Denton’s Fracking Ban: Will “Civil Authority” Insurance Coverage Apply To Lessees’ Loss Of Natural Gas Revenues?
On November 4, 2014, voters in Denton made that city the first in Texas to ban hydraulic fracturing within city limits.?á Within a day, lawsuits were filed by the Texas General Land Office and the Texas Oil and Gas Association, and state lawmakers and regulators voiced strong opposition to the ballot measure.?á Whatever the outcome of these legal challenges, lessees holding interests in the more than 270 natural gas wells affected by the ban potentially stand to lose significant revenues in the interim while litigation remains pending. For energy companies, whose operations may be curtailed by Denton?ÇÖs ?Ç£Fracking Ban Initiative,?Ç¥ one alternative source of relief may be found in insurance.?á Most commercial property policies contain some form of ?Ç£civil authority?Ç¥ coverage, which generally insures against the loss of business income sustained by an insured when, as a result of covered physical loss or damage to other property, access to the… Continue Reading
The U.S. Departments of Labor (DOL), Health and Human Services (HHS), and Treasury issued guidance confirming that employers may not reimburse employees for the cost of individual health coverage, either on a pre-tax or post-tax basis. Additionally, the guidance makes clear that an employer may not offer high-risk employees a choice between cash and coverage under the employer?ÇÖs plan. The DOL will consider such an offer to be discriminatory. The FAQs can be found?áhere.
For high deductible health plans related to health savings accounts, the annual deductible must be at least $1,300 for self-only coverage and $2,600 for family coverage, and annual out-of-pocket expenses cannot exceed $6,450 for self-only coverage and $12,900 for family coverage.
In Revenue Procedure 2014-61, the IRS announced indexed amounts for 2015. Among other limits, the dollar limitation on employee pre-tax payroll contributions to health flexible spending arrangements will increase to $2,550. The monthly qualified parking fringe benefit exclusion amount will be $250, while the commuter highway vehicle and transit pass amount will be $130. A ?Ç£high deductible health plan?Ç¥ must have, for self-only coverage, an annual deductible between $2,200 and $3,300, with annual out-of-pocket expenses of not more than $4,450, and for family coverage, an annual deductible between $4,450 and $6,650, with annual out-of-pocket expenses of not more than $8,150. IRS Revenue Procedure 2014-61 can be found here.
?Ç£Minimum Value?Ç¥ Plans Must Provide Substantial Coverage for Hospitalization and Physician Services
The Department of Treasury and the Department of Health and Human Services (the ?Ç£Departments?Ç¥) issued IRS Notice 2014-69 stating that health plans that fail to provide substantial coverage for in-patient hospitalization services or for physician services (or both) do not provide the ?Ç£minimum value?Ç¥ that is required by the Patient Protection and Affordable Care Act. Proposed regulations to that effect are expected to be issued in 2015. Employers are unable to rely solely on the minimum value calculator to demonstrate that plans provide minimum value for any portion of any taxable year ending on or after January 1, 2015, following finalization of the regulations. The Departments did provide limited grandfathering solely in the case of an employer that has entered into a binding written commitment to adopt, or has begun enrolling employees in, such plans prior to November 4, 2014. Employers maintaining such grandfathered plans will not be subject to… Continue Reading
The U.S. Department of Labor (the ?Ç£DOL?Ç¥) released an Information Letter coincident with the IRS?ÇÖs issuance of Notice 2014-66, confirming that the inclusion of unallocated deferred annuity contracts as fixed income investments within a series of TDFs as described in Notice 2014-66 would not cause the TDF series to fail to comply with the qualified default investment alternative rules applicable to TDFs under ERISA. The selection of unallocated deferred annuity contracts within a TDF series will satisfy the DOL?ÇÖs annuity selection safe harbor under ERISA (the ?Ç£Annuity Safe Harbor?Ç¥) if the plan sponsor prudently selects and appropriately monitors the investment manager and the investment manager meets each condition of the Annuity Safe Harbor. Plan sponsors of defined contribution plans offering TDFs that include deferred annuities for older participants should carefully review Notice 2014-66 and the DOL Information Letter to ensure that their TDF arrangements meet the conditions discussed in each.… Continue Reading
The Centers for Medicare & Medicaid Services (?Ç£CMS?Ç¥) announced the indefinite delay of its enforcement of the requirement that health plans obtain and use a Health Plan Identifier (?Ç£HPID?Ç¥) in HIPAA transactions. Certain health plans had been required to obtain a HPID by November 5, 2014. The enforcement delay applies to all HIPAA covered entities, including health plans and healthcare providers. The CMS announcement is available?áhere.
Putting the Genie Back in the Bottle: Fifth Circuit Finds Breach of Express Warranty to Repair Not Excluded by the ?Ç£Contractual Liability?Ç¥ Exclusion
The Fifth Circuit Court of Appeals has held in Crownover v. Mid-Continent Casualty Company?áthat a contractor?ÇÖs breach of an express warranty to repair does not constitute an ?Ç£assumption of liability in a contract or agreement?Ç¥ for purposes of the ?Ç£contractual liability?Ç¥ exclusion found in most general liability policies. Once upon a time, insurers, insureds and courts understood that the ?Ç£contractual liability?Ç¥ exclusion, which applies to damages the insured is obligated to pay by reason of the ?Ç£assumption of liability in a contract or agreement,?Ç¥ is triggered only ?Ç£when the insured assumes responsibility for the conduct of a third-party?Ç¥ in an indemnity or hold-harmless agreement.?á In Gilbert?áin 2010 and in Ewing?áin January of this year, the Texas Supreme Court adopted a new legal construct: ?Ç£?Çÿassumption of liability?ÇÖ means that the insured has assumed a liability for damages that exceeds the liability it would have under general law.?Ç¥ Since this new standard… Continue Reading