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The BenefitsLink Newsletter -
Welfare Plans Edition
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September 5, 2001 - 6,348 subscribers
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Exhaustion of Plan Procedures Not Required for COBRA Notice Claim
Thompson et al. v. Origin Technology In Business, Inc. (N.D. TX 2001). Excerpt: "The court rejected the employer's argument that the COBRA claim [of failure to timely provide a notice to Mr. Thompson, the employee] should be dismissed because the Thompsons had failed to exhaust the plan's internal appeals process. The court ... did not view that requirement as applicable to a claim for failure to provide a timely COBRA election notice." (EBIA Weekly)

Report: US Airways Sued Over Severance Plan
Excerpt: "A shareholder of US Airways Group Inc. ... has filed a lawsuit ... seeking to block the payout of $45 million in severance benefits to the airline's top three executives if they decide to resign ... The severance provision was part of the airline's plan to merge with United Airlines. The deal ultimately failed, but shareholder approval of the plan gave the executives the right to quit and collect the benefits up to more than a year after the vote, the [Washington Post] reported." (FindLaw.com)

ERISA Does Not Preempt Plaintiff's Wrongful Termination Claim Under Michigan Discrimination Statute
Excerpt: "[The plaintiff] claims that her termination from GM was an act of race and sex discrimination and retaliation, for which she is entitled to damages under Michigan law. She argues that these damages include, inter alia, the proceeds of a life insurance policy on her late husband's life-- proceeds to which she is entitled under GM's Salaried Life and Disability Benefit Program and Salaried Health Care Program." (United States Court of Appeals for the Sixth Circuit, via FindLaw.com)

Employer Funds in Account of TPA-Broker Are Plan Assets, Making TPA-Broker Liable as ERISA Fiduciary
Patelco Credit Union v. Sahni (9th Cir. 2001). Excerpt: "It appears that the employer at all times bore the full cost of the plan, with plan participants subject only to a $50 deductible. The TPA-broker was closely involved with plan design and administration; he not only managed the plan but effectively had complete control over its assets. This allowed the TPA-broker to do a number of things the plan and sponsor later challenged as ERISA fiduciary breaches ..." (EBIA Weekly)

Inaccurate Description of Change in Benefits May Cost Employer Big Bucks
Daniels v. Thomas & Betts Corp. (3d Cir. 2001). Excerpt: "[T]he employer changed supplemental insurance carriers. The new coverage was different in several ways, including that certain levels of coverage now required evidence of insurability. The plan participant involved in this dispute ... did not elect supplemental coverage at the time of the change, allegedly because he thought, based on language in the enrollment materials, that he was 'grandfathered' in his existing level of coverage." (EBIA Weekly)

Reductions In Retiree Medical Benefits Likely To Continue, According To EBRI Report
Reductions in employer-provided retiree medical benefits are likely to continue, driven by financial accounting requirements, escalating medical costs, federal court decisions, and potential legislation, according to a study recently released by the Employee Benefit Research Institute (EBRI). According to EBRI, the retiree medical cutbacks are most likely to affect future retirees, rather than current retirees. (Spencernet)

More Federal Agencies Offering Child Care Subsidies
Excerpt: "Sixteen agencies spent more than $2 million in fiscal 2001 to help lower-income federal employees cover the costs of child care in licensed centers, according to the Federal Employee Education and Assistance Fund (FEEA)." (GovExec.com)

IRS Discusses Substantiation and Other Requirements Regarding Cash Reimbursement for Transit Passes
IRS Information Letter 2001-0090 (Mar. 16, 2001). Excerpt: "In response to an inquiry regarding cash reimbursements for transit passes, the IRS issued this informal, nonbinding Information Letter discussing the Jan. 2001 final transportation fringe benefits regulations.... EBIA Comment: This Information Letter grabbed our interest because it seems to require an employee to make a more detailed certification than what the regulations require." (EBIA Weekly)

ERISA Did Not Preempt State Law Claims Against Insurer Under Individual Policy
ERISA did not preempt a beneficiary's state law claims against an insurer under an individual health insurance policy that had been converted from a group policy because an individual policy is not subject to ERISA. This was the ruling of the Ninth Circuit U.S. Court of Appeals in Waks v. Empire Blue Cross/Blue Shield (No. 99-17437). (Spencernet)

Employees Are Generally Taking the Right Steps to Resolve Health Care Disputes
Press release. Excerpt: "More often than not, consumers are not at fault for issues with their health plans. According to new research from Hewitt Associates ... 71 percent of reported escalated issues, such as access to care or billing, were originated because of errors made by the plan administrator or provider of care, and not by the participant.... [O]nly 29 percent originated with the employee or retiree." (Business Wire via IFEBP)

Congress Likely to Approve Mental Health Parity Measure
Excerpt: "Congress is 'likely' to pass a mental health parity bill that would prohibit insurers from placing lower dollar limits on mental health coverage than on other care, potentially broadening a 1996 law set to expire at the end of September, NPR's 'Morning Edition' reports ... The bill ... would keep insurers from imposing limits on hospital stays and physician visits for mental health treatment that are greater than those imposed for physical health visits ..." (KaiserNetwork.org)

House Patients Rights Bill Blasted in Colorado
Excerpt: "Colorado's patient protections could be critically weakened under a bill President Bush is pushing through Congress, according to state officials and a diverse collection of interest groups lining up in opposition." (Rocky Mountain News via MSNBC.com)

Dental Benefits Taking on Larger Role
Excerpt: "It's easy to think of oral health as completely separate from what occurs in the rest of the body. But to do so would be a big mistake, according to authorities who point out the important connection between dental and medical health-- and benefits." (BenefitNews.com)

Universal Coverage Might Be on 2002 Massachusetts Ballot
Excerpt: "Massachusetts Attorney General Thomas Reilly (D) will decide today the constitutionality of 27 proposed questions for the November 2002 ballot, including one that would ask voters to 'deny taxpayer-funded health insurance to every [state] lawmaker ... including the governor, unless the politicians enact a health care program that covers everyone in the state,' the Boston Globe reports." (KaiserNetwork.org)

Pharmacists Lobby States to Step Up Regulation of Pharmacy Benefit Managers
Excerpt: "Pharmacist groups have begun lobbying states to increase regulation of pharmacy benefit management firms ... the Wall Street Journal reports. Pharmacy benefit managers contract with health plans and self-insured plans to develop drug benefit packages for patients, directing them toward certain medications or classes of drugs in return for a rebate from drug manufacturers." (KaiserNetwork.org)

Emotion-Based Marketing in the Healthcare Industry
Excerpt: "[M]any marketers have run screaming in the opposite direction, afraid to use emotional marketing strategies as they might open up even more controversy. Instead, we have become primarily focused on a feature/benefit approach. But have we forgotten what healthcare is truly about-- making people's lives better?" (HealthLeaders.com)

Implementation of Medical Privacy Regulations: Significance of the 'Minimum Necessary' Standard
Transcript of testimony by representative of the American Civil Liberties Union the National Committee on Vital and Health Statistics Subcommittee on Privacy and Confidentiality on August 22, 2001. (National Coalition for Patient Rights)

(Following items are in both editions of the BenefitsLink Newsletter)


DOL Issues Two Advisory Opinions on the ERISA Exemption for Governmental Plans
DOL Advisory Opinions 2001-07A (July 2, 2001) and 2001-08A (Aug. 7, 2001). Excerpt: "EBIA Comment: of the governmental plan exemption can be complicated, given the multiplicity of state and local laws under which such entities that claim to be governmental entities operate. And it is important to remember that even though such plans are exempt from ERISA's Title I requirements, they may nevertheless have certain obligations under the Internal Revenue Code and the Public Health Service Act." (EBIA Weekly)

Complete PWBA Enforcement Manual Now Available
Want some hints as to how the Department of Labor conducts investigations of employee benefit plans? The enforcement manual used by employees of the DOL's Pension And Welfare Benefits Administration (PWBA) for guidance in enforcing ERISA is now available to Spencernet subscribers. (Spencernet)

The Question for Executives: To ISO or Not to ISO?
Excerpt: "Like Shakespeare's Hamlet, many executives face a difficult question whether or not to exercise their incentive stock options (ISOs). This article summarizes some of the key tax considerations and assumes that the reader has some general familiarity with the taxation rules that apply to ISOs and to non-qualified stock options (NSOs)." (Foundation for Enterprise Development)




Newly Posted or Renewed Job Openings (Post Yours!)
Senior Compliance Specialist for Putnam Investments
in MA
Executive Compensation Consultant for National Leader in Executive Compensation
in CA
Pension Administrator/Manager for Everest Pension Services LLC, an affiliate of Dorfman-Robbie CPAs
in NY
Manager of U.S. Benefits for Barclays Global Investors
in CA
Tax/Benefits Attorney for Marathon Oil
in TX



Newly Posted Conferences (Post Yours!)
Employee Satisfaction Forum in MA on September 10, 2001
presented by Sentinel Benefits
The Role and Impact of Gifts and Estates in VT on October 21, 2001
presented by The Center for Retirement Research at Boston College
Retirement Plan Designs for Closely Held Businesses Under the New Tax Law in ALL STATES on September 25, 2001
presented by The American Bar Association, Under the Auspices of the Joint Committee on Employee Benefits in Cooperation with the Small Business Council of America

Subscribe to the Retirement Plans Edition, too (click)


Copyright 2001 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.