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Prepare Benefits Materials in Consideration of the Surprise Medical Billing Rules and Model Notice

As employers prepare group health plans, SPDs, and other employee benefits materials for 2022, they need to consider the new surprise medical billing requirements under the No Surprises Act of the Consolidated Appropriations Act of 2021. Interim final rules were recently released for these new requirements, which are generally effective for plan years beginning on or after January 1, 2022. Provisions that may need to be changed include those regarding: (i) coverage of emergency services, including the definitions of emergency services and emergency medical conditions, how benefit payments are calculated, and coverage for out-of-network, independent freestanding emergency departments; (ii) network cost-sharing for out-of-network providers at network facilities who do not obtain consent for non-emergency services; and (iii) coverage of out-of-network air ambulance services. In addition, there is a new notice required that must be made publicly available, posted on a public website of the plan, and included in the plan’s… Continue Reading

Nothing in Life is Free ?Çô ERISA Expense Account Considerations

Many 401(k) plans contain spending accounts funded by revenue-sharing generated by a plan?ÇÖs mutual fund holdings. These accounts, often referred to as ERISA expense accounts, revenue-sharing accounts, or plan expense reimbursement accounts, can cause complications for plans if not administered properly. These revenue-sharing accounts can accumulate quickly, and in large plans, can result in hundreds of thousands of dollars each year. However, plan sponsors often do not know that the accounts are accumulating, and when they find them, may think they have just discovered ?Ç£free money.?Ç¥ But nothing in life is free, and missteps with the use of these funds could result in participant claims. Accordingly, before utilizing these funds, plan sponsors should use care and consider the following questions: Are the funds being held in the trust??áDOL Advisory Opinion 2013-03A (which is available here) noted that revenue sharing payments that were being received by the third party administrator prior… Continue Reading

Reminder: Employer Obligations Regarding Employee Life Insurance Coverage

In our prior blog post here, we discussed the case of Anastos v. IKEA Property, Inc., which highlighted the importance of an employer?ÇÖs understanding of how its group term life insurance coverage is impacted by changes in employment status, such as termination of employment, retirement, or a leave of absence. This understanding is necessary for the employer to correctly communicate to employees when life insurance coverage will end, when evidence of insurability will be required, and the requirements necessary to convert coverage. In Anastos, the employer drafted its retiree benefit plan to state that eligible retirees could continue life insurance and that, in most cases, coverage would be guaranteed with no medical certification required. When a retiree attempted to obtain this coverage, the employer admitted that its plan was misleading and that it could not obtain underwriting to provide that kind of life insurance continuation benefit. The retiree sued, and… Continue Reading

Delegating Fiduciary Duties Under ERISA Plans

The recent decision in Hampton v. National Union by the U.S. District Court for the Northern District of Illinois highlights the importance of following the provisions in ERISA plan documents for delegating fiduciary duties to entities acting as plan fiduciaries, such as third-party service providers and insurers. Following the death of her husband, who was an employee of The Boeing Company (?Ç£Boeing?Ç¥), the plaintiff sought to recover accidental death and dismemberment benefits under insurance policies sponsored by Boeing, for which she was the sole designated beneficiary. After National Union, which underwrote and co-administered the policies with AIG Claims, Inc., denied the plaintiff?ÇÖs initial benefits claim, as well as her appeal of such denial, the plaintiff brought suit under ERISA. The plaintiff argued that the court should apply a de novo standard of review (i.e., no deference given to the plan fiduciary?ÇÖs prior decisions) because National Union did not have discretionary… Continue Reading

Documentation of ERISA Authorized Representative Procedures

Under ERISA, a participant in an ERISA-covered plan has the right to designate an authorized representative to act on his or her behalf in connection with claims and appeals. The plan may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. Earlier this year, the DOL issued an information letter stating, in part, that: ?Ç£The plan must include any procedures for designating authorized representatives in the plan?ÇÖs claims procedures and in the plan?ÇÖs summary plan description (?Ç£SPD?Ç¥) or a separate document that accompanies the SPD.?Ç¥ Employers that sponsor ERISA plans should (i) verify that the claims procedures in each plan and SPD contain reasonable procedures for designating authorized representatives and (ii) amend the plan and SPD as needed. View the DOL information letter.

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

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 (?Ç£SPDs?Ç¥) 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

Court Finds Plan Language Does Not Require a Second Level Appeal

In this case, the summary plan description (?Ç£SPD?Ç¥) described a participant?ÇÖs ability to submit a second level appeal for a denied benefits claim under an employer-sponsored group health plan subject to ERISA and stated that failure to submit such an appeal would constitute a waiver of the participant?ÇÖs right to review the decision. In addition, the denial letter received by the participant stated that she had a right to request a second level appeal. However, the court found neither the plan document, SPD, or denial letter obligated the participant to file a second level appeal before filing a lawsuit, thus resulting in the court?ÇÖs denial of the defendant?ÇÖs motion for summary judgment for failure to exhaust the plan?ÇÖs administrative remedies. This case highlights the importance of reviewing plan and related documents to ensure they expressly state that submitting a second level appeal is required before a lawsuit over a denied… Continue Reading

Ninth Circuit Finds Summary of Material Modifications Violates ERISA for Failure to Reasonably Apprise Participant

A participant exceeded the lifetime maximum limit on benefits under a retiree health plan and then sued the employer and third party administrator for failure to adequately disclose the lifetime limit. The employer maintained an active employee health plan and a retiree health plan. However, the employer only used one summary plan description (?Ç£SPD?Ç¥) for both plans. The SPD consisted of the 2006 SPD and a series of summaries of material modifications (?Ç£SMMs?Ç¥) describing amendments to the plans since 2006. A 2010 SMM applied to the active employee plan and the retiree health plan. It stated that items marked with an asterisk did not apply to retirees. A heading labeled ?Ç£Health Care Reform*?Ç¥ contained an asterisk, but the layout of the SMM did not make it clear which of the subsequently described changes, including the removal of the lifetime limit, fell under this Health Care Reform heading and thus did… Continue Reading

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