EMPLOYEE BENEFITS BLOG
EMPLOYEE BENEFITS BLOG
Legal insights on employee benefits and executive compensation
EMPLOYEE BENEFITS BLOG
Legal insights on employee benefits and executive compensation
ERISA
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‘Right-Sizing’ Full-Time Employees to Reduce ACA Obligations May Lead to ERISA Class Action Exposure

by | Feb 24, 2016 | , ,

Compliance with the Affordable Care Act (ACA) has resulted in increased health benefit costs for many employers. A recent court decision demonstrates that while programs to reduce the number of full-time employees may lower health care costs in the short run, they also may lead to ERISA class action litigation. In Marin v. Dave and Buster’s, a federal district judge in the Southern District of New York denied a motion to dismiss a class action lawsuit claiming that the Dave and Buster’s amusement chain violated ERISA by cutting employee hours to avoid providing health care benefits to a class of employees.

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Supreme Court Issues Further Clarification on Equitable Relief Remedies Available Under ERISA

by | Jan 28, 2016 | ,

The Supreme Court of the United States’ recent ruling in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan holds that an ERISA plan cannot enforce an equitable lien against a participant’s general assets when the full amount of the settlement is spent on non-traceable items. This decision should encourage plan fiduciaries to take action on reimbursement and subrogation rights more quickly after learning of a third-party recovery, in order to preserve their right to assert an equitable remedy against an identifiable, traceable fund.

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Employers Need 2015 Year-End Planning to Meet Employee Reporting and Withholding Requirements

by and | Dec 17, 2015 | , ,

To avoid tax reporting and withholding penalties as 2015 draws to a close, employers need to properly plan and check their reporting for employees under non-qualified deferred compensation, fringe benefits, health benefits or other remuneration. Year-end planning for employers is important, because employee information reporting, including both Form W-2 and the new Affordable Care Act (ACA) Forms, is now subject to significantly increased penalties.

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Recent Government-Issued FAQs Cause Plan Sponsors to Clarify Preventive Care and Wellness in Health Plan Communications

by | Nov 5, 2015 | , ,

On October 23, 2015, the U.S. Departments of Labor (DOL), Health and Human Services (HHS) and Treasury issued frequently asked questions (FAQs) on the implementation of preventive care and wellness provisions of the Affordable Care Act (ACA) and mental health parity disclosure, adding to the existing list of 28 previous editions of FAQs on the implementation of ACA.

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Seventh Circuit Finds that State Insurance Law Applies, Resulting in De Novo Review of Benefit Claim

by , and | Sep 24, 2015 | , , ,

On September 4, 2015, the U.S. Court of Appeals for the Seventh Circuit ruled in Fontaine v. Metropolitan Life Insurance Company that the Employee Retirement Income Security Act of 1974, as amended (ERISA), does not preempt an Illinois state insurance regulation that prohibits discretionary authority clauses in health and disability plan insurance policies. The Seventh Circuit upheld the ruling of the U.S. District Court for the Northern District of Illinois, which decided that the Illinois regulation was not subject to preemption under precedent set forth in prior decisions by the Supreme Court of the United States.

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View From McDermott: Judicial Dos and Don’ts of ERISA Benefit Claim

by | Sep 16, 2015 | ,

Much has been written about the challenges that exist for the Employee Retirement Income Security Act of 1974 (ERISA) plan fiduciaries related to their investment of plan assets or review of plan administration fees related to those investments, and those challenges will continue for the foreseeable future given recent decisions of the Supreme Court in Dudenhoeffer and Tibble. However, before any litigation typically commences under ERISA, a claimant must exhaust their administrative claims review remedies under ERISA and the applicable benefit plan. In reviewing benefit claims, an ERISA plan administrator or their delegate must reasonably and timely jump through many hoops to decide benefit claims and notify the claimant of a benefit determination. If a plan administrator fails to clear any of these hoops (or just forgets to jump through them), the plan and the plan administrator can incur liabilities or waive defenses typically available in defending the claims in litigation.

This article, which was originally published by Bloomberg BNA’s Pension Benefits Daily, analyzes court cases that discuss how plan administrators should properly decide and administer ERISA benefit claims and what liability should attach to poor claims administration. Based on this case review, this article then suggests best practices to avoid mishandling the ERISA claims review process.

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DOL Clarifies Fiduciary Duties for Defined Contribution Plan Sponsors Offering Annuity Contracts

by and | Sep 1, 2015 | , , ,

The availability of annuity options under defined contribution plans has increased in recent years due to the shift from defined benefit to defined contribution plans. The U.S. Department of Labor recently issued new guidance that clarifies the legal responsibilities for fiduciaries who select an annuity provider for a defined contribution plan.

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What Private Equity Funds Should Know About ERISA

by | Aug 18, 2015 | ,

Managers of private equity funds who are responsible for investing the assets of a fund that holds plan assets are likely to be considered a fiduciary under the Employee Retirement Income Security Act of 1974, as amended (ERISA). ERISA imposes numerous duties on fiduciaries, and those who fail to meet ERISA’s standards may be personally liable to restore plan losses, disgorge profits made through the use of plan assets, and pay additional statutory penalties imposed by the Department of Labor. The fiduciary may also face criminal penalties if found guilty of wilful failure. It is therefore vitally important that fiduciaries are fully aware of all their duties under ERISA.

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Privacy and Security Concerns for Employee Benefit Plans with Service Provider Relationships

by , and | Jul 21, 2015 | , , , , , ,

Recent cyber-attacks on health insurers have heightened awareness that sensitive participant and beneficiary information may not be adequately secure. There will undoubtedly be other attacks on databases maintained by service providers to employee benefit plans, which raises an important question for Employee Retirement Income Security Act of 1974 (ERISA) fiduciaries: what should be done now to protect participant and beneficiary information entrusted to service providers against future attacks and unauthorized disclosure? While the extent of a fiduciary’s responsibility to protect personal identifiable information of participants and beneficiaries is unclear, the fiduciary provisions of ERISA can be interpreted to impose a general duty to protect this information when it is part of a plan’s administration. In addition, plan fiduciaries also may have obligations under other federal and state laws governing data privacy and security that are not preempted by ERISA. This article addresses the nature of the problem, identifies the types of data breaches that can occur with employee benefit plans, provides an overview of relevant law that may apply, and sets forth practical steps that can be taken by plan fiduciaries with service providers to address privacy and security concerns.

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View From McDermott: DOL Re-Proposes Regulations to Expand ERISA ‘Fiduciary’ Definition

by and | Jul 7, 2015 |

The U.S. Department of Labor (DOL) issued proposed regulations on April 14, 2015 that would expand the types of investment advice covered by fiduciary protections under the Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Internal Revenue Code of 1986, as amended (the Code). The proposed regulations would require advisers to ERISA-governed retirement plans and individual retirement accounts (IRA) to act as ‘‘fiduciaries’’ within the meaning of ERISA and the Code, subject to certain carve-outs identified by the DOL for nonfiduciary adviser services. Advisers that become fiduciaries under the proposed regulations would be subject to ERISA fiduciary duties and prohibited from engaging in certain non-exempt transactions. The proposed regulations are accompanied by two new class prohibited transaction exemptions and amendments to several existing class exemptions, which recognize the expanded scope of ERISA’s fiduciary protections under the proposed regulations while allowing advisers to continue certain types of transactions and existing fee arrangements that would otherwise be prohibited for ERISA fiduciaries. While the proposed regulations likely would have the greatest impact on the IRA marketplace, advisers to plan sponsors, and therefore plan sponsors themselves, are likely to be impacted. Comments on the proposed regulations are due by July 21, 2015.

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