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The BenefitsLink Newsletter -
Welfare Plans Edition
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May 13, 2002 - 6,379 subscribers
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(Help BenefitsLink to provide this newsletter at no charge to you -- our sponsors pay our way. Remember to visit them periodically; we try to make sure their products and services will be of interest to you. Thanks! --Editor)

Consumers Union Calls for Speedy Passage of Generic Drug Legislation
Excerpt: "Consumers Union, the nonprofit publisher of Consumer Reports magazine, today called on a Senate health committee to approve generic-drug legislation before Congress adjourns for the Memorial Day recess." (Consumers Union)

Text of Written Statement by Consumers Union to Congress Supporting Schumer-McCain Generic Drug Bill
Excerpt: "Consumers Union strongly supports Senate measure S.812, the 'Greater Access to Affordable Pharmaceuticals ('GAAP') Act.' This legislation, introduced by Senators Charles Schumer and John McCain, is designed to restore competition to the prescription drug market by preventing many of the anticompetitive tactics employed by brand name drug companies, and some generic drug companies, to keep lower-priced generics from coming to market." (Consumers Union)

Hatch and Waxman Divided on Whether Generic Drug Law Needs Overhaul
Excerpt: "The law made it easier for generic drugs to reach the market while extending the patents on brandname drugs to make up for delays in the approval process. But [Rep. Henry Waxman, D-Calif.], in a statement submitted to the Senate Health, Education, Labor and Pensions Committee ... maintained that it has turned out to be full of loopholes and is in need of a fix." (Medscape; free registration required)

Negotiators Agree To Extend Health Benefits to Trade-Displaced Workers, But Not Steelworkers
Excerpt: "Senate Democrats and White House negotiators on May 9 'resolved major disputes' over a provision in a Senate trade bill that would provide health benefits for about 100,000 U.S. workers displaced by international trade, the Washington Post reports." (KaiserNetwork.org)

Bush's Proposed Tax Credit for Uninsured Would Fall Short of Most Health Plan Premiums, Survey Says
Excerpt: "The tax credit plan that President Bush has proposed to help low-income Americans purchase health coverage 'falls far short' of the cost of health insurance premiums nationwide, according to a Families USA study scheduled for release May 13, the Washington Post reports." (KaiserNetwork.org)

Dissent in House G.O.P. Forces Leaders to Change Plan for Medicare Drug Benefit
Excerpt: "A quiet rebellion by Republican backbenchers has forced House Republican leaders to reconsider and revise their plan to provide drug benefits to the elderly under Medicare." (New York Times; free registration required)

Prescription Drug Benefit Bill Unlikely To Meet Memorial Day Deadline
Excerpt: "Although House Speaker Dennis Hastert (R-Ill.) earlier this month predicted that the House would act on a Medicare drug benefit proposal before the Memorial Day recess, House Republicans have objected to the proposal 'on a variety of fronts,' announcing last week they would not bring the bill to the floor before the break, Congressional Quarterly reporter Mary Agnes Carey says ..." (KaiserNetwork.org)

Humana Uses Paperless Plans to Save Health Insurance Costs, Touts Expanded Choices for Consumers
Excerpt: "The trials mark the beginning of a sweeping change in the way [Humana] sells health insurance. [It] is betting that putting transactions on the Web can do more than just save paperwork and postage. It thinks the Web can revivify an ailing industry, in part by encouraging employees to plan their own coverage and shoulder more costs.... Emboldened by the potential of his technology and the positive early returns, [CEO Mike] McCallister has begun marketing his Web products aggressively." (Fortune.com)

9th Circuit: Notice-Prejudice Rule Applied to Life Insurance Disability Notice Requirement
Carrington Estate Planning Services v. Reliance Standard Life Ins. Co. (9th Cir. 2002). Excerpt: "Under the laws of some states, an insurer may not deny a benefit claim because the insured failed to provide a notice required under the policy unless the insurer can demonstrate that it has been prejudiced by the lack of notice. The U.S. Supreme Court has held ... that these types of 'notice-prejudice' rules are state insurance laws saved from preemption by ERISA." (EBIA Weekly)

Amendment to Severance Plan Did Not Violate Plan's "No Cut-Back" Provision
Loskill v. Barnett Banks, Inc. Severance Pay Plan (11th Cir. 2002). Excerpt: "EBIA Comment: A plan sponsor has broad power to amend its welfare plans, which can be preserved by including a simple reservation of the right to amend in the plan document. Detailed procedures for how to adopt the amendment are not required-- and, as this case illustrates, are not even advisable." (EBIA Weekly)

Overview: Supreme Court Limits Benefit Plan Reimbursement Claims Against Participant
Health benefit plans have historically used ERISA section 502(a)(3) to enforce subrogation and reimbursement provisions. Those provisions apply when medical benefits duplicate liability payments received for injuries caused by third parties. The Supreme Court decided in the Knudson case that sec. 502(a)(3) does not permit enforcing plan reimbursement clauses against participants or beneficiaries who do not actually possess third party liability payments from which reimbursement would be made. (Sanders, Schnabel & Brandenburg, P.C.)

Government Agencies Launch New Web Site That Provides Health Care Quality Information
The Agency for Healthcare Research and Quality (AHRQ), the Centers for Medicare & Medicaid Services, and the Office of Personnel Management have jointly launched a new government Web site designed to help benefit managers, consumer advocates, and state officials communicate with their audiences about health care quality. The site, http://www.TalkingQuality.gov, provides step-by-step instructions on how to implement a quality measurement and reporting project, such as a health plan report card. (Spencernet)

Consumers Union: Texas HMO Study Shows Independent Review Laws Work for Plan Participants
Excerpt: "Texas consumers benefit when they ask for independent review of their health maintenance organizations' care denials, a Consumers Union study released [May 7, 2002] says. But the rate of overturned cases for certain medical conditions indicates that some consumers may not be getting the health care coverage they need. Among the areas are mental illness, gastric bypass, eating disorders and substance abuse care." (Consumers Union)

Appeals Court Upholds Florida Commissioner's Order Against N.A.P.T.
Excerpt: "The First District Court of Appeal in Florida has upheld an order by Insurance Commissioner Tom Gallagher for a company to stop doing business in the state because it was allegedly selling bogus health insurance. The company, based in Philadelphia and run by David Weinstein, allegedly sold phony health insurance under the acronym N.A.P.T., said Nina Bottcher, a spokeswoman for the Florida Department of Insurance." (Hoover's Online)

Texas Commissioner Shuts Down Two More Unlicensed Healthcare Businesses
Excerpt: "Texas Insurance Commissioner Jose Montemayor has issued an emergency order for two unlicensed health plans to stop doing business in Texas. The two plans, operated by the same people, catered to independent medical professionals, the Texas Department of Insurance said. National Guild of Medical Professionals Health and Welfare Benefit Trust Plan in Austin, Texas, allegedly owes more than $4 million in unpaid claims." (Hoover's Online)

Study Says Price Controls Would Dampen Drug Innovation
Excerpt: "Investment in the pharmaceutical and biotechnology sectors would fall sharply if the U.S. began regulating the price of prescription drugs and biopharmaceuticals, according to a study ... Contrary to popular belief, the study also suggests that pharmaceutical industry profits are 'appropriately aligned' with the amount of financial risk companies bear in researching and developing new medications." (Medscape; free registration required)

Texas Tells HMOs: No More Secret Payment Formulas
Excerpt: "Texas doctors, like doctors nationwide, are up in arms over HMO industry practices known as 'downcoding,' meaning changing billing codes to indicate a doctor should be paid less, and 'bundling,' meaning issuing a single lower payment for a group of related medical services rather than paying for each service individually." (insure.com)

Maine at Front Line in Fight Over the High Cost of Drugs
Excerpt: "Nowhere is the political debate over the drug industry more intense than in Maine, with its easy access to Canada, where prices are regulated and the cost differences are often achingly apparent. Support for expanding drug benefits, regulating prices and allowing imports from Canada runs across party lines here." (New York Times; free registration required)

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

Welcome to new BenefitsLink advertiser 4myBenefits, Inc.
Excerpt: "4myBenefits, Inc. (www.4mybenefits.com) is an innovative internet service that provides companies with a cost efficient employee benefits communication and administration solution. Order your free demonstration CD."

Analysis: Harris Trust Case in Supreme Court Expanded Persons Subject to Lawsuits Under ERISA
Excerpt: "In [Harris Trust and Savings Bank v. Salomon Smith Barney, Inc., 120 S.Ct. 2180 (2000)], the Supreme Court concluded that ERISA § 502(a)(3) does not limit 'the universe of possible defendants.' Accordingly, the Court has decided that anybody can be sued under ERISA, if they have been involved in some action that causes harm to the plan. How did the Court get there?" (Kilpatrick Stockton LLP)

To File a Form 5500 By Hand, Preparers Must Obtain Official DOL OCR Forms
Because there are two different types of hand-print 5500 Forms, one provided by the Department of Labor in optical character read (OCR)format and one generated by commercial software, some preparers have questioned whether the software-generated form can be printed and then filled out by hand. The answer is no. (SpencerNet)

Overview: IRS Guidance Issued on Taxation of Golden Parachute Payments
Excerpt: "A parachute payment is any payment that is: in the nature of compensation; to or for the benefit of a 'disqualified individual'; contingent on a change of ownership or control; and in [the] aggregate with other similar payments, at least 3 times the recipient's 'base amount." (Kilpatrick Stockton LLP)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Senior DC / 401(k) Administrators for L.A. Area TPA with Ocean View
in CA
Defined Benefit Professionals for Northern Trust Retirement Consulting, L.L.C.
in GA
Pension Administrator for Local Pension Administration Firm - Houston, Texas
in TX
Retirement Plan Administrator for Retirement Plan Services, Inc.
in NC
Senior Vice President - Client Relationship Manager for CitiStreet
in MA

Newly Posted Press Releases
Release of 457 Regulations Spurs Record Participation in May 8 NAGDCAST (National Association of Government Defined Contribution Administrators, Inc.)
Pyramid Reports Growing Interest in Service Aggregation and Systems Integration (Pyramid Digital Solutions)

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Copyright 2002 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.