A U.S. District Court in the 11th Circuit certified as a class action a case in which the plaintiff argued that her former employer, the Marriott International hotel chain, violated federal law by failing to: (1) provide a COBRA notice in Spanish; (2) adequately explain the procedures to elect healthcare coverage; (3) identify itself as the plan administrator; and (4) provide a notice that an average plan participant would understand. There are over 15,000 potential class members who received the allegedly deficient COBRA notice. Employers subject to COBRA are required to offer employees the option to continue their group health plan coverage after employment termination (among other COBRA qualifying events). These notices need to comply with language and other requirements. Employers that fail to comply with COBRA may face penalties of up to $110 per day for each individual who is sent a defective notice. Vazquez v. Marriott Int’l, Inc.,… Continue Reading
A recent case decided by the U.S. Court of Appeals for the Sixth Circuit provides yet another example of the importance of ensuring that plan documents and summary plan descriptions (“SPDs”) accurately and consistently describe plan benefits. In Pearce v. Chrysler Group LLC Pension Plan, the plan document provided that a participant who was not actively employed at retirement would be ineligible to receive an early retirement supplement. In contrast, the SPD stated that a participant did not need to be actively employed at retirement to remain eligible for the early retirement supplement. This discrepancy became an issue when an employee accepted a termination incentive, and the employer, relying on the language in the plan document, argued that this made the employee ineligible for the early retirement supplement. The employee requested that the lower court (i) grant equitable estoppel to prevent the employer from relying on the plan document, and… Continue Reading
SAVE THE DATE! The 3rd Annual Texas Insurance Academy Conference will be held on October 4, at the Haynes and Boone office in Dallas, Texas. Attendees will gain valuable insight from risk managers, coverage counsel and brokers about important insurance issues affecting businesses from a broad range of industries. Topics to Be Covered at 2018 Conference Risk Analysis for the C-Suite Managing the Claims Process to Maximize Recovery Coverage Protection for Sexual Misconduct Legislative and Law Update M&A Transactional Risks A Look at Future Risks About the Texas Insurance Academy: The Texas Insurance Academy (TIA) is dedicated to raising awareness of and addressing insurance issues affecting businesses in a broad range of industries and across the spectrum from risk management strategy and insurance policy procurement to pursuing claims for coverage. We provide a forum for networking and sharing of ideas in the areas of risk management and insurance coverage. The Texas Insurance Academy brings together knowledgeable professionals from… Continue Reading
IRS Finalizes Rules Permitting Use of Forfeitures to Fund Safe Harbor Contributions, QNECs, and QMACs
As we previously reported, on January 18, 2017, the IRS proposed amendments to regulations under Section 401(k) of the Internal Revenue Code that would permit the use of forfeitures to fund safe harbor contributions, qualified non-elective contributions (“QNECs”), and qualified matching contributions (“QMACs”). The IRS recently finalized the proposed amendments, effective as of July 20, 2018, without substantive changes. The prior regulations had provided that employer contributions could only qualify as safe harbor contributions, QNECs, or QMACs if they were non-forfeitable and not eligible for early distribution at the time they were contributed to the plan. The final regulations now provide that safe harbor contributions, QNECs, and QMACs be non-forfeitable and not eligible for early distribution at the time they are allocated to participants’ accounts. View the final regulations.
Reminder: July 31, 2018 Deadline for Annual Reporting and Payment of PCORI Fee Under the Affordable Care Act
The deadline for plan sponsors of self-insured health plans to report and remit the Patient-Centered Outcomes Research Institute fee (“PCORI Fee”) due under the Affordable Care Act with respect to the 2017 plan year is July 31, 2018. For this purpose, a plan year that ended during the 2017 calendar year is considered a 2017 plan year. The PCORI Fee is assessed to fund the Patient-Centered Outcomes Research Institute and applies to plan years ending on or after October 1, 2012, and before October 1, 2019. Plans should report and remit the PCORI Fee via a second quarter IRS Form 720. The PCORI Fee is based on a flat dollar amount multiplied by the average number of lives covered under the plan for the applicable plan year. The covered lives fee amount for plan years that ended after December 31, 2016, but before October 1, 2017 is $2.26, and the… Continue Reading
New Jersey recently enacted a law that is intended to address the issue of “surprise out-of-network charges” to patients who obtain healthcare from healthcare providers in New Jersey. The law, entitled the “Out-Of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act” (the “NJ Act”), applies with respect to patients who have insured health coverage, but may also apply to patients who participate in employer-sponsored, self-funded health plans subject to ERISA (each, a “Self-Funded Health Plan”) if such plans voluntarily “opt in” to the NJ Act. The NJ Act imposes numerous new disclosure obligations on healthcare providers in New Jersey regarding information to be posted on their websites or delivered directly to patients who will receive their services. Such information includes (i) the provider’s network status with respect to the patient’s health benefit plan, (ii) a listing of the standard charges for items and services provided by a healthcare facility and… Continue Reading
2018 Summer Associate Mira Park contributed to this post. On March 27, 2018, in Oracle America Inc. v. Google LLC, No. 17-1118 (Fed. Cir. 2018), the Court of Appeals for the Federal Circuit held that Google’s use of Oracle’s software code did not constitute a fair use and remanded for a trial on damages. Oracle is the copyright owner of the “declaring code”, as well as the structure, sequence, and organization (“SSO”) of the Java application programming interface (“API”) packages at issue in this case. A Java API package is a collection of pre-written Java source code programs for providing computer functions, and allows programmers to provide desired functions into their own programs without the need to write the corresponding code from scratch. In 2005, Google wrote its own code to run programs written in the Java language on its Android platform, but used the declaring code verbatim (i.e. 11,500… Continue Reading
The DOL released final regulations expanding the groups of employers that may participate in one ERISA-covered employee group health plan (an “Association Health Plan”). Generally, employers (including working owners with no employees) may participate in an Association Health Plan as long as they are in the same industry, state, or metropolitan area. A major benefit of joining together to participate in one ERISA-covered group health plan, as opposed to being treated as maintaining separate ERISA group health plans, is that the total number of employees participating in the Association Health Plan, from all participating employers, will determine whether the Association Health Plan is treated as “large group,” “small group,” or individual coverage for purposes of the mandates under the Affordable Care Act (the “ACA”). The ACA places a number of requirements on small group and individual coverage that do not apply to large group health plans. An Association Health Plan… Continue Reading
An administrative law judge for HHS upheld an award of $4.3 million in civil monetary penalties (the “Penalties”) against a Texas-based healthcare provider for violations of the HIPAA privacy and security rules (the “HIPAA Rules”). The provider is a “covered entity” under HIPAA (“CE”), and the Penalties are the fourth largest ever awarded to the Office of Civil Rights (“OCR”), the HHS agency that enforces the HIPAA Rules, by an administrative law judge or secured via a settlement for HIPAA violations. The Penalties stemmed from an OCR investigation of the CE in response to three separate HIPAA breach reports the CE filed with OCR during 2012 and 2013 involving the theft of an unencrypted laptop computer and the loss of two unencrypted thumb drives, which resulted in the impermissible disclosure of electronic protected health information (“EPHI”) of over 33,500 individuals. OCR’s investigation found that, although the CE had written encryption… Continue Reading
Consider Periodic Internal Plan Audits to Ensure Proper Application of Plan’s Definition of “Compensation”
A frequent, but often times avoidable, operational error for retirement plans is the failure to use the proper definition of compensation for various purposes, including, without limitation, calculating employee deferrals and employer contributions. A retirement plan’s definition of compensation typically includes dozens of components that all must be properly coded in the plan sponsor’s payroll system as eligible or ineligible plan compensation. Plan sponsors should periodically compare the plan’s definition of “compensation” to the employer’s payroll records to verify that the proper definition of compensation has been used for all plan purposes, including calculating employee deferrals and employer contributions. Performing such an audit can help identify any errors and help to minimize the amount of any corrective contributions and other fees and expenses that may be associated with correcting the error.