The Department of Labor’s (“DOL”) conflict of interest rule, informally coined the “fiduciary rule,” sparked much debate when the regulations were proposed in 2015, and finalized in 2016, to expand the definition of fiduciary under the Employee Retirement Income Security Act of 1974 (“ERISA”). However, the fiduciary rule was continuously challenged in the courts, and appears to have met its final fate at the hands of the Fifth Circuit nearly 2 years later. Continue Reading
In Eden Surgical Ctr. v. Cognizant Tech. Sols. Corp., No. 16-56422, 2018 U.S. App. LEXIS 10597 (9th Cir., Apr. 26, 2018), the U.S. Court of Appeals for the Ninth Circuit upheld the District Court’s Order dismissing the Complaint of an out-of-network healthcare provider attempting to pursue its patient’s rights under an ERISA plan based on an assignment of benefits. The defendant health plan’s claim administrator, Aetna, determined that benefits were not payable under the plan because the patient had not satisfied the plan’s deductible. Plaintiff brought this action on behalf of its patient challenging that benefit determination. The Ninth Circuit found that the plaintiff’s Complaint was properly dismissed by the district court because the patient’s health benefit plan did not permit assignments. Continue Reading
In Dowdy v. Metro. Life Ins. Co., 16-15824, 2018 U.S. App. Lexis 12648 (9th Cir. May 16, 2018), the Ninth Circuit ruled that an accident plan that covers “accidental injury that is the Direct and Sole Cause of a Covered Loss” really covers many losses that have causes other than the accidental injury. And the court held that an illness does not “contribute to” a loss unless it is a “substantial cause” of the loss. In so holding, the Court: relied on some Congressional policies underlying ERISA while ignoring others; and read language into a Plan that was not there. Continue Reading
In May 2017, the Internal Revenue Service (“IRS”) issued Revenue Procedure 2017-37, which set the 2018 limit at $6,900 for annual contributions made to a health savings account (“HSA”) by those with eligible family health insurance coverage. In March 2018, the IRS issued Internal Revenue Bulletin No. 2018-10, which lowered the 2018 limit by $50, to $6,850, as a result of a change in the inflation-adjustment calculations under the Tax Cuts and Jobs Act. This resulted in many plan sponsors needing to communicate the changes to employees participating in an HSA, to make changes to contributions as necessary, and to alter their payroll systems to account for the new limit.
Now, in Revenue Procedure 2018-27, the IRS rolled back its March 2018 guidance and reinstated the $6,900 limit, as a result of “numerous unanticipated administrative and financial burdens.” Those participating in an HSA are permitted to adjust their contributions in accordance with the again-revised limit. To the extent an individual with an HSA had already contributed the full $6,900 and as a result of the March 2018 guidance had to withdraw the $50 difference, with earnings, that individual can put that money back into the HSA provided it is permitted by the HSA custodian, and should check with the custodian.
In Ariana M. v. Humana Health Plan of Tex., 2018 U.S. App. LEXIS 5227, *5, 2018 WL 1096980 (March 1, 2018) (“Ariana M. II”), a majority of judges of the U.S. Court of Appeals for the Fifth Circuit, in an en banc decision, recently overturned its quarter century old holding in Pierre v. Connecticut General Life Insurance Company, 932 F.2d 1552 (5th Cir. 1991), which held that the factual determinations of ERISA benefit plan claim administrators are entitled to deference, regardless of whether the plan includes a grant of discretionary authority. Under Pierre, the Fifth Circuit has long held that such factual determinations can only be overturned if they are found to be arbitrary and capricious. In overturning its holding in Pierre, the Fifth Circuit joined nine sister circuits in ruling that all aspects of ERISA benefit denials will be reviewed de novo unless the governing plan delegates discretionary authority to the claim administrator. Continue Reading
Significant changes to the Department of Labor’s (“DOL”) rules regulating disability claims procedures are now in force. These new rules apply to claims filed on or after April 1, 2018.
ERISA directs the Secretary of Labor to establish and maintain rules which ensure that plan fiduciaries and insurance providers fully and fairly review claims for ERISA-governed benefits. The DOL’s rules regulating claims procedures are set forth at 29 C.F.R. § 2560.503-1, which contains detailed direction as to the claims handling process for both group health plans and disability plans. Historically, 29 C.F.R. § 2560.503-1 imposed similar obligations on group health plans and disability plans. That changed in 2010, however, with the implementation of the Affordable Care Act, under which claims procedures for group health plans were significantly modified, while procedures for disability plans remained untouched. Continue Reading
On May 22, 2017, Department of Labor (DOL) Secretary Alexander Acosta announced in an op-ed in the Wall Street Journal that the DOL would not issue another delay of the “fiduciary rule,” and that it was set to generally become effective on June 9, 2017. As we now know, certain provisions of the fiduciary rule went into effect on that date, with others being delayed until July 1, 2019. However, the fiduciary rule remains under attack in the courts. Two notable appellate court decisions were issued within days of one another, and both were decided by three judge panels. One case upheld narrow provisions of the fiduciary rule, and the other effectively completely invalidated the rule. Shortly after the second decision, the Department of Labor announced that it would not enforce the fiduciary rule “pending further review.” Continue Reading
In the world of ERISA litigation, one of the safest bets is usually that, if an employer establishes something that it calls a “plan,” and the plan allows a significant number of its employees to obtain money after retirement, ERISA is going to govern. Sure, there are situations where the employer is exempt from ERISA (it may be a governmental entity or affiliated with a church), but those exceptions are generally easy to spot.
However, Pasternack v. Shrader, 863 F.3d 162 (2d Cir. 2017), is a reminder of the risks of drawing such automatic conclusions, because sometimes a plan is just a plan. Pasternack essentially held that, when the primary purpose of a stock ownership plan was something other than deferring income or providing retirement income, ERISA may not govern. Though the Court asserted that the distinction between a pension plan and one that offered present benefits was “crisp and unambiguous,” one might be forgiven for harboring doubt that the line is as well-defined as the Court believed. Continue Reading
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