Monday, December 9, 2013
6th Cir: ERISA Remedy for Wrongful Denial of Benefits May Include Disgorgement Remedy under Section 502(a)(3)
Thanks to friend of the blog, Mark DeBofsky, for brining to my attention a potentially game-changing ERISA legal remedies case, Rochow v. Life Insurance Company of North America (6th Cir. Dec. 6, 2013).
Without seeking to lay out the byzantine world of ERISA remedial law, the important question in the case is whether a plaintiff can maintain both a Section 502(a)(1)(B) claim for benefits and Section 502(a)(3) claim for breach of fiduciary at the same time. If so, the question remains whether disgorgement of profits is cognizable remedy under Section 502(a)(3) against the insurance company for failure to pay the benefits on a timely basis.
Seems like this is the important holding by the 2-1 majority: “[W]e hold that disgorgement is an appropriate equitable remedy under § 502(a)(3) and can provide a separate remedy on top of a benefit recovery.” This is a welcome development for ERISA plaintiffs and their attorneys, as ERISA's rememdial scheme has been narrowly construed over the years to prevent plaintiffs from receiving full recovery for their losses.
The debate going forward is whether the Supreme Court's Varity case allows this outcome. That case stands for the proposition that where a plaintiff has a remedy for benefits under 502(a)(1)(B), a remedy on the same claim cannot be had for breach of fiduciary duty under 502(a)(3), as 502(a)(3) is only supposed to apply if no other provision does. It is the catch-all. Here, the court says essentially these are two different claims so Varity does not apply. It also says that the disgorgement sum of $3.7 million dollar is the appropriate remedy given the size of the benefit denied (almost $1 million disability claim), the time elapsed, and the fact that the benefit owed was commingled with other insurance company monies.
I think this conclusion is well-reasoned and consistent with other circuit decisions, but I suspect we will hear both the dissent’s “improper repackaging of the benefits claims” argument and that disgorgement is not a separate claim from the underlying benefits claim argument again soon. Indeed, I suspect the dissent's argument will gain some traction with conservatives on the 6th Circuit, which might make rehearing en banc more likely.
I assume the defendant will move for reconsideration and/or rehearing en banc. I wouldn’t be surprised if the decision survives circuit review, if it is not appealed to the Supremes. Stay tuned, as this will likely change the way ERISA plaintiff attorney approach cases where the benefit denial is also amounts to a breach of fiduciary duty.
Monday, December 2, 2013
Ed Zelinsky (Cardozo) has an interesting post on his OUP blog discussing a possible compromise to the on-going dispute between for-profit religious corporations, like Hobby Lobby, and the Obama administration's Affordable Care Act's (ACA's) contraceptive coverage mandate.
Here's a taste:
This entire controversy is unnecessary. The tax law contains devices for reconciling the religious concerns of employers like Hobby Lobby with the policy of expanding medical coverage: health savings accounts (HSAs) and health reimbursement arrangements (HRAs). The current regulatory exemption from the contraception mandate should be amended to include for-profit employers and to exempt from the federal contraception mandate employers (both non-profit and profit-making) who maintain HSAs or HRAs for their respective employees. Compromise along these lines would respect the genuinely-held views of religious minorities while implementing the federal policy of broadening access to health care.
An HSA/HRA compromise would eliminate the complicity of religious employers in the provision of contraception methods to which they object while enabling such employers’ employees to obtain on a pre-tax basis any medicines or devices such employees want, including contraception to which their employers object. Employers’ payments into their employees’ HSAs and HRAs would be the equivalent of the cash wages paid to such employees, wages which the employees are free to spend as they choose.
Personally, I do not see a RFRA or free exercise problem with ACA's mandate because it is not a law that targets religion or otherwise substantially burdens religious rights of individuals, for-profit corporations do not and should have have free exercise rights, and the exemption from the law for for-profit religious employers would permit them to inappropriately interfere with the personal health care decisions of their employees. I also do not know what "religious minorities" Ed is referring to, since corporations like Hobby Lobby seek to impose their very much dominant Christian religious practices on their employees (Christian and non-Christian alike).
All that being said, Ed should be given credit for thinking outside of the box and coming up with a compromise which might satisfy both sides of the debate. The likelihood of this suggestion being taken up in the short-term now that the Supreme Court has granted cert. in the Hobby Lobby case is unlikely. However, if Hobby Lobby and similar religiously-oriented corporations should prevail (a real possibility with the current make up of the court), then this proposal might be a way in which this type of much needed health care coverage could be provided to employees of for-profit religious employers.
Monday, November 25, 2013
Dana M. Muir (Stephen M. Ross School of Business at the University of Michigan) has just posted on SSRN her recently published piece in the Iowa Law Review entitled: Choice Architecture and the Locus of Fiduciary Obligation in Defined Contribution Plans.
Here is the abstract:
The insights of choice architecture have led to expanded use of default settings in defined contribution (DC) plans in both the United States and Australia. The two countries have taken somewhat similar approaches to the content of default investment products. However, they differ significantly in how they allocate the legal responsibilities associated with those default investment products. This paper compares the two approaches, particularly regarding the role of disclosure and the assignment of fiduciary responsibility. It concludes that Australia’s approach offers two lessons for the U.S. First, disclosure to and education of participants who are defaulted into investment products is inadequate to negate conflicts of interest and investment risk. Second, fiduciary responsibility for default investment products should be co-located with investment expertise and management. The paper suggests development of a new investment product, Safe Harbor Automated Retirement Products (SHARPs), based on these lessons.
I have had the privilege of reading this piece previously and like all of Dana's piece, it does a remarkable job identifying a problem based on a comparative analysis and then providing a practical, on-the-money solution to the problem that all ERISA stakeholders should be able to embrace as an effective approach to these problems with defined contribution plans. I hope there are perceptive legislators out there paying attention who will sponsor such legislation soon in order to improve the US occupational pension system for all workers.
Monday, November 18, 2013
In Cosey v Prudential, (4th Cir. Nov. 12, 2013), the Fourth Circuit held that the common plan formulation "proof satisfactory to the administrator" does not unambiguously confer discretion on the administrator and thus subjects the administrator's decisions to de novo judicial review (as opposed to arbitrary and capricious review under the Firestone/Glenn standard).
Like Jon, I find this decision interesting, as it has the potential to cut back on the abuse-of-discretion standard of review for many ERISA plans. However, I suspect that in response to this Court's decision, we are likely to see many plan amendments adding language which more unambiguously states the plan's intention to get the benefit of Firestone discretionary review for its benefit determination decisions.
Friday, November 8, 2013
Our own Paul Secunda has a new paper available for download on SSRN: An Analysis of the Treatment of Employee Pension and Wage Claims in Insolvency and Under Guarantee Schemes in OECD Countries: Comparative Law Lessons for Detroit and the United States. Here is the abstract:
To put the plight of the Detroit city employees into an international and comparative context when it comes to considering how their pension and wage claims should be treated in bankruptcy, it is instructive to consider how similar employee pension and wage claims would be treated in corporate insolvencies in other countries. It is necessary to focus on corporate insolvencies in other countries as the relevant comparison because most other countries do not have government systems in which municipalities have the same financial independence to borrow money and take on debt as municipalities do in the United States as part of the municipal bond market. Additionally, exploring the corporate bankruptcy systems in other countries provides a beneficial way to consider how to approach municipal bankruptcy situations in the United States, especially since corporate and municipal bankruptcies in the United States have a number of features in common when it comes to employee creditor claims.
This article therefore undertakes a comparative analysis of the treatment of pension and wage claims in insolvency proceedings and under guarantee schemes in the thirty-four member countries of the Organization of Economic Cooperation and Development (OECD) to understand whether the United States’ approach to employee claims in bankruptcy (in both the corporate and municipal context) is consistent with international norms. After completing the comparative analysis (which is comprehensively set out in the Country-by-Country Appendix at the end of this paper), this article then highlights common approaches to these issues, as well as important distinctions, setting up a number of tables to summarize the results.
All in all, most OECD countries have adopted hybrid systems which combine both some form of priority for both pension and wage claims, as well as some form of guarantee fund to complement the insolvency system. It is especially important to have these guarantee funds in place because insolvency processes can last for years, while the guarantee schemes are more likely to pay employees their claims within weeks or months. Unfortunately, the United States provides only limited priorities in most bankruptcy proceedings (and no such wage or pension priorities in Chapter 9 municipal proceedings), a guarantee system under the Pension Benefit Guaranty Corporation (PBGC) that is limited to pension plans, and then only to private-sector defined benefit pension plans. Neither private-sector defined contribution plans nor public sector pension plans come under a guarantee scheme in the United States.
One possible approach to employee claims in both municipal and corporate bankruptcies would be to pass pension and bankruptcy reform laws similar to what Canada enacted in 2008 as part of its Wage Earner Protection Program Act (WEPPA). Unlike the American system, WEPPA provides limited absolute priorities for pension contributions and a broad array of wage claims in insolvency, as well as a robust wage guarantee scheme. As to the policy reasons supporting this approach, it appears that greater emphasis is placed on the need to protect the weakness of employees creditors in the insolvency process as opposed to focusing on the need to ensure the existence of cheap, accessible credit for companies and governments.
This article concludes that given the relative vulnerability of employees and the sophistication of most lenders, the United States should balance these interests to provide increased protection for employment claims during municipal and corporate insolvency proceedings through giving heightened priority treatment to employees pension and wage claims in bankruptcy in tandem with a federally-operated guarantee scheme for both pension and wages claims.
An important and timely topic, especially as the public pension crisis looms large in this country.
Wednesday, November 6, 2013
Congratulations to Neville Harris (Univ. of Manchester School of Law (UK)) on the publication of his new book: Law in a Complex State: Complexity in the Law and Structure of Welfare.
From the publisher:
Approximately half of the total UK population are in receipt of one or more welfare benefits, giving rise to the largest single area of government expenditure. The law and structures of social security are highly complex, made more so by constant adjustments as government pursues its often conflicting economic, political and social policy objectives. This complexity is highly problematic. It contributes to errors in decision-making and to increased administrative costs and is seen as disempowering for citizens, thereby weakening enjoyment of a key social right.
Current and previous administrations have committed to simplifying the benefits system. It is a specific objective of the Welfare Reform Act 2012, which provides for the introduction of Universal Credit in place of diverse benefits. However, it is unclear whether the reformed system will be either less complex legally or more accessible for citizens.
This book seeks to explain how and why complexity in the modern welfare system has grown; to identify the different ways in which legal and associated administrative arrangements are classifiable as 'complex'; to discuss the effects of complexity on the system's administration and its wider implications for rights and the citizen-state relationship; and to consider the role that law can play in the simplification of schemes of welfare. While primarily focused on the UK welfare system it also provides analysis of relevant policies and experience in various other states.
This book represents the culmination of Neville's project on 'complexity' in welfare systems throughout Europe. Although the book focuses on the United Kingdom and some other non-US countries, the lessons to be learned are valuable ones as we consider going forward how to improve the complex social insurance system that we have here in the United States.
Wednesday, October 30, 2013
Friend of the blog Marcy Karin (ASU) writes to remind us of a symposium/CLE that readers of the blog will be interested in, especially those of you in the New York area. On Friday, Hofstra's Labor and Employment Law Journal will be holding a symposium on health legislation and the workplace. Forging a Path: Dissecting Controversial Health Legislation in the Workplace. The symposium will take place at Hofstra University Club, David S. Mack Hall, North Campus, Hofstra University, on Friday, November 1, 2013, from 9 am to 3 pm.
The lineup is impressive. Here are the details:
Keynote Speaker: Phyllis Borzi, Assistant Secretary for Employee Benefits Security, U.S. Department of Labor
Panel 1: The Evolution of Anti-Discrimination Disability Laws: Defining Reasonable Accommodation and Disability
- Rick Ostrove ’96, Partner, Leeds Brown Law, PC
- Keith Frank ’89, Partner, Perez & Varvaro
- Marcy Karin, Clinical Professor of Law and Director, Work-Life Policy Unit, Civil Justice Clinic, Sandra Day O’Connor College of Law at Arizona State University
- Jeffrey Schlossberg ’84, Of Counsel, Jackson Lewis LLP
- E. Pierce Blue, Special Assistant and Attorney Advisor, Office of Commissioner Chai Feldblum, U.S. Equal Employment Opportunity Commission
Panel 2: Workplace Uncertainties Under the ACA: Preparing the Employer and Employee for the Road Ahead
- Jill Bergman, Vice President of Compliance, Chernoff Diamond & Co., LLC
- Steven Friedman, Shareholder and Co-Chair, Employee Benefits Practice Group, Littler Mendelson P.C.
Panel 3: The FMLA 20 Years Later: What Have We Learned and Where Do We Go From Here?
- Robin Runge, Professorial Lecturer in Law, George Washington University Law School
- Rona Kitchen, Assistant Professor of Law, Duquesne University School of Law
- Joseph Lynett, Partner, Jackson Lewis LLP
- Nicole Porter, Professor of Law, The University of Toledo College of Law
Registration is $100 per person. Includes continental breakfast, lunch and CLE credits. Free for Hofstra University students, faculty, staff and administrators.
Sponsored by: Littler Mendelson P.C.
October 30, 2013 in Conferences & Colloquia, Disability, Employment Discrimination, Faculty Presentations, Pension and Benefits, Scholarship, Worklife Issues, Workplace Trends | Permalink | Comments (0) | TrackBack (0)
Thursday, October 24, 2013
SCOTUSblog has links to documents filed earlier this week by the federal government in a number of cases concerning whether corporations have free exercise rights under the First Amendment. Companies like Hobby Lobby have argued that the contraceptive mandate as interpreted by the Executive Branch to enforce the Affordable Care Act's mandate that preventive women's health services be covered without cost sharing substantially burdens the religious rights of either the corporation or its shareholders, and that the mandate thus violates either the First Amendment or the Religious Freedom Restoration Act.
The Tenth Circuit agreed with Hobby Lobby, finding that the mandate likely violates RFRA, and the federal government has filed a writ of certiorari in that case. Hobby Lobby apparently agrees that the Court should take the case. There is a circuit split between the Tenth Circuit and the Third and Sixth Circuit on this issue, and the Seventh and Eighth have issued unpublished decisions, granting stays of orders to comply with the mandate pending appeal of the issues. Finally, the Ninth Circuit, the Second Circuit, and the Minnesota Supreme Court have all found that corporations or their shareholders have some free exercise rights in other contexts. For more on that and another of these cases, see the cert petition in the Third Circuit case: Conestoga Wood Specialties Corp. v. Sebelius.
The circuit split, and the general agreement among the parties that the Court should resolve this issue make it more likely the Court will take one of these cases. The real question is whether the Court will consider only RFRA, and decide just Hobby Lobby or consolidate all of the pending petitions, or will consider both RFRA and the First Amendment.
Wednesday, October 23, 2013
Katie Kennedy (The John Marshall Law School) has asked me to post this Call for Papers concerning the Center for Tax Law and Employee Benefits upcoming symposium on the Affordable Care Act.
Here are some of the details: The Center for Tax Law and Employee Benefits is hosting the 12th Annual Employee Benefits Symposium next April 2014. The topic is “The Implementation of the Affordable Care Act.” W. Thomas Reeder, one of the top officials in Washington’s Affordable Care Act Office, will be the keynote speaker; so the Symposium will also be an opportunity to have the ear of a government representative.
The due date for an abstract is Tuesday, November 5, 2013. The Symposium’s date is Friday, April 4, 2014.
Tuesday, October 15, 2013
Update: Thanks to blog reader, Albert Feuer, for bringing to my attention Tejinder Singh’s commentary on the oral argument, Argument analysis: Nobody seems worried about ERISA limitations periods, SCOTUSBLOG (Oct. 17, 2013).
OK, hold onto your seats for some flat out ERISA law excitement. This morning, the United States Supreme Court heard oral argument in Heimeshoff v. Hartford Life & Accidental Insurance Company [Briefs at SCOTUSblog], concerning statute of limitation accrual issues for benefit claims under Section 502(a)(1)(B) of ERISA.
RossRunkel.com, as always, gets to the heart of the matter (which is really impressive when you consider it is ERISA after all):
Heimeshoff's disability policy, administered by Hartford, says that a court suit for wrongful denial of benefits has to be filed within three years of when the claimant files a proof of loss with the plan administrator.
That can be tough, given the fact that it's possible for the three-year period to begin to run before the claimant has gone through the administrative procedure that must be followed before bring a suit. I suppose it's even possible in some cases that the three years would run out before the claimant got a final denial.
Hartford has a simple response, which is that ERISA plans usually get enforced the way they are written.
There's really no statutory text that's much help.
The petition for certiorari points out that lower court have adopted three conflicting approaches to answer the question of accrual:
(1) A plan’s statute of limitations cannot begin running until the claimant has exhausted administrative remedies and the plan has issued a formal, final adverse determination (Fourth and Ninth Circuits);
(2) A plan’s pre-denial statute of limitations is enforceable if “reasonable,” as determined on a case-by-case basis (Second, Sixth, Seventh, Eighth, and Tenth Circuits);and
(3) The plan must notify the claimant of the time limits for judicial review, in the SPD and adverse determinations, in compliance with ERISA regulations; and if it does not, the court will not allow the plan to assert the plan’s limitations defense or will equitably toll the limitations period (First Circuit and a District Court in Second Circuit).
I don't see any clear path for the Court on this one.
Also see Argument preview: When can an ERISA limitations period start to run? at SCOTUSblog.
I agree wth Ross that this area of ERISA law is a mess. The ERISA written plan requirement rule suggests that the plan administrator follow the terms of the plan as written, but to do so, at least conceivably in some cases, the administrator could drag their feet and wait for the statute of limitations to run before finally deciding the internal appeal and thereby prevent the employee to ever file a benefits denial claim in court.
Equitable tolling might be one way with dealing with the potential unfairness of the rule, but its implementation would also be messy. Also, it is unavailing to say with a straight face that plan administrators and employee should be bound by terms of the plan because if the employee wanted a different type of SOL they could just bargain for it. Everyone knows that employees don't bargain over plan language. They are classic adhesion contracts, presented on a take-it-or-leave-it basis.
To me, the best rule would be to start the SOL to run once the internal administrative process has been finalized and the employee is free to sue in court. This approach has the advantages of both providing a clear point when the SOL starts to run, plus provides incentive for the plan administrators to complete claims processing as quickly as possible.
No predictions on this one, folks, but I fear this pro-employer/pro-plan sponsor court will adopt the written plan requirement rule and permit the plan sponsor to unilaterally set in the plan document an accrual date and a length for the statute of limitations which will further undermine employee rights under ERISA.
Richard Kaplan (Illinois Law) has posted on SSRN his piece in the Elder Law Journal entitled: Financial Planning for the Non-Retiree.
Here is the abstract:
This article addresses the various options under Social Security, Medicare, and private retirement accounts that should be considered by individuals who are approaching or have reached their “retirement age” but plan to continue working. Specifically, the article considers Social Security’s bonuses for delaying Social Security retirement benefits and the related impact on a surviving spouse’s benefits, enrollment costs and delayed enrollment penalties in Medicare Parts A (hospital coverage), B (physicians’ fees), and D (drugs), and the penalty-free deferral of retirement plan distributions beyond age 70½.
Needless to say, this is a valuable contribution not just for social insurance law scholars, but for anyone who finds themselves confronting these types of decisions in their lives.
Wednesday, September 25, 2013
Fordham Urban Law Journal Cooper-Walsh Symposium on Legacy Liabilities and Municipal Financial Distress
The Fordham Urban Law Journal's Cooper-Walsh Symposium this year is entitled: Legacy Liabilities and Municipal Financial Distress. It will be held on Friday, October 11th from 10:00 am to 4:30 pm at the Fordham Law School, 140 West 62nd Street, Room 430 B/C.
I have the good fortune of being part of this Symposium and will present a paper based on my recent research on how employment claims are treated in insolvency proceedings and guarantee schemes around the world. The hope is the provide U.S. policymakers some international benchmarks for the treatment of pension and wage claims in both corporate and municipal bankruptcy situations.
I will provide more information on my paper in coming weeks once I have posted a draft of the article, but for now here are the particulars for the Cooper-Walsh Symposium from the Journal website (including the program line up):
The sixth annual Cooper-Walsh Colloquium will address the effects of the rising costs of healthcare and pension plans on municipalities and their residents. Every year, the Colloquium is dedicated to bringing attention to the policies and legal frameworks that will shape the future of American cities. The Colloquium is organized in conjunction with Professor Susan Block-Lieb, the Cooper Family Chair in Urban Legal Issues, and Vice Dean Sheila Foster, the Albert A. Walsh Chair of Real Estate, Land Use, and Property Law.
The presenters will introduce their papers, followed by responses from commentators and round table discussions. The Fordham Urban Law Journal will publish the articles and responses in its Spring 2014 Cooper-Walsh Book.
To register, please contact Kristy Eagan, Cooper-Walsh Editor, at firstname.lastname@example.org.
In addition to myself, other presenters include Jack Beerman (BU), Melissa Jacoby (UNC), and Christine Chung (Albany). Opening remarks will be delivered by Richard Ravitch (former Lieutenant Governor of New York).
Tuesday, September 24, 2013
Caroline Mala Corbin has posted a new article on SSRN. It's entitled Corporate Religious Liberty and it focuses on claims that corporations have made recently that their religious liberty requires that they be exempt from the contraception mandate instituted by the Obama Administration in accordance with the Affordable Care Act. Here is the abstract:
Do for-profit corporations have a right to religious liberty? This question is front and center in dozens of cases challenging the Obama administration’s “contraception mandate.” Whether for-profit corporations are entitled to religious exemptions is a question of first impression, and one the Supreme Court is likely to answer in the next few years. Most scholars writing on this issue argue, “yes,” they do have the right to religious liberty, especially after the Supreme Court recognized that for-profit corporations have the right to free speech in Citizens United.
This essay argues “no,” for-profit corporations do not and should not have religious liberty rights. As a matter of current law, neither the Free Exercise Clause nor the Religious Freedom Restoration Act recognizes the religious rights of for-profit corporations. Citizens United changes nothing in religious liberty jurisprudence, as its protection for corporate speech is based on the rights of audiences and not the rights of corporate speakers.
As a normative matter, for-profit corporations should not have free exercise rights. There is no principled basis for extending a purely personal right to profit-making corporations, and for-profit corporations cannot be equated to churches or other voluntary religious associations. Finally, granting religious exemptions to corporations risks trampling on the religious liberty of individual employees.
It looks like a very interesting read.
Monday, September 23, 2013
On behalf of the Hofstra Labor & Employment Law Journal, Jamie Haar (Managing Editor of Articles) invites interested law professors and practitioners to submit original articles for publication in the Journal’s symposium issue.
The Journal will be devoting its Spring 2014 issue to the topics that will be discussed at this year’s Symposium. The Symposium will be dedicated to a practice-oriented and scholarly discussion on employer-regulated healthcare and the implications of employee leave and disability accommodations in the labor and employment law context. The Jounral is seeking articles on the impacts and implications of the Affordable Care Act and the recent amendments to the Americans with Disabilities Act on labor and employment law.
Submissions for article proposals or completed articles must be made by October 11th. Articles that need to be written should be completed by January 8, 2013. Articles may not exceed fifty pages and must be a minimum of fifteen pages. Please send all submissions to Jamie Haar, Managing Editor of Articles, via email to email@example.com.
Wednesday, September 18, 2013
The Employee Benefits Security Administration (EBSA) released today guidance (Technical Release 2013–04) defining the meaning of the terms “spouse” and “marriage” under ERISA in light of the U.S. Supreme Court's decision in June in U.S. v. Windsor.
Here is the pertinent text from the Technical Release:
In general, where the Secretary of Labor has authority to issue regulations, rulings, opinions, and exemptions in title I of ERISA and the Internal Revenue Code, as well as in the Department's regulations at chapter XXV of Title 29 of the Code of Federal Regulations, the term 'spouse' will be read to refer to any individuals who are lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that does not recognize such marriages. Similarly, the term 'marriage' will be read to include a same-sex marriage that is legally recognized as a marriage under any state law....
The terms 'spouse' and 'marriage,' however, do not include individuals in a formal relationship recognized by a state that is not denominated a marriage under state law, such as a domestic partnership or a civil union, regardless of whether the individuals who are in these relationships have the same rights and responsibilities as those individuals who are married under state law.
DOL Secretary Thomas Perez suggests that the DOL plans to issue additional guidance in the near future.
Monday, September 16, 2013
Feuer on How Should ERISA Plans Handle Powers of Attorney and Court-Appointed Guardians and the Absence of Such Agents for Participants Lacking Capacity?
Albert Feuer has completed the final article of a trilogy discussing the benefit rights of an ERISA plan participant or beneficiary. The third piece is: “How Should ERISA Plans Handle Powers of Attorney and Court-Appointed Guardians and the Absence of Such Agents for Participants Lacking Capacity?,” 54 Tax Mgmt. Memo. 351 (September 9, 2013) .
Albert explains that this newest piece describes some of the ERISA benefit rights that a participant or beneficiary may exercise and (1) argues that ERISA plans may, but need not, disregard state law agents seeking to exercise such rights other than pursuing a benefit claim, (2) makes suggestions for plan powers of attorneys that are likely to be understood by participants and may minimize plan risks, and (3) observes that participant directed plans will be responsible for investment decisions when a participant or beneficiary lacks the capacity to exercise investment rights, but has not appointed a third party agent to act on his or her behalf (this often occurs during the time between the time a participant dies and a beneficiary assumes such responsibilities).
Another welcome addition to the ERISA literature in this important area of the law.
Tuesday, September 3, 2013
Our own Paul Secunda was on NPR's Marketplace yesterday in a story about labor complaints with Obamacare. Washington & Lee's Tim Jost comments as well. An excerpt:
From high-wage construction workers to low-wage restaurant workers, 20 million employees get their health insurance through something known as Taft-Hartley plans. That’s where unions and employers get together and pay in for coverage.
Marquette University Law Professor Paul Secunda says Obamacare makes those plans really expensive for companies. “It might make more sense for employers to stop offering the Taft-Hartley plans, instead allow their employees to go on the state healthcare exchanges,” he says.
Secunda says not only would that mean workers end up with less generous coverage, it threatens the basic value of the unions.
“One of the thing that employees look to unions for -- the ability to get all sorts of employee benefits, but maybe most importantly health insurance benefits -- will no longer be something the unions can no longer offer in this environment,” he says.
Check out the entire story.
Wednesday, August 28, 2013
Albert Feuer has a new ERISA article out that may interest many of our employee benefit law-inclinced readers: Determining the Death Beneficiary Under an ERISA Plan and the Rights of Such a Beneficiary, 54 Tax Mgmt Memo. 323 (August 26, 2013).
According to Albert, the article seeks to provide advice to (1) ERISA plan administrators, who often struggle to determine who they should pay survivor benefits, and to (2) trusts and estates attorneys and family law attorneys, who often struggle to determine who, if anyone, may use state law to wrest benefits from the person entitled to receive survivor benefits from an ERISA plan.
A great addition indeed to this underdeveloped area of ERISA Law!
Monday, August 19, 2013
Thanks to Joe Seiner (South Carolina) for bringing to my attention this recently published article by Suja Thomas (Illinois) and Peter Molk (VAP lllinois) entitled: Employer Costs and Conflicts under the Affordable Act. It is published in the Cornell Law Review Online.
Here's the abstract:
In January 2015, qualified employers must provide health care coverage under the Patient Protection and Affordable Care Act of 2010 or face a fine. As employers actively attempt to minimize the costs that they will incur, the possibility emerges that employers will retaliate against or harass employees who seek coverage. This Essay discusses the protections for employees under the law and the possible deficiencies in the law. It shows that employers and employees often have contrasting incentives – employers to avoid coverage, and employees to take coverage – and these incentives may result in employer harassment and retaliation of employees. Presently, in an analogous context, employees often raise retaliation claims after they have complained of discrimination, and these claims have had significant success. Because of similarities between these situations, comparable retaliation under the ACA is likely, and perhaps it will occur even more due to the significant specific costs that employers face under the ACA.
As Joe points out, this timely article on the employment law implications of the Affordable Care Act has already been covered fairly extensively by the Wall Street Journal. The WSJ cites are here and here (behind pay wall). Check it out while it is hot.
Wednesday, August 14, 2013
Jonathan Feigenbaum and Scott Riemer have published in the ABA TIPS Health and Disability & Life Insurance Law Committee Newsletter (Summer 2013): Did the Supreme Court Flunk Constitutional Law When It Permitted Discretionary Review of Insured ERISA Benefits Cases?
From the Introduction:
Beginning with Firestone Tire & Rubber Co. v. Bruch, and its affirmance in Metropolitan Life Ins. Co. v. Glenn, and most recently in Conkright v. Frommert, the Supreme Court permitted District Courts to treat insured ERISA welfare benefits cases as summary review proceedings. In each case, the court focused on trust law, but never addressed whether the regulatory scheme it set up by these cases satisfies the requirements of Article III of the Constitution. The authors argue that discretionary review, without a full trial on the merits, violates Article III.
In the 1983 comedy Trading Places the amoral Duke brothers conduct an experiment in social Darwinism debating whether genetics or nurturing is the source of success. They make a wager, and then put their theories to the test. They manipulate the life of Louis Winthorp III (Dan Akroyd), a successful commodities trader, by “trading places” with Billy Ray Valentine (Eddie Murphy), a street con artist.
We’ll bet the same amount wagered by the Duke brothers with our readers – identify any litigation in the federal courts between private litigants, other than discussed in this paper, where the Article III Judge must defer to the decision of the defendant without conducting a full trial on the merits. We bet you can’t.
This is an interesting topic that has been explored by Don Bogan (Oklahoma), among others, in the past. The article makes an interesting and provocative point concerning the unique features of ERISA Section 502(a)(1)(B) litigation and the lack of a normal Article III federal court procedure.
Can anyone win the Duke brothers' wager that Feigenbaum and Riemer have put forward? I guess one of the questions is whether there is another area of law that has a statutorily required internal review process (like under ERISA Section 503) which requires exhaustion of internal appeals before a claim can be brought in court (not the same thing as what exists in Title VII scenarios where you can exhaust external administrative procedures by merely waiting out the EEOC)?
Another wrinkle is that ACA provides for the possibility of an alternative mechanism through an independent external medical review by a physician, which is de novo review of the plan administrator's claim denial and which is final and not appealable to court. How does that further complicate the Article III issue?