The DOL has announced that its new fiduciary duty rule and related prohibited transaction exemptions (the ?Ç£PTEs?Ç¥) will go into effect on June 9, 2017, although certain provisions in the PTEs will not become effective until after a ?Ç£transition period?Ç¥ that ends on January 1, 2018. On May 22, 2017, the DOL published Field Assistance Bulletin 2017-02, in which it announced a temporary enforcement policy whereby it will not pursue claims during the transition period against fiduciaries who are working diligently and in good faith to comply with the new fiduciary duty rule and the PTEs. The DOL also released a series of Conflict of Interest FAQs clarifying the standards that apply under the PTEs during the transition period. View Field Assistance Bulletin 2017-02. View the FAQs.
An employee went out on long-term disability leave due to a brain tumor. The employee and his wife had a meeting with the employer?ÇÖs benefits team, during which the couple was told ?Ç£everything would remain the same,?Ç¥ including how to keep their benefits the same during and after the leave period. However, conversion of the employee?ÇÖs life insurance coverage after his leave expired was not discussed. The employee was mailed a leave packet describing the continuation of benefits during leave; it stated that life insurance could be continued for the duration of the leave, that a conversion policy may be available, and to contact the benefits department for specific details. When the life insurance benefit claim was submitted after the employee?ÇÖs death, the benefits employee indicated that the employee was still on a FMLA leave of absence, and life insurance coverage was still in effect at the time of death,… Continue Reading
Federal Appeals Court Case Highlights Employer Actions for Defending Against Legal Claims Brought by Healthcare Providers
A recent decision by the U.S. Court of Appeals for the Ninth Circuit in two consolidated cases, one of which was Advanced Women’s Health Center, Inc. v. Anthem Blue Cross Life and Health Insurance Company, highlights several important points for employer-sponsors of group health plans when defending against legal claims brought by healthcare providers under ERISA. Advanced Women’s Health Center (“AWHC“) was an in-network provider of health services to participants under various group health plans subject to ERISA (collectively, the “Plans“), and Anthem served as the Plans’ third-party benefit claims administrator. In the course of a post-payment claims review, Anthem determined that certain claims for AWHC’s services had been overpaid and then pursued recoupment by offsetting such overpayments against other reimbursements payable to AWHC. AWHC brought suit against Anthem, based on its purported status as an ERISA “beneficiary,” seeking (i) a declaratory judgment that Anthem’s offsetting process violated ERISA’s claims… Continue Reading
The DOL recently published final rules that implement a 60-day delay in the effective date of the new fiduciary duty rule and related exemptions that the DOL proposed last March. Both the DOL and IRS previously announced enforcement relief from the new fiduciary duty rule in the event the DOL did not publish these final rules prior to April 10, 2017 (the enforcement relief is now moot since the final rules were published prior to that date). The final rules confirm that the new fiduciary duty rule?ÇÖs effective date has been pushed back from April 10, 2017 to June 9, 2017. The 60-day delay is intended to give the DOL time to reconsider the fiduciary duty rule and to determine whether it may adversely affect the ability of individuals to gain access to retirement information and financial advice. View the final rules.
Previously, the DOL, in Field Assistance Bulletin 2017-01, announced its temporary enforcement policy for the new fiduciary duty rule and related exemptions (the ?Ç£Fiduciary Rule?Ç¥). The IRS recently published Announcement 2017-4, stating excise taxes will not be assessed for violations of the Fiduciary Rule for the periods for which the DOL announced enforcement relief in Field Assistance Bulletin 2017-01. Excise taxes will not be assessed during the following periods: (i) if the DOL issues a final rule after April 10 delaying the effective date of the Fiduciary Rule, excise taxes won?ÇÖt be assessed for non-compliance with the rule during the ?Ç£gap?Ç¥ period between April 10 and the date a delay is implemented, and (ii) if the DOL decides not to delay the effective date of the rule, excise taxes won?ÇÖt be assessed for non-compliance occurring between April 10 and a ?Ç£reasonable?Ç¥ period after publication of the DOL?ÇÖs decision. View Announcement… Continue Reading
The U.S Department of Labor (“DOL“) recently published Field Assistance Bulletin 2017-01 (“FAB 2017-01“), in which it announced a temporary policy for enforcement of its new fiduciary duty rule and related exemptions (the “Fiduciary Rule“). On March 2, 2017, the DOL proposed regulations to delay the effective date of the Fiduciary Rule from April 10, 2017 to June 9, 2017. In response to concerns expressed by financial service institutions that uncertainty about whether the effective date of the Fiduciary Rule will actually be delayed could result in investor confusion and marketplace disruption, the DOL indicated in FAB 2017-01 that (1) in the event that it issues a final rule after April 10, 2017 to delay the effective date of the Fiduciary Rule, it will not initiate an enforcement action based on non-compliance with the rule during the “gap” period between April 10, 2017 and the date that the delay is… Continue Reading
A former employee alleged that Aetna, as administrator of FedEx?ÇÖs short-term disability plan, breached its fiduciary duty under ERISA when Aetna reported to FedEx that the employee filed a disability claim for substance abuse and Aetna later failed to correct this report. FedEx?ÇÖs drug policy stated that the disability vendor (Aetna) would notify FedEx when an employee sought benefits for substance abuse. The U.S. Court of Appeals for the Tenth Circuit found that compliance with FedEx?ÇÖs policy could not constitute a breach of fiduciary duty and Aetna had not provided inaccurate information to FedEx and thus the appeals court upheld the district court?ÇÖs summary judgment on the claim. Williams v. FedEx Corp. Services and Aetna Life Ins. Co., No 16-4032 (10th Cir. Feb. 24, 2017)
In proposed regulations recently released, the DOL delayed the effective date of its new fiduciary duty rule and related exemptions by 60 days, from April 10, 2017 to June 9, 2017. The DOL?ÇÖs announcement follows a presidential memorandum issued on February 3, 2017, directing the DOL to reconsider the new fiduciary duty rule to determine whether it may adversely affect the ability of individuals to gain access to retirement information and financial advice. The 60-day extension is intended to give the DOL time to collect information and to consider comments it receives related to issues raised in the presidential memorandum before the rule and exemptions become effective. For additional information on the fiduciary duty rule in its current form, please see our?áblog post. View the proposed regulations.
The U.S. Court of Appeals for the Ninth Circuit, sitting en banc, recently held that plaintiffs?ÇÖ breach of fiduciary duty claims were not barred by ERISA?ÇÖs six year limitations period, even when the retirement plan investments in question were selected by the plan?ÇÖs fiduciary more than six years prior to plaintiffs?ÇÖ suit. The Ninth Circuit applied the U.S. Supreme Court?ÇÖs recent decision in this case, which confirmed that fiduciaries have an ongoing fiduciary duty to monitor investments in retirement plans and to remove imprudent ones. (For additional information on the Supreme Court?ÇÖs decision, please see our prior post.) The Ninth Circuit distinguished between a fiduciary?ÇÖs duty to prudently select investment alternatives from the fiduciary?ÇÖs duty to prudently monitor them. Consequently, a fiduciary?ÇÖs ongoing duty to monitor plan investments could result in a series of breaches as an investment alternative is retained over time. The Ninth Circuit remanded the case back… Continue Reading
A recent federal district court case demonstrates the risk to an ERISA fiduciary?ÇÖs personal assets when he commits a fiduciary breach. The court previously held that the former owner of a privately-held company engaged in a prohibited transaction and breached his fiduciary duties when he sold shares of company stock to his company?ÇÖs leveraged ESOP at prices in excess of its fair market value. The district court required the owner to provide assets, including several cars, as security in conjunction with his motion to stay enforcement of the judgment pending appeal, stipulating that if the judgment were upheld, the security would be transferred to the plaintiffs. When the U.S. Court of Appeals for the Fifth Circuit upheld the judgment, the owner refused to turn over the assets. The district court is now ordering the owner to turn over the assets despite any hardship that it may cause the owner. Perez… Continue Reading