Blog post contributed by Larry Pascal, Partner and Co-Chair, International Practice at Haynes and Boone, LLP. Having returned recently from a six-day “people to people” trip to Havana arranged through the State Bar of Texas, I am struck by a variety of changes in the country since my last trip to Havana more than twelve years ago (also arranged through the State Bar of Texas). Of course, this trip was at a particularly exciting time, following in the wake of the recent presidential trip by Barack Obama (and a large American delegation) and the first concert in Cuba by the Rolling Stones. However, I sensed other changes, perhaps symbolized by the new construction near the Hotel Parque Central were we were staying. Since the adoption of the 2014 Foreign Investment Law No. 114, Cuba has cautiously embraced private foreign investment to a greater degree than before, albeit subject to more… Continue Reading
On April 20, 2016, the U.S. Departments of Labor, Health and Human Services, and Treasury issued a set of Frequently Asked Questions (“FAQs”) addressing certain provisions under the Affordable Care Act, the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”), and the Women’s Health and Cancer Rights Act of 1998 (“WHCRA”). The FAQs provide guidance on several topics, including coverage of colonoscopies and contraceptives, rescissions of coverage, disclosures required for claims related to out-of-network emergency services, coverage for individuals participating in approved clinical trials, reference-based pricing, various topics related to the MHPAEA, and coverage under the WHCRA. The FAQs are available here.
IRS Announces Withdrawal of Certain Proposed Nondiscrimination Rules Applicable to Cross-Tested Plans
The U.S. Department of the Treasury and the Internal Revenue Service announced in Announcement 2016-16 that they will withdraw certain provisions of proposed regulations published in January 2016 (the “Withdrawn Regulations”) relating to certain nondiscrimination requirements applicable to qualified retirement plans. The provisions of the Withdrawn Regulations were intended to address certain plan designs that satisfy existing nondiscrimination rules when providing a special benefit formula for selected employees without extending that formula to a classification of employees that is reasonable and established under objective business criteria. The Withdrawn Regulations would have presented problems for so-called “QSERP” provisions in defined benefit plan and certain cash balance plan designs, among others. Announcement 2016-16 can be found here.
Fourth Circuit Finds “Publication” and a Duty to Defend Portal Healthcare Privacy Class Action under General Liability Insurance
The Fourth Circuit Court of Appeals has affirmed a lower court ruling finding that the placement of confidential patient medical records on the internet qualifies as “publication” for purposes of an insurer’s duty to defend under a commercial general liability policy. According to an underlying class action complaint, Portal Healthcare Solutions (“Portal”) allowed private medical records to remain on an unsecured server and exposed to anyone with an internet connection for more than four months. At issue in coverage litigation between Portal Healthcare Solutions and its general liability insurer, Travelers, was policy language requiring Travelers to pay sums Portal became legally obligated to pay as damages because of injury arising from the “electronic publication of material that … gives unreasonable publicity to a person’s private life” or “discloses information about a person’s private life.” Rejecting attempts by Travelers to require evidence that the policyholder intended to communicate information to third… Continue Reading
The IRS recently reminded plan sponsors of pre-approved defined contribution plans (e.g., prototype and volume submitter plans) that they must adopt restated plan documents, which incorporate certain changes in the law, such as the Pension Protection Act of 2006, no later than April 30, 2016. Sponsors of pre-approved plans should have already received a restated plan document from their service provider, along with a copy of the IRS opinion letter that will apply to the restated plan. In a related announcement, the IRS provided an additional method for employers to correct a failure to timely adopt a pre-approved plan document. Previously, the only correction method available was for an employer to file an application under the IRS’s Voluntary Correction Program under the Employee Plans Compliance Resolution System. Now, the financial institution or service provider responsible for the pre-approved plan can submit a proposal to the IRS for an umbrella closing… Continue Reading
We recently reported on the DOL’s investigation of failures by large defined benefit plans to locate and pay benefits to vested, terminated participants (please see our prior blog post here). A related issue for all retirement plan sponsors to consider is how to handle uncashed distribution checks. The funds represented by such checks remain plan assets, so plan sponsors retain fiduciary responsibility for them. Consequently, plan sponsors should have procedures in place to locate missing participants and beneficiaries, and to address how unclaimed funds will be handled if a participant or beneficiary cannot be located, including when unclaimed funds may be forfeited and procedures for reinstating the funds if later claimed by an individual. Plan sponsors should work with their benefits counsel to ensure that their plan document and administrative procedures adequately address how to handle uncashed distribution checks and that such procedures are being followed on a consistent basis.… Continue Reading
The DOL has issued a final regulation defining who is a “fiduciary” of an employee benefit plan under ERISA (including an individual retirement account (“IRA”)) as a result of giving investment advice to a plan or its participants or beneficiaries. The DOL also issued a number of related prohibited transaction exemptions (including the “Best Interest Contract Exemption” and the “Principal Transactions Exemption”) and amendments to certain current prohibited transaction exemptions. The final rule broadly treats persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of an employee benefit plan or IRA as fiduciaries in a wide array of advice relationships. Although the final rule maintains the same essential framework as the proposed rule, it includes a number of changes and clarifications which the White House has indicated are efforts by the DOL to “[streamline] the rule and exemptions to reduce the compliance… Continue Reading
The Puerto Rico Treasury Department recently issued Administrative Determination No. 16-05 (the “Determination”), which provides a revised procedure for trusts forming part of Puerto Rico qualified requirement plans (“Benefits Trusts”) to meet their annual filing requirements under Section 1061.10(a) of the Puerto Rico Internal Revenue Code of 2011, as amended (“Trust Filing”). The new Trust Filing procedure applies with respect to taxable years beginning after December 31, 2014. Prior to the Determination, Benefits Trusts were required to file Form 480.7(OE) (or, if the trust was subject to Title I of ERISA, a copy of the IRS Form 5500) with the Puerto Rico Treasury Department by the last day of the seventh month following the end of the plan year (subject to an automatic 2½ month extension). Under the Determination, Benefits Trusts established or adopted by an employer that must file a Puerto Rico income tax return will comply with its… Continue Reading
HHS recently entered into a Resolution Agreement with North Memorial Health Care of Minnesota (“North Memorial”) to settle charges that North Memorial potentially violated HIPAA by failing to (1) enter into a business associate agreement with a major contractor and (2) implement a comprehensive risk analysis with respect to the security of its patients’ protected health information. OCR launched an investigation of North Memorial after an unencrypted laptop was stolen from the vehicle of an employee of its business associate. As part of the settlement, North Memorial agreed to pay HHS $1.55 million and to a corrective action plan under which North Memorial must, among other conditions, review and revise its HIPAA policies, procedures, and training as well as develop an organization-wide risk analysis and risk management plan. The Resolution Agreement is available here.
The U.S. Department of Health and Human Services Office for Civil Rights (“OCR”) recently announced it has begun its next phase of audits to assess the compliance of covered entities, such as employer-sponsored health plans, and their business associates with the Privacy, Security and Breach Notification Rules under the Health Insurance Portability and Accountability Act (“HIPAA”). During this phase of the audit program, OCR will review the HIPAA policies and procedures adopted by covered entities and business associates, primarily through desk audits but also via some on-site audits. OCR is currently sending letters by email to covered entities and business associates to verify their contact information and will subsequently send pre-audit questionnaires to gather information that OCR will use to identify potential audit candidates. In light of this new audit program, as well as several recent high dollar and burdensome settlement agreements that the U.S. Department of Health and Human… Continue Reading