Businesses leaders struggling to deal with economic setbacks frequently may be tempted to use employee benefit plan contributions or funds for added liquidity or otherwise fail to take appropriate steps to protect and timely deposit plan contributions or other plan assets.  A long and ever-mounting series of decisions demonstrates the risks that distressed businesses, their officers, directors and other employees fail to make appropriate arrangements for the proper fulfillment of employee benefit plan related obligations.

The latest wave of recent fiduciary liability settlement orders, judgments and prosecutions of business owners, executives, board members, and other business leaders of distressed companies over the past year document the potential personal businesses and their leaders may face if their health, 401(k) or other employee benefit programs are not appropriately funded and administered as required by the Employee Retirement Income Security Act of 1974, as amended (ERISA). 

While the U.S. Department of Labor Employee Benefit Security Administration (EBSA) long has aggressively pursued fiduciary responsibility enforcement actions against distressed or bankrupt companies and their officers, directors and other executives for their alleged involvement in the mishandling of their business’ medical, 401(k) or other pension and other employee benefit programs, the ongoing economic downturn has fueled a sharp increase in these EBSA enforcement activities.  

EBSA enforcement actions during 2009 continue to highlight the longstanding and ongoing policy of aggressive investigation and enforcement of alleged misconduct by companies, company officials, and service providers in connection with the maintenance; administration and funding of ERISA-regulated employee benefit plans. A review of the Labor Department’s enforcement record makes clear that where the Labor Department perceives that a plan sponsor or its management fails to take appropriate steps to protect plan participants, the Labor Department will aggressively pursue enforcement regardless of the size of the plan sponsor or its plan, or the business hardships that the plan sponsor may be facing.

EBSA reports enforcing $1.3 billion in recoveries related to pension, 401(k), health and other benefits during fiscal year 2009. EBSA has filed numerous lawsuits to compel distressed companies and/or members of their management to pay restitution or other damages for alleged breaches of ERISA fiduciary duties, to appoint independent fiduciaries, or both for plans sponsored by bankrupt or financially distressed companies.

Recent settlements and judgments obtained by the Labor Department and through private litigation document that officers and other members of management participating, or possessing authority to influence, the handling of heath, 401(k) and other pension, or other employee benefit plans regulated by ERISA may be exposed to personal liability if these benefit programs are not maintained and administered appropriately. This risk is particularly grave when the sponsoring company becomes financially distressed or goes bankrupt, as the handling of employee benefit and other responsibilities becomes particularly disrupted and the lack of company liquidity often leaves executives and service providers as the only or best source of recovery for government officials and private plaintiffs.

In the December 2, 2009 decision in Solis v. Struthers Industries Inc., for instance, a federal district judge ordered business leader Jomey B. Ethridge liable to pay $303,084.61 to restore assets belonging to the 401(k) plan of bankrupt Struthers Industries in an ERISA fiduciary responsibility action filed by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA). Filed by the EBSA in the U.S. District Court for the Southern District of Mississippi, the Struthers Industries lawsuit alleged that Ethridge and Struthers Industries allowed employee contributions to be used for purposes other than providing benefits resulting in losses of $310,084.57.  According to court documents, Struthers Industries designed and built heat transfer and pressure vessels at its Gulfport facility. In 2001, its 401(k) plan had 278 participants and assets totaling $8,279,083. The company filed for bankruptcy in 2003, and its assets were auctioned off in 2005. An independent fiduciary was appointed by the court in 2007 to manage the plan’s assets.  The ordered Ethridge personally to pay $303,084.61 in restitution to the plan for his involvement in the mishandling of the plan’s assets. The order also bars Ethridge from acting as a benefit plan fiduciary in the future.

The Struthers Industries decision comes on the heels of EBSA’s success in Solis v. T.E. Corcoran Co. Inc. last month in recovering more than $89,000 from business owners and operators found to have breached fiduciary duties to the participants of the T.E. Corcoran Co. Inc. Profit Sharing Plan by improperly loaning plan assets to he plan sponsor and an affiliated company. The Labor Department sued T.E. Corcoran Co. and its owners, John F. Corcoran and Thomas E. Corcoran Jr., alleging that the company and its owners caused the plan to lend money to the two companies at below market interest rates, without terms of payment and without documentation in violation of ERISA. The suit filed in the U.S. District Court for the District of Massachusetts, also named as a defendant Coran Development Co. Inc., a company co-owned by the Corcorans.  T.E. Corcoran Co. Inc. was the sponsor and administrator of the plan, while John and Thomas Corcoran were trustees of the plan, making all three fiduciaries and parties in interest with respect to the plan. ERISA specifically prohibits the use of employee benefit plan funds to benefit parties in interest.

The Corcoran judgment requires that the plan account balances of defendants John F. Corcoran and Thomas E. Corcoran Jr. be offset in the amount of $89,273 plus interest to be allocated to the accounts of the other plan participants. The offset will make whole all of the accounts of the non-trustee participants. In addition, the court order appoints an independent trustee to oversee the final distribution of the plan’s assets and the proper termination of the plan, requires the defendants to cooperate fully with the independent trustee in this process, and then prohibits them from serving as fiduciaries to any ERISA-covered plan for 10 years.

A complex maze of ERISA, tax and other rules make the establishment, administration and termination of employee benefit plans a complicated matter. When the company sponsoring a plan goes bankrupt or becomes distressed, the rules, as well as the circumstances can make the administration of these responsibilities a powder keg of liability for all involved. Companies and other individuals that in name or in function possess or exercise discretionary responsibility or authority over the maintenance, administration or funding of employee benefit plans regulated by ERISA frequently are found to be accountable for complying with the high standards required by ERISA for carrying out these duties based on their functional ability to exercise discretion over these matters, whether or not they have been named as fiduciaries formally.

Despite these well-document fiduciary exposures and a well-established pattern of enforcement by the Labor Department and private plaintiffs, many companies and their business leaders fail to appreciate the responsibilities and liabilities associated with the establishment and administration of employee benefit plans. Frequently, companies sponsoring their employee benefit plans and their executives mistakenly assume that they can rely upon vendors and advisors to ensure that their programs are appropriately established the establishment and maintenance of these arrangements with limited review or oversight by the sponsoring company or its management team.

In other instances, businesses and their leaders do not realize that the functional definition that ERISA uses to determine fiduciary status means that individuals participating in discretionary decisions relating to the employee benefit plan, as well as the plan sponsor, may bear liability under many commonly occurring situations if appropriate care is not exercised to protect participants or beneficiaries in these plans.

For this reason, businesses providing employee benefits to employees or dependents, as well as members of management participating in, or having responsibility to oversee or influence decisions concerning the establishment, maintenance, funding, and administration of their organization’s employee benefit programs need a clear understanding of their responsibilities with respect to such programs, the steps that they should take to demonstrate their fulfillment of these responsibilities, and their other options for preventing or mitigating their otherwise applicable fiduciary risks.

Curran Tomko Tarski LLP Attorneys Can Help

If your business needs assistance with distressed or bankruptcy company, defined benefit plan funding or other employee benefit, human resources, corporate ethics, and compliance practices, or other related concerns or in responding to restructuring and bankruptcy, employment or employee benefits related charges, audits, investigations or suits, please contact Curran Tomko Tarski LLP Corporate Restructuring & Bankruptcy Chair G. Michael Curran at mcurran@cttlegal.com, (214) 270-1402, Employment Practice Chair Cynthia Marcotte Stamer at cstamer@cttlegal.com, (214) 270-2402, or another Curran Tomko Tarski, LLP attorney of your choice.

Mr. Curran provides legal counsel on all aspects of out-of-court reorganizations and workouts, as well as bankruptcy proceedings. He has represented debtors, debtors’ and creditors’ committees, and third party purchasers in a variety of complex factual and legal scenarios, and has also acted as special counsel. His experience includes substantial experience addressing labor and employment, employee benefit and compliance issues arising in connection with restructuring, bankruptcy and other significant business events and transactions.

Ms. Stamer is experienced with assisting employers, fiduciaries, bankruptcy creditors and trustees, investors, purchasers and others about employee benefit, labor and employment, compensation and other services related concerns involved with distressed businesses or benefit plans, bankruptcy and restructuring transactions and other corporate or plan related events. Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group and a Joint Committee on Employee Benefit Council Member, Ms. Stamer has advised and represented these and other business clients on employee benefit, labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 22 years. Her experience includes significant experience representing and advising clients about the planning, implementation, risk management and defense of reductions in force and other labor and employment, employee benefits, compensation, insurance, compliance and other concerns affecting transactions involving bankrupt or distressed corporations. Ms. Stamer also speaks and writes extensively on these and other related matters. Among her many publications are her recent November, 2009 publication, Calculation of Minimum Contributions Required For Single Employer Pension Plans: The Final Rules for The Measurement of Assets and Liabilities For Pension Funding Purposes under Final Treasury Regulation Section 1.430(d)” and A Proactive Approach To Hr And Benefits Planning For Mergers, Acquisitions, Downsizing, Reengineering And Other Organizational Changes.” Persons interested in a copy of either of these publications may contact Ms. Stamer. For additional information about Ms. Stamer and her experience or to access other publications by Curran Tomko Tarski attorneys, see here or contact Ms. Stamer or Mr. Curran directly.   For additional information about the experience and services of members of the Curran Tomko Tarksi LLP team, see here.

Other Helpful Resources & Other Information

We hope that this information is useful to you.  Curran Tomko Tarski LLP offers a variety of updates, publications, training and other resources to assist its business clients and their leaders meet their legal and operational challenges.  If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your Currant contact information – including your preferred e-mail- by creating or updating your profile at www.CTTLegal.com and/or register to receive our CTT Corporate Compliance, Risk Management and Internal Controls updates in blog form at here. Some other recent updates that may be of interest include:

• Employee Benefit Plan Sponsors & Fiduciaries Urged To Audit Bonding, Staff & Service Providers Under ERISA Requirements
• IRS Guidance For Correcting Employment Tax Overpayments Released
• Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business
• New GINA Genetic Information Based Employment Discrimination & Confidentiality Mandates Require Updated Employment Poster, Policies & Procedures Now
• Employer H1N1 Risk Management Must Include Management of Employment Liabilities
• Confirm Credentials of Individuals Dealing With Employee Benefit Plans & Adequacy of ERISA Bonding
• Department Of Labor Announces Plans To Expand Reporting Employee Benefits, Wage & Hour, OSHA & Other Reporting & Disclosure Requirements & To Implement Other New Employee Benefit Regulations
• Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business
• Stericycle Inc.’s Acquisition Of Medserve Inc. Challenged As Anticompetitive
• House Passes Chemical Facility Anti-Terrorism Bill Requiring “Chemical Facilities” To Implement Complex New HR & Other Safety & Security Mandates
• Sept 23 Deadline For Employer & Other Health Plans, Health Care Providers & Other HIPAA-Covered Entities & Business Associates To Comply With New HHS Health Information Data Breach Rules
• Don’t Be a “Rubber Stamp” – Information Concerning the Submission of the Toxic Release Inventory Form
• Tighten Employment, Ethics & Internal Controls Policies & Practices To Minimize DOJ & Other Antitrust Exposures

Other Information & Resources

We hope that this information is useful to you. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information here or registering to participate in the distribution of these Curran Tomko Tarski Compliance, Risk Management & Internal Controls distributions here.  For important information concerning this communication click here.   If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.

©2009 Curran Tomko Tarski LLP.  All rights reserved.

While some businesses report improved business or hiring outlooks for 2010, many others are running out of time before the economic downturn and financing restrictions will force them to implement workforce reductions, close plants, or shut down all or portions of their business operations.  Where a distressed business contemplates a plant closing or mass layoff, the business and its leaders should consider its potential responsibilities under the Worker Adjustment and Retraining Notification Act (WARN) and where applicable, make appropriate arrangements to comply or implement the restructuring to minimize or avoid triggering WARN obligations.

WARN Applicability

WARN generally requires that an employer provide certain advance notices before a “plant closing” or a “mass layoff.”   The requirements of WARN generally apply to an employer if it employs more than 100 full-time employees or if it employs more than 100 employees who in the aggregate work at least 4,000 hours a week exclusive of overtime.

For purposes of WARN, a “plant closing” is the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating unit is within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees, excluding part-time employees.

In contrast, WARN defines a “mass layoff” as a reduction in force that:

• Does not result from a plant closing;
• Results in an employment loss at a single site of employment during any 30-day period for either (1) at least 33% of employees (excluding part-time employees, and at least 50 employees (excluding part-time employees), or at least 500 employees excluding part-time employees.

Because WARN exempts certain employment losses for purposes of making these determinations and employees from its requirements. For purposes of determining if a mass layoff or plant closing has occurred, employment losses for 2 or more groups at a single site of employment, each of which is less than the otherwise applicable minimum number of employees, but which in the aggregate exceed that minimum number set by WARN may constitute a plant closing or mass layoff under certain circumstances.

Additionally, a layoff or more than six months, which, at its outset, was announced to be a layoff of six months or less, is treated as an employment loss for purposes of WARN unless the extension results from unforeseen business circumstances and the employer gives notice in accordance with WARN when it becomes reasonably foreseeable that the layoff will extend beyond six months.

WARN Notice Requirement

When WARN applies, WARN generally requires that an employer provide at least 60 days advance written notice before any plant closing or mass layoff to the following parties unless the employer can prove that an exception applies:

• If the employees are represented by a union, the union,
• If the employees are not represented by a union, each affected employee, and
• To the State dislocated worker unit and the chief elected official of the unit of local government where the closing or layoff will occur.

Under certain circumstances, however, WARN may permit the provision of less than the otherwise required 60 days notice provided that when the allowed delay expires, the employer provides as much notification as is practical.  Since an employer claiming coverage by one of these exceptions as justification for delay in providing notice, however, such employers generally should both carefully evaluate the potential applicability of the exceptions and take appropriate action to preserve and document evidence that could be necessary or helpful to meet this burden of proof.  Assuming the appropriate evidence exists and can be produced, the following circumstances may warrant the provision of less than 60 days notice:

• When the notice would have been required, the employer was actively seeking capital or business which, if obtained, would have allowed the employer to avoid or postpone the shutdown and the employer reasonably and in good faith believed that giving the notice would have precluded the employer from obtaining the needed capital or business;
• The mass layoff or closing is caused by business circumstances not reasonably foreseeable when the notification would have been required; or
• The plant closing or mass layoff is the result of a natural disaster.

Special Considerations for Purchasers of Assets or Stock

In the case of a sale of assets or stock, the WARN regulations contemplate that responsibility for providing notification may be allocated by negotiation between the parties.  Otherwise, the responsibility for providing the notice generally applies to the entity that is the owner at the time of the employment loss.  Similar to certain successor liability rules imposed under the continuation of coverage rules of the Consolidated Omnibus Reconciliation Act (COBRA), however, the WARN regulations also indicate that a purchaser may be exposed to WARN Act liabilities if the seller fails to provide required WARN notifications and the purchaser does not thereafter provide the notices.

Additionally, many employers assume that that they do not need to comply with WARN if the purchaser hires the employees of the sellers, so that no break in employment occurs. It is not clear, based on the express language of the statute or the regulations, that WARN incorporates such an exception.  Therefore, prudent parties to the transaction generally will want to provide a WARN notification even under these circumstances. .Employer and union sponsored group health plans, their sponsors, insurers and administrators must act quickly to comply with the extension and expansion of temporary “COBRA Subsidy Rules” for “assistance eligible individuals” originally added to the group health plan medical coverage continuation requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) by the American Recovery and Reinvestment Act of 2009 (“AARA”) last February.

Other Risks & Responsibilities To Consider

In addition to WARN, business contemplating or implementing a plan closing, mass layoff or other reductions in force also should evaluate and make appropriate arrangements to address potential obligations under state plant closing laws, the ARRA Stimulus Bill Extension Rules amended and extended earlier this month (see here) and other requirements of COBRA,  voluntary or contractually obligated termination pay or other severance obligations, employee benefit, unemployment, and other laws. In this respect, particular attention generally is warranted to ensure that vesting and funding requirements for employee benefit plans are assessed and fulfilled, including any new or accelerated obligations to vesting if the reductions result in a partial or complete plan termination, cause underfunding of a defined benefit plans, special tax, securities or other obligations arising from the vesting of payment of deferred compensation under Internal Revenue Code § 409, golden parachute payments under Code §280G or other special compensation or benefits, as well as providing for appropriate application of employee benefit contributions withheld from pay., or otherwise.  Employers and members of management also will want to ensure that any employee contributions withheld from final pay are timely paid into trust or otherwise properly applied and that appropriate funding arrangements are put in place to meet employee benefit responsibilities, particularly since executives and others exercising discretion over these matters often become the targets of government or private plaintiff fiduciary liability claims when their distressed corporation fails to make appropriate arrangements.

Curran Tomko Tarski LLP Attorneys Can Help

If your business needs assistance with distressed or bankruptcy company, defined benefit plan funding or other employee benefit, human resources, corporate ethics, and compliance practices, or other related concerns or in responding to restructuring and bankruptcy, employment or employee benefits related charges, audits, investigations or suits, please contact Curran Tomko Tarski LLP Corporate Restructuring & Bankruptcy Chair G. Michael Curran at mcurran@cttlegal.com, (214) 270-1402, Employment Practice Chair Cynthia Marcotte Stamer at cstamer@cttlegal.com, (214) 270-2402, or another Curran Tomko Tarski, LLP attorney of your choice.

Mr. Curran provides legal counsel on all aspects of out-of-court reorganizations and workouts, as well as bankruptcy proceedings. He has represented debtors, debtors’ and creditors’ committees, and third party purchasers in a variety of complex factual and legal scenarios, and has also acted as special counsel. His experience includes substantial experience addressing labor and employment, employee benefit and compliance issues arising in connection with restructuring, bankruptcy and other significant business events and transactions.

Ms. Stamer is experienced with assisting employers, fiduciaries, bankruptcy creditors and trustees, investors, purchasers and others about employee benefit, labor and employment, compensation and other services related concerns involved with distressed businesses or benefit plans, bankruptcy and restructuring transactions and other corporate or plan related events. Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group and a Joint Committee on Employee Benefit Council Member, Ms. Stamer has advised and represented these and other business clients on employee benefit, labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 22 years. Her experience includes significant experience representing and advising clients about the planning, implementation, risk management and defense of reductions in force and other labor and employment, employee benefits, compensation, insurance, compliance and other concerns affecting transactions involving bankrupt or distressed corporations. Ms. Stamer also speaks and writes extensively on these and other related matters. Among her many publications are her recent November, 2009 publication, Calculation of Minimum Contributions Required For Single Employer Pension Plans: The Final Rules for The Measurement of Assets and Liabilities For Pension Funding Purposes under Final Treasury Regulation Section 1.430(d)” and A Proactive Approach To Hr And Benefits Planning For Mergers, Acquisitions, Downsizing, Reengineering And Other Organizational Changes.” Persons interested in a copy of either of these publications may contact Ms. Stamer. For additional information about Ms. Stamer and her experience or to access other publications by Curran Tomko Tarski attorneys, see here or contact Ms. Stamer or Mr. Curran directly.   For additional information about the experience and services of members of the Curran Tomko Tarksi LLP team, see here.

Other Helpful Resources & Other Information

We hope that this information is useful to you.  Curran Tomko Tarski LLP offers a variety of updates, publications, training and other resources to assist its business clients and their leaders meet their legal and operational challenges.  If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your Currant contact information – including your preferred e-mail- by creating or updating your profile at www.CTTLegal.com and/or register to receive our CTT Corporate Compliance, Risk Management and Internal Controls updates in blog form at here. Some other recent updates that may be of interest include:

• Employee Benefit Plan Sponsors & Fiduciaries Urged To Audit Bonding, Staff & Service Providers Under ERISA Requirements
• IRS Guidance For Correcting Employment Tax Overpayments Released
• Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business
• New GINA Genetic Information Based Employment Discrimination & Confidentiality Mandates Require Updated Employment Poster, Policies & Procedures Now
• Employer H1N1 Risk Management Must Include Management of Employment Liabilities
• Confirm Credentials of Individuals Dealing With Employee Benefit Plans & Adequacy of ERISA Bonding
• Department Of Labor Announces Plans To Expand Reporting Employee Benefits, Wage & Hour, OSHA & Other Reporting & Disclosure Requirements & To Implement Other New Employee Benefit Regulations
• Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business
• Stericycle Inc.’s Acquisition Of Medserve Inc. Challenged As Anticompetitive
• House Passes Chemical Facility Anti-Terrorism Bill Requiring “Chemical Facilities” To Implement Complex New HR & Other Safety & Security Mandates
• Sept 23 Deadline For Employer & Other Health Plans, Health Care Providers & Other HIPAA-Covered Entities & Business Associates To Comply With New HHS Health Information Data Breach Rules
• Don’t Be a “Rubber Stamp” – Information Concerning the Submission of the Toxic Release Inventory Form
• Tighten Employment, Ethics & Internal Controls Policies & Practices To Minimize DOJ & Other Antitrust Exposures

Other Information & Resources

We hope that this information is useful to you. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information here or registering to participate in the distribution of these Curran Tomko Tarski Compliance, Risk Management & Internal Controls distributions here.  For important information concerning this communication click here.   If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.

©2009 Curran Tomko Tarski LLP.  All rights reserved.

By Cynthia Marcotte Stamer

The Employee Benefit Security Administration (EBSA) is inviting public comment on the compliance burdens to comply with its administrative procedure (‘‘procedural rules’’) for obtaining a determination by the EBSA if a particular employee benefit plan is established or maintained under or pursuant to one or more collective bargaining agreements for purposes of section 3(40) of the Employee Retirement Income Security Act (ERISA).

Codified beginning at 29 CFR 2570.15, these procedural rules concern specific criteria set forth in 29 CFR 2510.3–40 which, if met, constitute a finding by EBSA that a plan is collectively bargained. Plans that meet the requirements of the criteria rules are not subject to state law and qualify for delayed compliance, exemption or other special treatment under various requirements of ERISA, the Internal Revenue Code or other applicable requirements.  Among other things, overzealous characterization and marketing of self-insured health plans covering employees of multiple employers as collectively bargained and therefore exempt from state insurance regulation has resulted in numerous high profile enforcement actions for insurance fraud or other violations around the country over the past decade. 

The procedural rules require applicants to submit certifications and other documentation.  EBSA is inviting comments on the appropriateness of the assessment currently published in connection its publication of the procedural rules of the compliance burden estimates these procedural rules

EBSA particularly is interested in comments that:

• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., by permitting electronic submissions of responses.

If you have questions about or need assistance evaluating, commenting on or responding to this invitation or other employee benefit, employment, compensation, employee benefit, workplace health and safety, corporate ethics and compliance practices, concerns or claims, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer.  Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, and a Council Member on the ABA Joint Committee on Employee Benefits, Ms. Stamer is experienced advising and assisting employers, employee benefit plan and their fiduciaries, insurers, financial advisory services, administrators and custodians, debtors, trustees and creditors in bankruptcy and others about plan, process, and product design, administration, documentation, risk management and defense under ERISA, COBRA, HIPAA, labor and employment, tax, state banking and insurance, and other laws.  She also advises, assists, trains, audits and defends employers and others regarding the federal and state Sentencing Guideline and other compliance, equal employment opportunity, privacy,  leave, compensation, workplace safety, wage and hour, workforce reengineering, and other labor and employment and defends related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators. Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 20 years. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience, see here or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

Other Information & Resources

We hope that this information is useful to you. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information here or registering to participate in the distribution of our Solutions Law Press HR & Benefits Update distributions here.  Some other recent updates that may be of interested include the following, which you can access by clicking on the article title:

• Stamer Speaks To CPAs About “Privacy & Information Security: Managing Your Accounting Practice’s Liabilities & Counseling Your Clients” January 12, 2010
• Rising Enforcement and Changing Rules Require Prompt Review & Update of Health Plan Privacy & Data Security Policies & Procedures
• 3 Articles On Employee Benefit Risk Management Published In ABA RPTE E-Report
• President Signs Law Extending & Expanding Temporary AARA COBRA Subsidy Requirements For Group Health Plans
• Mishandling Employee Benefit Obligations Creates Big Liabilities For Distressed Businesses & Their Business Leaders
• DOL Plans To Tighten Employment Protections For Disabled Veterans & Other Disabled Employees Signals Need For Businesses To Tighten Defenses
• GINA Discussion Topic At February HHS Advisory Committee on Genetics, Health & Society Meeting G
• Employee Benefit Plan Sponsors & Fiduciaries Urged To Review Bonding, Credentials of Staff & Service Providers Under ERISA
• Added IRS Guidance For Correcting Employment Tax Overpayments Released
• Labor Department To Expand Employee Benefits, Wage & Hour, OSHA & Other Reporting & Disclosure Requirements & To Implement Other New Employee Benefit Regulations
• IRS Publishes Table For Determining Qualified Plan Covered Compensation for Purposes of Code § 401(l)(5)(E)
• PBGC Expands Pension Benefit Protection For Military Service Members As Justice Department Files 22nd USERRA Military Leave Lawsuit Against An Employer Since January
• Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business
• Justice Department Suit against MasTec Advanced Technologies For Violating Army Reserve Member’s Rights Highlights Expanding Employer Military Leave Risks & Liabilities
• ADAAA Amendment Broader ADA “Disability” Definition Not Retroactive, Employer Action Needed To Manage Post 1/1/2009 Risks
• New Study Shares Data On Migrant Health Care Challenges Along The Border
• Employer & Other Health Plans & Other HIPAA-Covered Entities & Their Business Associates Must Comply With New HHS Health Information Data Breach Rules By September 23
• Stamer, Others To Discuss Technology Use/Risks in Employee Benefits, Tax & HR Consulting & Administration
• Businesses Cautioned To Strengthen Investigation & Employment Practices To Minimize Potential Exposure To Retaliation Claims In Light Of Recent Supreme Court Retaliation Decision
• OFCCP To Apply Special Procedures, Heightened Scrutiny To Equal Employment Practices of Government Contractors, Subcontractors On ARRA Funded Projects

For important information concerning this communication click here.   If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.

©2009 Cynthia Marcotte Stamer. All rights reserved. 

One provision of health reform which has the states up in arms, for varying reasons, relates to the expansion of Medicaid coverage.  First, the expansion creates a mandate by the federal government levied upon the states, since Medicaid is basically a 50/50 matching program of state and federal dollars.  Second, some states, which have expanded benefits for Medicaid beneficiaries, enacted on their own and at their own expense, are nonplussed that states with more basic benefits will get federal dollars to expand their Medicaid coverage. Third, the proposed expansion of eligibility for Medicaid, up to 150% of the federal poverty level in House version, and 133% in the Senate version, will create the largest  unfunded mandate placed on the states by the federal government in history.  It would be well for all to remember the Constitution of the United States.  The 10th amendment to the Constitution, part of the original bill of rights states clearly: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.   Many states are already deeply in the red in terms of their budgets and cannot figure out how they will raise revenues to meet this federal demand.  Of course, states, like the federal government do NOT produce revenue, but consume it.  Therefore it is logical to believe that at the state level, taxes and fees will have to increase to cover the costs of Medicaid expansion.  Since the Federal treasury is also deeply in the red, federal taxes, fees and the like will surely need to be increased to meet this demand.  Tax and fee increases of the magnitude that will be needed, in the midst of a weak economy, will no doubt have a chilling effect on economic recovery and growth.  This will add to the national deficit, increase borrowing, increase the percentage of GDP that goes to pay debt interest and service, weaken the dollar further and propel us toward a dangerous hyperinflation, or worse, a deflation.  Most health care issues could have been dealt with in a manner that would have accomplished many of the genuine goals sought, without this massive expansion of federal power, spending and debt . . . obi jo

Health Care Nullification Legislation – http://www.tenthamendmentcenter.com/nullification/health-care/

Arizona HCR2014: National Health Care Nullification – http://www.tenthamendmentcenter.com/2009/06/26/arizona-hcr2014-national-health-care-nullification/

States that have already broadly expanded health care coverage are pushing back against the Senate overhaul bill, arguing that it unfairly penalizes them in favor of states that have done little or nothing to extend benefits to the uninsured. With tax revenues down and budgets breaking, the states — including Arizona, California, New Jersey, New York and Wisconsin — say they cannot afford to essentially subsidize other states’ expansion of health care. The bill passed by the Senate on Thursday would move toward universal health insurance coverage in large part by expanding Medicaid, a program whose costs have traditionally been shared by the states and the federal government. Massachusetts and Vermont, the states providing the broadest coverage, have already received some relief for the anticipated Medicaid costs in the negotiations that led to the passage of the Senate bill. To secure the crucial 60th vote from Senator Ben Nelson, Democrat of Nebraska, Senate leaders permanently exempted his state from paying to expand Medicaid. But other states, many of them strong supporters of an overhaul, have been left in the lurch.

South Carolina Attorney General Henry McMaster on Monday stressed that Senate Democrats’ move to cover Nebraska’s new Medicaid patients in full could represent “corruption.” In an interview McMaster said Democrats included the provision in the chamber’s healthcare bill purely to buy Sen. Ben Nelson’s (D-Neb.) much-needed vote. It is ultimately unconstitutional, McMaster added, as it places a disproportionate burden on the 49 other states to cover Nebraska’s Medicaid costs.

States With Expanded Health Coverage Fight Bill – http://www.nytimes.com/2009/12/27/health/policy/27states.html?emc=tnt&tntemail0=y

States Fight Medicaid Expansion – http://online.wsj.com/article/SB124571731912339159.html

Payoffs for states get Harry Reid to 60 votes – http://www.politico.com/news/stories/1209/30815.html

S.C. attorney general: Medicaid deal could ‘represent corruption’ – http://thehill.com/blogs/blog-briefing-room/news/73747-sc-attorney-general-medicaid-deal-could-represent-corruption

Big payoffs to senators on health bill stoke public anger – http://www.washingtonexaminer.com/politics/Big-payoffs-to-senators-on-health-bill-stokes-public-anger-8675288-79940092.html

Getting ‘reform’ the wrong way – http://www.messengernews.net/page/content.detail/id/521209.html

www.blogsurfer.us     www.bloglines.com     www.blogburst.com     www.blogcatalog.com     www.clusty.com     www.reddit.com     www.huffingtonpost.com     www.digg.com     www.wikio.com     www.propeller.com     www.mashable.com     www.bing.com     www.wellsphere.com

Accountants and their clients face increasing regulatory and business pressures to protect the sensitive business and personal information collected and maintained in the course of their operation to minimize their exposure to personal identity theft and other cybercrime scams by employees, business partners and others. Curran Tomko Tarski LLP Partner Cynthia Marcotte Stamer will speak about “Privacy & Information Security: Managing Your Accounting Practice’s Liabilities & Counseling Your Clients” to members of the Dallas CPA Society on January 12, 2010 beginning at 2:00 p.m.

Part of the Dallas CPA Society Member Appreciation CPE Series Meeting, Ms. Stamer’s presentation will be part of four hours of free CPE training to be provided at a program open to members only at the Hilton Lincoln Centre Hotel located at 5410 LBJ Freeway, Dallas TX  75240 from 1 p.m. to 4:50 p.m. Central Time.  (Parking at the facility costs $5.00).  To register or for additional information, see here.

Curran Tomko Tarski LLP Attorneys Can Help

If you need help responding to these developments or other legislative, regulatory or enforcement concerns, Curran Tomko Tarski LLP can help.  Curran Tomko and Tarski LLP and its attorneys have significant experience assisting businesses and business leaders to manage and defend privacy, data security, tax employee benefit, employment, health care, environmental, safety, securities and other compliance and risk management concerns.

Curran Tomko Tarksi LLP Partner Cynthia Marcotte Stamer has more than 22 years experience helping businesses to use the law, process and technology to manage people and processes, and to manage technology, privacy and data security, employment and other legal and operational risks affecting their businesses.   Author of “Privacy & Securities Standards-A Brief Nutshell,” “Privacy Invasions of Medical Care-An Emerging Perspective,” and “E-Health Business and Transactional Law Other Liability-Tort and Regulatory;” published by The Bureau of National Affairs, Inc., Ms. Stamer has extensive experience advising a accounting firms, law firms, banks and financial services organizations, insurers, consultants, health plans, health care providers and others about HIPAA, FACTA, and other privacy, trade secret and other information security and data breach risk management and compliance concerns.  Ms Stamer also speaks, publishes and provides public policy input extensively on data security, technology and other internal controls and risk management matters.   Chair Elect of the American Bar Association RPTE Employee Benefits & Compensation Committee, an ABA Joint Committee on Employee Benefits  Council member, and Chair of the Curran Tomko Tarski Labor, Employment & Employee Benefits Practice, Ms. Stamer also is Board Certified in Labor & Employment law.  For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

If you need assistance with these or other compliance concerns, wish to inquire about federal or state regulatory compliance audits, risk management or training, assistance investigating or responding to a known or suspected compliance or risk management concern, or need legal representation on other matters please contact the author of this update, Cynthia Marcotte Stamer, CTT Labor & Employment Practice Chair at cstamer@cttlegal.com, 214.270.2402; or your other preferred Curran Tomko Tarski LLP attorney.

Other Helpful Resources & Other Information

We hope that this information is useful to you.  Curran Tomko Tarski LLP offers a variety of updates, publications, training and other resources to assist its business clients and their leaders meet their legal and operational challenges.  If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your Currant contact information – including your preferred e-mail- by creating or updating your profile at www.CTTLegal.com and/or register to receive our CTT Corporate Compliance, Risk Management and Internal Controls updates in blog form at here.

For important information concerning this communication click here.   If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.

Accountants and their clients face increasing regulatory and business pressures to protect the sensitive business and personal information collected and maintained in the course of their operation to minimize their exposure to personal identity theft and other cybercrime scams by employees, business partners and others. Curran Tomko Tarski LLP Partner Cynthia Marcotte Stamer will speak about “Privacy & Information Security: Managing Your Accounting Practice’s Liabilities & Counseling Your Clients” to members of the Dallas CPA Society on January 12, 2010 beginning at 2:00 p.m.

Part of the Dallas CPA Society Member Appreciation CPE Series Meeting, Ms. Stamer’s presentation will be part of four hours of free CPE training to be provided at a program open to members only at the Hilton Lincoln Centre Hotel located at 5410 LBJ Freeway, Dallas TX  75240 from 1 p.m. to 4:50 p.m. Central Time.  (Parking at the facility costs $5.00).  To register or for additional information, see here.

If you need help responding to these developments or other legislative, regulatory or enforcement concerns, Curran Tomko Tarski LLP can help.  Curran Tomko and Tarski LLP and its attorneys have significant experience assisting businesses and business leaders to manage and defend privacy, data security, tax employee benefit, employment, health care, environmental, safety, securities and other compliance and risk management concerns.

Curran Tomko Tarksi LLP Partner Cynthia Marcotte Stamer has more than 22 years experience helping businesses to use the law, process and technology to manage people and processes, and to manage technology, privacy and data security, employment and other legal and operational risks affecting their businesses.  Author of “Privacy & Securities Standards-A Brief Nutshell,” “Privacy Invasions of Medical Care-An Emerging Perspective,” and “E-Health Business and Transactional Law Other Liability-Tort and Regulatory;” published by The Bureau of National Affairs, Inc., and many other publications, Ms. Stamer has extensive experience advising a accounting firms, law firms, banks and financial services organizations, insurers, consultants, health plans, health care providers and others about HIPAA, FACTA, and other privacy, trade secret and other information security and data breach risk management and compliance concerns.  Ms Stamer also speaks, publishes and provides public policy input extensively on data security, technology and other internal controls and risk management matters.   Chair of the American Bar Association RPTE Employee Benefits & Compensation Committee, an ABA Joint Committee on Employee Benefits Council member, and Chair of the Curran Tomko Tarski Labor, Employment & Employee Benefits Practice, Ms. Stamer also is Board Certified in Labor & Employment Law.  For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

If you need assistance with these or other compliance concerns, wish to inquire about federal or state regulatory compliance audits, risk management or training, assistance investigating or responding to a known or suspected compliance or risk management concern, or need legal representation on other matters please contact the author of this update, Cynthia Marcotte Stamer, CTT Labor & Employment Practice Chair at cstamer@cttlegal.com, 214.270.2402; or your other preferred Curran Tomko Tarski LLP attorney.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of Ms. Stamer here and learn more about  other Curran Tomko Tarski LLP attorneys here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information to Cstamer@CTTLegal.com or registering to participate in the distribution of these and other updates on our Solutions Law Press distributions here. For important information concerning this communication click here.    If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to here.

©2009 Cynthia Marcotte Stamer. All rights reserved.

Accountants and their clients face increasing regulatory and business pressures to protect the sensitive business and personal information collected and maintained in the course of their operation to minimize their exposure to personal identity theft and other cybercrime scams by employees, business partners and others. Curran Tomko Tarski LLP Partner Cynthia Marcotte Stamer will speak about “Privacy & Information Security: Managing Your Accounting Practice’s Liabilities & Counseling Your Clients” to members of the Dallas CPA Society on January 12, 2010 beginning at 2:00 p.m.

Part of the Dallas CPA Society Member Appreciation CPE Series Meeting, Ms. Stamer’s presentation will be part of four hours of free CPE training to be provided at a program open to members only at the Hilton Lincoln Centre Hotel located at 5410 LBJ Freeway, Dallas TX  75240 from 1 p.m. to 4:50 p.m. Central Time.  (Parking at the facility costs $5.00).  To register or for additional information, see here.

If you need help responding to these developments or other legislative, regulatory or enforcement concerns, Curran Tomko Tarski LLP can help.  Curran Tomko and Tarski LLP and its attorneys have significant experience assisting businesses and business leaders to manage and defend privacy, data security, tax employee benefit, employment, health care, environmental, safety, securities and other compliance and risk management concerns.

Curran Tomko Tarksi LLP Partner Cynthia Marcotte Stamer has more than 22 years experience helping businesses to use the law, process and technology to manage people and processes, and to manage technology, privacy and data security, employment and other legal and operational risks affecting their businesses.  Author of “Privacy & Securities Standards-A Brief Nutshell,” “Privacy Invasions of Medical Care-An Emerging Perspective,” and “E-Health Business and Transactional Law Other Liability-Tort and Regulatory;” published by The Bureau of National Affairs, Inc., and many other publications, Ms. Stamer has extensive experience advising a accounting firms, law firms, banks and financial services organizations, insurers, consultants, health plans, health care providers and others about HIPAA, FACTA, and other privacy, trade secret and other information security and data breach risk management and compliance concerns.  Ms Stamer also speaks, publishes and provides public policy input extensively on data security, technology and other internal controls and risk management matters.   Chair of the American Bar Association RPTE Employee Benefits & Compensation Committee, an ABA Joint Committee on Employee Benefits  Council member, and Chair of the Curran Tomko Tarski Labor, Employment & Employee Benefits Practice, Ms. Stamer also is Board Certified in Labor & Employment law.  For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

If you need assistance with these or other compliance concerns, wish to inquire about federal or state regulatory compliance audits, risk management or training, assistance investigating or responding to a known or suspected compliance or risk management concern, or need legal representation on other matters please contact the author of this update, Cynthia Marcotte Stamer, CTT Labor & Employment Practice Chair at cstamer@cttlegal.com, 214.270.2402; or your other preferred Curran Tomko Tarski LLP attorney.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of Ms. Stamer here /the Curran Tomko Tarski LLP attorneys here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information to Cstamer@CTTLegal.com or registering to participate in the distribution of these and other updates on our Solutions Law Press HR & Benefits Update distributions here. For important information concerning this communication click here.    If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to here.

©2009 Cynthia Marcotte Stamer. All rights reserved.

Health plans and their business associates should review and update their practices and policies concerning the use access and disclosure of protected health information in response to changing requirements and expanding enforcement exposures under the Health Insurance Portability & Accountability Act of 1996 (HIPAA) Privacy and Security Rules.

A series of Office of Civil Rights (OCR) enforcement action against health plans highlights the need for group health plans and insurers to exercise care to comply with HIPAA’s Privacy & Security Rules.  For example, OCR recently required a HMO to take a series of corrective actions based on findings from its investigation of a complaint that the HMO impermissibly disclosed a member’s protected health information by sending her entire medical record to a disability insurance company without her authorization.  Based on its investigation, OCR found the HMO violated HIPAA by relying on a form to make the disclosure that failed to meet the Privacy Rule requirements to qualify as a valid authorization under the Privacy Rule.  Based on these findings, OCR required the HMO among other things:

• To create a new HIPAA-compliant authorization form that specifies what records and/or portions of the files will be disclosed, that the respective authorization will be kept in the patient’s record, together with the disclosed information and otherwise to meet the content requirements of the Privacy Rule for an authorization; and
• To implement a new policy that directs staff to obtain patient signatures on these forms before responding to any disclosure requests, even if patients bring in their own “authorization” form.

Another action resulted after a national health maintenance organization sent explanation of benefits (EOB) by mail to a complainant’s unauthorized family member. OCR’s investigation determined that a flaw in the health plan’s computer system put the protected health information of approximately 2,000 families at risk of disclosure in violation of the Privacy Rule.  To resolve this case, OCR required among other things that the insurer to correct the flaw in its computer system, review all transactions for a six month period and correct all corrupted patient information.

In yet another case, OCR found an employee of a major health insurer impermissibly disclosed the PHI of one of its members without following the insurer’s authorization and verification procedures. Among other corrective actions to resolve the specific issues in the case, OCR required the health insurer to train its staff on the applicable policies and procedures, to take action to mitigate the harm to the individual and to counsel and give a written warning to an employee who made the disclosure.

While OCR declined to impose any civil penalties in any of these three instances, violations of the Privacy Rules have resulted in both criminal prosecutions by the Department of Justice and the payment of large civil settlements to OCR.  See, e.g., 2 New HIPAA Criminal Actions Highlight Risks From Wrongful Use/Access of Health Information  HIPAA Risks Soar As CVS Agrees to Pay $2.25 Million To Resolve HIPAA Charges & Stimulus Bill Amends HIPAA.  Furthermore, recent amendments to the Privacy Rules increase the likelihood that health plans and other covered entities violating the Privacy Rules will incur civil penalties.  The American Recovery and Reinvestment Act of 2009 (ARRA) amended the Privacy Rules effective October, 2009 to increase the civil penalties for Privacy Rule violations and to include new breach notification requirements for covered entities.  Additional ARRA amendments to HIPAA scheduled to take effect February 17, 2010 will further tighten the conditions under which covered entities may use, access or disclose PHI under the Privacy Rules, will expand the circumstances under which health plans and other covered entities will be required to account for dealings with PHI under HIPAA, and will extend the duty to comply with and liability for violations of the Privacy Rules to business associates.  In the meanwhile, employees increasingly are alleging Privacy Rule violations as part of their whistleblower or other wrongful discharge claims.  See, e.g. Retaliation For Filing HIPAA Complaint Recognized As Basis For State Retaliatory Discharge Claim.

In light of these changing rules and expanding liabilities, health plans and their business associates need to review and update their Privacy and Security practices, business associate agreements and privacy notices for compliance in light of the expanding enforcement activities of OCR and these evolving Privacy and Security Rules.  These and other developments make it imperative that health plans and other covered entities and their business associates immediately review and update their HIPAA and other data security and privacy practices to guard against growing liability exposures under HIPAA and other federal and state laws.

If your organization needs assistance reviewing, updating, administering or defending privacy and data security practices under HIPAA, state data breach or other laws, Curran Tomko Tarski LLP can help.  The author of this update, Curran Tomko Tarski LLP Partner Cynthia Marcotte Stamer has extensive experience advising and assisting health plans, health insurers, and other covered entities and business associates to review, update, document, enforce and defend their HIPAA and other privacy and data security policies and practices.  The author of numerous publications on HIPAA and other privacy and data security rules, she also speaks and conducts training extensively on these concerns. 

Ms. Stamer is experienced with assisting employers, insurers, administrators, and others to design and administer group health plans cost-effectively in accordance with HIPAA and other applicable federal regulations as well as well as advising and defending employers, health plans, insurers and others against privacy, tax, employment discrimination and other labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the OCR, DOJ,IRS, Department of Labor and other federal and state regulators.. Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, a representative to the ABA Joint Committee on Employee Benefits Council, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 22 years. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

Other Information & Resources

We hope that this information is useful to you. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information here or registering to participate in the distribution of our Solutions Law Press HR & Benefits Update distributions here.  Some other recent updates that may be of interested include the following, which you can access by clicking on the article title:

• Employee Benefit Plan Sponsors & Fiduciaries Urged To Review Bonding, Credentials of Staff & Service Providers Under ERISA
• Added IRS Guidance For Correcting Employment Tax Overpayments Released
• Labor Department To Expand Employee Benefits, Wage & Hour, OSHA & Other Reporting & Disclosure Requirements & To Implement Other New Employee Benefit Regulations
• Preventive HR Strategies to Minimize Post Holiday Celebration Legal Hangovers
• IRS Publishes Table For Determining Qualified Plan Covered Compensation for Purposes of Code § 401(l)(5)(E)
• PBGC Expands Pension Benefit Protection For Military Service Members As Justice Department Files 22nd USERRA Military Leave Lawsuit Against An Employer Since January
• Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business
• Justice Department Suit against MasTec Advanced Technologies For Violating Army Reserve Member’s Rights Highlights Expanding Employer Military Leave Risks & Liabilities
• Employer H1N1 Virus Risk Management Requires Employer Care To Manage Virus Risks Without Violating Employment Discrimination or Other Laws
• New GINA Genetic Information Based Employment Discrimination & Confidentiality Mandates Take Effect
• SHRM Urges American’s To Oppose HR 3962, The Affordable Health Care For America Act
• Businesses Cautioned To Strengthen Investigation & Employment Practices To Minimize Potential Exposure To Retaliation Claims In Light Of Recent Supreme Court Retaliation Decision
• OFCCP To Apply Special Procedures, Heightened Scrutiny To Equal Employment Practices of Government Contractors, Subcontractors On ARRA Funded Projects
• US and UK Agree to Share Information & Cooperate On Pension Security As US Defined Benefit Plan Sponsors Face Tough New Defined Benefit Plan Funding Requirements
• Congress Considering Extending & Expanding Group Health Plan COBRA Subsidy Mandates On Heels of Enactment of Expanded Military Leave-Related Family Leave Mandates
• EEOC Prepares To Broaden “Disability” Definition Under ADA Regulations
• Tighten Employment, Ethics & Internal Controls Policies & Practices To Minimize DOJ & Other Antitrust Exposures
• OSHA Final Rule Updates OSHA Personal Protective Equipment Standards
• “Disability” Definition Not Retroactive, Employer Action Needed To Manage Post 1/1/2009 Risks

For important information concerning this communication click here.   If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.

©2009 Cynthia Marcotte Stamer. All rights reserved. 

Health plans and their business associates should review and update their practices and policies concerning the use access and disclosure of protected health information in response to changing requirements and expanding enforcement exposures under the Health Insurance Portability & Accountability Act of 1996 (HIPAA) Privacy and Security Rules.

A series of Office of Civil Rights (OCR) enforcement action against health plans highlights the need for group health plans and insurers to exercise care to comply with HIPAA’s Privacy & Security Rules.  For example, OCR recently required a HMO to take a series of corrective actions based on findings from its investigation of a complaint that the HMO impermissibly disclosed a member’s protected health information by sending her entire medical record to a disability insurance company without her authorization.  Based on its investigation, OCR found the HMO violated HIPAA by relying on a form to make the disclosure that failed to meet the Privacy Rule requirements to qualify as a valid authorization under the Privacy Rule.  Based on these findings, OCR required the HMO among other things:

• To create a new HIPAA-compliant authorization form that specifies what records and/or portions of the files will be disclosed, that the respective authorization will be kept in the patient’s record, together with the disclosed information and otherwise to meet the content requirements of the Privacy Rule for an authorization; and
• To implement a new policy that directs staff to obtain patient signatures on these forms before responding to any disclosure requests, even if patients bring in their own “authorization” form.

Another action resulted after a national health maintenance organization sent explanation of benefits (EOB) by mail to a complainant’s unauthorized family member. OCR’s investigation determined that a flaw in the health plan’s computer system put the protected health information of approximately 2,000 families at risk of disclosure in violation of the Privacy Rule.  To resolve this case, OCR required among other things that the insurer to correct the flaw in its computer system, review all transactions for a six month period and correct all corrupted patient information.

In yet another case, OCR found an employee of a major health insurer impermissibly disclosed the PHI of one of its members without following the insurer’s authorization and verification procedures. Among other corrective actions to resolve the specific issues in the case, OCR required the health insurer to train its staff on the applicable policies and procedures, to take action to mitigate the harm to the individual and to counsel and give a written warning to an employee who made the disclosure.

While OCR declined to impose any civil penalties in any of these three instances, violations of the Privacy Rules have resulted in both criminal prosecutions by the Department of Justice and the payment of large civil settlements to OCR.  See, e.g., 2 New HIPAA Criminal Actions Highlight Risks From Wrongful Use/Access of Health Information  HIPAA Risks Soar As CVS Agrees to Pay $2.25 Million To Resolve HIPAA Charges & Stimulus Bill Amends HIPAA.  Furthermore, recent amendments to the Privacy Rules increase the likelihood that health plans and other covered entities violating the Privacy Rules will incur civil penalties.  The American Recovery and Reinvestment Act of 2009 (ARRA) amended the Privacy Rules effective October, 2009 to increase the civil penalties for Privacy Rule violations and to include new breach notification requirements for covered entities.  Additional ARRA amendments to HIPAA scheduled to take effect February 17, 2010 will further tighten the conditions under which covered entities may use, access or disclose PHI under the Privacy Rules, will expand the circumstances under which health plans and other covered entities will be required to account for dealings with PHI under HIPAA, and will extend the duty to comply with and liability for violations of the Privacy Rules to business associates.  In the meanwhile, employees increasingly are alleging Privacy Rule violations as part of their whistleblower or other wrongful discharge claims.  See, e.g. Retaliation For Filing HIPAA Complaint Recognized As Basis For State Retaliatory Discharge Claim.

In light of these changing rules and expanding liabilities, health plans and their business associates need to review and update their Privacy and Security practices, business associate agreements and privacy notices for compliance in light of the expanding enforcement activities of OCR and these evolving Privacy and Security Rules.  These and other developments make it imperative that health plans and other covered entities and their business associates immediately review and update their HIPAA and other data security and privacy practices to guard against growing liability exposures under HIPAA and other federal and state laws.

If your organization needs assistance reviewing, updating, administering or defending privacy and data security practices under HIPAA, state data breach or other laws, Curran Tomko Tarski LLP can help.  The author of this update, Curran Tomko Tarski LLP Partner Cynthia Marcotte Stamer has extensive experience advising and assisting health plans, health insurers, and other covered entities and business associates to review, update, document, enforce and defend their HIPAA and other privacy and data security policies and practices.  The author of numerous publications on HIPAA and other privacy and data security rules, she also speaks and conducts training extensively on these concerns. 

We hope you found this information helpful.  If you or some that you know would like to register to receive future Health Privacy & Technology Updates, register or update your profile here and/or register to receive these updates in blog distribution form here.  If your organization needs assistance with understanding or managing its responsibilities or liabilities under HIPAA or other health care or employment laws or wishes to inquire about HIPAA training or other services and experience of Cynthia Marcotte Stamer, please contact Ms. Stamer via e-mail to Cstamer@CTTLegal.com or by telephoning Ms. Stamer at 214.270.2402.    To learn more about Cynthia Marcotte Stamer click here.  For important information concerning this communication click here.

 ©2009 Cynthia Marcotte Stamer.  All rights reserved. 

Curran Tomko Tarski LLP Labor & Employment Practice Chair Cynthia Marcotte Stamer  the author of three articles in the December  2009 Issue of the American Bar Association Real Property Probate & Trust Section E-Report:

• Department of Labor Announces Plans To Expand Employee Benefits, Wage & Hour, OSHA & Other Reporting & Disclosure Requirements & Implement Other New Employee Benefit Regulation
• Mishandling Employee Benefit Obligations Creates Liabilities For Distressed Businesses & Their Leaders
• Employee Benefit Plan Sponsors & Fiduciaries Urged To Review Bonding, Credentials of Staff & Service Providers Under ERISA

Chair of the American Bar Association RPTE Employee Benefits & Compensation Committee, an ABA Joint Committee on Employee Benefits  Council member, and Chair of the Curran Tomko Tarski Labor, Employment & Employee Benefits Practice, Cynthia Marcotte Stamer is  nationally and internationally recognized for her work assisting businesses, employee benefit plan fiduciaries and vendors, insurers, administrative services providers, governments, and other entities to develop administer and defend cost-effective employee benefit other human resources programs, policies and procedures to meet their budgetary, risk management and compliance and other objectives.  Board certified in Labor & Employment law, Ms. Stamer applies her extensive experience regarding employment, employee benefit, and other related laws to assists clients in a wide range of business and litigation contexts.   The co-founder of the Solutions Law Consortium, Ms. Stamer, also is the publisher of Solutions Law HR & Benefits Update. She speaks and writes extensively about employee benefits and other human resources, compensation and internal controls matters.

If your organization or employee benefit plan needs assistance with employee benefits, labor and employment or other internal controls and risk management matters, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402; or another Curran Tomko Tarski, LLP attorney of your choice.  For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi, LLP team, see here.

Other Helpful Resources & Information

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information to cstamer@cttlegal.com or registering to participate in the distribution of these and other updates on our CTT HR & Employee Benefits Update distributions in blog form via RSS feed here.  You also may be interested in staying abreast of emerging internal controls and compliance challenges by reviewing and registering for our Corporate Compliance, Risk Management & Internal Controls distributions.  For important information concerning this communication click here.  If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to support@cttlegal.com.

©2009 Curran Tomko Tarski LLP.  All rights reserved.

If you have questions about or need assistance evaluating, commenting on or responding to the  Proposed Regulations, the Q&As, or other employment, compensation, employee benefit, workplace health and safety, corporate ethics and compliance practices, concerns or claims, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer.  Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is experienced with assisting employers and others about compliance with federal and state equal employment opportunity, compensation and employee benefit, workplace safety, and other labor and employment, as well as advising and defending employers and others against tax, employment discrimination and other labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators. Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 20 years. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

Other Information & Resources

We hope that this information is useful to you. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information here or registering to participate in the distribution of our Solutions Law Press HR & Benefits Update distributions here.  Some other recent updates that may be of interested include the following, which you can access by clicking on the article title:

• IRS Proposes To Update Regulations On Exclusion of Damages Received on Account of Personal Physical Injuries or Physical Sickness To Eliminate Tort Test
• OSHA Final Rule Updates OSHA Personal Protective Equipment Standards
• DOL Proposes Changes To H-2A Temporary & Seasonal Agricultural Nonimmigrant Worker Certification Procedures & Related Rules
• Register Now For HITECH Act Health Data Security & Breach Update: Learn What You Must Do This Month To Comply With New Health Data Breach Regulations
• ADAAA Amendment Broader ADA “Disability” Definition Not Retroactive, Employer Action Needed To Manage Post 1/1/2009 Risks
• New Study Shares Data On Migrant Health Care Challenges Along The Border
• Employer & Other Health Plans & Other HIPAA-Covered Entities & Their Business Associates Must Comply With New HHS Health Information Data Breach Rules By September 23
• Stamer, Others To Discuss Technology Use/Risks in Employee Benefits, Tax & HR Consulting & Administration
• Businesses Cautioned To Strengthen Investigation & Employment Practices To Minimize Potential Exposure To Retaliation Claims In Light Of Recent Supreme Court Retaliation Decision
• OFCCP To Apply Special Procedures, Heightened Scrutiny To Equal Employment Practices of Government Contractors, Subcontractors On ARRA Funded Projects
• With September 8 Deadline For Government Contractors To Use E-Verify, USCIS Invites Comments On E-Verify Program Designated Agent Processr Enforcement

For important information concerning this communication click here.   If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.

©2009 Cynthia Marcotte Stamer. All rights reserved.

Well, the Senate has not seen this much rancor since the 1850’s – and we know where that all ended up.  The reality is not that 100 members of the senate do not agree on the need for health insurance reform or health reform in general, but that that there are polar opposite views of how this should be accomplished.  This difference is reflective of the breakdown of the populace into two opposing camps over the role of centralized federal government, with it’s entrenched bureaucracy, special interests and unlimited power to enact confiscatory taxes on the populace.  One camp seeks expansion of the federal role in everyday life as well as expansion of the welfare state while the other camp seeks greater autonomy for the states and limits on federal power and federal taxation.  Sound familiar.  Check your history books.  This debate is as old as the Republic itself.  The main concern is that now that we have the majority of citizens (and illegals) paying no income tax, the desire to raise taxes on the minority is becoming insatiable in an effort to fund ever more ambition and far reaching programs to “take care of” those with less.  This then is the fundamental impasse.  This along with the unwillingness of both sides to tackle head on regulation of the health insurance industry as opposed to working toward federal control or no control.

The other sad note in all of this is the transparent and obvious vote buying that is going on.  We have commented on this before.  If any private citizen paid members of the Senate in cash or kind, it would be called bribery.  It seems however when the Majority Leader, Mr. Reid, with approval of the President does the same thing, but with taxpayer dollars, it is called compromise and savvy legislating.  Semantics cannot hide the seedy reality of this type of back room wheeling and dealing with other peoples money – the taxpayers  money.  Since Mr. Reid and his Senate cronies are already feeding at the public trough, it is doubly sad that they are using taxpayer money to “persuade” their erstwhile Democratic colleagues to vote in a manner they wish.

Overlooked in all of this is the fact neither conservatives or liberals are happy with the outcome so far.  Some would argue that this means the legislation is good, making all sides unhappy.  We however would argue that this represents the fundamental flaws in the bills in the House and Senate.  Most worrisome is that neither bill definitively bans private insurers from denying coverage for pre-existing conditions without any caveats.  It also does not definitively ban, in plain language, the dropping of subscribers who become ill. Oh, it says that more or less on both counts, until you get into the detail and legalese and find what appears to be ample wiggle room for health insurers to weasel out on these two most fundamental reforms.  There is also no real attempt to control health insurance premiums or to modify the underwriting formulas used by health insurers.  All glaring flaws.

No doubt, something is coming out of the Senate.  That means we will refocus on the two bill and what might be accomplished in conference committee to salvage real health reform . . . obi jo and jomaxx

Nasty charges of bribery. Senators cut off midspeech. Accusations of politics put over patriotism. Talk of double-crosses. A nonagenarian forced to the floor after midnight for multiple procedural votes. In the heart of the holiday season, Senate Republicans and Democrats are at one another’s throats as the health care overhaul reaches its climactic votes. A year that began with hopes of new post-partisanship has indeed produced change: Things have gotten worse.

Senate Debate on Health Care Exacerbates Partisanship – http://www.nytimes.com/2009/12/21/health/policy/21senatecnd.html?_r=1&emc=tnt&tntemail0=y

In the great health care debate of 2009, President Obama has cast himself as a cold-eyed pragmatist, willing to compromise in exchange for votes. Now ideology — an uprising on the Democratic left — is smacking the pragmatic president in the face. Stung by the intense White House effort to court the votes of moderate holdouts like Senator Joseph I. Lieberman, independent of Connecticut, and Senator Ben Nelson, Democrat of Nebraska, liberals are signaling that they have compromised enough. Grass-roots groups are balking, liberal commentators are becoming more critical of the president, some unions are threatening to withhold support and Howard Dean, the former Democratic Party chief, is urging the Senate to kill its health bill.

Liberal Revolt on Health Care Stings White House – http://www.nytimes.com/2009/12/18/health/policy/18liberals.html?emc=tnt&tntemail0=y

Senate Democrats said Saturday that they had clinched an agreement on a far-reaching overhaul of the nation’s health care system and forged ahead with efforts to approve the legislation by Christmas over Republican opposition. As the Senate convened in a blizzard, Democratic leaders hailed a breakthrough that came when Senator Ben Nelson, Democrat of Nebraska, agreed to back the bill after 13 hours of negotiations on Friday, making him the pivotal 60th vote for a measure that President Obama has called his top domestic priority. Mr. Nelson committed his vote after winning tighter restrictions on insurance coverage for abortions, as well as increased federal health care aid for his state.

Democrats Clinch Deal for Deciding Vote on Health Bill – http://www.nytimes.com/2009/12/20/health/policy/20health.html?emc=tnt&tntemail0=y

Thirty million people without health insurance stand to gain coverage under a deal announced on Saturday by Senate Democrats. To get the 60 votes needed to pass their bill, Democrats scrapped the idea of a government-run public insurance plan, cherished by liberals, and replaced it with a proposal for nationwide health plans, which would be offered by private insurers under contract with the government. The legislation also includes a proposal that would limit insurance coverage of abortion. The provision, which was the last piece of the puzzle to fall into place, was negotiated by the Senate majority leader, Harry Reid, Democrat of Nevada, to win the support of Senator Ben Nelson, Democrat of Nebraska, who is an opponent of abortion.

Negotiating to 60 Votes, Compromise by Compromise – http://www.nytimes.com/2009/12/20/health/policy/20care.html

Louisiana Senator Mary Landrieu, one of three lawmakers being wooed by Democratic leaders to back health-care legislation, won the inclusion of an extra $100 million in federal aid for low-income people in her state. Landrieu, a Democrat, has championed federal aid for rebuilding Louisiana since Hurricane Katrina devastated the New Orleans area in 2005.  “It is something she has been working on for a long time,” spokesman Robert Sawicki said of the aid, which the Congressional Budget Office estimated at $100 million. Still, he said, Landrieu hasn’t decided whether to back Senate Democratic leader Harry Reid’s bid to start debate on the bill. Jim Manley, a spokesman for Reid, declined to comment.

Mary Landrieu Wooed To Back Health Care With $100 Million For Her State – http://www.huffingtonpost.com/2009/11/20/mary-landrieu-wooed-to-ba_n_365954.html

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Employer and union sponsored group health plans, their sponsors and administrators must act quickly to comply with the extension and expansion of temporary “COBRA Subsidy Rules” for “assistance eligible individuals” originally added to the group health plan medical coverage continuation requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) by the American Recovery and Reinvestment Act of 2009 (“AARA”) last February.

The Department of Defense Appropriations Act (H.R. 3326) signed into law by President Obama on December 19, 2009 extended the period that employer and union-sponsored group health plans must allow employees and members of their family that lose group health plan coverage due to an involuntary employment loss to continue their group medical coverage under the reduced premium and other temporary ARRA COBRA Subsidy Rules and lengthened the period during which an involuntary employment loss can qualify an otherwise COBRA-eligible employee or dependent as an assistance eligible individual.

Original COBRA Subsidy Rules

As originally enacted, the ARRA COBRA Subsidy Rules limited the COBRA premium that a COBRA-covered group health plan could charge a COBRA-eligible employee or dependent whose group health plan eligibility ended due to an involuntary employment loss between September 1, 2008 and December 31, 2009 (“assistance eligible individual”) to 35% of the otherwise applicable COBRA premium (the “Reduced ARRA Premium”) for a period of up to 9 months (the “Subsidy Period”).  ARRA dictated that employers sponsoring these group health plans must pay the remaining 65% of the COBRA premium (the “COBRA Subsidy”) for the assistance eligible individual during the Subsidy Period, but allowed employers to seek reimbursement by claiming a payroll tax credit for these COBRA Subsidy payments by complying with applicable IRS procedures.  AARA also mandated that group health plans offering a choice of coverage options offer assistance eligible individuals the option to switch coverage options and required group health plans to notify assistance eligible individuals of the special COBRA Subsidy Rules.

H.R. 3326 COBRA Subsidy Rules Extension

As signed into law on December 19, 2009, H.R. 3326:

• Extends the period during which an involuntary employment loss can qualify an otherwise COBRA-eligible employee or dependent as an assistance eligible individual for an additional two months (from December 31, 2009 to February 28, 2010);
• Adds an additional 6 months (from 9 to 15 months) to the the Subsidy Period during which an assistance eligible individual experiencing an involuntary loss of employment between September 1, 2008 and February 28, 2010 is entitled to pay the Reduced AARA Premium;
• Requires group health plans to notify assistance eligible individuals of the extension; and
• Requires group health plans to allow additional time for assistance eligible individuals who had exhausted their original 9-month Subsidy Period before H.R. 3326 extended the Subsidy Period to 15 months to pay the Reduced AARA Premium related to the extension.

Group health plans, their employer or union sponsors, administrators, insurers and service providers will need to act quickly to prepare and provider required updated notifications to assistance eligible individuals of these extended eligibility periods and their resulting rights,  and otherwise update their plan documents, procedures, and COBRA notifications in light of these new rules. 

Curran Tomko Tarski LLP Attorneys Can Help

If you need help responding to these developments or other legislative, regulatory or enforcement concerns, Curran Tomko Tarski LLP can help.

Curran Tomko and Tarski LLP and its attorneys have significant experience assisting businesses and business leaders to manage and defend health and other employee benefit, employment, environmental, safety,  securities and other compliance and risk management concerns.

The author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer is experienced with assisting employers, insurers, administrators, and others to design and administer group health plans cost-effectively in accordance with COBRA and other applicable federal regulations.

The author of the “Health Plan Eligibility Toolkit,” Ms. Stamer has more than 22 years experience helping clients understand and respond to these and other employee benefit and human resources concerns. Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, a representative to the ABA Joint Committee on Employee Benefits Council, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 22 years.  She also advises and defends employers, plans, insurers, fiduciaries, administrators and others against ERISA, tax, employment discrimination, wage and other and other labor and employment claims and other related audits, charges, audits, claims and investigations by the IRS, Department of Labor, CMS, HHS, DOJ, insurance regulators and other federal and state regulators.. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

If you need assistance with these or other compliance concerns, wish to inquire about federal or state regulatory compliance audits, risk management or training, assistance investigating or responding to a known or suspected compliance or risk management concern, or need legal representation on other matters please contact the author of this update, Cynthia Marcotte Stamer, CTT Labor & Employment Practice Chair at cstamer@cttlegal.com, 214.270.2402; or your other preferred Curran Tomko Tarski LLP attorney.

Other Helpful Resources & Other Information

We hope that this information is useful to you.  Curran Tomko Tarski LLP offers a variety of updates, publications, training and other resources to assist its business clients and their leaders meet their legal and operational challenges.  If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your Currant contact information – including your preferred e-mail- by creating or updating your profile at www.CTTLegal.com and/or register to receive our CTT Corporate Compliance, Risk Management and Internal Controls updates in blog form at here. Some other recent updates that may be of interest include:

• Employee Benefit Plan Sponsors & Fiduciaries Urged To Audit Bonding, Staff & Service Providers Under ERISA Requirements
• IRS Guidance For Correcting Employment Tax Overpayments Released
• Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business
• New GINA Genetic Information Based Employment Discrimination & Confidentiality Mandates Require Updated Employment Poster, Policies & Procedures Now
• Employer H1N1 Risk Management Must Include Management of Employment Liabilities
• Confirm Credentials of Individuals Dealing With Employee Benefit Plans & Adequacy of ERISA Bonding
• Department Of Labor Announces Plans To Expand Reporting Employee Benefits, Wage & Hour, OSHA & Other Reporting & Disclosure Requirements & To Implement Other New Employee Benefit Regulations
• Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business
• Stericycle Inc.’s Acquisition Of Medserve Inc. Challenged As Anticompetitive
• House Passes Chemical Facility Anti-Terrorism Bill Requiring “Chemical Facilities” To Implement Complex New HR & Other Safety & Security Mandates
• Sept 23 Deadline For Employer & Other Health Plans, Health Care Providers & Other HIPAA-Covered Entities & Business Associates To Comply With New HHS Health Information Data Breach Rules
• Don’t Be a “Rubber Stamp” – Information Concerning the Submission of the Toxic Release Inventory Form
• Tighten Employment, Ethics & Internal Controls Policies & Practices To Minimize DOJ & Other Antitrust Exposures

Other Information & Resources

We hope that this information is useful to you. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information here or registering to participate in the distribution of these Curran Tomko Tarski Compliance, Risk Management & Internal Controls distributions here.  For important information concerning this communication click here.   If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.

©2009 Curran Tomko Tarski LLP.  All rights reserved.

By Cynthia Marcotte Stamer

Employer and union sponsored group health plans, their sponsors and administrators must act quickly to comply with the extension and expansion of temporary “COBRA Subsidy Rules” for “assistance eligible individuals” originally added to the group health plan medical coverage continuation requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) by the American Recovery and Reinvestment Act of 2009 (“AARA”) last February.

The Department of Defense Appropriations Act (H.R. 3326) signed into law by President Obama on December 19, 2009 extended the period that employer and union-sponsored group health plans must allow employees and members of their family that lose group health plan coverage due to an involuntary employment loss to continue their group medical coverage under the reduced premium and other temporary ARRA COBRA Subsidy Rules and lengthened the period during which an involuntary employment loss can qualify an otherwise COBRA-eligible employee or dependent as an assistance eligible individual.

Original COBRA Subsidy Rules

As originally enacted, the ARRA COBRA Subsidy Rules limited the COBRA premium that a COBRA-covered group health plan could charge a COBRA-eligible employee or dependent whose group health plan eligibility ended due to an involuntary employment loss between September 1, 2008 and December 31, 2009 (“assistance eligible individual”) to 35% of the otherwise applicable COBRA premium (the “Reduced ARRA Premium”) for a period of up to 9 months (the “Subsidy Period”).  ARRA dictated that employers sponsoring these group health plans must pay the remaining 65% of the COBRA premium (the “COBRA Subsidy”) for the assistance eligible individual during the Subsidy Period, but allowed employers to seek reimbursement by claiming a payroll tax credit for these COBRA Subsidy payments by complying with applicable IRS procedures.  AARA also mandated that group health plans offering a choice of coverage options offer assistance eligible individuals the option to switch coverage options and required group health plans to notify assistance eligible individuals of the special COBRA Subsidy Rules.

H.R. 3326 COBRA Subsidy Rules Extension

As signed into law on December 19, 2009, H.R. 3326:

• Extends the period during which an involuntary employment loss can qualify an otherwise COBRA-eligible employee or dependent as an assistance eligible individual for an additional two months (from December 31, 2009 to February 28, 2010);
• Adds an additional six months (from 9 to 15 months) the Subsidy Period during which an assistance eligible individual experiencing an involuntary loss of employment between September 1, 2008 and February 28, 2010 is entitled to pay the Reduced AARA Premium;
• Requires group health plans to notify assistance eligible individuals of the extension; and
• Requires group health plans to allow additional time for assistance eligible individuals who had exhausted their original 9-month Subsidy Period before H.R. 3326 extended the Subsidy Period to 15 months to pay the Reduced AARA Premium related to the extension.

Group health plans, their employer or union sponsors, administrators, insurers and service providers will need to act quickly to prepare and provider required updated notifications to assistance eligible individuals of these extended eligibility periods and their resulting rights,  and otherwise update their plan documents, procedures, and COBRA notifications in light of these new rules. 

If you have questions about or need assistance evaluating, commenting on or responding to these or other employment, health or other employee benefit, workplace health and safety, corporate ethics and compliance or other concerns or claims, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer.  The author of the “Health Plan Eligibility Toolkit,” Ms. Stamer is experienced with assisting employers, insurers, administrators, and others to design and administer group health plans cost-effectively in accordance with COBRA and other applicable federal regulations as well as advising and defending employers and others against tax, employment discrimination and other labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators.. Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, a representative to the ABA Joint Committee on Employee Benefits Council, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 22 years. Ms. Stamer also speaks and writes extensively on these and other related matters.  For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

Other Information & Resources

We hope that this information is useful to you. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information here or registering to participate in the distribution of our Solutions Law Press HR & Benefits Update distributions here.  Some other recent updates that may be of interested include the following, which you can access by clicking on the article title:

• GINA Discussion Topic At February HHS Advisory Committee on Genetics, Health & Society Meeting
• Employee Benefit Plan Sponsors & Fiduciaries Urged To Review Bonding, Credentials of Staff & Service Providers Under ERISA
• Added IRS Guidance For Correcting Employment Tax Overpayments Released
• Labor Department To Expand Employee Benefits, Wage & Hour, OSHA & Other Reporting & Disclosure Requirements & To Implement Other New Employee Benefit Regulations
• Preventive HR Strategies to Minimize Post Holiday Celebration Legal Hangovers
• IRS Publishes Table For Determining Qualified Plan Covered Compensation for Purposes of Code § 401(l)(5)(E)
• PBGC Expands Pension Benefit Protection For Military Service Members As Justice Department Files 22nd USERRA Military Leave Lawsuit Against An Employer Since January
• Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business
• Justice Department Suit against MasTec Advanced Technologies For Violating Army Reserve Member’s Rights Highlights Expanding Employer Military Leave Risks & Liabilities
• Employer H1N1 Virus Risk Management Requires Employer Care To Manage Virus Risks Without Violating Employment Discrimination or Other Laws
• New GINA Genetic Information Based Employment Discrimination & Confidentiality Mandates Take Effect
• SHRM Urges American’s To Oppose HR 3962, The Affordable Health Care For America Act
• Businesses Cautioned To Strengthen Investigation & Employment Practices To Minimize Potential Exposure To Retaliation Claims In Light Of Recent Supreme Court Retaliation Decision
• OFCCP To Apply Special Procedures, Heightened Scrutiny To Equal Employment Practices of Government Contractors, Subcontractors On ARRA Funded Projects
• US and UK Agree to Share Information & Cooperate On Pension Security As US Defined Benefit Plan Sponsors Face Tough New Defined Benefit Plan Funding Requirements
• Congress Considering Extending & Expanding Group Health Plan COBRA Subsidy Mandates On Heels of Enactment of Expanded Military Leave-Related Family Leave Mandates
• EEOC Prepares To Broaden “Disability” Definition Under ADA Regulations
• Tighten Employment, Ethics & Internal Controls Policies & Practices To Minimize DOJ & Other Antitrust Exposures
• OSHA Final Rule Updates OSHA Personal Protective Equipment Standards
• “Disability” Definition Not Retroactive, Employer Action Needed To Manage Post 1/1/2009 Risks

For important information concerning this communication click here.   If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.

©2009 Cynthia Marcotte Stamer. All rights reserved. 

Simi Valley Group Health Plans. CALL NOW 818-348-4944 Click here for more info: http://www.localvideo.tv/california-ca/simi-valley/simi-valley-group-health-insurance-plan Group Medical

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By Cynthia Marcotte Stamer

Business owners, executives, board members, and other business leaders of companies facing financial challenges should heed a mounting series of recent fiduciary liability settlement orders, judgments and prosecutions as strong reminders of the potential personal risk they may face if their health, 401(k) or other employee benefit programs are not appropriately funded and administered as required by the Employee Retirement Income Security Act of 1974, as amended (ERISA). 

Businesses leaders struggling to deal with economic setbacks frequently may be tempted to use employee benefit plan contributions or funds for added liquidity or otherwise fail to take appropriate steps to protect and timely deposit plan contributions or other plan assets.  A long and ever-mounting series of decisions demonstrates the risks of yielding to these temptations for businesses that sponsor these plans and the business leaders that make these decisions.

EBSA Prosecutes Businesses & Executives That Bungle ERISA Obligations

The mishandling of employee benefit obligations by financially distressed companies during the ongoing economic downturn is fueling an increase in Department of Labor Employee Benefit Security Administration (EBSA) enforcement actions against distressed or bankrupt companies and their officers or directors for alleged breaches of fiduciary duties or other mishandling of medical, 401(k) or other pension, and other employee benefit programs sponsored by their financially distressed companies.

EBSA enforcement activities during 2009 continue to highlight the longstanding and ongoing policy of aggressive investigation and enforcement of alleged misconduct by companies, company officials, and service providers in connection with the maintenance, administration and funding of ERISA-regulated employee benefit plans. A review of the Labor Department’s enforcement record makes clear that where the Labor Department perceives that a plan sponsor or its management fails to take appropriate steps to protect plan participants, the Labor Department will aggressively pursue enforcement regardless of the size of the plan sponsor or its plan, or the business hardships that the plan sponsor may be facing.

EBSA reports enforcing $1.3 billion in recoveries related to pension, 401(k), health and other benefits during fiscal year 2009. EBSA has filed numerous lawsuits to compel distressed companies and/or members of their management to pay restitution or other damages for alleged breaches of ERISA fiduciary duties, to appoint independent fiduciaries, or both for plans sponsored by bankrupt or financially distressed companies.

Recent settlements and judgments obtained by the Labor Department and through private litigation document that officers and other members of management participating, or possessing authority to influence, the handling of heath, 401(k) and other pension, or other employee benefit plans regulated by ERISA may be exposed to personal liability if these benefit programs are not maintained and administered appropriately. This risk is particularly grave when the sponsoring company becomes financially distressed or goes bankrupt, as the handling of employee benefit and other responsibilities becomes particularly disrupted and the lack of company liquidity often leaves executives and service providers as the only or best source of recovery for government officials and private plaintiffs.

Executives Ordered To Pay To Make Things Right

In the December 2, 2009 decision in Solis v. Struthers Industries Inc., for instance, a federal district judge ordered business leader Jomey B. Ethridge liable to pay $303,084.61 to restore assets belonging to the 401(k) plan of bankrupt Struthers Industries in an ERISA fiduciary responsibility action filed by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA). Filed by the EBSA in the U.S. District Court for the Southern District of Mississippi, the Struthers Industries lawsuit alleged that Ethridge and Struthers Industries allowed employee contributions to be used for purposes other than providing benefits resulting in losses of $310,084.57.  According to court documents, Struthers Industries designed and built heat transfer and pressure vessels at its Gulfport facility. In 2001, its 401(k) plan had 278 participants and assets totaling $8,279,083. The company filed for bankruptcy in 2003, and its assets were auctioned off in 2005. An independent fiduciary was appointed by the court in 2007 to manage the plan’s assets.  The ordered Ethridge personally to pay $303,084.61 in restitution to the plan for his involvement in the mishandling of the plan’s assets. The order also bars Ethridge from acting as a benefit plan fiduciary in the future.

The Struthers Industries decision comes on the heels of EBSA’s success in Solis v. T.E. Corcoran Co. Inc. last month in recovering more than $89,000 from business owners and operators found to have breached fiduciary duties to the participants of the T.E. Corcoran Co. Inc. Profit Sharing Plan by improperly loaning plan assets to he plan sponsor and an affiliated company. The Labor Department sued T.E. Corcoran Co. and its owners, John F. Corcoran and Thomas E. Corcoran Jr., alleging that the company and its owners caused the plan to lend money to the two companies at below market interest rates, without terms of payment and without documentation in violation of ERISA. The suit filed in the U.S. District Court for the District of Massachusetts, also named as a defendant Coran Development Co. Inc., a company co-owned by the Corcorans.  T.E. Corcoran Co. Inc. was the sponsor and administrator of the plan, while John and Thomas Corcoran were trustees of the plan, making all three fiduciaries and parties in interest with respect to the plan. ERISA specifically prohibits the use of employee benefit plan funds to benefit parties in interest.

The Corcoran judgment requires that the plan account balances of defendants John F. Corcoran and Thomas E. Corcoran Jr. be offset in the amount of $89,273 plus interest to be allocated to the accounts of the other plan participants. The offset will make whole all of the accounts of the non-trustee participants. In addition, the court order appoints an independent trustee to oversee the final distribution of the plan’s assets and the proper termination of the plan, requires the defendants to cooperate fully with the independent trustee in this process, and then prohibits them from serving as fiduciaries to any ERISA-covered plan for 10 years.

A complex maze of ERISA, tax and other rules make the establishment, administration and termination of employee benefit plans a complicated matter. When the company sponsoring a plan goes bankrupt or becomes distressed, the rules, as well as the circumstances can make the administration of these responsibilities a powder keg of liability for all involved. Companies and other individuals that in name or in function possess or exercise discretionary responsibility or authority over the maintenance, administration or funding of employee benefit plans regulated by ERISA frequently are found to be accountable for complying with the high standards required by ERISA for carrying out these duties based on their functional ability to exercise discretion over these matters, whether or not they have been named as fiduciaries formally.

Despite these well-document fiduciary exposures and a well-established pattern of enforcement by the Labor Department and private plaintiffs, many companies and their business leaders fail to appreciate the responsibilities and liabilities associated with the establishment and administration of employee benefit plans. Frequently, companies sponsoring their employee benefit plans and their executives mistakenly assume that they can rely upon vendors and advisors to ensure that their programs are appropriately established the establishment and maintenance of these arrangements with limited review or oversight by the sponsoring company or its management team.

In other instances, businesses and their leaders do not realize that the functional definition that ERISA uses to determine fiduciary status means that individuals participating in discretionary decisions relating to the employee benefit plan, as well as the plan sponsor, may bear liability under many commonly occurring situations if appropriate care is not exercised to protect participants or beneficiaries in these plans.

For this reason, businesses providing employee benefits to employees or dependents, as well as members of management participating in, or having responsibility to oversee or influence decisions concerning the establishment, maintenance, funding, and administration of their organization’s employee benefit programs need a clear understanding of their responsibilities with respect to such programs, the steps that they should take to demonstrate their fulfillment of these responsibilities, and their other options for preventing or mitigating their otherwise applicable fiduciary risks.

If you have questions about or need assistance evaluating, commenting on or responding to these or other employment, health or other employee benefit, workplace health and safety, corporate ethics and compliance or other concerns or claims, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer.  Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is experienced with assisting employers and others about compliance with federal and state equal employment opportunity, compensation and employee benefit, workplace safety, and other labor and employment, as well as advising and defending employers and others against tax, employment discrimination and other labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators. Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 20 years. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

Other Information & Resources

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©2009 Cynthia Marcotte Stamer. All rights reserved.

In our section ‘details on the plan’ we have offered, unconventional, yet we think innovative solutions to address the conundrum of having business in the business of providing health insurance coverage (which for 99% of businesses, is not their business).  We have argued from day one that the  post-WWII model of employer benefits including health insurance, while understandable historically, made no sense in the new economy that is evolving in the 21st century. Businesses need to be free to focus on their core competencies and not have to worry about superfluous matters, such as health insurance policies and their administration, which should be the responsibility of the individual.  Just as a worker brings a resume with his/her qualifications, education, special training and experience, they should bring their own health insurance.  Employers and potential employees SHOULD NOT have to entertain that issue as part potential employment discussions.

A recent article in the NY Times on the drain on innovation being caused by the current link between employers and health insurance is insightful (see below). However, we cannot get over this problem without some fundamental changes.  These are changes which ARE NOT encompassed in the health bills now being debated in the Congress.  They include freeing business from the need to provide health coverage, mandating that citizens obtain and maintain health coverage, addressing costs for individuals through the dual action of raising the minimum wage and exercising real regulatory authority and oversight in regard to the health insurance industry.  Below, we have listed just 4 of the current 16 points of “the plan” which we have outlined and evolved to create real, meaningful health care reform.   Innovation and the free market are linked.  We must free our businesses to do what they do best, innovate, create jobs and grow.  Real health reform can do just that, but not without common sense mixed with out of the box thinking . . . obi jo

(1) All persons must have health insurance from the private sector or government sponsored plans.

Many have objected to this as a violation of personal choice and freedom.  However, I would suggest that it is a dereliction of civic responsibility (if such a thing still exists in America) to force others (fellow citizens, doctors, hospitals, insurers, government - i.e. taxpayers) to pick up the tab for you when you become very sick or injured (as you WILL at some point in this life).  By mandating coverage with penalties, just as we do for auto insurance, we put personal responsibility back in the equation.  It has been far too long since that was the case as the government in particular, along with big labor and big business to varying degrees, have sought to remove responsibility from the individual and to displace it to some other entity.

(5) All company-sponsored programs would be phased out over three years (better than a tax break).

This will strike some as a major politically incorrect proposal.  However, if we are to restore personal responsibility back to the system we must do so by removing the need for businesses, which are clearly not in the health insurance business, from it.  Business should not be in the health business, but in business.  The morass created by having to have benefit coordinators (who spend most of their time on health insurance matters) instead of focused on traditional benefits (retirement, vacation, leave, etc., etc.) is inefficient and costly.  Elimination of the need for businesses to carry these costs will result in markedly reduced overhead, which is even better than a tax break to expand their current coverage systems as some have suggested.

(6) Minimum wage increased by $2.00 per hour so low income workers would have no excuse to offer for not having coverage.

Again, there will be resistance in many quarters to this proposal.  As we well know, the minimum wage is in the process of being increased as we speak ($6.55 effective July 24, 2008 and then again rising to $7.25 per hour effective July 24, 2009).  However, a further increase as suggested beyond this is a better format than asking businesses of all sizes to carry the full load for providing health insurance, which should be a personal responsibility.  For a full time worker, this $2 increase translates to $4,160 per year ($2 x 2080 hours).  That is more than sufficient for workers to purchase their own health care coverage within the context of the full plan as outlined here.

(7) Private health insurance should be re-structured to function as a regulated utility. Their rate structure should be only that needed to operate (process payments, review claims etc) plus a set profit of not more than 8-10%. Rates to be set nationally not state by state, or group by group.

Another very controversial approach. This site favors open markets and market based solutions to problems.  However, if we view health care as a national security issue and personal citizen responsibility (not necessarily a ‘right’ as some would argue) then it is fairly easy to justify some set controls on health insurance premiums and rates.  At present, there is little control, and since product offerings vary so widely and offer insurers so many avenues to deny claims, there must be some balance put into play.

Details on “the plan” – http://realhealthreform.wordpress.com/the-plan/details-on-the-plan/

This link between insurance and innovation isn’t relevant merely for the obvious reason that Congress is in the late stages of debating health reform. It is also relevant because the United States is suffering from an innovation deficit. Even before the financial crisis, the decade that will end later this month was on pace to have the slowest economic growth of any since before World War II. The No. 1 reason, I’d argue, was our innovation deficit.

Only 46% of companies with three to nine employees offer health insurance, down from 56 percent a decade ago, according to the Kaiser Family Foundation. Why? The administrative costs of insurance are high when they aren’t spread over a large group of workers. Insurers also know that the individuals and small companies who sign up for health plans tend to be the ones with the most medical problems, pushing premiums for such plans even higher. So unless the government steps in to create a large pool of workers who can then buy insurance more cheaply, many small companies will go without it — and some workers will find themselves tethered to the safety of a big company.

If Health Care Reform Fails, America’s Innovation Gap Will Grow – http://www.nytimes.com/2009/12/16/business/economy/16leonhardt.html?_r=1&ref=politics

The United States spent 16 percent of its GDP in 2007 on health care, higher than any other developed nation. The nonpartisan Congressional Budget Office (CBO) estimates that number will rise to 25 percent by 2025 without changes to federal law (PDF). Employer-funded coverage is the structural mainstay of the U.S. health insurance system. According the U.S. Bureau of Labor Statistics, about 71 percent of private employees in the United States had access to employer-sponsored health plans in 2006. A November 2008 Kaiser Foundation report notes that access to employer-sponsored health insurance has been on the decline (PDF) among low-income workers, and health premiums for workers have risen 114 percent in the last decade. Small businesses are less likely than large employers to be able to provide health insurance as a benefit. At 12 percent, health care is the most expensive benefit paid by U.S. employers, according to the U.S. Chamber of Commerce.

Healthcare Costs and U.S. Competitiveness – http://www.cfr.org/publication/13325/

According to data from the Bureau of Labor Statistics National Compensation Survey (NCS), in March 2006, 71 percent of private industry workers had access to employer-sponsored medical care plans and 52 percent participated in such plans. In the NCS, employees are described as having access to a benefit plan if it is available to them for their use. Employees are considered as participating in contributory plans if they have paid the required contributions and fulfilled any requisite service requirements. Employees in noncontributory plans are described as participating whether or not they have fulfilled any applicable service requirements. The term “take-up rate” refers to an estimate of the percentage of workers with access to a benefit plan who participate in the plan. The term “incidence” can refer to either rates of access to or rates of participation in a benefit plan. Most employees place a high value on benefits, especially benefits such as medical, life, and disability insurance. Firms employing large number of employees generally can negotiate lower group insurance rates and better coverage than individual employees are able to negotiate in the open market

The Likelihood of Having Employer-Sponsored Health Insurance – http://www.bls.gov/opub/cwc/cm20071128ar01p1.htm

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Here’s the scoop – Medicare pays so poorly that doctors are constantly evaluating their desire to even participate in the plan at all.  Therefore it is no surprise that the AMA, which has supported health reform efforts, suggested it will withdraw or modify its support if there is an expansion of Medicare.  Their view, shared in part by us, is that expanding Medicare to those over 55 and under 65 will be more of a bad thing.  Medicare historically is the worst payer, second only to Medicaid for physicians and hospitals.  In most if not all cases, physicians and certainly hospitals, loose money overall on Medicare patients, having to “make up”  the difference from patients with private insurance.  So one concern has always been that Medicare, if used as a model, would lead to higher overall taxation since its benefit and payment structure are insufficient to meet both demand and costs.  Thus we see the AMA’s position change in the face of this proposal.

Additionally, we can see how the fragile Democratic coalition can be fractured by their continuing to overreach and by their refusal to address core problems one at a time instead of going for the home run of an overall health system reform.  It now appears that the far left is ready to kill any bill that does not have some pubic option or Medicare expansion or both.  They are infuriated with Senator Joseph Lieberman (I-CT) and his decision to vote against any bill that contains a public option or Medicare expansion.  Meanwhile, President Obama, who stood by on the sidelines through most of the legislative process, now is acting as cheerleader for the Congress to get to the finish line – please, someone, somebody, cross the line with a bill, any bill – that seems to be his most definable political position on health reform at the moment.

We have proposed real health reform from day one.  We have argued that the real role of government was regulation as needed and oversight, not legislation that consumed, controlled or competed directly with the private sector.  We have argued that the vast majority of the problems with the health care system can be fixed in large measure by a more “out of the box” approach which would preserve the best of our market system, while eliminating the flaws that have allowed many to pay too much, get too little for their premium dollar, or not be able to get health insurance at all.  A bad bill, is NOT better than any bill.  Real health reform, even if accomplished piece by piece, via a process which considers each item and votes them up and down would be better than the “throw the blanket”over it concept the Democratic leadership has embraced. There is no shame in starting over.  We vote for start over . . . obi jo and jomaxx

Senate Democratic leaders appeared poised to abandon efforts to create a government-run insurance safety net in their push for health-care reform, as they attempted to close ranks around a bill they hoped would win the backing of all 60 members of their caucus. Democratic negotiators had already disappointed liberal lawmakers by jettisoning a full-fledged public insurance plan a week earlier. Last night, party leaders conceded that a key portion of the compromise they crafted to replace the public option — a proposal allowing people as young as 55 to buy into Medicare — also did not have sufficient support from Democratic moderates to overcome a likely Republican filibuster.

Senate health bill unlikely to include Medicare buy-in – http://www.washingtonpost.com/wp-dyn/content/article/2009/12/14/AR2009121401580.html

The White House is encouraging Senate Majority Leader Harry Reid (D-Nev.) to cut a deal with Sen. Joe Lieberman (I-Conn.), which would mean eliminating the proposed Medicare expansion in the health reform bill, according to an official close to the negotiations. But Reid is described as so frustrated with Lieberman that he is not ready to sacrifice a key element of the health care bill, and first wants to see the Congressional Budget Office cost analysis of the Medicare buy-in. The analysis is expected early this week.

White House to Harry Reid: Cut deal with Joe Lieberman – http://www.politico.com/news/stories/1209/30572.html

Prodded by President Barack Obama, Senate Democrats won tentative backing from one holdout and worked intensely to satisfy another Tuesday as they grappled with the last, lingering disputes blocking passage of health care legislation by Christmas. Obama said his congressional allies were “on the precipice” of a historic accomplishment that has eluded presidents and lawmakers for generations, adding the emerging bill includes “all the criteria that I laid out” in a speech to a joint session of Congress earlier in the year.  In the privacy of a presidential meeting, liberals vented their frustration at having to abandon the last vestige of a government-run insurance option in the legislation, a slow-motion concession made over many months, most recently to moderates including Sen. Joseph Lieberman, I-Connecticut. Two days after jolting the leadership by threatening to oppose the measure if it included an expansion of Medicare, Lieberman said with the agreed-upon changes, “I’m going to be in a position where I can say what I’ve wanted to say all along: that I’m ready to vote for health care reform.”  That left Sen. Ben Nelson, D-Neb., the only known potential holdout among the 60 senators who are members of the party’s caucus, a group that includes 58 Democrats, Lieberman, and Sen. Bernie Sanders, I-Vt. Nelson has already has won key concessions from Majority Leader Harry Reid, including an agreement to leave in place the insurance industry’s exemption from anti-trust laws. He also is seeking changes to increase restrictions on abortion coverage in a new insurance marketplace the bill would establish.

Upbeat Obama says Senate near health care passage – http://news.yahoo.com/s/ap/20091215/ap_on_bi_ge/us_health_care_overhaul

The notion of a public health insurance plan appears to be evaporating from the Senate’s healthcare reform bill, replaced in part with an expansion of Medicare — an idea that’s meeting resistance from doctor and hospital associations. A proposal to scrap the public plan to allow people as young as 55 to “buy in” to the Medicare program by paying premiums emerged from negotiations between five liberal Democrats and five moderate Democrats. They met earlier this week at the request of Senate Majority Leader Harry Reid (D-Nev.), who wants Democrats to reach an agreement that can get the 60 votes Reid needs to break a threatened Republican filibuster and pass the bill.   The American Medical Association (AMA), which supported the House healthcare bill, hasn’t yet offered a stance on the Senate bill, but it has opposed expanding Medicare to younger people. ”The AMA is committed to legislation to expand affordable health insurance coverage to all Americans, but the AMA has longstanding policy opposing the expansion of Medicare given the fiscal projections for the future,” said AMA President J. James Rohack, MD. “We believe a health insurance exchange without an expansion of Medicare will provide more affordable choices and better access to care for Americans ages 55 to 64.”

Medicare Buy-In Plan Meets Resistance – http://www.medpagetoday.com/PublicHealthPolicy/Medicare/17462

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The start of a new calendar year always brings up insurance related questions about plan benefits, deductibles and HSA funding. Here are answers to some of the most commonly asked questions.
pubDate:Wed, 25 Nov 2009 14:58:31 -0600
Original Link:End of the Year Insurance Reminders For Health, HSA, Life and Dental Plans – insurancebazaar.net

Businesses sponsoring employee benefit plans and officers, directors, employees and others acting as fiduciaries with respect to these employee benefit plans should take steps to confirm that all of the appropriate fiduciary bonds required by the Employee Retirement Income Security Act of 1974, as amended (ERISA) are in place, that all employee benefit plans sponsored are appropriately covered, and that all individuals serving in key positions requiring bonding are covered and appropriately qualified to serve in that capacity under ERISA and the terms of the bond.

ERISA generally requires that every employee benefit plan fiduciary, as well as every other person who handles funds or other property of a plan (a “plan official”), be bonded if they have some discretionary control over a plan or the assets of a related trust.  While some narrow exceptions are available to this bonding requirement, these exceptions are very narrow and apply only if certain narrow criteria are met.  

Plan sponsors and other plan fiduciaries should take steps to ensure that all of the bonding requirements applicable to their employee benefit plans are met at least annually.  This process should include adopting a written policy requiring bonding and verifying that appropriate bonds are in place for all internal personnel and outside service providers subject to the bonding requirements.  

Steps should be taken to ensure that the required fiduciary bonds are secured in sufficient amounts and scope to meet ERISA’s requirements.  In addition to confirming the existence and amount of the fiduciary bonds, plan sponsors and fiduciaries should confirm that each employee plan for which bonding is required is listed in the bond and that the bond covers all individuals or organizations that ERISA requires to be bonded.  For this purpose, the review should verify the sufficiency and adequacy of bonding in effect for both internal personnel as well as outside service providers.  In the case of internal personnel, the adequacy of the bonds should be reviewed annually to ensure that bond amounts are appropriate.  Unless a service provider provides a legal opinion that adequately demonstrates that an ERISA bonding exemption applies, plan sponsors and fiduciaries also should require that third party service providers provide proof of appropriate bonding as well as to contract to be bonded in accordance with ERISA and other applicable laws, to provide proof of their bonded status or documentation of their exemption, and to provide notice of events that could impact on their bonded status.

When verifying the bonding requirements, it also is a good idea to conduct a criminal background check and other prudent investigation to reconfirm the credentials and suitability of individuals and organizations serving in fiduciary positions or otherwise acting in a capacity covered by ERISA’s bonding requirements.  ERISA generally prohibits individuals convicted of certain crimes from serving, and prohibits plan sponsors, fiduciaries or others from knowingly hiring, retaining, employing or otherwise allowing these convicted individuals during or for the 13-year period after the later of the conviction or the end of imprisonment, to serve as:

• An administrator, fiduciary, officer, trustee,   custodian, counsel, agent, employee, or representative in any   capacity of any employee benefit plan,    
• A consultant or adviser to an employee benefit plan,  including but not limited to any entity whose activities are in  whole or substantial part devoted to providing goods or services  to any employee benefit plan, or
• In any capacity that involves decision-making authority or custody or control of the moneys, funds, assets, or property of any employee benefit plan.

Knowing or intentional violation of this prohibition may expose violating party to fines of up to $10,000, imprisonment for not more than five years, or both.  Even where the violation is not knowing or willful, however, allowing disqualified persons to serve in fiduciary roles can have serious consequences such as exposure to Department of Labor penalties and personal liability for breach of fiduciary duty for damages resulting to the plan if it is established that the retention of services was an imprudent engagement of such an individual that caused the loss.  When conducting such a background check, care should be taken to comply with the applicable notice and consent requirements for conducting third party conducted background checks under the Fair Credit Reporting Act (FCRA) and otherwise applicable law.  As such background investigations generally would be conducted in such a manner as to qualify as a credit check for purposes of the FCRA, conducting background checks in a manner that violates the FCRA credit check requirements itself can be a source of significant liability.

Curran Tomko Tarski LLP Attorneys Can Help

If your organization needs assistance with monitoring, assessing, managing or defending these or other labor and employment, compensation or benefit practices, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer at cstamer@cttlegal.com, (214) 270-2402, or another Curran Tomko Tarski LLP attorney of your choice.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group and a nationally recognized author and speaker, Ms. Stamer is experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, risk management  and internal controls matters.  Ms. Stamer is experienced with assisting employers, fiduciaries, bankruptcy trustees, investors, purchasers and others about defined benefit plan and other employee benefit, labor and employment, compensation and other related concerns involved with distressed businesses or benefit plans, bankruptcy and restructuring transactions and other corporate or plan related events. Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group and a Joint Committee on Employee Benefit Council Member, Ms. Stamer has advised and represented these and other business clients on employee benefit, labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 20 years.  Her experience includes significant experience representing and advising employee benefit plan sponsors,  fiduciaries, and service providers and their affiliates; investors, creditors, bankruptcy trustees, and others about employee benefit, labor and employment and related services and compensation concerns affecting transactions involving bankrupt or distressed corporations.  Ms. Stamer also speaks and writes extensively on these and other related matters. 

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