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What the Supreme Court is Hearing Today: Wednesday – Severability and Medicaid

Update (12:45 PM ET): Audio and transcript from this morning’s arguments is available here.

Update (3:12 PM ET): Audio from the afternoon arguments is available here.

Over the last few days we have posted brief descriptions of the arguments the Supreme Court will hear in U.S. Department of Health and Human Services, et al. v State of Florida, et al., the case challenging the landmark health reform law, the Patient Protection and Affordable Care Act (“PPACA”). As the audio of the oral arguments is released, we will post links to the audio here. Go to our prior posts for some background and a discussion of Monday’s and Tuesday’s arguments. As with Tuesday’s arguments, the individuals challenging the law are joined by the National Federation of Independent Businesses (“NFIB”). Additionally, similar to the arguments over the AIA described in Monday’s post, the Court appointed a special counsel to argue in favor of complete severability of the Individual Mandate.

Today, they will hear a total of two and a half hours of argument: 90 minutes on the issue of Severability, a break for lunch, and then 1 hour on PPACA’s expansion of Medicaid. We will take each argument separately.

Severability

What are they arguing about? If the Court determines that the Individual Mandate is unconstitutional (as discussed in yesterday’s post), then can the Mandate be removed from the law by itself with the rest of the

What the Supreme Court is Hearing Today: Tuesday – The Minimum Coverage Provision (a.k.a. the Individual Mandate)

Update: The audio and transcript of  today’s oral arguments is now available here.

Yesterday, today, and tomorrow we are posting brief descriptions of the arguments the Supreme Court will hear in U.S. Department of Health and Human Services, et al. v State of Florida, et al., the case challenging the landmark health reform law, the Patient Protection and Affordable Care Act (“PPACA”). As the audio of the oral arguments is released, we will post links to the audio here. Go to our first post for some background and a discussion of Monday’s arguments. Note that, in arguing over the constitutionality of the Individual Mandate, the individual respondents are joined by the National Federation of Independent Businesses (“NFIB”).

Today, the Court will hear two hours of argument on the Minimum Coverage Provision (a.k.a. the Individual Mandate).

What are they arguing about? Does Congress have the power to force you to buy health insurance or pay a penalty? The issue is fundamentally about Congress’s authority to regulate interstate commerce under the Commerce Clause of the Constitution (for an additional discussion of this point, see our October post on this issue). The Court will consider whether the Individual Mandate falls within Congress’ ability to regulate commerce among the states or to tax and spend for the general welfare.

What does the U.S. Government say? Of course Congress can do this, says the U.S. Government. The health care market accounts for 17.6%

What the Supreme Court is Hearing Today: Monday – Anti-Injunction Act

Update: Audio of today’s arguments are now available here.

Over the next few days we are going to post brief descriptions of the arguments the Supreme Court will hear in U.S. Department of Health and Human Services, et al. v State of Florida, et al., the case challenging the landmark health reform law, the Patient Protection and Affordable Care Act (“PPACA”).  As the audio of the oral arguments is released, we will post any links to the audio here.

By way of background, there are three parties to this litigation: (1) the U.S. Government who is defending the constitutionality of the law, (2) individuals (sometimes jointed by the National Federation of Independent Businesses) who are essentially arguing that they are harmed by the requirement to purchase insurance, and (3) 26 States, some of which are advocating that the individual mandate violates laws they have passed and some of which are advocating that the Medicaid expansion enacted under the health reform law is unconstitutionally coercive.

First up is the 90 minutes of argument on the Anti-Injunction Act.

What are they arguing about? The Anti-Injunction Act (the “AIA”) is a tax statute that prevents anyone from suing to preemptively prevent the collection or assessment of a tax.  Its purpose is to keep all of us from suing about taxes we do not like until after the IRS has had a chance to determine how the tax will be enforced and assessed.  Once the tax is assessed,

Preventing Assignment of Health Plan Benefits

Preventing Assignment of Health Plan Benefits

March 22, 2012

Authored by: benefitsbclp

A recent South Carolina federal district court case underscores the importance of a robust anti-assignment clause in health plan documents.  In the case, the court held that a hospital could not stand in the shoes of a plan participant and sue a health plan to force payment of benefits to the hospital.  Prior to receiving treatment, the participant had signed a standard form assigning his benefits to the hospital.  When the plan denied benefits, the hospital sued to force the plan to pay.

The plan in question had a strong anti-assignment provision.  The court basically said that the plan’s anti-assignment clause governed and rendered the participant’s assignment invalid.  The court said that the fact that the plan could, and did, pay benefits directly to providers on behalf of participants in other circumstances did not change the result.  The court stated that the direct payment of benefits to providers was not inconsistent with the anti-assignment provision because payment to a third party (here, the hospital) made that party a beneficiary, not an assignee.  The hospital had its own rights as a third-party beneficiary, but was not an assignee because it did not receive an assignment of the participant’s rights due to the anti-assignment provision in the plan.

This case highlights the need for plan sponsors to make sure their health plan documents and SPDs contain robust, unambiguous anti-assignment provisions.  While this case involved a single provider and a single participant, there are circumstances where a single provider could acquire

W-2 Reporting of Health Coverage and EAPs, Wellness Programs, and On-Site Clinics

On Tuesday, the IRS released additional interim guidance on the health reform requirement to include the cost of health coverage on an employee’s Form W-2.  Employers are permitted, but not required, to report these amounts on 2011 W-2s issued by the end of this month, but reporting will be required for 2012 W-2s issued in January 2013.

Of particular interest in the guidance is the following Q&A:

Q-32: Is the cost of coverage provided under an employee assistance program (EAP), wellness program, or on-site medical clinic required to be included in the aggregate reportable cost reported on Form W-2?

A-32: Coverage provided under an EAP, wellness program, or on-site medical clinic is only includible in the aggregate reportable cost to the extent that the coverage is provided under a program that is a group health plan for purposes of § 5000(b)(1). An employer is not required to include the cost of coverage provided under an EAP, wellness program, or on-site medical clinic that otherwise would be required to be included in the aggregate reportable cost reported on Form W-2 because it constitutes applicable employer-sponsored coverage, if that employer does not charge a premium with respect to that type of coverage provided to a beneficiary qualifying for coverage in accordance with any applicable federal continuation coverage requirements. If an employer charges a premium with respect to that type of coverage provided to a beneficiary qualifying for coverage in accordance with any applicable federal continuation coverage requirements,

Have You Inadvertently Amended Your Benefit Plans in an Acquisition?

Have You Inadvertently Amended Your Benefit Plans in an Acquisition?

November 29, 2011

Authored by: benefitsbclp

Has your company recently acquired another company or its assets? Did the purchase agreement require continuation of any particular level of benefit for acquired employees or retirees? If so, the Fifth Circuit appears to believe that the purchase agreement may have amended your company’s employee benefit plans to provide those benefits described in the purchase agreement. What does this mean? That acquired employees and retirees can potentially sue your company for benefits described in a contract to which the employees and retirees were neither a party nor a third party beneficiary.

Evans v. Sterling, 2011 WL 4837847 (5th Cir. 2011).

In December of 1996, Sterling Chemicals acquired American Cyanamid’s (“Cytec”) acrylic fibers business in an asset purchase transaction. In connection with the acquisition, Sterling offered employment to certain Cytec employees. The asset purchase agreement included a provision requiring Sterling to provide certain levels of retiree medical coverage for the acquired Cytec employees unless Cytec agreed to changes. Sterling provided these retiree benefits to Cytec employees under its own retiree plans following consummation of the acquisition.

A few years following its acquisition of the Cytec business, Sterling increased retiree medical premiums for the acquired Cytec employees. The acquired Cytec employees sued, and the Fifth Circuit held that Sterling could not increase retiree premiums for the acquired Cytec employees without Cytec’s consent.

The court reasoned that the asset purchase agreement between Sterling and Cytec amended Sterling’s existing retiree medical programs. Following earlier precedent in Halliburton Co. Benefits Committee v. Graves,

New EBSA Consumer Assistance Website

New EBSA Consumer Assistance Website

November 23, 2011

Authored by: benefitsbclp

The Department of Labor’s Employee Benefit Security Administration (EBSA) is making it easier for consumers to submit questions and complaints regarding their health and retirement plans. EBSA has created a new consumer assistance website which allows users to submit inquiries electronically.  If you hablo Espanol, it’s also available in Spanish.

The DOL claims the new website provides easy access to useful information through links for resources/tools, hot topics, and publications. It also provides links to electronic forms where a user may “Ask a Question”, “Submit a Complaint”, or “Report a Problem.” EBSA seems to be serious about wanting to hear from consumers and give them assistance by promising to respond to all inquiries within three business days.

What does this mean for employers? The increased ease in which employees can submit complaints regarding their health and retirement plans to the DOL may lead in increased government scrutiny. Employers should now, more than ever, make it a point to respond to employee inquires quickly and adequately. If an employee is not satisfied with their employer’s response, they now have a quick means to complain to the government. Employers should also be sure to thoroughly document their responses to employee questions and complaints, including the rationale, just in case the DOL comes knocking.

Special Action Items for October

Special Action Items for October

October 13, 2011

Authored by: benefitsbclp

This is a brief reminder on common time-sensitive matters. We distribute these by email every month. If you would like to be added to the list, please comment below or email one of us. If you have questions, please call one of us. Thanks very much.

DEADLINES

Only a few days left to comply with these deadlines:

  • October 15, 2011 is the last day that a calendar-year plan can be corrected by amendment and in operation to address failure of the minimum coverage requirements of Code Section 410(b) and the general nondiscrimination requirements of Code Section 401(a)(4) in 2010. Has your plan received these tests from the plan’s recordkeeper?
  • 2011 third-quarter contributions to defined benefit plans must be made by October 15, 2011.
  • Calendar-year defined benefit plans with 100 or more participants are required to submit online premium filings to the PBGC by October 17, 2011. Special rules apply for new plans and plans with changed plan years. Click here for instructions.
  • For calendar-year plans that filed for an extension through Form 5558 by August 1, 2011, the 2010 Form 5500 must be filed by October 17, 2011.
  • The due date for the Form 5500 of a direct filing entity, such as a master trust, is 9? months after the end of the DFE’s fiscal year. For a direct filing entity with a calendar fiscal year, the filing deadline for the 2010 Form 5500 is October 17, 2011.

Other upcoming filing deadlines:

What Does Growing Wheat Have to do with Health Reform?

What Does Growing Wheat Have to do with Health Reform?

October 5, 2011

Authored by: benefitsbclp

I get a lot of clients, family members, friends, acquaintances, and random strangers who find out I’m a lawyer asking me what I think is going to happen to the health reform law when the lower court decisions are reviewed by the Supreme Court. Fortunately, unlike the various real estate, estate planning, or tort questions I get asked (mostly by family), this is a subject that I actually know a little about.(1) I am not a Constitutional Law expert, but it was one of my favorite classes in law school.

My personal opinion is that I do not think it or any part of it will be struck down. Others disagree, but they are forgetting that health reform has everything to do with growing wheat.(2)

Back in the 1930’s, FDR kept pushing New Deal reforms through Congress. When the laws were challenged before the Supreme Court, the Supreme Court struck many of them down on the grounds that Congress did not have the authority to enact such laws. FDR threatened to increase the size of the Supreme Court(3) and nominate friendly justices who would uphold the reforms and magically we received Wickard v. Filburn.(4)

In Wickard, an Ohio farmer, Roscoe Filburn, was challenging part of the Agriculture Adjustment Act of 1938.(5) The Act purported to regulate how much of Roscoe’s farm could be devoted to wheat production. Roscoe planted and harvested significantly more than he was allotted under the Act. He argued that the additional wheat was for his personal

Getting Ready for Open Enrollment

Getting Ready for Open Enrollment

September 16, 2011

Authored by: Serena Yee

The fall is the time many employers with calendar year group health plans begin to prepare for open enrollment.  Below is a list of required notices that employers should consider including in their enrollment materials.   

  • COBRA Notice.  Plan administrators must provide a written initial COBRA notice to each employee and his or her spouse when group health plan coverage first commences of his or her rights under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”).  This notice must contain specific information, and the Department of Labor has issued a model notice.
  • HIPAA Privacy Notice.  If the group health plan is required to maintain a notice of privacy practices under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the notice must be distributed upon an individual’s enrollment in the plan.  Notice of availability to receive another copy must be given every three years.
  • Special Enrollment Rights.  A group health plan must provide each employee who is eligible to enroll with a notice of his or her HIPAA special enrollment rights at or prior to the time of enrollment.  Among other things, this notice must describe the recently enacted rights afforded under the Children’s Health Insurance Program Reauthorization Act.
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