[firm] blog logo

DOL Issues Relief for Plan Fiduciaries

The DOL’s Employee Benefits Security Administration (?Ç£EBSA?Ç¥) recently issued EBSA Disaster Relief Notice 2020-01. Notice 2020-01 applies to employee benefit plans, employers, labor organizations, and other plan sponsors, plan fiduciaries, participants and beneficiaries, and service providers subject to ERISA. Notice 2020-01 remains in effect from March 1, 2020 until 60 days after the announcement of the end of the presidentially declared national emergency due to COVID-19 (the ?Ç£National Emergency?Ç¥). Untimely Notice Relief Fiduciaries of ERISA plans generally have an obligation to provide notices and disclosures in accordance with the timing requirements of ERISA. However, under Notice 2020-01, the employee benefit plan and the responsible plan fiduciary will not be considered to violate ERISA for failing to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020 and 60 days after the announced end of the National Emergency, if the plan and responsible fiduciary act in… Continue Reading

Employers Take Note of Suspended COBRA Deadlines due to COVID-19

The U.S. Departments of Labor and the Treasury recently issued a joint notice promulgating final rules that take effect immediately upon publication in the Federal Register (the ?Ç£Notice?Ç¥). The Notice suspends a number of deadlines for employer-sponsored, group health plans, including deadlines under COBRA. The extension period is from March 1, 2020 until 60 days after the federal government announces the end of the COVID-19 national emergency or other date announced by the DOL (the ?Ç£Outbreak Period?Ç¥). The Outbreak Period is disregarded in determining whether the following COBRA deadlines have been met: (i) the date by which an individual must notify the plan of a COBRA qualifying event or disability determination, (ii) the 60-day period to elect COBRA coverage, and (iii) the deadline to make COBRA premium payments. Group health plans were also offered relief via the suspension of the deadline for providing COBRA election notices to COBRA qualified beneficiaries.… Continue Reading

PBGC Adds Fiduciary Breaches to Mediation Program

In 2017, the PBGC introduced a program that offered voluntary mediation with certain termination liability collection and Early Warning Program cases. The program was made permanent and was expanded to include fiduciary breach cases in 2019. Mediation is offered to eligible plan sponsors either with the demand letter (for fiduciary breach cases) or at the outset of mediation (for Early Warning Program cases) or after review of the information disclosed to the PBGC under 29 C.F.R. ?º 4062.6 (for termination liability cases). View the PBGC Mediation Program.

Plan Agent?ÇÖs Misstatements, Plus a Deficient SPD, May Equal an ERISA Fiduciary Breach

A recent opinion issued by the U.S. Court of Appeals for the Second Circuit highlights the adverse consequences that may arise when an employer sponsor of a group health plan that is subject to ERISA fails to maintain a summary plan description of the plan (?Ç£SPD?Ç¥) that is clearly written and that adequately and accurately describes the benefits available under the plan and the terms and conditions of coverage. Case Summary ?Ç£In re: Emily DeRogatis?Ç¥ is a decision out of the U.S. Court of Appeals for the Second Circuit. Under the facts of this case, Mrs. DeRogatis, the widow of a deceased participant in a multiemployer group health plan, filed a breach of fiduciary duty claim under ERISA against the plan administrator, asserting that prior to her husband?ÇÖs death, they were provided misinformation by two non-fiduciary, ?Ç£ministerial?Ç¥ plan representatives (the ?Ç£Representatives?Ç¥) regarding the effect of Mr. DeRogatis?ÇÖs retirement on their… Continue Reading

Fifth Circuit Opinion Clarifies Legal Claims Distinction under ERISA

In Manuel v. Turner Industries Group, L.L.C., the U.S Circuit Court of Appeals for the Fifth Circuit (whose jurisdiction includes Texas) considered various claims under ERISA that were brought by Michael Manuel, a former employee of Turner Industries (?Ç£Turner?Ç¥). His claims were brought against Turner and Prudential, the insurer and claims fiduciary under Turner?ÇÖs long-term disability benefits plan, and related to a denial of benefits to Manuel under that plan. One of his claims was for breach of fiduciary duty asserted against Turner under Section 502(a)(3) of ERISA (the ?Ç£Equitable Relief Provision?Ç¥) based on Manuel?ÇÖs argument that the plan?ÇÖs SPD omitted the pre-existing condition exclusion contained in the plan document that was the basis for Prudential?ÇÖs denial of his benefits claim, and thus Manuel relied to his detriment on a deficient SPD. Citing Fifth Circuit and U.S. Supreme Court precedent under ERISA, the Fifth Circuit reiterated the standing rule that… Continue Reading

Federal Court of Appeals Determines that ERISA?ÇÖs Six-Year Statute of Repose May Be Expressly Waived

In a case of first impression for a federal appellate court, the U.S. Court of Appeals for the Eleventh Circuit held that a fiduciary may affirmatively waive any defenses based on the six-year statute of repose in Section 413 of ERISA. In this case, the U.S. Secretary of Labor brought an action against the company and its owner/CEO who was also the trustee of the company?ÇÖs employee stock ownership plan (?Ç£ESOP?Ç¥), claiming that the owner engaged in prohibited self-dealing by causing the plan to purchase company stock at inflated prices. While attempting to negotiate a settlement, the?áSecretary of Labor agreed to delay filing suit in exchange for the defendants executing a series of tolling agreements, in which they agreed they would ?Ç£not assert in any manner the defense of statute of limitations, the doctrine of waiver, laches, or estoppel, or any other matter constituting an avoidance of the Secretary?ÇÖs claims… Continue Reading

DOL Announces Enforcement Policy on Arbitration Limitation in the Exemptions

As currently drafted, following the transition period, the Exemptions will be unavailable to any fiduciary whose contract with a retirement investor includes a waiver or qualification of the investor’s right to bring or participate in a class action or other representative action in court. In FAB 2017-03, the DOL announced a policy limiting enforcement of this provision in the Exemptions. Specifically, the DOL announced that it will not pursue a claim against any fiduciary or treat any fiduciary as being in violation of the Exemptions solely because the contract between the fiduciary and the investor includes an arbitration agreement that prevents the investor from participating in class action litigation. FAB 2017-03 is available?áhere.

DOL Proposes to Extend Transition Period for Fiduciary Rule Exemptions

The DOL recently published a notice (the “Notice“) proposing to extend the “transition period” currently in effect for the Best Interest Contract Exemption and the Principal Transactions Exemption (the “Exemptions“), which were issued in connection with the DOL’s new plan fiduciary definition. During the transition period, fiduciaries may rely on the Exemptions by adhering to the “Impartial Conduct Standards” (i.e., an advisor must give prudent advice that is in retirement investors’ best interest, charge no more than reasonable compensation, and avoid misleading statements). The other conditions applicable to the Exemptions will not become effective until the transition period ends. The Notice proposes to extend the transition period, which is currently scheduled to end on January 1, 2018, through July 1, 2019. The Notice also proposes a delay in the effective date of certain amendments to Prohibited Transaction Exemption 84-24 until July 1, 2019. The Notice is available?áhere.

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 ?Ç£Final Rule?Ç¥). 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?ÇÖs 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?ÇÖs 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?ÇÖs 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

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 (?Ç£MagnaCare?Ç¥) 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 ?Ç£network management fee.?Ç¥ 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?ÇÖs ?Ç£prudent layperson standard?Ç¥ because MagnaCare did not inform participants with diagnosis codes that were not on MagnaCare?ÇÖs ?Ç£ER list?Ç¥ that… Continue Reading

September 2021
S M T W T F S
 1234
567891011
12131415161718
19202122232425
2627282930  

Archives