In Kinsinger, a federal district court in North Carolina significantly penalized a plan administrator that failed to timely respond to employees’ request for plan documents related to an employer-sponsored group health plan subject to ERISA. The documents were not provided until 748 days after the ERISA required 30-day period to provide documents had expired, and then only in response to a lawsuit claiming an ERISA fiduciary breach for misappropriating employee contributions. The federal district court assessed a penalty of $55 per day (half of the statutory maximum of $110 dollars per day) for the failure to provide the required documents—a penalty determined by the court to reflect “both the egregiousness of the [plan administrator’s] misconduct as well as the extraordinary length of delay.” This opinion serves as a cautionary warning to ERISA plan administrators to not ignore document requests; however, not all documents requested by plaintiff’s attorneys are required to… Continue Reading
Jason Whitney, Counsel, Haynes and Boone, LLP After the U.S. Supreme Court tightened the requirements of 35 U.S.C. Section 112 in Nautilus, Inc. v. Biosig Instruments, Inc. by holding that claims must describe “the scope of the invention with reasonable certainty,” some envisioned the possibility of a reinvigorated indefiniteness standard standing as a bulwark against overly broad or vaguely drafted patent claims. Indeed, just months after Nautilus, the Court of Appeals for the Federal Circuit hinted at such a future with Interval Licensing LLC v. AOL, Inc., which established the rule that terms of degree “must provide objective boundaries” for claimed inventions. But as the Federal Circuit has continued to define the contours of Nautilus over the following years, indefiniteness attacks have met uneven success and produced inconsistent application of Section 112. The Federal Circuit’s recent opinion in Guangdong Alison Hi-Tech Co. v. ITC, which examined the term of degree… Continue Reading
The IRS recently published final regulations addressing changes enacted by the Tax Cuts and Jobs Act of 2017, the Bipartisan Budget Act of 2018, and other prior changes to the tax code. The final regulations do not contain any substantive differences to the proposed regulations issued by the IRS in November 2018. The new final regulations: • Permit, but do not require, hardship distributions from a participant’s elective contributions, QNECs, QMACs (including safe harbor matching contributions), and any earnings on those amounts, regardless of when they were contributed or earned. • Prohibit plans from containing a requirement that a participant may not contribute to the plan for any period of time following a hardship distribution (in other words, eliminate the six-month suspension rule). • Eliminate the requirement that a participant take out all available plan loans before receiving a hardship distribution (although plans may continue to contain such a requirement).… Continue Reading
HHS’s Office for Civil Rights(“OCR”), which is the government agency responsible for enforcement of the HIPAA privacy, security, breach notification, and enforcement rules (the “HIPAA Rules”), recently issued a new fact sheet (“Fact Sheet”). The Fact Sheet recaps the provisions in the HIPAA Rules for which a HIPAA business associate may be held directly liable for compliance. HIPAA business associates of an employer-sponsored group health plan, which is a “covered entity” under HIPAA, would include, for example, the health plan’s third-party claims administrator, a health plan consulting firm, a benefits broker, and the health plan’s outside legal counsel, if such persons or entities create, receive, maintain, or transmit HIPAA protected health information (“PHI”) on behalf of the health plan. The Fact Sheet clarified that OCR has authority to take enforcement action against business associates only for certain requirements and prohibitions of the HIPAA Rules as listed in the Fact Sheet,… Continue Reading
In MTD Products Inc. v. Iancu, the U.S. Court of Appeals for the Federal Circuit described how to identify a means-plus-function limitation under 35 U.S.C. § 112, ¶ 6. In particular, the court clarified that the question of whether § 112, ¶ 6 applies is distinct from the determination of what structure corresponds to the means-plus-function limitation, and held that the description in the specification of corresponding structure does not determine if § 112, ¶ 6 applies. MTD is a decision on appeal from an inter partes review (“IPR”) of U.S. Patent No. 8,011,458 (“the ’458 patent”), owned by MTD Products. The ’458 patent describes zero turn radius (“ZTR”) vehicles such as riding lawnmowers, and explains how for prior art ZTR steering systems, when a vehicle was moving forward, it turned in the direction the steering wheel was rotated, but when the vehicle was moving in reverse, it turned… Continue Reading
Federal Departments Announce No Enforcement Action Regarding Drug Manufacturer Coupons Counting Toward Out-of-Pocket Maximums
HHS’s 2020 Notice of Benefit and Payment Parameters (“NBPP”) provides that a group health plan does not have to count drug manufacturer coupons for brand-name drugs towards an annual out-of-pocket maximum if there is a medically appropriate generic equivalent. Many questions were raised by this rule, including (i) how it interacted with health savings account guidance and (ii) what types of arrangements and/or plans to which it applied. The DOL, HHS, and the Treasury Department (collectively, the “Departments”) announced in an FAQ (available here) that the Departments will not initiate any enforcement action if a group health plan does not count the value of drug manufacturer coupons toward an out-of-pocket maximum. This no enforcement policy lasts until HHS’s 2021 NBPP becomes effective, and the 2021 NBPP should clarify how this rule affects employer-sponsored group health plans.
In Private Letter Ruling 201933005 (the “PLR”), the IRS recently addressed whether certain genetic testing services and reports provided to an individual by a commercial retailer of bundled ancestry and health evaluation services (“Ancestry Provider”) constituted “medical care” expenses under Section 213(d) of the Internal Revenue Code, which would be reimbursable to the individual from his or her employer-sponsored health flexible spending arrangement (“HFSA”). Under the facts of the PLR, the Ancestry Provider (i) collected a DNA sample from an individual through a DNA testing kit, (ii) sent the sample to a third-party laboratory for genetic testing, and (iii) issued reports to the individual with results from such laboratory testing, including, among other things, information regarding the individual’s potential health risks. The IRS concluded that because the Ancestry Provider’s bundled services included both non-medical (i.e., ancestry) as well as health services, the costs of its services must be valued and… Continue Reading
IRS: Retirement Plan Distributions are Taxable Even if a Participant Refuses to Cash a Distribution Check
In Revenue Ruling 2019-19, the IRS clarified that a plan participant’s refusal to cash a distribution check after she received it does not (i) permit her to exclude the amount of the distribution from her taxable income, (ii) alter her employer’s duty to withhold all applicable taxes from the distribution, or (iii) alter her employer’s duty to report the taxable income on a Form 1099-R. While this Revenue Ruling addresses the treatment of plan distributions when a participant receives, but refuses to cash, a distribution check, the ruling does not address other situations in which a distribution check is not cashed, such as in the case of missing participants. The ruling states that the IRS and Treasury are continuing to analyze such issues and may publish related guidance in the future. Revenue Ruling 2019-19 is available here.
DOL Publishes FAQs on Employer Retirement Plan Obligations to Reemployed Service Members Under USERRA
The DOL recently published a series of frequently asked questions (“FAQs”) on its website that provide general guidance to employers on their retirement plan obligations to reemployed service members under the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”). Among other things, the FAQs address (i) what military service must be credited for purposes of determining retirement benefits, (ii) an employer’s obligation to make retirement plan contributions while an employee is on a qualifying military leave of absence, and (iii) an employee’s right to make up missed contributions when he or she is reemployed following a qualifying military leave of absence. The FAQs are available here.
The DOL has updated the model notice that employers providing group health coverage may use to notify eligible employees about Medicaid or the Children’s Health Insurance Program (“CHIP”) premium assistance programs available in their home states. Employers must provide this notice before the start of the plan year. The updated model CHIP notice is available here.