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Structuring a Settlement to Fund a Special Needs Trust May Not Work to Block ERISA Plan’s Recovery

In ACS Recovery Services, Inc. v. Griffin (2013 CA5), the Fifth Circuit recently allowed fiduciaries of an ERISA group health plan to seek reimbursement from a special needs trust established for a participant through a personal injury settlement.  The key to this decision was the court’s interpretation of the leading Supreme Court cases in this space – Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002) and Sereboff v. Mid-Atlantic Medical Services, Inc. 547 U.S. 356 (2006).

In this case, Mr. Griffin was employed by FKI Industries and was a participant in its ERISA group health plan when he was injured in a car accident.  Mr. Griffin entered into a settlement with a third party for $294,440, but did not reimburse the ERISA group health plan for the $50,076 in medical expenses it paid.  After segregating attorneys’ fees, additional medical expenses and amounts for Mr.

Supreme Court Overturns DOMA (in part) – What’s Next for Employers?

Earlier today, the U.S. Supreme Court held that Section 3 of the Defense of Marriage Act (“DOMA”) is unconstitutional. Section 3 contained the definition of “marriage” for federal law purposes and restricted the definition to include only marriages between a man and a woman. [Additional background information may be found here.] Now, the federal government must look to state law to determine whether a couple is legally married for the purpose of more than 1,000 federal laws, including ERISA, the Internal Revenue Code, COBRA, and FMLA. The Court explained “DOMA’s unusual deviation from the usual tradition of recognizing and accepting state definitions of marriage here operates to deprive same-sex couples of the benefits and responsibilities that come with the federal recognition of their marriages.”

What Does This Mean for Employers? It means that in states that recognize same-sex marriages, same-sex spouses are immediately eligible for the same federal benefits as opposite-sex

Heads Up – SCOTUS Decision Tomorrow on Same-sex Marriage

Heads Up – SCOTUS Decision Tomorrow on Same-sex Marriage

June 25, 2013

Authored by: benefitsbclp

Tomorrow, Wednesday June 26th, the Supreme Court is expected to release two opinions related to same-sex marriage: Windsor v. United States – a constitutional challenge to Section 3 of DOMA and Hollingsworth v. Perry – a constitutional challenge to Prop 8.  [Additional background information may be found here.]

While same-sex marriage supporters wait anxiously for the rulings, employers are also waiting to see how these rulings may affect employee benefit offerings.  A broad ruling could mean that employers would need to provide benefits and protections to same-sex spouses immediately, though many commentators believe that the court will not rule broadly in either case (i.e. both cases could be dismissed for lack of standing).

If the court does overturn Section 3 of DOMA, many uncertainties for employers would still exist, such as what benefits and protections must be provided to same-sex spouses that married in one state but now live

Time to Assess the Independence of Your Compensation Committee’s Outside Counsel and Other Advisers

Among other things, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires a company with securities listed on a national exchange to:

  • Have a compensation committee of independent directors;
  • Provide the committee with authority and funding to retain its own advisers; and
  • Have the committee assess the independence of its advisers (other than in-house counsel) before retaining the adviser or receiving the advice.

As previously announced in our January 29, 2013 client bulletin (available [here]), the NYSE and Nasdaq have adopted rules implementing the Dodd-Frank requirements.

Effective July 1, 2013, under applicable NYSE and Nasdaq rules, the compensation committee is required to consider the independence of its compensation consultant, outside legal counsel and other advisers before selecting or receiving advice from them.  There is no requirement that the committee hire or receive advice from solely independent advisers, only that it consider their independence before selecting or receiving

CMS Integrity Standards Offer Further Details on State-Based Health Insurance Marketplaces

On Friday, the Centers for Medicare and Medicaid Services (“CMS”) issued a proposed rule addressing various issues relating to exchanges, small business health options program (“SHOP”) and qualified health plan (“QHP”) issuers.  Most of the 250+ pages detail proposed standards intended to ensure the oversight and financial integrity of such entities.  This post focuses on the provisions addressing consumer protections, applications for individual coverage, and administration of premium tax credits and cost-sharing reductions.

Qualified Health Plan Issuers

Beginning October 1, individuals will be able to shop for QHPs offered by issuers through state-based marketplaces (“Exchange”).  QHP  issuers that seek to directly enroll individuals through an Exchange will be required to meet certain minimum consumer protection requirements, including ensuring that their websites provide standardized comparative information on each available QHP offered and premium and cost-sharing information, providing summaries of benefits and coverages, identifying whether a plan is a bronze, silver,

The Final (And Not Interim Final) Regulations on Wellness Programs

While the EEOC continued to grapple with what level of financial incentives is acceptable under nondiscrimination laws (e.g., GINA and ADA), the DOL, HHS and Treasury (the “Departments”) issued final regulations addressing incentives for nondiscriminatory wellness programs in group health plans.  The final regulations generally follow the proposed regulations issued by the Departments last November (see our prior post here), including increasing the maximum incentive threshold for health-contingent wellness programs from 20% to 30% (50% in the case of tobacco related programs) of the total cost of coverage, and provide numerous clarifications. For an overview of the new wellness rules, which are effective for plan years beginning on or after January 1, 2014, please see our recent client alert.

In addition to the usual commentary, the preamble to the regulations include a report of the findings of a study of wellness programs sponsored by

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