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Summary Judgment Against Participants’ Claims Regarding Inaccurate Benefit Calculation in SPD Affirmed

The U.S. Court of Appeals for the Ninth Circuit affirmed a summary judgment against claims of participants who received summary plan description materials which incorrectly described the calculation of benefits based on the plan terms. Citing the U.S. Supreme Court’s decision in Cigna v. Amara, the court stated that the discrepancy between the summary plan description and the plan document did not create a triable issue, because the summary plan description did not constitute the terms of the plan. The court found that reformation of the plan document was improper because there was no evidence that the plan document contained a mistake or that its terms were induced by fraud. Although Amara suggested that reformation might be appropriate if the employer intentionally misled employees, in this case there was no evidence that the employer materially misled employees, and even if it had misled employees, appellants conceded that they did not… Continue Reading

Sixth Circuit Holds that a Union’s Indemnification of an Employer’s Withdrawal Liability Does Not Violate Public Policy

In a case of first impression, the U.S. Court of Appeals for the Sixth Circuit held that a union’s agreement in a collective bargaining agreement to indemnify an employer for its withdrawal liability under a multiemployer plan does not violate public policy and is therefore enforceable. In this case, the General Drivers, Warehousemen and Helpers Local Union No. 89 specifically agreed in its collective bargaining agreement with Shelter Distribution, Inc. that the union “shall indemnify [Shelter] for any contingent liability which may be imposed under the Multiemployer Pension Plan Amendment Acts of 1980.” The court reasoned that (i) the indemnity was analogous to obtaining a policy from an insurance company to cover any potential liability for fiduciary breaches as described in Section 1110(b) of the Multiemployer Pension Plan Amendments Act; (ii) the indemnity is not a violation of any “well defined and dominant” public policy; and (iii) the goals of… Continue Reading

Agencies Request Comments on Proposed Exemption for Certain Religious Employers from providing Contraception Coverage

The U.S. Departments of Labor, Health and Human Services, and the Treasury issued an advance notice of proposed rulemaking soliciting comments for proposed amendments to a recently-issued rule exempting certain religious employers from having to provide contraception coverage. Other non-exempt religious-affiliated employers—such as religious schools and hospitals—that provide health coverage to their employees have been given an additional year to comply with the requirement that their plans include contraception coverage. The proposed rule for which the agencies seek input will outline potential accommodations for non-exempt religious organizations while also “ensuring contraceptive coverage for plan participants and beneficiaries covered under their plans (or, in the case of student health insurance plans, student enrollees and their dependents) without cost sharing.” A copy of the notice is available here.

Departments Release FAQs on Summary of Benefits Coverage Requirement

On March 19, 2012, the U.S. Departments of Labor, Health and Human Services and the Treasury issued Part VIII in the set of FAQs addressing implementation of the Affordable Care Act. The FAQs answer questions that were raised in connection with the Final Rules regarding the Summary of Benefits and Coverage (“SBC”) that were published on February 14, 2012. For group health plan coverage, the Final Rules provide that, for disclosures concerning participants who enroll or re-enroll through an open enrollment period (including late enrollees and re-enrollees), the SBC must be provided beginning on the first day of the first open enrollment period that begins on or after September 23, 2012. For disclosures with respect to participants who enroll in coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the SBC must be provided beginning on the first day of… Continue Reading

Yahoo! v. Facebook: Clicking Through the Blogosphere Bias

Originally posted March 13.  Updated March 28, 2012. On March 12th, Yahoo! filed a patent infringement lawsuit in the Northern District of California alleging that Facebook infringes ten Yahoo! patents.  Immediate reaction has been widely critical of Yahoo!, from interpreting statements made in the filing as a claim by Yahoo! that it “patented the whole idea of Facebook” to characterizing Yahoo! as “relentlessly stagnating as Facebook innovated.”  Such is to be expected from the blogosphere with regard to the party asserting software or Internet-related patents.  However, if one really wants to weigh the merits of this lawsuit and the claims being made about it, there really is no substitute for digging into the subject matter of the patents that Yahoo! claims cover various aspects of how Facebook operates: Yahoo!’s “Advertising Patents” Yahoo! claims protection in systems and methods for advertising, placing advertisements on a web page in a manner according… Continue Reading

Fraud Allegations Sour Apple’s Promises That Its App Store Is Secure

Apple should be celebrating.  Its App Store recently exceeded 2 billion downloads.  Over 600,000 apps are now available for the iPhone, iPad and iPod Touch.  Yet, continuing claims of fraud surely dampen any celebration and threaten to sour the App Store’s reputation as a secure marketplace. The New York Times recently shared Ryan Matthew Pierson’s story.  In about an hour, Mr. Pierson’s iTunes account was charged $437.71 for virtual currency that he could use to buy guns, nightclubs and cars in iMobsters, a popular iPhone game.  The problem is, Mr. Pierson has never played the game.  He was the victim of fraud.  Unfortunately, Mr. Pierson is not alone.  Hundreds of others have complained that the App Store is not secure. Consumers are not the sole victims of this fraud.  Developers lose hundreds of thousands of dollars to App Store fraud.  Compounding their problems is consumers’ perception that developers are to blame… Continue Reading

IRS Provides Guidance on Rollovers from Defined Contribution Plans to Defined Benefit Plans to Obtain Annuities

In Revenue Ruling 2012-4, the IRS provided guidance for employers that sponsor both a defined contribution plan and a defined benefit plan to allow participants in the defined contribution plan to roll over amounts from that plan to the defined benefit plan in exchange for an annuity from the defined benefit plan. Under the ruling, the defined benefit plan does not violate Code sections 411 or 415 if the plan provides an annuity using actuarial factors that are at least as favorable as the applicable interest rate and mortality table under Code section 417(e). The rolled over amounts must be nonforfeitable and the defined benefit plan must not be permitted to accept rollovers if the plan’s adjusted funding target attainment percentage drops below 60 percent. A copy of the Revenue Ruling can be found here.

The New Runaway Jurors: Social Media Addicts

Imagine you are at home one night enjoying your favorite pastimes—checking your Facebook page and Twitter feed.  Your significant other intrudes, and tells you that there was a jury summons in the mail—and it has your name on it. You immediately update your statuses (all of them) to “OH NO! JURY DUTY!  ):”  After all, you know what comes next: if selected, you anticipate weeks of missed work, long-winded lawyers, and uncomfortable seats. Your worst fears regarding the seats are confirmed while participating in something the judge refers to as “voir dire.”  To your chagrin, you are selected for the jury.  Then, you are surprised when the judge adds insult to injury by instructing the jury to refrain from mentioning the trial in any social media for the duration of the trial. But, you were never one to keep your Twitter followers waiting, were you?  So—against the judge’s instructions—you live-blog… Continue Reading

HHS Settles HIPAA Case for $1.5 Million

On March 13, 2012, HHS announced a settlement with Blue Cross Blue Shield of Tennessee (“BCBST”) regarding potential violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Privacy and Security Rules. The investigation by HHS arose after a November 2009 breach report notice submitted by BCBST to HHS reported that 57 unencrypted computer hard drives containing “protected health information” (“PHI”) of more than 1 million individuals were stolen from a leased facility in Tennessee. As a result of its investigation, HHS discovered that BCBST failed to implement appropriate administrative and physical safeguards to adequately protect PHI. In addition to the $1.5 million penalty, the settlement agreement requires BCBST to review, revise and maintain its Privacy and Security Policies and Procedures and to conduct regular trainings for all BCBST employees with responsibilities under HIPAA. According to HHS, this enforcement action is the first resulting from the breach report… Continue Reading

HHS Issues Final Regulations on State Health Insurance Exchanges under Health Reform

The U.S. Department of Health and Human Services (“HHS”) issued final and interim final regulations addressing, among other items, (1) how the state health insurance exchanges which are required under the health reform legislation will be established and operated and (2) how individuals and small businesses can participate in the exchanges. The regulations, which combine policies from the two sets of proposed regulations that were issued last summer, offer additional flexibility regarding the eligibility determination process. The regulations are scheduled to be published in the Federal Register on March 27, 2012, but a pre-publication copy of the regulations is available here. Additionally, a copy of the regulatory impact analysis issued by HHS is available here.

March 2012
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