seth Hanft on our sister blog Employee Benefits Law Report last Friday. It provides a great reminder to in-house counsel addressing employee benefit claims that their communications with their benefits personnel regarding employee benefits claims may not be protected by the attorney-client privilege. Keep in mind that both counsel and benefits managers often wear fiduciary and non-fiduciary hats when addressing benefits plans issues and it is not always clear which hat they are wearing when. Therefore, to avoid potential spill over of this fiduciary exception to their other areas of responsibility, in house

Porter Wright Launches Employee Benefits Blog

Employer Law Report is pleased to share with you the launching of Porter Wright’s latest blog – Employee Benefits Law Report – which we have created as a resource to help guide employers of all sizes through the complex administrative and legal challenges facing their employee benefit plans.

This blog – edited by my partners Ann Caresani and Rich Helmreich – will provide the latest information in a wide range of areas related to Employee Benefits including:

  • ERISA and employee benefits litigation
  • Health care reform
  • Retirement plans
  • Audits and correction
  • Benefits issues related to mergers and acquisitions
  • Employee Stock Ownership

ERISA Time Travel Continues

We recently blogged about an infrequent ERISA surprise from the US Supreme Court, in CIGNA v. Amara, and now we have a second ruling from the Supreme Court in that case, granting Amara certioria and remanding.  This is a procedural twist that is more interesting to lawyers than employers, but it underscores the point we made about uncertainty in this area:  we don’t really know what remedies are other "appropriate equitable relief" under ERISA, or know how much exposure employers face regarding their ERISA plans.  Establishing procedures for compliance with ERISA’s disclosure and other requirements is …

Supreme Court Time Travels with an ERISA Case

Supreme Court decisions about ERISA cases, while infrequent, typically contain some surprises, as demonstrated most recently in CIGNA Corp. v. Amara.

In 1997, CIGNA notified employees that it was freezing accruals under its traditional defined benefit plan, and converting the plan into a cash balance plan. A cash balance plan is a "hybrid" defined benefit plan with features similar to a defined contribution plan. The method for determining accruals under the cash balance plan is different from the method under the traditional defined benefit plan, and in many cases takes into consideration the benefits already accrued under the traditional …

Sixth Circuit Upholds Denial of ERISA-Based Income Protection Benefits; Plan Administrator Need Not Investigate Whether the Employer Violated FMLA

As demonstrated by the Sixth Circuit’s recent decision in Farhner v. United Transportation Union Discipline Income Protection Program, a well-drafted ERISA income protection or severance pay plan should enable the plan administrator to rely on the employer’s stated reason for termination of an employee, rather than conducting an independent review of the facts regarding the termination.

In May 2004, Mark Farhner, a trackman and conductor for the Kansas City Southern Railroad sought a three-month leave of absence for "medical reasons." KCSR’s human resources manager requested additional information from Farhner to justify his request. When Farhner’s vacation leave had been …

Health Care Reform Dilemmas for Employers Sponsoring Group Health Plans

Many employers sponsoring group health plans are asking ….

What employee benefit plan-related changes are required by the Patient Protection and Affordable Care Act?

When must these changes be implemented?

Will these changes raise costs, and what penalties and fees might my company face for non-compliance?

We have just issued a Law Alert that discusses these and other dilemmas facing employers sponsoring group health plans. We also have record attendance scheduled to attend our Employment Relations Seminar next Tuesday, May 4, 2010 at the Hilton Columbus at Easton Town Center, where we will be discussing "Health Care Reform: What Employers Need …

Congress Extends COBRA Subsidy for A Third Time–Until May 31, 2010

Last week, the President signed into law House Resolution 4851, which extends several government programs through May 31, 2010, including the ARRA COBRA subsidy. House Resolution 4851 is referred to as the Continuing Extension Act of 2010. It simply extends the previous COBRA subsidy cut-off date of March 31, 2010 to May 31, 2010. The text of the law briefly explains that those terminated between April 1 and 15 will be retroactively covered by the law similar to past extensions of the COBRA subsidy. 

Keep in mind that, as stated in my earlier posts on this subsidy, assistance eligible individuals who are involuntarily …

The Supreme Court Rejects Actuarial Heresy in Conkright v. Frommert

Rejecting actuarial heresy, the United States Supreme Court has refreshingly acknowledged that “People make mistakes. Even administrators of ERISA plans.” Specifically, the Court held that a single honest mistake in plan interpretation does not justify stripping the administrator of deference for subsequent related interpretations.

In Conkright v. Frommert, a case that has been winding through the courts for the past decade, rehired employees of Xerox Corporation alleged that the Xerox pension plan administrator improperly offset their benefit calculations for prior lump sum distributions of pension benefits. Their claims involved a series of plan amendments, communication to participants, and how the plan administrator …

The Health Reform Bill: What Do Employers Need to Know?

Following a year-long contentious debate, Congress finally passed the President’s top domestic agenda item: Health Reform.

Sunday, the House of Representatives passed the Senate version of the Health Reform Bill by a slim margin (three votes more than required) and no Republican support. The Bill contains broad reforms that make numerous significant changes to the ways in which healthcare is accessed, delivered and financed. Some of the noteworthy changes (and effective dates) for employers to consider are the following:

  •  Employers with 200 or more employees that sponsor a health plan must automatically enroll all employees in the employer-sponsored plan. Employees may

Congress passes temporary COBRA subsidy extension through March 31, 2010

Congress recently passed the Temporary Extension Act of 2010, which, in addition to extending unemployment benefits, extends and expands the COBRA premium subsidy originally provided by ARRA (the stimulus bill). The new law extends the end of the eligibility period for the COBRA subsidy from February 28, 2010 to March 31, 2010. This means that individuals involuntarily terminated between September 1, 2008 and March 31, 2010 are eligible for 15 months of subsidized COBRA premiums—with the employee paying only 35% of the actual COBRA premium.

The recent extension also expands the COBRA subsidy to those who lost their health insurance coverage as …

Ohio extends State Mini-COBRA Health Insurance Continuation Coverage From 12 to 15 Months

Governor Strickland just signed into law a bill (House Bill 300) that would extend Ohio’s state “mini COBRA” coverage for any policies delivered, issued, or renewed on or after February 25, 2010.

The coverage under the Ohio mini-COBRA law will be extended from 12 months to 15 months so long as the employee is eligible for the federal COBRA subsidy. At present, the federal COBRA subsidy does not apply to any employees involuntarily terminated after February 28, 2010. This state extension was passed in anticipation of a federal extension of the COBRA subsidy beyond that date, which is presently under consideration in …

Department of Labor Announces that Sample Notices for Extended COBRA Subsidy Will Be Forthcoming

As you will recall from my earlier post, Congress and the President extended the COBRA subsidy, originally a part of the American Recovery and Reinvestment Act of 2009 (ARRA) (the stimulus bill), to individuals involuntary terminated through February 28, 2010 (from December 31, 2009) and the length of the subsidy to 15 months (from 9 months). 

This COBRA subsidy extension will require new notices be sent to individuals involuntarily terminated (and otherwise qualifying under ARRA as an “assistance eligible individual” (AEI)). These model notices were released yesterday, and, in many cases, AEIs must be notified by February 17, 2010. The Department of …

Facebook Photos Prompt Termination of Long Term Disability Benefits

CBC News in Canada is reporting that a Canadian long-term disability insurance carrier recently terminated the long-term disability benefits a Quebec woman was receiving for "major depression" after photos she posted on her Facebook page showed her "having a good time at a Chippendales bar show, at her birthday party and on a sun holiday." According to the CBC, the woman, 29-year-old Nathalie Blanchard, contends that her doctor recommended that she try "to have fun, including nights out at her local bar with friends and short getaways to sun destinations, as a way to forget her problems." Nevertheless, Manulife, the …

GINA Interim Final Regulations: Highlights and the Potential Impact on Group Health Plans

On October 7, 2009, the DOL, IRS, and HHS issued interim final regulations implementing Sections 101 to 103 of the Genetic Information Nondiscrimination Act of 2008 (GINA). For group health plans, these regulations become effective on the first day of the plan year beginning on or after December 7, 2009. For the individual market, the regulations are effective December 7, 2009. The new regulations broaden GINA’s general prohibition on requesting or requiring an individual or their family member to undergo genetic testing. Of note is the new rule that health plans may not provide incentives to induce participants to fill …

Breach Notification Under the HITECH Act: Action Points for Employers Who Sponsor Self-Insured Group Health Plans

As we previously have noted, the Department of Health and Human Services recently issued an interim final rule under the HITECH Act requiring HIPAA-covered entities to notify each individual whose unsecured PHI has been, or is reasonably believed by the covered entity to have been, accessed, acquired, used, or disclosed as a result of a breach of unsecured protected health information.  Employers who sponsor self-insured group health plans need to take immediate action to ensure compliance with the new rule. Among other things, employers should be modifying written HIPAA privacy policies and procedures, training plan sponsor workforce members who …

Michael Vick Gets Released From the ERISA Doghouse, But Could You be Next?

Sports fans, you can breath easier about your fantasy football lineups — Michael Vick is out of the doghouse with the U.S. Department of Labor, presuming he complies with a consent judgment. We had cautioned in an earlier post that Vick’s release from prison did not necessarily mark the end of his government obligations, given DOL allegations of ERISA violations. As explained in the DOL’s press release, the DOL’s complaint alleged that Vick and others improperly removed $1.35 million of pension plan assets to help pay the criminal restitution imposed on Vick after his conviction for unlawful dog fighting, and to …

More Case Law Regarding Documentation Required to Revise or Terminate Negotiated Retiree Healthcare Benefits

The Sixth Circuit has decided two new cases regarding ERISA lifetime retiree healthcare benefits under a collective bargaining agreement, continuing to put a thumb on the scale in favor of vested benefits, but recognizing that an employer may have the right to make “reasonable modifications” to those benefits. In an earlier post, we discussed the hurdles in place for employers attempting to reduce or eliminate these benefits.

In Reese v. CNH Am. LLC, No. 08-1234/1302/1912 (July 27, 2009), a group of retirees sought a declaration that they were entitled to lifetime healthcare benefits under a 1998 collective bargaining …

DOL Scrutinizes ERISA Plan Audits

Do you sponsor any employee benefit plans that are required to be audited on annual basis? If yes, you should be aware that the DOL is targeting certain auditors and is seeking penalties from the plan administrator (typically, the employer) of up to $1,100 per day, or $50,000 per annual report, when it believes that the audit work is deficient. There are a number of due diligence steps you can take in an effort to comply with ERISA responsibilities, and to reduce exposure in this area.  For a discussion of these steps, please read our recent Client Alert: DOL Scrutinizes ERISA Plan Audits.

HHS Publishes HITECH Interim Final Rule

On August 24, 2009, the U.S. Department of Health and Human Services ("HHS") published its interim final rule in the Federal Register, thereby implementing the HITECH Act. The Act’s breach notification rules will become effective on September 23, 2009 — fewer than 30 days away. 

Therefore, as the Act relates to employer-sponsored group health plans and health care providers, any breaches of protected health information (PHI) that occur on or after September 23rd must be reported to the affected individuals and, when the breach impacts 500 or more individuals, to HHS and the media. Covered entities must make annual reports of breaches of …

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