Litigation – Page 2 – Benefits Law Group Blog

The Tide is High…Keep Holding On For More Retirement Plan Fee Litigation

by Brenda Berg

The U.S. Supreme Court’s ruling this week in Hughes v. Northwestern University will do nothing to stem the rising tide of retirement plan fee litigation. But the ruling doesn’t mean fiduciary breach claims are more likely to be successful either. Instead, the Court kept its ruling very narrow: a broad investment menu with some prudent funds will not automatically mean the fiduciaries are off the hook for offering imprudent funds.

The plaintiffs in Hughes were participants in two 403(b) retirement plans sponsored by Northwestern University. The participants brought claims for breach of fiduciary duty against the University, the retirement plan committee, and the individuals who administered the plans. The participants alleged the fiduciaries breached their duty of prudence by: (1) allowing recordkeeping fees that were too high; (2) allowing plan investments with excessive investment fees; and (3) providing participants too many investment options (over 400!) which resulted in participant confusion and poor investment decisions. Read more

I Feel Good… I Knew That I Would… Wellness Program Reminders

December 3, 2021/in Cafeteria Plans, DOL, Fiduciary Duties, Fringe Benefits, Health & Welfare Plans, Litigation

by Alex Smith

With employers considering the imposition of health plan premium surcharges on participants who are COVID unvaccinated, a recent court decision highlights the importance of complying with the HIPAA wellness program requirements.

A federal district court in Ohio recently rejected a portion of Macy’s motion to dismiss the Department of Labor’s (DOL’s) enforcement action with respect to the tobacco surcharges on health plan premiums Macy’s imposed as part of its wellness program. In its enforcement action, the DOL focused on the lack of a reasonable alternative standard for some of the years covered by the enforcement action and the lack of retroactively refunding the surcharge to participants who earned the right to avoid the surcharge later in the plan year for certain years in which a reasonable alternative standard was made available. As background, health contingent wellness programs are required to provide a reasonable alternative standard for earning the incentive (avoiding the surcharge) under HIPAA. Read more

Here Comes the Sun: The DOL Intends to Shine the Light on Mental Health Parity

August 23, 2021/in Benefits Plan Creation, Cafeteria Plans, Corporate Governance in Benefits, DOL, ERISA, Fiduciary Duties, Health & Welfare Plans, IRS, Legislation, Litigation, State Benefits Laws

by Bret F. Busacker

We previously blogged about the new Mental Health Parity and Addiction Equity Act (MHPAEA) reporting and disclosure requirements established by the Consolidated Appropriation Act, 2021 (CAA).

As a refresher, employers and carriers that sponsor group health plans are now required to provide upon request a full analysis of the process followed by the plan in establishing non-quantitative treatment limitations (NQTLs) for the plan and the impact these NQTL’s have on mental health and substance use disorder (MH/SUD) benefits provided by the plan. This disclosure requirement went into effect on February 10, 2021.

The DOL has recently signaled its intent to focus on MHPAEA issues in filing suit against United Healthcare Insurance Company (“UHIC”) and United Behavioral Health (“UBH”). Read more

Doctor, Doctor . . . Health Plan Litigation Update

June 18, 2021/in Health & Welfare Plans, Litigation

By Kevin Selzer

For individuals who work with employer-sponsored benefit plans, the past 18 months has been packed with new developments from federal and state legislatures as well as executive branch initiatives and regulatory guidance. Today’s post covers two cases from the judiciary impacting employer-sponsored health plans.

SCOTUS and the ACA. Yesterday, the U.S. Supreme Court rejected challenges to the Affordable Care Act (ACA) in Texas v. California. Specifically, the Supreme Court found that the plaintiffs do not have legal standing to challenge the individual mandate because they could not show that the $0.00 individual mandate penalty has or would cause an injury to the plaintiffs.

Are You Ready to Provide Your MHPAEA Disclosure?

April 23, 2021/in Benefits Plan Creation, Cafeteria Plans, Corporate Governance in Benefits, DOL, ERISA, Fiduciary Duties, Health & Welfare Plans, IRS, Legislation, Litigation, State Benefits Laws

DOL and HHS FAQs Provide Important Insights

by Bret F. Busacker

We previously blogged about the new Mental Health Parity and Addiction Equity Act (MHPAEA) reporting and disclosure requirements established by the Consolidated Appropriation Act, 2021 (CAA). As a refresher, employers and carriers that sponsor group health plans are now required to provide upon request a full analysis of the process followed by the plan in establishing non-quantitative treatment limitations (NQTLs) for the plan and the impact these NQTL’s have on mental health and substance use disorder (MH/SUD) benefits provided by the plan. This disclosure requirement went into effect on February 10, 2021. Read more

But I Said No, No, No . . . New Requirement for Mental Health and Substance Abuse Benefits

February 26, 2021/in DOL, ERISA, Health & Welfare Plans, Litigation, State Benefits Laws

By Kevin Selzer

Employee benefit plans are subject to numerous laws that restrict, or at least limit, discrimination within the plans. Many benefit plan nondiscrimination rules focus on whether highly and non-highly compensated employees are receiving equal treatment under those plans; however, the recently enacted Consolidated Appropriations Act, 2021 (CAA) is bringing some attention to an often-overlooked discrimination rule that prohibits group health plans from discriminating with respect to mental health and substance use disorder benefits (MH/SUD benefits). Read more

US District Court Pushes Back on DOL’s ERISA Plan Ruling Finding It Arbitrary and Capricious

October 23, 2020/in Benefits Plan Creation, ERISA, Health & Welfare Plans, Legislation, Litigation, State Benefits Laws

by Bret Busacker

As with many of the issues at stake in the upcoming Presidential election, the future of how Americans will obtain healthcare is a core issue this November. The Trump administration previously outlined its view that healthcare could be provided through Association Health Plans that consist of loosely related employer groups, including self-employed individuals. This Association Health Plan rule was then struck down by the Second Circuit Court of Appeals, which concluded the Rule was too aggressive; and exceeded the scope of the Employee Retirement Income Security Act (ERISA).

A recent US District Court case in Texas throws new fuel on the debate fire of whether healthcare coverage may be offered through ever-more expansive and creative employer sponsored arrangements; or whether ERISA should be interpreted to limit employer coverage to more traditional employer-employee structures.

Wait a Minute Mr. Postman . . . COBRA Litigation Update

July 23, 2020/in DOL, ERISA, Health & Welfare Plans, Litigation

by Kevin Selzer

We have been monitoring an increase in litigation relating to COBRA election notices in recent months. The plaintiffs in these cases allege that COBRA election notices are deficient, and as a result, the plaintiffs, on a class basis, should be awarded a $110/per day per participant penalty (among other relief). Many of these cases allege deficiencies on notices that are substantially similar to the Department of Labor’s model notice.

While none of these cases have fully worked through the courts, a number have settled for significant sums. The settlement success has predictably spurred more complaints and suits.

[Don’t] Tell Me Lies, Tell Me Sweet Little Lies … or the SEC will charge you with fraud

December 19, 2019/in Corporate Governance in Benefits, Equity Compensation, Executive Compensation, Fiduciary Duties, Investments, Litigation

by John Ludlum

Many private companies assume that if valid federal and state exemptions from registration are available for private company securities that there is little risk of problems with the Securities Exchange Commission (SEC). While it is rare for the SEC to take an interest in private company transactions, many SEC Rules apply to private company securities and transactions.

In one example, Stiefel Labs (Company) maintained an Employee Stock Bonus Plan (Plan) with Company contributions funded, at least in part, by shares of Company stock. As a private company, repurchases by the Company were the only way for employees to receive liquid funds for their shares. The Company engaged independent accountants to perform fiscal year end valuations and made this valuation information available to Plan participants and used this value for repurchases for the next year.

Walk this way…to avoid the pitfalls of ERISA

November 21, 2019/in Benefits Plan Creation, DOL, Equity Compensation, ERISA, Executive Compensation, Fiduciary Duties, IRS, Litigation, PBGC, Retirement Plans, State Benefits Laws

by John Ludlum

Companies implement bonus plans to meet a variety of business objectives: retention, specific company business goals, change of control, and others. In designing bonus plans, there are a variety of legal fields that must be understood for exemption or compliance including securities, tax, ERISA, and employment. Many times, bonus plans that pay only in cash for achieving specific corporate objectives and which require services through the date of payment are exempt from onerous compliance mandates; however, if a bonus plan is found to provide retirement income or “results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,” then that arrangement may be found to be a “pension plan” under ERISA Section 3(2) (29 U.S.C. § 1002(2)(A)). Once a bonus plan is subject to ERISA, it must comply with ERISA’s annual reporting, participant communications, funding, participation, vesting, and fiduciary duty requirements.