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Fifth Circuit Rules that Plan Administrators Must Accept QDROs Even if Suspected to be Based on a Sham Divorce

The Fifth Circuit ruled that a retirement plan administrator may not refuse to treat a domestic relations order (DRO) as a qualified domestic relations order (QDRO) under ERISA on the basis that the administrator believes the DRO was not obtained in good faith from the court that issued it. In this case, Continental Airlines alleged that several pilots and their spouses obtained ?Ç£sham?Ç¥ divorces for purposes of obtaining lump sum pension distributions from the Continental Pilots Retirement Plan, which they otherwise could not have received without the pilots separating from service. In rejecting Continental?ÇÖs claim for restitution, the Fifth Circuit held that the plan administrator may only review DROs based on whether the statutory criteria were met and not on any other criteria, such as whether the divorce was obtained in good faith. Plan administrators should review their QDRO procedures to ensure that only the statutory criteria are considered in… Continue Reading

Effective Dates of Retirement Plan Fee Disclosures Extended Again

Last year, the Department of Labor (DOL) issued an interim final rule regarding fee disclosures from pension plan service providers to fiduciaries and a final rule regarding fee disclosures from plan administrators to participants. The DOL previously extended the effective date of the fiduciary-level disclosure rule until January 1, 2012, intending to align its applicability date with the participant-level fee disclosure rule, which is applicable for plan years beginning on or after November 1, 2011. The DOL has again extended the effective date of the fiduciary-level disclosure rule from January 1, 2012 to April 1, 2012. In addition, the transition period for the participant-level disclosure rule has been extended. Now, initial disclosures must be made no later than the later of 60 days after the first day of the first plan year beginning after November 1, 2011, or 60 days after the effective date of the fiduciary-level disclosure rule. For… Continue Reading

Fifth Circuit Rules that Plan Administrators Must Accept QDROs Even if Suspected to be Based on a Sham Divorce

The Fifth Circuit ruled that a retirement plan administrator may not refuse to treat a domestic relations order (DRO) as a qualified domestic relations order (QDRO) under ERISA on the basis that the administrator believes the DRO was not obtained in good faith from the court that issued it.?á In this case, Continental Airlines?áalleged that?áseveral pilots and their spouses obtained ?Ç£sham?Ç¥ divorces for purposes of obtaining lump sum pension distributions from the Continental Pilots Retirement Plan, which they otherwise could not have received without the pilots separating from service.?á In?árejecting Continental’s claim for restitution, the Fifth Circuit held that the plan administrator may only review DROs based on whether the statutory criteria were met and not on any other criteria, such as whether the divorce was obtained in good faith. ?áIn light of this decision, plan administrators?áshould review their QDRO procedures to ensure that only the statutory criteria are considered… Continue Reading

Greta Cowart to Speak at ALI-ABA Course in September

Greta Cowart will be speaking on health plans and health reform at the ALI-ABA Course of Study, Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers, Thursday-Friday, September 15-16, 2011, at the WashingtonPlazain Washington, D.C.?á A program description and online registration are available on the web, here.

Department of Labor Issue FAQ on Using Credit Ratings in Prohibited Transaction Exemptions

The DOL has determined that individual prohibited transaction exemptions are not federal regulations and as a result, are not subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act provision that requires federal agencies to review and modify existing regulations referring to, or requiring reliance on, credit ratings by July 21, 2011.?á Nonetheless, the DOL recognizes Congress’s intent to reduce reliance on credit ratings and is soliciting public input on alternative standards with regard to individual prohibited transaction exemptions.?á See here.

Agencies Release Interim Final Regulations and Additional Guidance on Health Plan Claims and Appeals Requirements under Health Reform

The Departments of Treasury, Labor (the ?Ç£DOL?Ç¥), and Health and Human Services (?Ç£HHS?Ç¥) published amendments to the final regulations that were issued in July 2010 implementing the internal claims and appeals and external review processes required under health reform for non-grandfathered group health plans. In connection with amended regulations, the DOL issued Technical Release No. 2011-02, providing additional guidance and transition relief with respect to various requirements. This new guidance makes several significant changes to the prior interim final regulations issued last July. For additional information on the changes made, click here.

Sixth Circuit Upholds Constitutionality of Health Reform?ÇÖs Individual Mandate

The Sixth Circuit this week became the first?áfederal?áappellate court to issue a decision on the constitutionality of the Patient Protection and Affordable Care Act (?Ç£PPACA?Ç¥) by affirming a district court decision that PPACA’s individual insurance mandate is constitutional.?á In the case, a public interest law firm and four individuals challenged this mandate, which is effective in 2014, claiming that?áit unconstitutionally compels them to purchase health insurance. The district court held that the provision falls within Congress’s authority under the Commerce Clause. On appeal, the Sixth Circuit affirmed, in a split decision, with two of the three judges upholding the mandate under the Commerce Clause, and each issuing his own opinion.?á With respect to the Commerce Clause, the lead opinion found that the?áindividual insurance mandate?áis a?áconstitutional?áexercise of?ápower under the Commerce Clause power because Congress had a rational basis for concluding that (1), in the aggregate,?áthe practice of self-insuring for the cost… Continue Reading

Application Deadline for ?Ç£Mini-Med?Ç¥ Waiver Program

On June 17, 2011, the U.S. Department of Health and Human Services (?Ç£HHS?Ç¥) released CCIIO Supplemental Guidance 2011-1D entitled: ?Ç£Concluding the Annual Limit Waiver Application Process?Ç¥ (the ?Ç£Supplemental Guidance?Ç¥). The Supplemental Guidance modifies certain terms of the program under which a health plan or insurer may obtain a waiver from the minimum annual limit requirements contained in the Patient Protection and Affordable Care Act (the ?Ç£Act?Ç¥). Under the Supplemental Guidance, the waiver application process will conclude on September 22, 2011, and no new applications will be accepted after that time. Applicants seeking to renew their existing waiver can apply starting June 24, 2011. Applicants can extend their waiver until January 1, 2014. As a condition of the extension, the Supplemental Guidance requires annual limit updates?ábe filed annually on December 31, 2012 and December 31, 2013. Additionally, as part of the Supplemental Guidance, HHS issued new model notice language that must… Continue Reading

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