In a recent news release, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor confirmed that its final rule amending the disability claims procedure requirements applicable to ERISA-covered employee benefit plans (the “Final Rule”) will go into effect on April 1, 2018.
In today’s Federal Register, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor has published its notice delaying, by 90 days, the applicable date of its final rule amending the disability claims procedure requirements applicable to ERISA-covered employee benefit plans (the “Final Rule”). The new claims procedures had initially been set to become applicable on January 1, 2018. That date has now been delayed to April 1, 2018.
The new claims procedures of the Final Rule apply to all ERISA plans that provide disability benefits, which include not only short-term and long-term disability plans but also other types of ERISA plans with disability provisions, such as many retirement plans. The purpose of the delay is to provide EBSA with time to consider the Final Rule’s impact on the group disability insurance market, in light of President Trump’s Executive Order 13777 directing federal agencies to evaluate regulations (with input from affected entities) with an eye toward reducing regulatory burden and expense. Continue Reading
The U.S. Court of Appeals for the Second Circuit has ruled that New York’s anti-subrogation statute, N.Y. Gen. Oblig. Law § 5-335(a), applies both to “offsets” for prospective benefit payments and to reimbursements for prior benefit disbursements. In so holding, the Second Circuit ruled that a Plan’s choice-of-law provisions may not be dispositive of which jurisdiction’s anti-subrogation statute will apply to govern disbursement and/or recovery of that Plan’s assets.
The case, Arnone v. Aetna Life Ins. Co., 860 F.3d 97 (2d Cir. 2017), arose after the plaintiff-appellant, Salvatore Arnone, a New York resident, was injured while working in New York at the site of a customer of his employer. Arnone filed for, and received, disability benefits through an ERISA-governed plan (“Plan”) insured and administered by Aetna. Arnone also commenced a personal injury action in New York state court against his employer’s customer. Arnone eventually settled the personal injury suit for a lump-sum payment. Continue Reading
On October 6, 2017, the Department of Labor signed a proposed Rule “to delay for ninety (90) days – through April 1, 2018 – the applicability of the Final Rule amending the claims procedure requirements applicable to ERISA-covered employee benefit plans that provide disability benefits.”
Specifically, the DOL proposes:
Section 2560.503-1 is amended by removing “on or after January 1, 2018” and adding in its place “after April 1, 2018” in paragraph (p)(3) and by removing the date “December 31, 2017” and adding in its place “April 1, 2018” in paragraph (p)(4).
The proposed rule is scheduled to be officially published on October 12, 2017. There will be a 15-day period for comments on the proposal to extend the applicability date. There will also be a 60-day period to submit “comments providing data and otherwise germane to the examination of the merits of rescinding, modifying, or retaining the rule[.]” Continue Reading
Deciding an issue of first impression, the U.S. Court of Appeals for the Second Circuit recently held that a plaintiff’s claim under ERISA § 502(c)(1) was barred by Connecticut’s one-year statute of limitations for an action seeking to collect a statutorily-imposed civil penalty. Brown v. Rawlings Fin. Servs. LLC, (2d. Cir., 8/22/17) (Jacobs, Leval, Raggi, Js.).
Plaintiff, a plan participant, had filed suit against Rawlings, Aetna, and the William W. Backus Hospital claiming that they had failed to timely respond to her request for documents concerning her healthcare benefit plan. The defendants moved to dismiss her complaint on the ground that the suit was not timely filed, and the District Court granted the motion. Plaintiff thereafter appealed to the Second Circuit, arguing that the District Court had applied the incorrect limitations period. Continue Reading
The U.S. Department of Labor (DOL) has filed a proposal with the Office of Management and Budget (OMB) to delay implementation of the following exemptions under the fiduciary rule from January 1, 2018 to July 1, 2019:
- Best Interest Contract Exemption (PTE 2016-01)
- Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs (PTE 2016-02)
- Prohibited Transaction Exemption 84-24 for Certain Transactions Involving Insurance Agents and Brokers, Pension Consultants, Insurance Companies, and Investment Company Principal Underwriters (PTE 84-24)
This development was publicized by the DOL in a notice of administrative action submitted by its attorneys to the U.S. District Court for the District of Minnesota in one of several antifiduciary rule cases currently pending. Notification of the submission to the OMB becomes publicly available the morning following the submission, which will bring additional details to this delay.
On May 22, 2017, Department of Labor (DOL) Secretary Alexander Acosta announced in an op-ed in the Wall Street Journal that the DOL will not issue another delay of the “fiduciary rule,” set to become generally effective on June 9, 2017. Secretary Acosta stated on Monday evening that “[w]e have carefully considered the record in this case…and have found no principled legal basis to change the June 9 date while we seek public input.”
The long-awaited rule, which revised the definition of “fiduciary” for retirement investment advice purposes, had an original applicability date of April 10, 2017. President Donald Trump, by way of presidential memorandum dated February 3, 2017, ordered the DOL to review the fiduciary rule and prepare an updated economic and legal analysis to determine whether the fiduciary rule was likely to harm investors, disrupt the retirement services industry, or cause an increase in litigation. After receiving more than one thousand comments from those who would potentially be affected by the rule, the DOL issued a rule to delay its effective date to June 9, 2017, so it could further evaluate the rule.
In tandem with Secretary Acosta’s announcement, the DOL issued Field Assistance Bulletin (FAB) No. 2017-02, which issued a temporary enforcement policy on the fiduciary rule, as well as an 11-page set of FAQs relating to the upcoming June 9 effective date and the transition period from June 9, 2017, to January 1, 2018, when the rest of the rule is set to take effect.
A recent decision by the Eighth Circuit Court of Appeals, Jones v. Aetna Life Ins. Co., No. 16-1714, 2017 U.S. App. LEXIS 8112 (8th Cir. May 8, 2017), provides another signal that those of us defending against benefit claims increasingly may have to contend with simultaneous equitable claims for breach of fiduciary duty. Though the law is developing in this area (when is ERISA law not “developing”?), and likely will vary from circuit to circuit, you can expect more plaintiffs to add an equitable claim to a benefits complaint, and you can expect at least some courts to allow those claims to go forward. What strategies will prove most effective in responding to this latest tactic? While there are no definitive answers at this point, there are some ideas to consider. Continue Reading
A court in the Western District of Virginia held that a lawyer working as a Senior Trust Officer for a fiduciary to an Employee Stock Ownership Plan could be personally liable to workers who claim they overpaid for their employer’s stock purchased by the employer’s ESOP. Hugler v. Vinoskey, 2017 BL 145574, W.D. Va., No. 6:16-cv-00062, 5/2/17. Continue Reading
In Hannan v. Hartford Financial Services, Inc., (2d Cir., April 25, 2017), the Second Circuit Court of Appeals affirmed dismissal of a potential ERISA class action against Family Dollar Stores, its employee benefits plan, and the plan’s group life insurance provider (Hartford), rejecting allegations by plan participants that the plan defendants had engaged in a so-called “cross-subsidization” scheme in violation of federal law. The Second Circuit confirmed that neither the negotiation of premium rates nor any alleged subsidization component between different types of life insurance provided under the plan constituted a breach of fiduciary duty or prohibited transaction under ERISA.
The background facts, as alleged in the complaint and summarized in the court decisions, are as follows. Family Dollar contracted with Hartford to provide group life insurance coverage to employees under the Family Dollar Stores, Inc. Group Insurance Plan (the “Plan”). All employees were automatically enrolled in basic life insurance under the Plan at no cost to them. They also were offered the option (but were not obligated) to purchase supplemental life insurance coverage for which they would pay the premiums. Continue Reading