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In Sixth Circuit, a Change in Contribution Payment Methods under a Group Health Plan is not a Loss of Coverage under COBRA

In Morehouse v. Steak N Shake, the U.S. Court of Appeals for the Sixth Circuit (the “Sixth Circuit” or “Circuit Court”) reversed a federal district court’s prior holding that a change in contribution payment methods under a group health plan constitutes a loss of coverage under COBRA. The plaintiff was a participant in Steak N Shake’s (“SNS”) group health plan when she sustained a work-related injury. Due to her injury, she took a leave of absence (and thus incurred a reduction in her work hours) and began receiving workers’ compensation benefits. Because the participant was not receiving her usual salary from SNS, SNS instead deducted her contributions toward her plan coverage from her workers’ compensation checks. When the participant’s workers’ compensation payments terminated, SNS informed her that she must continue to pay her required plan contributions out-of-pocket in order to continue her coverage under the plan. When she did not… Continue Reading

Sixth Circuit Decision Highlights Importance of Distributing Accurate SPDs

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

Sixth Circuit Upholds Decision that Divorce Decree Delivered After Death Is QDRO

A couple entered into a separation agreement, which was later incorporated into a divorce decree, in which they agreed to maintain any employer-related life insurance policies for the benefit of their minor child until she turned 18 or graduated from high school. At the time, the father had an employer-sponsored life insurance policy through Sun Life that listed his uncle as the sole beneficiary. The father died without changing the designated beneficiary to his daughter. After his death, but before payment of the life insurance benefits, the daughter’s attorney provided Sun Life with a copy of the divorce decree and separation agreement. Nevertheless, Sun Life paid the benefits to the deceased father’s uncle, and the daughter then sued Sun Life for failing to follow the terms of a qualified domestic relations order (“QDRO”). A federal district court originally held that the daughter was entitled to the life insurance benefits, and… Continue Reading

ERISA Does Not Preempt Michigan Paid Claims Tax

In Self-Insurance Institute of America v. Snyder, the U.S. Court of Appeals for the Sixth Circuit ruled that ERISA does not preempt a Michigan state statute requiring insurers and third-party administrators (“TPAs”) of self-funded group health plans to pay a one percent tax on all “paid claims” that such entities make to medical service providers.  The statute also requires insurers and TPAs to (i) file quarterly returns with the Michigan Department of the Treasury, (ii) keep accurate and complete records, and (iii) develop and implement a methodology for collecting the tax.  By way of background, earlier this year the U.S. Supreme Court vacated the Sixth Circuit’s 2014 decision in this case (which also held that the Michigan statute was not preempted by ERISA) and remanded the case for further consideration in light of the Supreme Court’s recent decision in Gobeille v. Liberty Mutual Insurance Co.  In Gobeille, the Supreme Court… Continue Reading

May 2020
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