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DOL Announces Temporary Enforcement Policy in Response to Fifth Circuit Decision Invalidating New Fiduciary Rule

On May 7, 2018, the DOL issued Field Assistance Bulletin 2018-02 (“FAB 2018-02”), in which it announced a temporary policy related to enforcement of its new fiduciary duty rule and related exemptions (collectively, the “Fiduciary Rule”) in advance of an expected order to be issued by the U.S. Court of Appeals for the Fifth Circuit vacating the entire Fiduciary Rule (for more information on the Fifth Circuit’s decision to vacate the Fiduciary Rule, please see our prior blog post). Effective as of June 9, 2017, and until the DOL issues additional regulations, exemptions, or other applicable administrative guidance, the DOL will not pursue prohibited transaction claims against fiduciaries who provide investment advice so long as the fiduciary is working diligently and in good faith to comply with guidance previously issued by the DOL under the Fiduciary Rule, such as the best interest contract exemption or principal transactions exception. The DOL… Continue Reading

DOL Clarifies ESG Investing Guidance

The DOL recently released Field Assistance Bulletin (“FAB”) No. 2018-01, which provides guidance on earlier-issued Interpretive Bulletins 2015-01 and 2016-01 (the “IBs”) regarding how ERISA plan fiduciaries may exercise shareholder rights and the extent to which such fiduciaries may take into account environmental, social, or corporate governance (“ESG”) considerations when making plan investments. FAB 2018-01 includes additional observations regarding the IBs and cautionary notes for plan fiduciaries regarding (i) treatment of ESG factors as being economically relevant to a particular investment choice, (ii) following guidelines related to ESG factors in a plan’s investment policy statement, (iii) selection of ESG-themed investment alternatives as a plan’s “qualified default investment alternative”, and (iv) incurring significant plan expenses for shareholder engagement activities related to plan investments. View the FAB 2018-01.

New FAQs for the Mental Health Parity and Addiction Equity Act

The federal Departments of Labor (“DOL”), Health and Human Services, and the Treasury have jointly issued a set of proposed frequently asked questions (“FAQs”) which address nonquantitative treatment limitations (“NQTLs”) and health plan disclosure issues under the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”). Generally, the MHPAEA prohibits group health plans and issuers from imposing financial requirements or treatment limitations on “mental health benefits” and “substance use disorder benefits” (collectively, “MH/SUD Benefits”) that are more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits (collectively, “Med/Surg Benefits”). With respect to NQTLs, which include medical management, step therapy, and pre-authorization (versus “quantitative treatment limitations”, which are numerical, such as visit limits and day limits), a group health plan cannot impose an NQTL on MH/SUD Benefits in any classification unless, under the terms of the plan as written and in… Continue Reading

2018 HSA Contribution Limit Transition Relief

The IRS has issued guidance stating that taxpayers may use $6,900 as the maximum health savings account (“HSA”) contribution limit for family coverage for 2018. In 2017, the IRS stated that the maximum HSA contribution for family coverage for 2018 would be $6,900. However, recent tax reform legislation changed how the contribution limit is calculated, and in March of 2018, the IRS issued a reduced limit for 2018 of $6,850. The new IRS guidance now permits taxpayers to continue to treat the 2018 limit as $6,900 and also provides guidance for taxpayers who already received a distribution of an excess contribution in 2018 based on the $6,850 limit. View the guidance in Rev. Proc. 2018-27.

Vanda v. West-Ward: This Time, Dosage Adjustment Claims are Patent Eligible Subject Matter

The Federal Circuit’s decision in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals, No. 2016-2707, addresses the complicated topic of patent eligibility in the pharmaceutical space. The decision upheld the district court’s decision finding of Vanda’s personalized medical treatment claims as patent eligible under § 101.  The case also confirms that amending an Abbreviated New Drug Application (ANDA) to address a patent issued after the original ANDA’s filing can infringe the later-issued patent. Vanda owns a New Drug Application (NDA) for FANPAT (iloperidone), an antipsychotic drug used to treat schizophrenia. Id. at 4. Upon filing the NDA, Vanda listed U.S. Reissue Patent No. 39,198 in the Food and Drug Administration’s Orange Book for iloperidone. Id. at 2. In 2013, West-Ward filed its ANDA seeking approval to manufacture and sell a generic version of iloperidone. Id. at 5. While West-Ward’s ANDA was pending, the Patent Office issued U.S. Patent No. 8,586,610. Soon thereafter,… Continue Reading

Kidnap Ransom Insurance: Unlocking Coverage for Ransomware Attacks

By one account, “the cost of global ransomware attacks will exceed $11.5 billion annually by 2019, up from $5 billion last year and $325 million in 2015” – a 35X increase in just four years.  Relative to other cyber crime, ransomware is an equal opportunity enterprise—striking individuals as well as businesses of all kinds. Risk managers, in-house counsel and other executives may be tempted to assume that there is no traditional coverage for cyber ransom, or that only a stand-alone network security/privacy liability policy (often with deductibles or self-insured retentions exceeding the ransom) is likely to cover such loss. There is an often overlooked alternative. Kidnap, ransom & extortion (“K&R”) coverage, placed by many companies in connection with traditional D&O or crime policies, may provide a much-needed source of recovery for policyholders and an efficient alternative to dedicated network security/privacy liability insurance. Ransomware Trends in 2018 Ransomware has been a cyber… Continue Reading

UPDATED: Energy Bankruptcy Reports and Surveys

Borrowing Base Redeterminations Survey: Includes details on what lenders, borrowers and others in the energy industry expect regarding the borrowing base redeterminations in light of oil price uncertainty – most recent update April 10, 2018. Oil Patch Bankruptcy Monitor: Includes details on oil and gas producers that have filed for bankruptcy since the beginning of 2015 – most recent update March 31, 2018. Oilfield Services Bankruptcy Tracker: Includes details on oilfield services companies that have filed for bankruptcy since the beginning of 2015 – most recent update March 31 2018. Midstream Report: Includes details on the midstream companies that have filed for bankruptcy since 2015 – most recent update: March 31, 2018.

IRS Issues Paid Family and Medical Leave Tax Credit FAQs

Under the American Tax Cut and Jobs Act (the “Act”), employers may claim a tax credit for providing paid family and medical leave to certain qualifying employees during 2018 and 2019. This paid leave program must permit qualifying employees to take leave for the reasons permitted under the federal Family and Medical Leave Act (“FMLA”), but employers do not have to be subject to FMLA in order to qualify for the tax credit. We previously provided details about this tax credit as part of our discussion of employee compensation and benefits changes under the Act. The IRS recently issued a series of frequently asked questions (“FAQs”) regarding this tax credit, including FAQs addressing requirements for an employer’s program to qualify for the tax credit, qualifying employee eligibility, and how the tax credit is calculated. The FAQs also indicate that an employer cannot claim this tax credit for providing paid leave… Continue Reading

Be Careful in Reimbursing Travel Expenses from Plan Assets

While many qualified retirement plans allow for the reimbursement of certain administrative expenses from plan assets, plan fiduciaries must ensure that plan assets are being used only to reimburse reasonable administrative expenses, and not expenses that could be considered personal or business expenses. This issue may arise in a variety of contexts, including, in particular, a plan’s reimbursement of travel expenses. The DOL has taken the position that no personal or business related expenses are payable from plan assets, even if the travel is related to the administration of the plan. The concern with using plan assets to reimburse travel expenses is being able to prove that the travel expenses relate solely to the administration of the plan, and are not merely a personal or business expense.

SimpleAir v. Google: Consider the Scope of the Claims in a Claim Preclusion Analysis

On May 12, 2018, the Federal Circuit held in SimpleAir, Inc. v. Google LLC, No. 2016-2738, that a terminal disclaimer does not raise a presumption that a continuation patent is patentably indistinct from its parent patent.  In SimpleAir, the issue was whether an action asserting infringement of two patents was barred by claim preclusion or the Kessler doctrine when the same activity had been judged not infringing in earlier litigations involving other patents in the same family, all of which were related as continuations, and all of which included terminal disclaimers to the ultimate parent patent.  The Federal Circuit held that notwithstanding the terminal disclaimers, the district court could not simply rely on a presumption that the claims were patentably indistinct, and instead must compare the scope of the claims to determine whether claim preclusion or the Kessler doctrine applies.  Id. at *2. SimpleAir filed a series of patent infringement actions against… Continue Reading

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