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Welfare Plans Edition

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June 9 - 12, 2000

Supreme Court Says Physician Incentive Payments by HMOs Do Not Violate ERISA
Excerpt: "Patients cannot sue health maintenance organizations under a federal law for giving doctors financial bonuses to hold down treatment costs, the Supreme Court ruled Monday. Such financial incentives are how Congress intended for HMOs to work, the justices said in a unanimous ruling that closed one legal avenue for patients' lawsuits but still leaves open the possibility of lawsuits in state court." (Associated Press, via Yahoo! News)

Full Text of Supreme Court's Opinion in Pegram v. Herdrich

Benefit Plans Can Sue Brokers and Other Nonfiduciaries for Damages
Excerpt: "The unanimous decision means Ameritech Corp. and its pension plan trustee, Harris Trust and Savings Bank, can continue trying to recover some $20 million lost in a deal with Salomon Brothers Smith Barney Inc., a stock brokerage that is now part of Citigroup Inc." (Associated Press)

Full Text of Supreme Court's Opinion in Harris Trust v. Salomon Smith Barney Inc.
Excerpt: ERISA "Section 502(a)(3)'s authorization to a plan 'participant, beneficiary, or fiduciary' to bring a civil action for 'appropriate equitable relief' extends to a suit against a nonfiduciary 'party in interest' to a prohibited transaction barred by §406(a)." (FindLaw.com)

Court Finds Health Plan Was a Governmental Plan Exempt From ERISA, Despite Employer's Intent
Excerpt: "In this proposed class action lawsuit, plaintiffs, all employees of the Rhode Island Resource Recovery Corporation (RIRRC), brought suit against their health plan for violations of ERISA. The court first looked at whether the plan was a governmental plan exempt from ERISA." (EBIA Weekly)

3d Cir Adopts Sliding Scale Standard of Review Where Insur Co Funds and Determines Benefits
Excerpt: "In this long-term disability discontinuance of benefits case, the Third Circuit addressed the proper standard of review where an insurance company both funds benefits and makes benefit determinations." (EBIA Weekly)

3d Cir: Notice of Severance Plan Termination in a Shareholder Meeting Notice May be Insufficient
Excerpt: "[T]his case demonstrates that participants may be able to recover benefits under a plan by showing prejudice from non-compliance with ERISA's disclosure requirements, bad faith, active concealment or detrimental reliance. Plan sponsors should avoid this risk by providing timely notices of plan changes and plan termination using customary summary plan description updates or summaries of material modifications." (EBIA Weekly)

Worker Reclassification and Subrogation: Using Plan Drafting to Head Off Issues
Excerpt: "Recent guidance from the IRS on worker reclassification and the Sixth Circuit on subrogation rights points the way to drafting plan language that will significantly enhance protections for plan sponsors and plans (pension and welfare)." (Kilpatrick Stockton LLP)

Navigating the Maze of ERISA Class Actions
Excerpt: "Faced with a possible class action lawsuit, many businesses choose to move heaven and earth to avoid having a class certified, fearing the liability of a giant pool of plaintiffs. With ERISA litigation, that's not always the best strategy. Sometimes a class action actually helps the defense." (Faegre & Benson, LLP)

Court: Appeal Deadline Never Started To Run Because EOB Omitted Reason For Denial
Excerpt: "[T]he U.S. Court of Appeals for the District of Columbia found for the claimant because there were actually four reasons for turning down the initial LTD claims and the claimant was never informed of the fourth reason." (Corbel)

Domestic Partner Benefits May Require Reconciliation of Laws
Excerpt: "Although some state and local laws suggest that all domestic partnerships--both same-sex and opposite sex--should be covered, many employers limit domestic partner coverage to same-sex partners on the basis that those individuals are prohibited under law from marrying. Federal and state court rulings suggest that limiting coverage in this fashion would be permissible." (Employee Benefit News)

GM, Ford, Chrysler to Give Benefits to Same-Sex Partners
Excerpt: "The announcement from General Motors Corp., Ford Motor Co. and the Chrysler division of DaimlerChrysler AG covers about 345,000 employees, and could signal that such benefits will become standard in corporate America." (Associated Press)

Family Research Council: 'Hit And Run: Big Three Auto Makers Attack Marriage'
Excerpt: "By offering marital health benefits to homosexual couples, General Motors, Ford and DaimlerChrysler have joined the corporate cultural wrecking crew that seeks to destroy traditional morality. This is a hit-and-run attack on marriage and the natural family, regardless of the corporations' stated motives." (Family Research Council)

Automakers Offer Benefits to Partners of Gay Employees
Excerpt: "The country's top automakers will provide health benefits to partners of gay employees, a move widely seen as a sign that such benefits are moving faster into the mainstream." (USA Today)

Medical Privacy Bill Introduced by House Banking Committee Chairman
Excerpt: "House Banking Committee Chairman Jim Leach, R-Iowa, has introduced legislation that would bar financial institutions from sharing customer medical financial records without customer consent." (National Underwriter Company)

ERISA Industry Committee Applauds Rejection of Democrat-Sponsored Version of Healthcare Bill
Excerpt: ERIC "applauded the U.S. Senate's rejection of an effort by Senator Edward Kennedy (D-MA) to tack onto unrelated legislation the Democratic 'Patients' Bill of Rights,' which would subject employers to malpractice-like liability for voluntarily offering health care benefits to their employees. The bill represents the death of affordable health care coverage for millions of working Americans and their families." (ERISA Industry Committee)

Health Care Crisis: Who's At Risk
Web site of information to accompany television show of the same name, airing in the United States during June 2000. (PBS)

House Passes Estate Tax Repeal
Excerpt: "The House of Representatives has approved a Republican-championed bill that would completely roll back the 84-year-old federal tax on estates, despite the strong objections of the Clinton Administration and the likelihood of a presidential veto should it arrive at the White House in its current form." (CNN)

Senate Rejects Democratic Patients' Rights Bill, 51-48
Excerpt: "While the result was no surprise, Democrats declared they had succeeded in forcing GOP senators to the wrong political side of an issue considered of high interest to many voters in this fall's presidential and congressional contests." (Chicago Tribune)

Patients' Rights Maneuver Is Blocked In Senate
Excerpt: "In a rancorous prelude to election-year debates across the country, Senate Republicans Thursday narrowly thwarted a Democratic effort to bypass stalled negotiations and pass the most comprehensive overhaul of the managed care industry since the advent of health maintenance organizations." (New York Times Syndicate)

Democrats' Version of Patients' Rights Defeated in Senate
Excerpt: "An effort by Democrats' to jump-start legislation on patients' rights failed in the Senate late Thursday, as Republican senators largely stuck together to deal a narrow, 51-48 defeat to a bill backed by the White House." (A. M. Best)

GOP Rejects Patient Rights Bill
Excerpt: "Senate Republicans, holding ranks on a politically charged issue, rejected a White House-backed patient rights bill Thursday that would give Americans broad new authority to sue their HMOs for denial of care." (Associated Press)

US Electronic Signature Bill Heads for Vote
Excerpt: "Compromise legislation giving electronic signatures and documents the same force in law as their paper counterparts will likely come to a vote in the House next Tuesday, House Commerce Committee Chairman Thomas Bliley said Friday." (Reuters, via The Standard)

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