[firm] blog logo

DOL Confirms June 9, 2017 Effective Date for the Fiduciary Rule

The DOL has announced that its new fiduciary duty rule and related prohibited transaction exemptions (the ?Ç£PTEs?Ç¥) will go into effect on June 9, 2017, although certain provisions in the PTEs will not become effective until after a ?Ç£transition period?Ç¥ that ends on January 1, 2018. On May 22, 2017, the DOL published Field Assistance Bulletin 2017-02, in which it announced a temporary enforcement policy whereby it will not pursue claims during the transition period against fiduciaries who are working diligently and in good faith to comply with the new fiduciary duty rule and the PTEs. The DOL also released a series of Conflict of Interest FAQs clarifying the standards that apply under the PTEs during the transition period. View Field Assistance Bulletin 2017-02. View the FAQs.

HHS Settlement with HIPAA Covered Entity Exacts $2.5 Million Penalty for Non-compliance

The U.S. Department of Health and Human Services?ÇÖ Office for Civil Rights (?Ç£OCR?Ç¥) recently announced a $2.5 million HIPAA privacy and security settlement with CardioNet, a wireless health services provider and covered entity under HIPAA, based on CardioNet?ÇÖs impermissible disclosure of unsecured electronic protected health information (?Ç£EPHI?Ç¥). The disclosure occurred when a laptop computer belonging to a member of CardioNet?ÇÖs workforce, which contained the unsecured EPHI of 1,391 individuals, was stolen from a parked vehicle outside of the workforce member?ÇÖs home. CardioNet reported the breach to OCR and an investigation ensued, pursuant to which OCR determined that (i) CardioNet did not have a sufficient risk analysis and risk management process in place at the time of the theft, (ii) CardioNet had never actually implemented its draft policies and procedures for compliance with HIPAA?ÇÖs security rules, and (iii) CardioNet was unable to produce any final policies or procedures regarding the implementation… Continue Reading

Anything You Say May Be Used Against You In A Court Of Law

For patent practitioners, prosecution disclaimer is an often forgotten patent law principle that can find its way back into the formalistic claim construction adhered to in many Federal Circuit decisions. In some cases, patentees may disclaim more than is necessary to overcome cited art during prosecution. That was exactly the case in Technology Properties Ltd. v. Huawei Tech, et al. (Case Numbers 2016-1306, 2016-1307, 2016-1309, 2016-1310, and 2016-1311, Fed. Cir. March 3, 2017) (?Ç£Tech. Prop. Ltd.?Ç¥), where a patentee?ÇÖs remarks during prosecution ultimately led to narrowing limitations being read into the issued claims. In Tech. Prop. Ltd., Technology Properties Limited LLC, Phoenix Digital Solutions LLC, and Patriot Scientific Corp. (?Ç£Technology Properties?Ç¥) asserting U.S. Patent No. 5,809,336 (?Ç£?Çÿ336 patent?Ç¥) against several defendants, including Huawei Technologies Co., Samsung Electronics Co., Nintendo Co., and LG Electronics, Inc. (?Ç£Appellees?Ç¥). The?á?Çÿ336 patent is directed to decoupling a variable frequency system clock connected to a CPU… Continue Reading

SEC Charges CEO for Failing to Properly Disclose Executive Perks to Shareholders

A former CEO of a marketing company has agreed to settle charges by the U.S. Securities and Exchange Commission (the ?Ç£SEC?Ç¥) that his executive perks were not properly disclosed to the company?ÇÖs shareholders. According to the SEC?ÇÖs order, annual filings disclosed that the company?ÇÖs CEO and chairman received an annual perquisite allowance of $500,000 in addition to other benefits. However, the SEC?ÇÖs investigation discovered that the company paid for the CEO?ÇÖs personal use of private airplanes as well as charitable donations in his name, yacht and sports car expenses, cosmetic surgery, jewelry, medical expenses for family members, pet care, and a wide range of other perks that the company failed to properly disclose. The SEC alleged the CEO improperly obtained an additional $11.285 million in perks beyond his disclosed benefits and the $500,000 annual allowance. The CEO has since resigned and returned $11.285 million to the company. The CEO consented… Continue Reading

Limits Set in Equity Plans Yield Less Stringent Standard of Review

In a recent Delaware Court of Chancery case, stockholders brought suit against a company?ÇÖs directors alleging breach of fiduciary duty for awarding themselves ?Ç£grossly excessive compensation.?Ç¥ The excessive compensation in question included equity grants issued pursuant to the company?ÇÖs equity incentive plan. The terms of the stockholder-approved plan provided limits on the number of shares that the company could issue as stock options, restricted stock, and restricted stock units and on the number of shares the company could award to employees and directors. The court held that the specific equity awards could be reviewed pursuant to the business judgment rule, which is the standard used to review executive compensation approved by a disinterested committee rather than a more stringent standard required for ?Ç£self-dealing.?Ç¥ In applying the business judgment rule, the court found that it was critical that the director-specific limits set forth in the plan differed from the limits that… Continue Reading

IRS Chief Counsel Clarifies Tax Treatment of Certain Benefits Paid by Self-Insured Health Plans

On April 24, 2017, the IRS Chief Counsel issued a memorandum addressing the tax consequences of employer provided, self-insured health coverage that primarily provides cash payments (or other taxable benefits) to participating employees upon the completion of various wellness-related activities. The IRS noted it was aware these programs were being marketed to employers as a way to provide cash and cash-equivalent compensation to employees on a tax-free basis. In addition to providing a discussion on whether and when an arrangement would be considered accident or health insurance, the memorandum clarifies that even if employees pay an after-tax contribution to participate in the plan, the value of cash payments (or other taxable benefits) received under the plan would be considered taxable wages to employees if the average value of the cash (or other taxable benefits) received are expected to exceed any after-tax contributions paid by participating employees. In other words, the… Continue Reading

Executive Order Intended to Ease Religious-Based Objections to Women?ÇÖs Contraceptive Services

On April 17, 2017, President Trump signed an executive order (the ?Ç£EO?Ç¥) that includes a request to the Secretaries of Treasury, Labor, and Health and Human Services to consider amending regulations related to a plan sponsor?ÇÖs ability to make a conscience-based objection to, and opt out of, complying with the preventive services mandate under the Affordable Care Act (the ?Ç£ACA?Ç¥). Under the ACA, non-grandfathered group health plans must generally provide coverage for specified preventive services, including women?ÇÖs contraceptive services. Although the EO broadly indicates the entire ACA preventive services mandate, the context of the order suggests the focus is on women?ÇÖs contraceptive services. Religious employers, narrowly defined as houses of worship, are currently exempt from the requirement to cover women?ÇÖs contraceptive services, but there is no exemption for non-profit religiously affiliated employers or any for-profit organization. The EO appears to request the agencies make it easier for religiously-affiliated employers to… Continue Reading

UPDATED: Energy Bankruptcy Reports and Surveys

Oil Patch Bankruptcy Monitor: details on oil and gas producers that have filed for bankruptcy since the beginning of 2015. Updated April 27, 2017. Oilfield Services Bankruptcy Tracker: details on middle-market oilfield services companies that have filed for bankruptcy since the beginning of 2015. Updated April 27, 2017. Borrowing Base Redeterminations Survey: details on what lenders, borrowers and others in the energy industry expect regarding the borrowing base redeterminations in light of oil price uncertainty – Updated April 04, 2017. Midstream Report: details on the midstream companies that have filed for bankruptcy since 2015. Updated February 20, 2017.

IRS Releases 2018 Inflation-Adjusted Amounts for HSAs and HDHPs

The IRS recently issued Revenue Procedure 2017-37, which sets the 2018 calendar year limits on (i) annual contributions that can be made to a health savings account (?Ç£HSA?Ç¥) and (ii) annual deductibles and out-of-pocket maximums under a high deductible health plan (?Ç£HDHP?Ç¥). The 2018 limits, which?áwere increased across the board from the 2017 limits, are as follows: Minimum HDHP deductibles ?Çô $1,350 self-only coverage ($50 increase from 2017); $2,700 family coverage ($100 increase from 2017). HDHP out-of-pocket maximum limits ?Çô $6,650 self-only coverage ($100 increase from 2017); $13,300 family coverage ($200 increase from 2017). Annual HSA contribution limits ?Çô $3,450 self-only coverage ($50 increase from 2017); $6,900 family coverage ($150 increase from 2017). View Revenue Procedure 2017-37.

Employer?ÇÖs Fiduciary Liability for Failing to Provide Life Insurance Conversion Notice

An employee went out on long-term disability leave due to a brain tumor. The employee and his wife had a meeting with the employer?ÇÖs benefits team, during which the couple was told ?Ç£everything would remain the same,?Ç¥ including how to keep their benefits the same during and after the leave period. However, conversion of the employee?ÇÖs life insurance coverage after his leave expired was not discussed. The employee was mailed a leave packet describing the continuation of benefits during leave; it stated that life insurance could be continued for the duration of the leave, that a conversion policy may be available, and to contact the benefits department for specific details. When the life insurance benefit claim was submitted after the employee?ÇÖs death, the benefits employee indicated that the employee was still on a FMLA leave of absence, and life insurance coverage was still in effect at the time of death,… Continue Reading

May 2017