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The BenefitsLink Newsletter -
Welfare Plans Edition
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March 28, 2001
Today's sponsor: The COBRA Administrator Handbook (click)


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New Topic Being Tracked on BenefitsLink: Severance Pay
Links to valuable Internet news and research on severance pay are now being collected under the topic, 'Severance Pay." (BenefitsLink)

Medical Information Bureau Opens To Select Health Insurers
Excerpt: "Select individual and small group health insurers now have access to medical information on more than 16 million people contained in files warehoused by the Medical Information Bureau (MIB). Although many of the MIB's member life insurers that also offer health and disability insurance have long had access to the MIB's databases, now select companies that sell only health insurance can belong to the organization and search through the information." (insure.com)

HHS Secretary Seeks HIPAA Privacy Rule Changes
Excerpt: "Health and Human Services Secretary Tommy Thompson said Tuesday that he expects to make changes to Clinton administration medical privacy rules, responding to industry complaints about the potential cost." (Associated Press, via Yahoo! News)

Links to Testimony of March 22, 2001 HIPAA Privacy Hearing
Excerpt: "March 22 -- The House Energy and Commerce Health Subcommittee held a hearing today entitled, 'Assessing HIPAA: How Federal Medical Record Privacy Regulations Can Be Improved.' The hearing held on March 22, 2001 was intended to focus on the unintended consequences of the Health Insurance Portability and Accountability Act's (HIPAA) medical record privacy regulations. The following witnesses appeared at Thursday's hearing:" (HIPAAdvisory.com)

Employer Pays $175,000 to Employee Whose Voluntary Cancer Policy Lapsed Under Cafeteria Plan
Dumontier v. Ray Lower & Assoc. (Ct. App. Ark. 2001). Excerpt: "Employers that offer voluntary benefits can be held responsible for negligent administration. This case also sends another message to both employers and sellers of insurance products: be on guard about possible lapses of coverage whenever there is a change in carriers." (Employee Benefits Institute of America)

Prudential Loses Appeal in New York Medical Guidelines Case
Excerpt: "The complaint alleged that, rather than using experienced physicians to determine medical necessity, Prudential permitted nonphysician nurse clinicians to determine 'appropriate medical care,' based on undisclosed and unregulated guidelines promulgated by Milliman & Robertson. The guidelines ... conflict with generally accepted medical practice, and had induced some Prudential health plan subscribers to join the Prudential plan under false pretenses, the complaint alleged." (A. M. Best)

Doctors Press Battle Against Insurers
Excerpt: "Amended suit renews accusation that managed-care companies acted in concert to illegally alter or deny claims." (Los Angeles Times)

Plan Can Require Signing of Subrogation Form Before Paying Claims
Joseph E. Alves v. Silverado Foods, Inc. (10th Cir. 2000). Excerpt: "[T]he Make Whole doctrine was generally stated as: where an insured is entitled to receive recovery for the same loss from more than one source, e.g., the insurer and the tortfeasor, it is only after the insured has been compensated for all of the loss that the insurer acquires a right of subrogation." (Sungard Corbel)

3 State Groups Join Doctors in Health Insurer Class Action
Excerpt: "The state medical associations of California, Georgia and Texas joined individual doctors from seven states yesterday in a federal lawsuit that accused eight health insurers, including Aetna Inc. and the CIGNA Corporation, of engaging in 'a pattern of racketeering activity' to deny necessary medical care." (New York Times; free registration required)

Make-Whole Doctrine Imposed on Plan with Unclear Subrogation and Reimbursement Language
Hiney Printing Co. v. Brantner (6th Cir. 2001). Excerpt: "[S]ubrogation clauses must be explicit and detailed to be enforceable--and that includes clarity regarding whether or not the participant's right to be made whole is superseded by the plan's subrogation right." (Employee Benefits Institute of America)

Denial of Life Insurance Benefits Upheld When Participant's Death Was Caused by Intoxication
Balthis v. AIG Life Ins. Co. (4th Cir. 2001). Excerpt: "The participant in this case, who was covered under an employer-sponsored life insurance policy, choked to death on his own vomit while sleeping after becoming intoxicated. The insurer denied benefits under the life insurance policy because of a clause in the policy that excluded coverage for a loss caused by 'the Insured Person being legally intoxicated under the applicable law of the jurisdiction where the accident occurred.'" (Employee Benefits Institute of America)

5th Cir.: Disability Plan Administrator Did Not Abuse Discretion In Applying Elimination Period
Aboul-Fetouh v. Employee Benefits Comm., No 00-60367 (5th Cir. March 16, 2001). Where evidence showed that in April, plan beneficiary was nearly fully recovered and ready to begin work again, ERISA plan administrator did not abuse discretion in finding that subsequent depression in July was a medical condition separate from the original physical injury. (FindLaw.com)

8th Cir.: Plan Had to Cover Medically Necessary Breast Surgery Despite Exclusion for Augmentation (PDF)
Milone v. Exclusive Healthcare, No 00-1445, 00-1934 (8th Cir. March 22, 2001). ERISA plan that excluded coverage for breast augmentation or reduction not caused by cancer does not apply to breast surgery that is medically necessary. (FindLaw.com)

6th Cir.: Make-Whole Rule Prevents Enforcement of Ambiguous Subrogation and Reimbursement Provisions
Hiney Printing Co. v. Brantner, No 99-4535, 00-3012 (6th Cir. March 16, 2001). Excerpt: "Where the subrogation and reimbursement provisions under ERISA plan are ambiguous, the make-whole rule prevents their enforcement, but employee failure to make a proper request for ERISA plan documents under 29 USC 1132(c)(1) precludes an imposition of fines against employer." (FindLaw.com)

9th Cir.: Plan Can't Coordinate Benefits With Underinsured Motorist Coverage if Document is Silent
Boston Mutual Insurance v. Murphree, No 99-16239 (9th Cir. March 12, 2001). Excerpt: "An employee health plan, governed by the Employee Retirement Income and Security Act of 1974, 29 U.S.C. section 1001 et seq., may not coordinate medical benefits with a participant's underinsured motorist coverage, where coordination provision does not mention underinsured coverage." (FindLaw.com)

Computer Associates Considers Severance for Some It Fired
Excerpt: "Computer Associates is considering offering severance payments to some of the employees it fired two months ago, the company said yesterday." (New York Times; free registration required)

Benefits Enable Auto Workers To Weather Downturn
Excerpt: "Dismissed [Chrysler] workers draw roughly two-thirds of straight-time pay for 42 weeks, through a mix of state and company payments. They then resume drawing full pay -- nearly $50,000 a year -- until the end of the current contract, in September 2003. They also stay in one of the nation's best private health plans." (New York Times; free registration required)

Sun Uses Incentive Compensation To Boost Supply-Chain Performance
Excerpt: "To be sure, companies have long reserved incentive compensation plans for senior executives, salespeople and others who directly affect revenues and earnings. But now, some are extending incentive plans down through the organization." (CFO.com)

Opposition to Bipartisan Patients Rights Legislation Differs from Stance Bush Had on Campaign Trail
Excerpt: "As a presidential candidate, then-Gov. Bush declared that he had brought Democrats and Republicans together to pass the Texas Patients' Bill of Rights. 'We're one of the first states that said you can sue an HMO for denying you proper coverage,' he said at the time. But [last] week, in his first presidential speech on health-care reform ... [he] said he wants stricter limits than the Texas measure provides on patients' rights to sue health insurers." (The Detroit News)

What Should Constitute a Patients' Bill of Rights?
Excerpt: "Our legislation is a compromise of a compromise. We took the Norwood-Dingell bill ... and modified it to respond to the concerns of its critics ... [N]o employer can be held liable for the death or injury of a patient unless the employer is directly responsible for a decision that leads to either of these results. It keeps jurisdiction over medical decisions in state courts, where they belong, while providing that pure contract issues are settled in federal courts." (Sen. James Jeffords; Sen. Edward Kennedy)

Shrinking Coverage As Health Benefits Dwindle, Some Retirees Fight Back
Excerpt: "Millions of Americans count on health insurance from their employers even after they retire. Maybe they shouldn't. U.S. employers are increasingly cutting back on retiree health care programs, endangering the financial security of many present and future retirees, including baby boomers." (The Hartford Courant)

Texas Warns Insurers Against Small Group Bias
Excerpt: "Texas Insurance Commissioner Jose Montemayor says he is cracking down on insurers that use excessively high premiums and other illegal means to discourage 'baby group' employers -- those with two to five employees -- from buying health insurance." (insure.com)

Trends in Out-of-Pocket Spending by Insured American Workers, 1990-1997
Excerpt: "Spending for medical expenses, drugs, and supplies declined by 23 percent, but this decline was offset by rising employee contributions for health insurance premiums. The shift to managed care, whose benefit structure requires less cost sharing, may have played a role in reducing out-of-pocket spending." (Medscape; free registration required)

Long-Term Care Insurance Bill Introduced
Excerpt: "Even taxpayers who do not itemize on their tax returns could claim deductions of up to $3000 for the cost of long-term care insurance premiums, with a separate deduction of up to $3000 for the cost of purchasing or providing care, under legislation introduced in the House and Senate on Tuesday." (Medscape; free registration required)

Finance Committee Testimony: "Society's Great Challenge: the Affordability of Long-Term Care"
March 27, 2001. Excerpt: "Today's witnesses -- all of whom are experts in their fields -- will present important perspectives on meeting the public, private, and personal financial challenges of long-term care. The goal of today's hearing is to raise awareness about the financial risk to every individual's retirement income security posed by long-term care needs and to consider steps Congress can take to ensure that Americans are better prepared to meet long-term care challenges." (U.S. Senate Finance Committee)

Description of Federal Tax Rules and Legislative Background Relating To Long-Term Care (PDF)
Background information prepared for March 27, 2001 Senate Finance Committee hearing on long-term care. (Joint Committee on Taxation)

Health Professionals Unionize to Take on HMOs
Excerpt: "This month, [Dr. Alexandra] Forbes and 59 other members of a Vermont professional organization, The PsychAlliance, agreed to affiliate with the 1.2 million-member American Federation of Teachers. In doing so, they join more than 50,000 doctors nationwide who are also collaborating with the labor movement to increase their bargaining power with health maintenance organizations." (New York Times Syndicate)

CalPERS Drops Aetna, Cigna From 2002 Benefits
Excerpt: "The California Public Employees' Retirement System (Calpers), one of the state's biggest buyers of health insurance, said on Wednesday it has decided to drop Aetna Inc. and Cigna Corp. from its roster of managed-care providers next year because they are too expensive." (Associated Press, via Excite News)

CFOs May Question the Value of Health Benefits
Excerpt: "With the explosion in health care costs, senior financial executives have reason to question why their companies are offering benefits in the first place. Overall health-care costs have already increased 10.3 percent in 2001, according to a recent survey ... The costs of providing prescription drug benefits increased 14.6 percent." (CFO.com)

(Following items also appear in Retirement Plans Edition)


U.S. Supreme Court Holds That ERISA Preempts State Law Revoking Beneficiary Designation Upon Divorce
Egelhoff v. Egelhoff, 2001 U.S. LEXIS 2458 (2001). Excerpt: "This decision will be applauded by plan administrators and their attorneys because it allows them to rely on plan documents to determine beneficiary status without having to determine what effect state law might have." (Employee Benefits Institute of America)

Lear Execs Accept Bonuses in Restricted Stock Instead of Cash
Excerpt: "Automotive supplier Lear Corp. said its top 100 executives deferred more than $10 million in salary and bonuses in 2000. The executives accepted restricted stock awards in lieu of cash bonuses in a move to more closely link their pay to the performance of the company and its stock price ..." (The Detroit News)

Executives Win Rewards Despite Stock's Descent
Excerpt: "'When you look at the year that they had now - they lost $52 million and the stock price is down - what is the justification for paying someone a bonus?' [investment advisor Bradley] McCurtain asked. 'What's the justification for handing out stock options? What are those people doing for you?'" (BenefitsLink)

Market Place: Companies Start to Warm Up to Restricted Stock
Excerpt: "Restricted stock is finally getting some respect. Long viewed as a freebie thrown at senior executives who were already amply paid, it is now enjoying a comeback. As companies and investors grow disillusioned with the unbridled use of stock options, companies are looking for alternatives to tie the fortunes of senior management to those of shareholders. Even some large investors are rethinking their traditional opposition." (New York Times; free registration required)

Treasury Secretary Will Sell Alcoa Stock
Excerpt: "In an abrupt reversal, Treasury Secretary Paul H. O'Neill said yesterday that he would sell about $100 million worth of Alcoa Inc. stock and options that he had planned to keep." (New York Times; free registration required)




Newly Posted or Renewed Job Openings (Post Yours!)
Retirement Sales District Manager for ADP, Inc.
in DC, MD, VA
Pension Compliance Specialist for CNA TRUST
in CA
Retirement Specialists for KeyBank
in OH
Asset Unitization Manager for Reliance Trust Company
in GA
Strategic Planning Leader for Transamerica
in CA
Pension Administrator for Means & Associates, LLC
in CA
Insurance/Employee Benefits Sales Executive for CSI
in PA
Client Services Consultant for American United Life Insurance Company
in MD, TX
Pension Plan Representative for Lincoln Trust Company, a leader in the retirement plan industry
in CO
Employee Benefits Attorney for Morgan, Lewis & Bockius LLP
in DC



Newly Posted Press Releases
Innovative Perk Increases Employee Satisfaction In More Ways Than One! (Meals by Bonni)

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