On April 18, 2013, PBGC filed a complaint (PBGC v. Saint-Gobain Corp. Benefits Comm., E.D. Pa. Case No. 13-02069) to involuntarily terminate a defined benefit plan sponsored by Saint-Gobain Containers, Inc. before Ardagh Group, S.A. acquires Saint-Gobain through a share purchase. PBGC alleges that the plan is underfunded by approximately $523.7 million and that the sale will transfer the plan from Saint-Gobain’s “investment-grade” controlled group to Ardagh’s controlled group, unreasonably increasing PBGC’s potential long-run loss from the plan.
Articles
IRS ESTABLISHES PRE-APPROVED PLAN PROGRAM FOR 403(b) PLANS
On March 28, 2013, the IRS issued Revenue Procedure 2013-22 which establishes a program for the IRS to accept applications for opinion and advisory letters for 403(b) prototype plans and 403(b) volume submitter plans, respectively, starting June 28, 2013. The new program is similar to the pre-approved plan program maintained by the IRS for tax-qualified plans with one significant difference – an employer who adopts a pre-approved 403(b) plan will not be able to apply for an individual determination letter for the 403(b) plan. In addition, the IRS has stated that it is not establishing a determination letter program for individually designed 403(b) plans at this time. Although many large employers will likely continue to use individually-designed 403(b) plans, the program offers employers an alternative to adopting an individually-designed plan to satisfy the written plan requirement under the final regulations issued under Section 403(b) of the Internal Revenue Code.
403(b) PLANS – CORRECTION DUE TO LOSS OF TAX-EXEMPT STATUS
What happens if a tax-exempt organization becomes ineligible to sponsor a Section 403(b) Plan because it loses its exempt status under Internal Revenue Code Section 501(c)(3)? As an example, loss of tax-exempt status may occur automatically if the organization fails to file an annual Form 990 information return for three consecutive years. It may also lose its exempt status if the IRS revokes or terminates exempt status for other reasons.
403(b) PLANS – CORRECTION OF PLAN ERRORS
Final Internal Revenue Code Section 403(b) regulations, which became effective January 1, 2009, require that plan sponsors adopt written 403(b) Plan documents. A 403(b) Plan is a form of defined contribution retirement plan that may only be offered by employers that are tax-exempt entities under Section 501(c)(3) of the Internal Revenue Code or that are…
View From Proskauer: U.S. Supreme Court Provides Defendants With More Ammunition for Defeating Class Certification by Requiring Classwide Proof of Damages
The U.S. Supreme Court recently ruled in Comcast Corp. v. Behrend, 2013 WL 1222646 (U.S. Mar. 27, 2013) that, in order to obtain class certification, plaintiffs carry the burden of establishing not only that they have proof of classwide liability, but also that their potential damages are tied to their theory of liability and capable of classwide proof. The Court’s ruling follows on the heels of its ruling in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), in which it suggested that the admissibility standard for expert evidence outlined in Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579 (1993), should apply at the class certification stage. Instead of ruling on the Daubert issue, the Court provided what could prove to be an even more effective means for defeating class certification.
Monetary Damages Potentially Available For Inadequate Disclosure
In Weaver Bros. Ins. Assoc., Inc. v. Braunstein, No. 11-5407, 2013 WL 1195529 (E.D. Pa. Mar. 25, 2013), a district court denied the plan administrator’s motion for judgment on the pleadings, ruling that monetary relief may be available for ERISA violations associated with the plan administrator’s failure to properly communicate the participant’s benefit rights…
IRS Clarifies Applicability of Pay or Play to Multiemployer Plans’ Contributing Employers
Last Friday, employers contributing to multiemployer plans received some good news. As expected, the Internal Revenue Service amended the transition rule for 2014 originally set forth in its proposed regulations on the pay or play mandate. (The new text of the rule can be found here). An employer required by a collective bargaining agreement to…
Still No EEOC Guidance on Permissible Wellness Program Incentives
Despite the clear support for employers’ continued and expansive use of wellness programs as a means of promoting health and preventing disease expressed in the Affordable Care Act and the recently-proposed rules implementing and expanding employment-based wellness programs [http://www.proskauer.com/publications/client-alert/new-guidance-on-wellness-programs-issued/], the Equal Employment Opportunity Commission (“EEOC”) has still not provided more definitive guidance on permissible…
Fully-Insured Expatriate Health Plans Get Extra Time to Comply with PPACA
Recognizing that expatriate group health plans may find it impossible, or nearly impossible, to comply with all of the relevant provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA), the U.S. Labor Department, the U.S. Department of Health and Human Services (HHS) and the U.S. Treasury Department have recently released a joint response to a Frequently Asked Question (FAQ)providing temporary transitional relief to plan sponsors of certain insured expatriate health plans from complying with some of PPACA’s provisions. Last year, the Departments gave sponsors of expatriate group health plans a one-year enforcement reprieve from the summary of benefits and coverage requirement. http://www.proskauer.com/news/detail.aspx?news=7776
District Court Permits ERISA Claim for Benefits of IRO Review, Holding Such Review Is Not an Arbitration
In Yox v. Providence Health Plan, No. 12–cv–01348, 2013 WL 865968 (D. Or. Mar. 8, 2013), a federal district court held that the review of benefit denials by an independent review organization (IRO) is not akin to an arbitration proceeding, and thus did not preclude a plan participant from seeking judicial review under ERISA of an adverse benefit determination. The plaintiff sued in federal court under ERISA § 502(a)(1)(B) following denial of health coverage for injuries caused by a seizure and fall. Under the insured health plan terms, the plaintiff exhausted the internal claims procedures and then pursued external review by an IRO (which appeared to be mandated by state insurance law). The IRO upheld the initial denial of benefits. In response to the plaintiff’s suit, the plan argued that IRO determinations are similar to arbitration proceedings and, therefore, judicial review of these determinations should be precluded or greatly limited as would be the case for arbitration procedures governed by the Federal Arbitration Act. The court rejected this argument on the basis of the U.S. Supreme Court’s ruling in Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355 (2002). In Rush, the Supreme Court specifically concluded that independent medical reviews were not arbitration proceedings.