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DOL Brief Supports ERISA Claims for Violation of Mental Health Parity Requirements

The U.S. Secretary of Labor (the ?Ç£Secretary?Ç¥) recently filed an amicus (friend of the court) brief with the U.S. Court of Appeals for the First Circuit arguing that, where a beneficiary alleged that he was denied covered mental health benefits because his employer?ÇÖs group health plan applied an exclusion in violation of ERISA?ÇÖs mental health parity requirements, he is authorized to bring a claim for those benefits under ERISA. ERISA Section 502(a)(1)(B) allows a beneficiary to bring a civil action to ?Ç£recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.?Ç¥ The amicus brief was filed in the case of N.R. v. Raytheon Co., in which a beneficiary of the company?ÇÖs self-funded health plan was denied coverage for speech therapy treatment under the terms of… Continue Reading

DOL Clarifies Position Regarding COBRA Notice Requirement

As we discussed in our prior blog post here, there has been a recent significant increase in class action litigation challenging the sufficiency of COBRA election notices. These cases typically allege that a deficient or misleading COBRA notice caused a former employee (or other COBRA qualified beneficiary) to lose group health plan coverage because the notice lacked certain required information or was not written in an understandable manner. One claim that is often raised in these cases is that the COBRA notice fails to provide the name, address, and telephone number of the plan administrator. However, the DOL recently clarified its position on this matter in an amicus brief filed in Carter v. Southwest Airlines Co. Board of Trustees, which is a proposed COBRA class action lawsuit. In its brief, the DOL stated that a COBRA election notice is not required to contain contact information for the plan administrator if… Continue Reading

California Expands Mental Health Parity Requirements

California recently enacted Senate Bill 855 (?Ç£SB 855?Ç¥), which expands certain requirements related to mental health and substance use disorders. SB 855 applies to any California ?Ç£health care service plan contract?Ç¥ or disability insurance policy issued, amended, or renewed on or after January 1, 2021. Significantly, SB 855 renders ?Ç£void and unenforceable?Ç¥ any provision in a health care service plan contract that reserves discretionary authority to the plan to determine eligibility for benefits or coverage, interpret the terms of the contract, or provide for standards of interpretation or review that are inconsistent with California law. If this provision is not preempted by ERISA as applied to an employer-sponsored group health plan, such mandate could eliminate the deferential standard of review that would otherwise be available under ERISA to the plan administrator. SB 855 is available here.

Extending Health Plan Coverage for Furloughed Employees

Due to the COVID-19 pandemic, many employers have placed a portion of their workforces into a furloughed status. Some employers want to keep furloughed employees covered under the employer?ÇÖs group health plan. For a self-funded plan, many stop-loss insurers have approved keeping furloughed employees covered under the plan in covered employment status (as opposed to offering COBRA coverage) for up to six months. In addition, many insurance companies have offered similar coverage extensions under fully-insured, group health plans. As the pandemic continues, some employers want to continue covering furloughed employees beyond the original six-month period. Before providing extended coverage for furloughed employees, it is critical that the employer first obtain written approval from the stop loss carrier for any self-funded benefits, as well as from the insurer for any fully-insured benefits, before granting such an extension, in addition to timely amending the affected plans and communicating such amendments to participants.

Cross-Plan Offsetting Practice is Challenged in Class Action Lawsuit

This class action lawsuit, styled Scott, et al. v. UnitedHealth Group, Inc., et al., was filed in the U.S. District Court for the District of Minnesota on July 14, 2020. This lawsuit follows the decision of the U.S. Court of Appeals for the Eighth Circuit in Peterson v. UnitedHealth Group Inc. that was issued last year. In Scott, the plaintiffs, who were participants in the plans at issue in Peterson, filed, on behalf of a class of plaintiffs (the ?Ç£Class?Ç¥), a class action against UnitedHealth Group, Inc. and its wholly-owned subsidiaries (collectively, ?Ç£UHC?Ç¥), in their capacities as an insurer and/or third-party claims administrator of employer-sponsored group health plans. The lawsuit alleges the breach of UHC?ÇÖs fiduciary duties under ERISA as related to UHC?ÇÖs practice of ?Ç£cross-plan offsetting.?Ç¥ The Class consists of participants and beneficiaries in all group health plans that are administered by UHC and contain ?Ç£cross-plan offsetting?Ç¥ (collectively, the… Continue Reading

Target?ÇÖs $1.6 Million COBRA Notice Settlement Offer: Employers, It?ÇÖs Time to Review Your COBRA Election Notices

As we discussed in our prior blog post here, there are many reasons why an employer needs to review its template COBRA election notice, such as for the new extended COBRA deadlines as a result of the COVID-19 pandemic, the new DOL model notice, and dramatically increased class action litigation challenging the legal sufficiency of COBRA election notices. These cases have resulted in significant expenditures being incurred by the targeted employers. These cases typically allege that a deficient or misleading COBRA notice caused a former employee (or other COBRA qualified beneficiary) to lose health coverage because the notice lacked required information or was not written in an understandable manner. For example, plaintiffs recently proposed a $1.6 million class action settlement to resolve allegations that Target Corporation failed to provide adequate COBRA election notices. Many employers use third-party vendors to prepare and distribute their plans?ÇÖ COBRA election notices; however, the employer… Continue Reading

M&A Considerations When the Seller Uses a PEO

Smaller companies often use professional employer organizations (?Ç£PEOs?Ç¥) as a way to reduce benefit costs and to assist with many, if not all, human resources and payroll functions. While PEOs may work well for a company?ÇÖs day-to-day operations, they can create headaches and complications in corporate transactions. When acquiring a company that uses a PEO, it is important to consider the following: Seller?ÇÖs representations and warranties relating to employee benefit plan compliance generally include representations and warranties relating to the compliance of the plans it sponsors. Since individual companies do not sponsor PEOs, the typical benefit plan representations and warranties should be modified to include representations and warranties regarding any plans or benefits provided by the seller or its controlled group members plus more limited representations and warranties regarding the plans sponsored by the PEO. Depending on the PEO involved, it may be more difficult to get copies of actual… Continue Reading

Employer Religious and Moral Exemptions to the Provision of Contraceptive Care Remain Intact

In a recent seven-to-two opinion in the case of Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania, et al., the U.S. Supreme Court upheld the rights of certain employers to claim exemption from providing contraceptive care under the preventive care mandate of the Affordable Care Act (?Ç£ACA?Ç¥) based on religious or moral objections. General Background of the Case The ACA requires covered employers to provide women with ?Ç£preventive care and screenings?Ç¥ without any cost sharing requirements (the ?Ç£Preventive Care Mandate?Ç¥). The ACA relies on ?Ç£preventive care guidelines?Ç¥ (?Ç£Guidelines?Ç¥) supported by the Health Resources and Services Administration (?Ç£HRSA?Ç¥), an agency of the federal Department of Health and Human Services, to determine what ?Ç£preventive care and screenings?Ç¥ should include. The Guidelines mandate that health plans provide coverage for all FDA approved contraceptive methods. When the Departments of Health and Human Services, Labor, and the Treasury (collectively, the ?Ç£Departments?Ç¥)… Continue Reading

Bostock v. Clayton County, Georgia ?Çô What It May Mean for Group Health Plans

The U.S. Supreme Court?ÇÖs recent decision in Bostock v. Clayton County, Georgia held that Title VII of the Civil Rights Act of 1964 protects the employment rights of individuals who are gay, lesbian, or transgender because ?Ç£sex plays a necessary and undisguisable role?Ç¥ in discrimination based on sexual orientation and gender identity. Although this case addressed whether an employer could fire an individual based on sexual orientation or gender identity, there could also be important implications for benefit plans. For example, employees could use the Bostock decision to seek coverage under group health plans for certain procedures that have traditionally been excluded from coverage, such as gender-affirmation surgery, arguing that such exclusions violate the protections under Title VII. If the plan covers implants after a mastectomy but would not cover the same procedure for an individual who is transitioning, the exclusion for transitioning individuals may also be challenged based on… Continue Reading

Payments for Certain Healthcare Arrangements are Tax Deductible

The IRS recently issued proposed regulations that?áaddress the treatment of amounts paid by an individual for a ?Ç£direct primary care arrangement?Ç¥ or a ?Ç£health care sharing ministry?Ç¥ (collectively, the ?Ç£Arrangements?Ç¥) as being tax-deductible ?Ç£medical care expenses?Ç¥ under Section 213 of the Internal Revenue Code (the ?Ç£Code?Ç¥). Under the proposed regulations, a direct primary care arrangement (?Ç£DPC Arrangement?Ç¥) is defined as a contract between the individual and one or more primary care physicians pursuant to which the physician(s) agree to provide medical care for a fixed annual or periodic fee without billing a third party. A health care sharing ministry (?Ç£Sharing Ministry?Ç¥) is defined as a tax-exempt organization under Section 501(c)(3) of the Code that meets specified requirements, including that its members share a common set of ethical or religious beliefs and share medical expenses in accordance with those beliefs. HSAs and the Arrangements. The preamble to the proposed regulations confirms… Continue Reading

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