A federal district court in Tennessee ruled that ERISA did not preempt state law claims for short-term disability benefits because the short-term disability plan fell under the “payroll practice” exception of ERISA. LeBlanc v. SunTrust Bank, No. 3:15-cv-00630 (M.D. Tenn. Aug. 24, 2015). SunTrust provided employees with short-term disability benefits for up to 25 weeks per injury or illness and required employees to be approved for the full 25-week period before they qualified for long-term disability benefits. Continue Reading
After a top-hat plan and pension plan denied a participant’s claims and appeals for additional benefits, the plan administrators preemptively filed a declaratory judgment action, seeking a declaration that: (i) termination of defendant’s employment was not for the purpose of interfering with his ability to attain rights under the plans or ERISA; (ii) the top-hat plan is exempt from certain ERISA requirements; and (iii) the pension plan correctly denied defendant’s claim and appeal. Continue Reading
The Third Circuit recently held that ERISA administrative appeal denial letters must include plan-imposed time limits for commencing a lawsuit challenging the claim denial, and the failure to provide such notice warranted setting aside the plan’s limitation period. Mirza v. Ins. Adm’r. of Am., Inc., 2015 WL 5024159 (3d Cir. Aug. 26, 2015). The ERISA claims regulation provides that adverse determination letters must provide a “description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action” for benefits. 29 C.F.R. § 2560.503-1(g)(1)(iv). Consistent with the First and Sixth Circuits’ rulings on this issue, the Third Circuit determined that the regulation’s “time limit” notice requirement applies not only to periods pertaining to when a participant may file an administrative appeal, but also to a plan-imposed limitation period for commencing a lawsuit after an appeal is denied. In so ruling, the Court reasoned that not requiring such notice would permit administrators to “hide the ball” because participants are more likely to read and rely on adverse determination letters than lengthy plan documents. Having found that such notice is required, the Court determined the proper remedy was to set aside the plan’s limitation period and to replace it with the most analogous state law period, which the parties agreed was New Jersey’s six-year limitation period applicable to breach of contract claims.
Proskauer’s Perspective: Given that three circuits already have ruled consistently on these issues, plan fiduciaries should make sure that administrative appeal denial letters specifically set forth plan-imposed time limits. Furthermore, given the courts’ tendency not to penalize participants for failure to consult SPDs and plan documents when pursuing a claim for benefits, plan sponsors and administrators should consider whether there is other information pertinent to the claims process to which they should affirmatively alert participants when determining claims for benefits.
The Sixth Circuit rejected a participant’s argument that the plan’s subrogation provision was not enforceable because it was only in the plan’s summary plan description, and not in the trust agreement that the participant argued was the operative plan document. The Court determined that the subrogation provision was contained within a document that served as the summary plan description as well as the plan document. The Court further ruled that “[n]othing in Amara prevents a document from functioning both as the ERISA plan and as an SPD.” The Sixth Circuit’s ruling, Board of Trustees of the National Elevator Industry Inc. Health Benefit Plan v. Moore, No. 14-4048, 2015 WL 5010985 (Aug. 25, 2015), is consistent with a recent decision from the Eleventh Circuit, which we previously reported on here.
Through new FAQs and final regulations, the U.S. Departments of Labor (“DOL”), Health and Human Services (“HHS”) and the Treasury (the “Departments”) have further clarified various issues related to the preventive care coverage requirement for non-grandfathered group health plans under the Affordable Care Act (“ACA”) as related to preventive care coverage.
The ACA requires that non-grandfathered group health plans provide benefits for certain preventive care without cost sharing, including:
- Evidenced-based items or services that have a rating of “A” or “B” in the current recommendations of the United States Preventive Services Task Force (“USPSTF”) for the individual (except for breast cancer screening, mammography, and prevention, where there are updated USPSTF standards);
- Immunizations for routine use recommended by the Advisory Committee on Immunization Practices (“ACIP”) of the Centers for Disease Control and Prevention (“CDC”) for the individual;
- For infants, children, and adolescents: evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (“HRSA”); and
- For women: other evidence-informed preventive care and screening provided for in comprehensive guidelines supported by the HRSA
Although public opposition to the 40% excise tax on high-cost health care is rapidly growing, the IRS continued to develop a regulatory framework for administration of the excise tax through its issuance of Notice 2015-52 on July 30, 2015. Similar to the first notice on this topic, Notice 2015-52 merely identifies various administrative challenges without providing concrete guidance. If nothing else, the new guidance provides another preview into what will undoubtedly be a complex regulatory environment. Continue Reading
The Eleventh Circuit affirmed dismissal of ERISA breach of fiduciary claims against Delta Air Lines and other alleged plan fiduciaries in connection with a defined contribution plan’s investments in Delta Air Lines stock. In so ruling, the Court joined a growing number of decisions following Dudenhoeffer that have dismissed claims based on public information. Continue Reading
Mapping in a 401(k) plan occurs when an investment option is removed and the participant’s investment in that option is transferred to a different investment option (absent direction from the participant). On remand from the Eighth Circuit, the district court in Tussey v. ABB Inc., No. 2:06-cv-04305 (W.D. Mo. July 9, 2015), held that plan fiduciaries abused their discretion when they mapped participants’ investments from a balanced fund to the plan trustee’s managed allocation fund. In so ruling, the court found that the trustee and plan sponsor had entered into an improper cross-subsidization agreement whereby the trustee was paid above-market rates for providing services to the plan in exchange for providing various administrative services to the plan sponsor at a loss. As a result of this conflict, Continue Reading
With the impending deadline early next year, most applicable large employers are (or should be) in the process of gearing up for what is perhaps the biggest Affordable Care Act (“ACA”) compliance challenge this year — the information reporting requirements found in Sections 6055 and 6056 of the Internal Revenue Code (the “Code”) (details of which can be found here). Many employers are finding that properly programming their systems to track the data necessary to complete the forms is a lengthy, time consuming and complicated process. As they work with their vendors and internal resources to prepare to meet their obligations, employers should be aware that over the last few months, the stakes have been raised by new legislation and there has been some additional guidance as to completion of the forms. Continue Reading
The Third Circuit recently held that a plaintiff was not entitled to a monetary, equitable remedy under ERISA § 502(a)(3) where he failed to prove actual harm. Perelman v. Perelman, Nos. 14–1663, 14–2742, 2015 WL 4174537 (3d Cir. 2015). Continue Reading