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The BenefitsLink Newsletter -
Welfare Plans Edition
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July 23, 2002 - 6,490 subscribers
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Senators Working on Alternatives to Current Medicare Drug Benefit Proposals
Excerpt: "Anticipating that neither of the two major Medicare drug benefit proposals the Senate is to consider on July 23 will win the 60 votes needed for passage, some senators are creating 'hybrid versions' of the plans, the New York Times reports." (KaiserNetwork.org)

Side-by-Side Comparison of Leading Medicare Prescription Drug Proposed Legislation
Excerpt: "This document, prepared by Health Policy Alternatives, Inc., provides a side-by-side comparison of three major federal proposals to provide outpatient prescription drug coverage to Medicare beneficiaries, introduced as of July 12, 2002 ..." (Kaiser Family Foundation)

Court Awards $100 Per Day Penalties But Not Reimbursement of Medical Expenses for Late COBRA Offer
DiGiovanni v. The Guardian Life Insurance Company of America (D. Mass. 2002). Excerpt: "[T]he employer sent the employee a letter stating that ... she could elect group health plan continuation coverage under COBRA, retroactive to the first day following her separation date, if she paid a premium of $3,300 for the first eight months of COBRA coverage.... The court stated that she could not recover [medical expenses incurred during the eight months] because she had not paid COBRA premiums." (EBIA Weekly)

Doctor Sues UnumProvident, Says He Was Encouraged to Deny Disability Claims
Excerpt: "A former medical director of UnumProvident is suing his former employer, alleging that the insurer encouraged him to help deny disability claims-- and then fired him when he didn't." (insure.com)

Supreme Court's Preemption Rollback Hangs Over Employer Health Plans, Managed Care Organizations (PDF)
Excerpt: "[Rush Prudential HMO, Inc. v.] Moran continues a string of decisions, begun by the [Supreme] Court in 1995, which narrow the 'ERISA preemption' doctrine that once seemed to put a stranglehold on states' ability to regulate healthcare. Moran may turn out to be the most significant of all these decisions, through applications of its analysis to other preemption issues." (Gardner Carton & Douglas)

Administrator of Self-Funded Plan Had Apparent Conflict, So Court Seeks Probative, Material Evidence (PDF)
Nord v. The Black & Decker Disability Plan (9th Cir. 2002). Excerpt: "First, we must determine whether the affected beneficiary has provided material, probative evidence, beyond the mere fact of the apparent conflict, tending to show that the fiduciary's self-interest caused a breach ... [I]f the beneficiary has made the required showing, the principles of trust law require us to act very skeptically in deferring to the discretion of an administrator who appears to have committed a breach ..." (U.S. Court of Appeals for the Ninth Circuit, via FindLaw.com)

No Statutory Penalties for Plan's Failure to Follow Proper Approach Under Claims Procedures
Browning v. A.T. Massey Coal Co. Employees' Comprehensive Benefits Plan (S.D. W.Va. 2002). Excerpt: "There is no question that the new DOL claims procedure regulations require ERISA plans to provide copies of documents relevant to a claim denial when requested by a claimant.... Nevertheless, we think that the court is correct in concluding that $110 per day penalties under ERISA Section 502(c)(1) are not available for a plan's failure to provide requested claims documents ..." (EBIA Weekly)

Beneficiary Change Was Effective Despite Employee's Mistakes in Completing Form
Metropolitan Life Insurance Co. v. Johnson (7th Cir. 2002). Excerpt: "The court found that the beneficiary change was effective under the federal common-law doctrine of substantial compliance, a doctrine whose incorporation into ERISA has been approved by other courts as well. The court applied the legal test for substantial compliance that it had recently adopted in Davis v. Combes." (EBIA Weekly)

Hearts Grow Fonder of Absence Management
Excerpt: "In today's increasingly complex disability benefits marketplace, absence-management programs may be more relevant now than at any other time.... [A] recent survey [suggests] that the direct and indirect cost of disability and absence exceeds 20% of payroll ..." (BenefitNews.com)

Informal DOL Q&As Address How HIPAA Applies to Retiree Medical Plans
Excerpt: "Q/A-3 addresses whether HIPAA's portability, access and renewability requirements apply to stand-alone retiree medical plans.... The DOL's answer in the JCEB transcript is that 'the HIPAA requirements do not apply to a retiree only plan, with one exception.' The exception is ERISA Section 711, regarding benefits for mothers and newborns ..." (EBIA Weekly)

Managing Care: Insights Into One Patient's Situation in California
July 22, 2002. Excerpt: "The skyrocketing costs of health care through the eyes of one diabetes patient working in California.... For now, officials of Kaiser and CalPERS say their best hope is taming costs for the sickest 15 percent of enrollees, who represent about 70 percent of the total health care tab." (PBS Online NewsHour)

Position Paper: Profiting From Pain-- Where Prescription Drug Dollars Go (PDF)
44 pages. Excerpt: "As public concern mounts about the explosion in prescription drug costs, the pharmaceutical industry argues that high drug prices are necessary. High prices are needed, the industry repeatedly contends, to finance research and development (R&D) so manufacturers can bring newer, better drugs to market. If steps are taken to rein in drug prices, so the industry argument goes, manufacturers will be forced to slash R&D. This report belies that argument." (Families USA)

Opinion: Socialized Medicine Is Real Headache
Excerpt: "[W]hat elderly Americans are really finding in Canada is not evidence of rapacity by U.S. pharmaceutical companies so much as a niche buying opportunity that exists mainly because of government regulation. The Canadian government imposed price controls on patented drugs beginning in 1987 in hopes of preventing Canada's government health care system from going bust.... In addition, when is the last time that you heard of a Canadian pharmaceutical company discovering a new wonder drug?" (OpinionJournal.com)

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

Overview: Electronic Disclosure & Recordkeeping Requirements (PDF)
Excerpt: "The [PWBA] issued final rules establishing 'safe harbor' standards for using electronic media for communications to satisfy ERISA disclosure obligations under Title I of ERISA, which will become effective October 9, 2002.... In order to meet the 'safe harbor' standards, the plan administrator must ..." (LeBoeuf, Lamb, Green & MacRae, L.L.P.)

Coke's Method for Valuing Options Might Fall Flat
Excerpt: "At the suggestion of [Warren] Buffett, a Coca-Cola board member and a believer in markets, the world's largest soft-drink maker won't use a pricing model such as the Black-Scholes method to value options. Instead, Coke will get quotes from brokerage firms to buy or sell options with the same characteristics as those granted to employees.... Conceptually, Buffett is dead on. But there are a plethora of problems that suggest the approach won't fully succeed." (Graef Crystal on Bloomberg.com)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Technical Specialist - Retirement - QPA for Edward Jones
in MO
Senior DC Plan Consultant\Administrator for Simpkins & Associates
in TX

Newly Posted Press Releases
NAGDCA To Award Member of Financial Press With 2002 Media Recognition Award (National Association of Government Defined Contribution Administrators, Inc.)
98% of July 12 NAGDCAST Participants Request National Association of Government Defined Contribution Administrators to Offer 2003 NAGDCAST Series (National Association of Government Defined Contribution Administrators, Inc.)

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