This class action lawsuit, styled Scott, et al. v. UnitedHealth Group, Inc., et al., was filed in the U.S. District Court for the District of Minnesota on July 14, 2020. This lawsuit follows the decision of the U.S. Court of Appeals for the Eighth Circuit in Peterson v. UnitedHealth Group Inc. that was issued last year. In Scott, the plaintiffs, who were participants in the plans at issue in Peterson, filed, on behalf of a class of plaintiffs (the ?Ç£Class?Ç¥), a class action against UnitedHealth Group, Inc. and its wholly-owned subsidiaries (collectively, ?Ç£UHC?Ç¥), in their capacities as an insurer and/or third-party claims administrator of employer-sponsored group health plans. The lawsuit alleges the breach of UHC?ÇÖs fiduciary duties under ERISA as related to UHC?ÇÖs practice of ?Ç£cross-plan offsetting.?Ç¥ The Class consists of participants and beneficiaries in all group health plans that are administered by UHC and contain ?Ç£cross-plan offsetting?Ç¥ (collectively, the… Continue Reading
Target?ÇÖs $1.6 Million COBRA Notice Settlement Offer: Employers, It?ÇÖs Time to Review Your COBRA Election Notices
As we discussed in our prior blog post here, there are many reasons why an employer needs to review its template COBRA election notice, such as for the new extended COBRA deadlines as a result of the COVID-19 pandemic, the new DOL model notice, and dramatically increased class action litigation challenging the legal sufficiency of COBRA election notices. These cases have resulted in significant expenditures being incurred by the targeted employers. These cases typically allege that a deficient or misleading COBRA notice caused a former employee (or other COBRA qualified beneficiary) to lose health coverage because the notice lacked required information or was not written in an understandable manner. For example, plaintiffs recently proposed a $1.6 million class action settlement to resolve allegations that Target Corporation failed to provide adequate COBRA election notices. Many employers use third-party vendors to prepare and distribute their plans?ÇÖ COBRA election notices; however, the employer… Continue Reading
Smaller companies often use professional employer organizations (?Ç£PEOs?Ç¥) as a way to reduce benefit costs and to assist with many, if not all, human resources and payroll functions. While PEOs may work well for a company?ÇÖs day-to-day operations, they can create headaches and complications in corporate transactions. When acquiring a company that uses a PEO, it is important to consider the following: Seller?ÇÖs representations and warranties relating to employee benefit plan compliance generally include representations and warranties relating to the compliance of the plans it sponsors. Since individual companies do not sponsor PEOs, the typical benefit plan representations and warranties should be modified to include representations and warranties regarding any plans or benefits provided by the seller or its controlled group members plus more limited representations and warranties regarding the plans sponsored by the PEO. Depending on the PEO involved, it may be more difficult to get copies of actual… Continue Reading
In a recent seven-to-two opinion in the case of Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania, et al., the U.S. Supreme Court upheld the rights of certain employers to claim exemption from providing contraceptive care under the preventive care mandate of the Affordable Care Act (?Ç£ACA?Ç¥) based on religious or moral objections. General Background of the Case The ACA requires covered employers to provide women with ?Ç£preventive care and screenings?Ç¥ without any cost sharing requirements (the ?Ç£Preventive Care Mandate?Ç¥). The ACA relies on ?Ç£preventive care guidelines?Ç¥ (?Ç£Guidelines?Ç¥) supported by the Health Resources and Services Administration (?Ç£HRSA?Ç¥), an agency of the federal Department of Health and Human Services, to determine what ?Ç£preventive care and screenings?Ç¥ should include. The Guidelines mandate that health plans provide coverage for all FDA approved contraceptive methods. When the Departments of Health and Human Services, Labor, and the Treasury (collectively, the ?Ç£Departments?Ç¥)… Continue Reading
The IRS recently published an updated Operational Compliance Checklist (the ?Ç£Checklist?Ç¥), which lists changes in qualification requirements that became effective during the 2016 through 2020 calendar years. Examples of items added to the Checklist for 2020 include, among other things: Final regulations relating to hardship distributions; Temporary nondiscrimination relief for closed defined benefit pension plans; Penalty-free withdrawals from retirement plans for individuals in cases of birth or adoption; and Increase in age for required beginning date for mandatory distributions. The Checklist is only available online and is updated periodically to reflect new legislation and IRS guidance.?á The Checklist does not, however, include routine, periodic changes, such as cost-of-living increases, spot segment rates, and applicable mortality tables, which can instead be found on the IRS?ÇÖs Recently Published Guidance webpage here. The Checklist is available here.
The DOL?árecently issued a proposed rule to amend the ?Ç£investment duties?Ç¥ regulation at found at 29 CFR 2550.404a-1 (the ?Ç£Regulation?Ç¥). The proposed rule would provide investment guidance to ERISA plan fiduciaries in light of recent trends in environmental, social, and governance (?Ç£ESG?Ç¥) investing. ERISA requires plan fiduciaries to act ?Ç£solely?Ç¥ in the interest of plan participants and beneficiaries and for the ?Ç£exclusive purpose?Ç¥ of providing benefits and paying reasonable administrative expenses and prudently selecting investments for the plan. In the past, the DOL has periodically issued guidance addressing fiduciary duties under ERISA with respect to ESG-based investment decisions, including Interpretive Bulletin 94-1, which described a ?Ç£tie-breaker standard,?Ç¥ whereby ESG considerations could be the deciding factor when competing investments served the plan?ÇÖs economic interests equally. Later Interpretive Bulletins emphasized that it would be a violation of ERISA to accept reduced returns in favor of ESG goals, but that in certain cases,… Continue Reading
The Puerto Rico Treasury Department (?Ç£Puerto Rico Treasury?Ç¥) recently issued Internal Revenue Circular Letter (?Ç£CC RI?Ç¥) 20-29 extending the period to make ?Ç£Special Disaster Distributions?Ç¥ from qualified retirement plans and IRAs from June 30, 2020 to December 31, 2020. See our prior blog post here for details regarding what distributions qualify as Special Disaster Distributions. Other provisions of previously issued CC RI 20-09 (which provides rules applicable to distributions), CC RI 20-23 (which amends CC RI 20-09 to add additional eligible expenses), and CC RI 20-24 (which removes the requirement of signing before a notary public) continue in force. A copy of CC RI 20-29 can be found here.
Notice 2020-52 (the ?Ç£Notice?Ç¥) provides temporary relief allowing sponsors of ?Ç£safe harbor?Ç¥ 401(k) and 403(b) plans to amend their plans mid-plan year to suspend or reduce safe harbor contributions through the end of the plan year regardless of whether the employer (i) is suffering an economic loss, or (ii) included a statement in its annual safe harbor notice that safe harbor contributions could be reduced or suspended during the plan year. Plans that adopt an amendment to reduce or suspend safe harbor non-elective contributions in accordance with this Notice will not be treated as failing to satisfy the 30 day notice requirement in the regulations, provided that a supplemental notice is provided to the eligible employees no later than August 31, 2020, and the plan amendment that reduces or suspends the non-elective contributions is adopted no later than the effective date of the reduction or suspension. Plans that adopt an… Continue Reading
The New DOL Fiduciary Rule ?Çô A Return to the Old with a New Proposed Prohibited Transaction Exemption
On June 29, 2020, the DOL issued its much anticipated new ?Ç£fiduciary rule?Ç¥ under ERISA. The new rule is meant to replace the DOL?ÇÖs previous fiduciary rule (and related exemptions) which went into effect in 2016 but was vacated by the U.S. Court of Appeals for the Fifth Circuit in 2018. The new fiduciary rule is composed of two parts: (i) a final regulation which reaffirms and reinstates the five-part test for determining whether a person renders ?Ç£investment advice?Ç¥ for purposes of ERISA (the ?Ç£Reinstated Rule?Ç¥), and (ii) a new prohibited transaction class exemption for investment advice fiduciaries based on the ?Ç£impartial conduct standards?Ç¥ previously adopted by the DOL (the ?Ç£Proposed Exemption?Ç¥). Reinstated Rule The new rule amends the Code of Federal Regulations to reinstate the prior 1975 regulation which contained the five-part test for determining whether a financial institution or investment professional is a fiduciary for rendering ?Ç£investment advice.?Ç¥… Continue Reading
Fast Tracking Your Ex Parte Patent Appeals May Be Appealing: United States Patent & Trademark Office (USPTO) Announces New Pilot Program
Starting July 2, 2020, ex parte appeals to the Patent Trial and Appeal Board (PTAB) can be expedited under the new Fast-Track Appeals Pilot Program. It currently takes approximately 15 months for the PTAB on a typical appeal when decisions are issued in the order that the appeals are docketed, and this delay is often longer for certain technology centers. The new Pilot Program advances an appeal out of turn, and guarantees that the PTAB will issue a decision within 6 months of the appeal’s entry into the program. Ex parte appeals are available to patent applicants whose claims have been twice rejected during examination, which typically happens when an examiner issues a final rejection. Such appeal requires that the applicant file a Notice of Appeal and Brief on Appeal, as well as pay the Notice of Appeal fee and pay the appeal forwarding fee after the Examiner’s Answer is issued. The applicant… Continue Reading