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The BenefitsLink Newsletter -
Welfare Plans Edition
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July 2, 2002 - 6,490 subscribers
Today's sponsor: Benefit Software Inc.

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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)

North Carolina Offers New Way To Appeal Health Insurance Claim Denials
Excerpt: "Beginning July 1, 2002, many North Carolina consumers will have a new option for handling disputes when their HMO claims are denied. That's when the state's 'external review law' goes into effect." (insure.com)

Health Insurers Consider Use of Tiered Hospital Coverage in Milwaukee
Excerpt: "Insurers are categorizing hospitals based on cost and charging higher co-payments for using more expensive facilities. For example, co-payments could be $0 to $200 per day for hospitals in lower tiers and up to $400 per day for hospitals in higher tiers." (The Business Journal of Milwaukee via bizjournals.com; free registration required)

Few People Fight HMO Health Claim Denials in Michigan
Excerpt: "Michigan's insurance complaint system, which provides for state review of denied health claims, has helped patients win nearly half their cases. But, through the first 16 months of its existence, an average of only 19 claims a month were filed." (Detroit Free Press)

Analysis: the Supreme Court Reins in the FMLA (Slightly)
Excerpt: "At first blush, the high court's decision in this case (Ragsdale v. Wolverine World Wide, Inc., 00-6029), appears to be a victory for employers. But HR professionals should be careful not to make too much of this decision." (HR Magazine)

Supreme Court Orders 5th Cir. to Reconsider Its Decision on Texas "Independent Review" Statute
Montemayor v. Corporate Health Ins.(U.S. 2002). Excerpt: "In the [Rush Prudential HMO v. Moran] decision, the [U.S. Supreme] Court rejected the analysis of the Fifth Circuit, which had found a similar independent review law in Texas to be preempted because it conflicted with ERISA's civil enforcement provisions. The Supreme Court has now vacated the judgment in the Fifth Circuit case and sent the case back for further consideration in light of the Rush opinion." (EBIA Weekly)

After Sale of Facility, Employees Hired by Purchaser Are Not Entitled to Severance Benefits
Analysis of Easterly v. Philips Electronics North America Corp. (6th Cir. 2002). Excerpt: "[T]he court found that the language of the plan--which did not say that employees had to be laid off or separated 'from the employer'--supported the plan administrator's interpretation that employees had to be laid off or separated from employment in general. Other language in the plan also supported the plan administrator's interpretation." (EBIA Weekly)

Analysis: Hospital May Sue for Benefits Under ERISA as Assignee of Participant
Dallas Cty. Hospital Dist. v. Associates' Health and Welfare Plan (5th Cir. 2002). Excerpt: "Plan sponsors and administrators must be aware that a health care provider may sue directly for payment of disputed plan benefits either under ERISA because of a valid assignment of benefits or under state law when there is no such assignment (either because none was obtained or because plan language categorically prohibits participants and beneficiaries from assigning plan benefits)." (EBIA Weekly)

California Appellate Court Says Kaiser HMO Not Required to Cover Viag*a
Excerpt: "[A] three-judge panel of the Third Appellate District agreed with Kaiser Foundation Health Plan's argument that the Department of Managed Health Care exceeded its authority when it said the health plan could not exclude Viag*a from its benefits menu.' [Editor's note -- the asterisk is an 'r' of course -- if we didn't do this, many email filters would prevent this newsletter from reaching you!] (PLANSPONSOR.com)

The Impact of Reduced Benefits and Increased Cost Sharing
by Jason S. Lee and Laura Tollen. Excerpt: "The same level of cost savings achieved by cutting benefits or raising cost sharing could be achieved by switching to group-model HMO plans." (Health Affairs)

Confusion About HIPAA Privacy Rules (PDF)
Excerpt: "Less than a year before the Health Insurance Portability and Accountability Act's privacy rules take effect for most large employer health plans, there is still a lot of confusion and misinformation out there. Following are 10 beliefs I have heard making the rounds and why I think they are, at best, misleading and, at worst, dangerous." (Gardner Carton & Douglas)

Not a Single Sick Day in 62 Years
Excerpt: "Mildred Parsons, bucking the very laws of nature, worked as an FBI secretary in Washington for 62 years, 9 months and 2 days -- never once calling in sick." (Washington Post)

Aetna Adding Health Insurance Products For Small Businesses
Excerpt: "The line will include up to a dozen health plans per state and include dental, life and short-term disability products. It is being rolled out in California, Florida, New York, Pennsylvania and Texas beginning [July 1]." (The [Jacksonville] Florida Times-Union)

Full Steam Ahead for "Health Reimbursement Arrangements" With Carryovers
Analysis of Revenue Ruling 2002-41. Excerpt: "[Health Reimbursement Arrangements] that are funded solely by the employer (and not by salary reductions) can permit carryovers of unused amounts from year to year (i.e., the 'use-it-or-lose-it rule' does not apply) and are not subject to the onerous rules that apply to health FSAs ..." (EBIA Weekly)



Links to Items on Executive Comp, Benefits in General
(These items appear in both editions of the BenefitsLink Newsletter)

When Plan Document Is More Favorable to Participant, It Controls Over Conflicting SPD
Bergt v. Retirement Plan for Pilots Employed by MarkAir, Inc. (9th Cir. 2002). Excerpt: "The reasoning of this case, which applies equally to both pension and welfare plans, illustrates the difficulties and importance of creating an SPD that is consistent with the plan document. The Ninth Circuit in its discussion cited a familiar concept: the burden of uncertainty created by careless or inaccurate drafting of an SPD is placed on the drafter ..." (EBIA Weekly)

Executive Comp Consulting Firm Comments on Proposed NYSE Corporate Governance Changes (PDF)
Excerpt: "The June 6 proposal addresses two primary executive compensation issues: 1. The shareholder approval requirements applicable to equity compensation plans ... 2. Other governance issues related to the structure and operation of Board compensation committees ... Our comments on each of these issues are provided below." (Frederic W. Cook & Co., Inc.)

Opinion: Congress Ought to Stay Away From Executive Pay
Excerpt: "History shows that laws intended to do good, like the Levin-McCain proposal, actually hurt shareholders when judged in retrospect. Indeed, I would like to see Congress roll back two pieces of the current tax law that relate to executive pay. The first is the so-called $1 million cap on its deductibility. The second pertains to 'golden parachutes,' the munificent payouts that many chief executive officers receive when their companies are taken over." (Graef Crystal on Bloomberg.com)

For HR Professionals: What to Do With Bad News
Excerpt: "A supervisor has legitimate worries about the value of the company stock in the 401(k) plan, but would doing something about it constitute illegal trading on inside information?" (HR Magazine)

Welcome to new BenefitsLink advertiser Chicago Consulting Actuaries
Excerpt: "Chicago Consulting Actuaries is different from other actuarial firms. We are genuinely dedicated to discovering and developing the full value and potential of our clients' information...we turn numbers into ideas. CCA's technology is at the heart of the company, embodying CCA's fresh, client-centered focus. We have a full suite of innovative products and services, which offer unique advantages to our clients everyday."




Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Client Relationship Manager for Pension Third Party Administrator
in MI
Flex Plan Services Manager for Pension Specialists, Inc.
in CA
Sr. Plan Administrator for American National Insurance Company
in TX
Trust Officer for American Express Financial Advisors
in MN
Pension Administrator for BFP Associates
in MA



Newly Posted Conferences (Post Yours!)
Plan Sponsor Forum 2002 - Cleveland OHin OH on August 19, 2002
presented by Caterpillar Investment Management Ltd.
Plan Sponsor Forum 2002 - Washington DC Metro Areain DC, MD, VA on August 20, 2002
presented by Caterpillar Investment Management Ltd.
Plan Sponsor Forum 2002 - Central Illinoisin IL on September 6, 2002
presented by Caterpillar Investment Management Ltd.
SmartFlex...an Innovative Solution for FSAsin NY on July 10, 2002
presented by New York Metropolitan Area Chapter - ISCEBS
Retirement Distributions: Estate and Tax Planning Strategiesin OH on August 5, 2002
presented by Presented by Professional Education Systems Institute, LLC
Retirement Distributions: Estate and Tax Planning Strategiesin OH on August 6, 2002
presented by Presented by Professional Education Systems Institute, LLC
Retirement Distributions: Estate and Tax Planning Strategiesin OH on August 8, 2002
presented by Presented by Professional Education Systems Institute, LLC



Newly Posted Press Releases (Post Yours!)
Federated Clearing Services Launches Internet-Based Software (Federated Investors, Inc.)
Labor Department's Lawsuit Names Independent Fiduciary To Terminate DCT's 401(k) Plan (U.S. Department of Labor, Pension and Welfare Benefits Administration)
Labor Department Amends EXPRO (U.S. Department of Labor, Pension and Welfare Benefits Administration)

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Editor and Publisher: David Rhett Baker, J.D.