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Missing or Unresponsive Participants and Required Distributions from Qualified Retirement Plans

It is often difficult for retirement plans to maintain current addresses for terminated participants. If distributions are not made (or are not permitted) at the time of a participant’s employment termination, the plan is required to make sure distributions are taken or begin either at the plan’s normal retirement date or when the participant reaches age 70 ½, depending on the plan’s terms. If the plan does not comply with the plan’s distribution requirements, the plan risks disqualification. When discovered, on audit or otherwise, the plan must correct the noncompliance which often involves paying fees or penalties to avoid plan disqualification. To avoid these problems, employers should take the following steps: Examine your plan to determine when distributions are required. Many plans require the participant to file a claim to begin their benefits and do not require distributions to begin at normal retirement date. In those circumstances, distributions must begin… Continue Reading

No Business Associate Agreement is Enough to Result in a $31,000 Settlement

On April 17, 2017, the Center for Children’s Digestive Health in Illinois (“CCDH”) entered into a resolution agreement with HHS pursuant to which CCDH agreed to pay $31,000 to settle potential HIPAA privacy rule violations. The primary basis for the settlement was the lack of a business associate agreement between CCDH and one of its business associates, which HHS determined demonstrated a lack of effective control and review of CCDH’s HIPAA policies and procedures. FileFax, Inc. (“FileFax”) is an Illinois record storage and disposal company. FileFax’s clients included healthcare providers, such as CCDH. FileFax’s services to those providers included the storage and disposal of medical records. A whistleblower led to a 2015 investigation of FileFax by the Illinois Attorney General. HHS then discovered that FileFax was discarding medical records in an unlocked dumpster adjacent to its building and had also shipped a large volume of other medical records to a… Continue Reading

Texas Supreme Court Clarifies Damages Recoverable For Violations Of The Texas Insurance Code

The Texas Supreme Court has clarified years of confusion over the damages recoverable for statutory “bad-faith” by holding that policy benefits can constitute actual damages resulting from violations of the Texas Insurance Code. The Problem Since at least 1998, Texas policyholders and insurers have labored under some uncertainty regarding the damages recoverable when an insurer engages in “unfair or deceptive acts or practices” denominated as such under Chapter 541 of the Texas Insurance Code. Section 541.060, for example, prohibits insurers from, among other things, (1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue; (2) failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear; (3) failing to promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts… Continue Reading

Federal Appeals Court Case Highlights Employer Actions for Defending Against Legal Claims Brought by Healthcare Providers

A recent decision by the U.S. Court of Appeals for the Ninth Circuit in two consolidated cases, one of which was Advanced Women’s Health Center, Inc. v. Anthem Blue Cross Life and Health Insurance Company, highlights several important points for employer-sponsors of group health plans when defending against legal claims brought by healthcare providers under ERISA. Advanced Women’s Health Center (“AWHC“) was an in-network provider of health services to participants under various group health plans subject to ERISA (collectively, the “Plans“), and Anthem served as the Plans’ third-party benefit claims administrator. In the course of a post-payment claims review, Anthem determined that certain claims for AWHC’s services had been overpaid and then pursued recoupment by offsetting such overpayments against other reimbursements payable to AWHC. AWHC brought suit against Anthem, based on its purported status as an ERISA “beneficiary,” seeking (i) a declaratory judgment that Anthem’s offsetting process violated ERISA’s claims… Continue Reading

The IP Beacon, March 2017

View the PDF version of the March 2017 IP Beacon. Subject Matter Eligibility Guidance from the Federal Circuit: Thales Visionix v. United States By Kelvin Varghese Both the courts and the Patent and Trademark Office (PTO) have struggled to define the metes and bounds of the subject matter eligibility analysis under 35 U.S.C. § 101. The Court of Appeals for the Federal Circuit’s recent decision on March 8, 2017 in Thales Visionix Inc. v. United States further clarifies the first step of the eligibility analysis, while confirming the significance of that step. Read more. No Respite On The Horizon For CBM Patents By Andrew Cohn The Patent Trials and Appeals Board and the Federal Circuit have continued their hostility to payment and financial technology patents, recently invalidating three patents and reversing a large damage award in Smartflash LLC v. Apple Inc, see Smartflash LLC v. Apple Inc., Case No. 2016-1059… Continue Reading

Haynes and Boone Borrowing Base Redeterminations Survey – Spring 2017 Results

Haynes and Boone, LLP’s spring 2017 survey of oil and gas borrowers and lenders demonstrates a modestly improved outlook for the oil and gas market. In its “Borrowing Base Redeterminations Survey: Spring 2017,” the firm polled a broad cross-section of the industry, including executives at oil and gas producers, oilfield services companies, banks and private equity firms, to glean their forward-looking views about the financial state of the market. Specifically, the survey asked respondents to offer predictions about producers’ future borrowing capacity or “borrowing bases”. Producers and lenders meet twice a year to assess borrowing bases — determinations that turn on banks’ projections about the future prices of the producers’ oil and gas reserves. Survey respondents expect that 76 percent of producers will see their borrowing bases increase slightly or remain unchanged compared to their fall 2016 borrowing bases. This is improved from Haynes and Boone’s fall 2016 survey, when… Continue Reading

DOL Final Rule Implements 60-Day Delay of New Fiduciary Duty Rule

The DOL recently published final rules that implement a 60-day delay in the effective date of the new fiduciary duty rule and related exemptions that the DOL proposed last March. Both the DOL and IRS previously announced enforcement relief from the new fiduciary duty rule in the event the DOL did not publish these final rules prior to April 10, 2017 (the enforcement relief is now moot since the final rules were published prior to that date). The final rules confirm that the new fiduciary duty rule’s effective date has been pushed back from April 10, 2017 to June 9, 2017. The 60-day delay is intended to give the DOL time to reconsider the fiduciary duty rule and to determine whether it may adversely affect the ability of individuals to gain access to retirement information and financial advice. View the final rules.

Differing burdens of proof in the PTAB and district courts can allow patent challengers a second bite at the apple

The different burdens of proof in the Patent Trial and Appeal Board (PTAB) and in district court means that the PTAB may find patent claims unpatentable even after the claims were held valid over the same evidence in litigation. Novartis AG v. Noven Pharm. Inc., No. 2016-1678, 2016-1679 (April 4, 2017).

In two separate Inter Partes Review (IPR) proceedings, the PTAB found the asserted claims of Novartis’s U.S. Patent Nos. 6,316,023 and 6,335,031 unpatentable for obviousness over various combinations of prior art references. Novartis, No. 2016-1678, 2016-1679 at 2, 4. However, those same claims had previously been litigated in the U.S. District Court for the District of Delaware. Id. at 6. Based on the “same” arguments and the “same” evidence considered by the PTAB, the Delaware District Court held the claims not obvious, and the Federal Circuit affirmed the court. Id.; Novartis Pharm. Corp. v. Watson Labs., Inc., 611 F. App’x 988 (Fed. Cir. 2015); Novartis Pharm. Corp. v. Noven Pharm., Inc., 125 F. Supp. 3d 474 (D. Del. 2015).

Federal Circuit clarifies limited exception to the presumption that ‘consisting of’ is a closed term

Federal Circuit clarifies limited exception to the presumption that ‘consisting of’ is a closed term

In the case of a claim directed to a composition “consisting of” substances selected from a Markush group, when is the presence of an unclaimed ingredient sufficiently unrelated to the invention to preclude infringement?  The Federal Circuit recently addressed this question in Shire Dev., LLC v. Watson Pharm., Inc., No. 2016-1785 (Fed. Cir. February 10, 2017).  The Federal Circuit reversed the district court’s finding of infringement because the accused product did not satisfy the claimed Markush group requirements.  Shire, No. 2016-1785 at 2.  Specifically, the Court found that the accused product containing an ingredient not listed in the claimed Markush group did not infringe where that additional ingredient structurally and functionally related to the invention.  Id. at 7-9. The asserted claims of U.S. Patent No. 6,773,720 require a controlled-release oral pharmaceutical composition including a specific active ingredient; an inner, lipophilic matrix; an outer, hydrophilic matrix; and other excipients.  Id. at… Continue Reading

IRS Announces Enforcement Relief from Fiduciary Rule

Previously, the DOL, in Field Assistance Bulletin 2017-01, announced its temporary enforcement policy for the new fiduciary duty rule and related exemptions (the “Fiduciary Rule”). The IRS recently published Announcement 2017-4, stating excise taxes will not be assessed for violations of the Fiduciary Rule for the periods for which the DOL announced enforcement relief in Field Assistance Bulletin 2017-01. Excise taxes will not be assessed during the following periods: (i) if the DOL issues a final rule after April 10 delaying the effective date of the Fiduciary Rule, excise taxes won’t be assessed for non-compliance with the rule during the “gap” period between April 10 and the date a delay is implemented, and (ii) if the DOL decides not to delay the effective date of the rule, excise taxes won’t be assessed for non-compliance occurring between April 10 and a “reasonable” period after publication of the DOL’s decision. View Announcement… Continue Reading

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