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Emergency PTO Sharing Plans May Help Employees Affected by Hurricane Harvey

With the effects of Hurricane Harvey likely to be felt for many weeks and months to come, employees affected by the storm may need to take time off from work in excess of the amount of paid time off (“PTO”) they are eligible for from their employer. One way to provide additional PTO to affected employees is for the employer to adopt an emergency PTO sharing plan. Under an emergency PTO sharing plan, employees can donate some of their PTO to a PTO bank that is administered by the employer. Employees who have been adversely affected by Harvey could apply for additional PTO, and the employer would then grant additional PTO to the affected employees based on need. For purposes of an emergency PTO sharing plan, an employee has been adversely affected by a natural disaster if it caused severe hardship to the employee (or a family member) that requires… Continue Reading

Additional Relief for Benefit Plans Due to Hurricane Harvey

The IRS and DOL have announced additional relief for benefit plans affected by Hurricane Harvey. This relief applies to participants, beneficiaries, and plans whose plan administration and/or recordkeeping functions reside within the disaster area. This relief includes the following: The filing date for Form 5500 filings due on or after August 23, 2017 and before January 31, 2018 is automatically extended to January 31, 2018. The DOL will provide relief for certain plan loan and distribution verification procedures to be described in later guidance, provide enforcement relief for delays in forwarding participant contributions, and provide relief for failures to timely provide blackout notices for temporary plan restrictions caused by Harvey. The DOL requests welfare plans make reasonable accommodations for participants and beneficiaries who are unable to timely file benefit claims or make COBRA elections for the purposes of preserving coverage and providing benefits. The request for accommodation should also include… Continue Reading

IRS provides Retirement Plan Loan and Hardship Distribution Relief for Harvey Victims

The IRS has released Announcement 2017-11 providing relief from some of the loan and hardship distribution requirements under qualified retirement plans (including Code Section 401(a) and 403(b) plans) for the period of August 23, 2017 through January 31, 2018. The relief applies to employees or former employees either (i) whose principal residence on Aug. 23 was in one of the Texas counties identified by FEMA for individual assistance because of Hurricane Harvey, or (ii) whose place of employment on Aug. 23 was in one of those counties. The relief also applies if the employee’s or former employee’s “lineal ascendant or descendant, dependent, or spouse” lived or worked in one of those counties on Aug. 23. This relief will also apply to those living or working in other areas FEMA may identify for individual assistance in Texas or other states due to damage from Harvey. For a list of the counties… Continue Reading

Hurricane Harvey and Insurance Coverage: Protecting Your Statutory Rights Before September 1st

As Hurricane Harvey continues to sweep the Texas coastline and destroy property in its path, insureds should take action before September 1st to protect their statutory rights and avoid the changes made under House Bill 1774, also referred to as the “Hail Bill,” which take effect September 1, 2017. The Hail Bill adds “Chapter 542A – Certain Consumer Actions Related to Claims for Property Damage” to the Texas Insurance Code. This Chapter applies to actions on first-party claims for damage or loss of covered real property caused “wholly or partially” by “forces of nature”—including damage caused by floods, hurricanes, and rainstorms. In relevant part, Chapter 542A does two important things. First, Chapter 542A limits the interest policyholders may recover from a late-paying insurer under Section 542.060 of the Insurance Code for so-called “forces of nature” claims from 18 percent to approximately 10 percent under current market rates. Second, Chapter 542A… Continue Reading

Court Requires EEOC to Reconsider Wellness Program Regulations

Generally, the Americans with Disabilities Act (the “ADA“) and the Genetic Information Non-Discrimination Act (“GINA“) permit employers to offer certain wellness programs if they are “voluntary.” The EEOC issued regulations in 2016, which we discussed here, permitting wellness programs to have incentives of up to 30 percent of the cost of health plan coverage in order to align with permitted incentives under the Health Insurance Portability and Accountability Act (“HIPAA“). The AARP sued the EEOC claiming that this 30 percent limit was still coercive and was contrary to the “voluntary” requirement under the ADA and GINA. The U.S. District Court for the District of Columbia granted AARP’s motion for summary judgment, concluding that the EEOC failed to adequately explain its decision to interpret “voluntary” as permitting a 30 percent incentive level. Although governmental agencies are generally given deference, the “EEOC does not appear to have considered any factor that actually… Continue Reading

DOL Issues Additional FAQs on New Fiduciary Rule

The DOL recently released a set of FAQs related to its new plan fiduciary definition and related exemptions (the “Final Rule”). Specifically, the FAQs clarify that service providers who are required to provide ERISA Section 408(b)(2) notices to retirement plan sponsors, which disclose the service provider’s fees and services, are not required to update those notices to state the service provider is now a fiduciary until the date when fiduciary status must first be disclosed under the Final Rule’s Best Interest Contract and Principal Transaction Exemptions, which is currently January 1, 2018. (Please note that on August 9, 2017, the DOL filed a motion with the court presiding over the ongoing litigation concerning the Final Rule’s validity, stating that the DOL intends to further delay the effective date of the Best Interest Contract and Principal Transaction Exemptions for an additional 18 months.) In addition, the FAQs clarify that communications regarding… Continue Reading

Seventh Circuit Rules ERISA Plan’s Venue Selection Clause is Enforceable

On August 10, 2017, the U.S. Court of Appeals for the Seventh Circuit held in In re: Mathias that an ERISA-covered plan’s venue selection clause limiting where civil lawsuits may be filed against the plan was enforceable, joining the Sixth Circuit which reached a similar conclusion in 2014 in the case of Smith v. Aegon Cos. Pension Plan. ERISA Section 502(e)(2) provides that a civil action may be brought: (i) in the district where the plan is administered, (ii) where the breach took place, or (iii) where a defendant resides or may be found. The Court held that the statute’s language (i.e. “may”) is permissive and that neither the statute nor the legislative history indicates that plans should be prevented from contractually limiting these options. The Seventh Circuit appeared to give weight to the fact that the plan’s venue selection provision required suit to be filed where the plan administrator… Continue Reading

Third Party Administrator of Health Plans Settles with DOL for $16 Million over Fee Disclosure and Claims Processing Issues

The U.S. Department of Labor alleged that, in addition to charging a per-employee monthly fee, which was disclosed, a third party administrator (“MagnaCare”) charged employer-provided health plans an undisclosed markup above the actual amounts paid by MagnaCare to ancillary medical service providers such as labs and radiology and imaging services. The plans paid MagnaCare the full amount, and MagnaCare remitted the lower actual charges to the providers and retained the undisclosed markup, which MagnaCare called a “network management fee.” By operating under this fee arrangement and charging an undisclosed fee that was not approved by plan fiduciaries independent of MagnaCare, the DOL alleged MagnaCare breached its fiduciary duties and committed prohibited transactions under ERISA. In addition, the DOL alleged that MagnaCare did not fully comply with the Affordable Care Act’s “prudent layperson standard” because MagnaCare did not inform participants with diagnosis codes that were not on MagnaCare’s “ER list” that… Continue Reading

The Federal Circuit Declares Upon Further Review – it’s Very Obvious

On July 26, 2017, in Soft Gel Technologies, Inc., v. Jarrow Formulas, Inc. (Appeal No. 17-1051, Fed. Cir. July 26, 2017), the Court of Appeals for the Federal Circuit (“the CAFC”) affirmed the Patent and Trial Appeal Board’s (PTAB) rulings from three inter partes reexaminations invalidating numerous claims of three patents assigned to Soft Gel Technologies, Inc. (“Soft Gel”) on obviousness grounds. The CAFC, in affirming the PTAB, applied various canons of obviousness law to refute Soft Gel’s position, specifically emphasizing that an obviousness rejection cannot be overcome by attacking references individually, and that only a reasonable expectation of success, rather than absolute predictability of success, is required as a basis of motivation to combine references. Soft Gel Patents Each specification of the Soft Gel patents (“U.S. Patent Nos. 8,124,072 (“’072 patent”), 8,105,583 (“’583 patent”), and 8,147,826 (“’826 patent”)) describes a method for dissolving a substance commonly referred to as… Continue Reading

UPDATED: Energy Bankruptcy Reports and Surveys

Oil Patch Bankruptcy Monitor: includes details on oil and gas producers that have filed for bankruptcy since the beginning of 2015 – most recent update July 31, 2017. Oilfield Services Bankruptcy Tracker: includes details on middle-market oilfield services companies that have filed for bankruptcy since the beginning of 2015 – most recent update July 31 2017. Midstream Report: includes details on the midstream companies that have filed for bankruptcy since 2015 – most recent update July 31, 2017.

August 2017
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