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Keeping Your (Top) Hat On

April 27, 2016

Authors

benefitsbclp

Keeping Your (Top) Hat On

April 27, 2016

by: benefitsbclp

Top Hat“Top hat” plans are plans employers maintain for a “select group of management or highly compensated employees.” These plans are exempt from many of ERISA’s protections, including eligibility, vesting, fiduciary responsibility and funding. Thus, they are often used to provide benefits to management employees over and above those provided under the company’s broad-based retirement plans.

Choosing which employees may participate in a “top hat” plan is an important decision, as selecting employees who are ineligible for this type of arrangement may lead to violations of ERISA, penalties, increased taxes, and other liabilities. For years companies, courts, and even the Department of Labor (DOL) have struggled with defining the group of employees who can participate in a “top hat” plan. Two recent federal court cases provide insight into the current state

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Fourth Circuit: Plan Administrator Must Obtain “Readily Available Information” in Claims Determination

December 30, 2014

Authors

Bard Brockman and Lisa Van Fleet

Fourth Circuit: Plan Administrator Must Obtain “Readily Available Information” in Claims Determination

December 30, 2014

by: Bard Brockman and Lisa Van Fleet

What is a plan administrator’s obligation under ERISA to seek and obtain information potentially relevant to a participant claim where the participant has not provided it? The Fourth Circuit recently provided guidance on that issue in the case of Harrison v. Wells Fargo Bank, N.A. A copy of that opinion is available here.

Nancy Harrison was an online customer service representative for Wells Fargo Bank. In 2011, she underwent a thyroidectomy to remove a large mass that had extended into her chest and which caused chest pain and tracheal compression. She was unable to work and received short-term disability benefits under the Wells Fargo plan. While she was recovering and waiting for a second, more invasive surgery, her husband died unexpectedly, triggering a recurrence of depression and post-traumatic stress disorder (PTSD) related to the death of her children in a house fire a few years before.

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Would’ve, Could’ve, Should’ve

August 29, 2014

Authors

benefitsbclp

Would’ve, Could’ve, Should’ve

August 29, 2014

by: benefitsbclp

Tatum v. RJR Nabisco Investment Committee, decided by the Fourth Circuit on August 4, involved the divestiture of the Nabisco stock funds following spin off of Nabisco.  Some 14 years after Nabisco and RJ Reynolds merged to form RJR Nabisco, the merged company decided to separate the food and tobacco businesses by spinning off the tobacco  business.  Following the spinoff, the RJR 401(k) plan, which was formed after the spinoff, provided for the Nabisco stock funds as frozen funds, which permitted participants to sell, but not purchase, Nabisco stock.

Although the Plan document provided for the Nabisco stock funds, RJR decided to eliminate the funds approximately 6 months following the spinoff.  The decision was made by a “working group” of several corporate employees and not by either of the fiduciary committees appointed to administer the Plan and review its investments.

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Kind of Halbig Deal

July 22, 2014

Authors

Chris Rylands

Kind of Halbig Deal

July 22, 2014

by: Chris Rylands

You may have heard about the potentially crippling blow to ACAMoney Puzzle (as some have described) dealt by a three-judge panel of the D.C. Circuit Court of Appeals today in Halbig v. Burwell.  Basically, a group of individuals and employers challenged the IRS rule that allowed tax credits to help pay for individual coverage through federally-run ACA marketplaces.  Their argument was that the literal reading of the statute only allowed these subsidies for individual policies purchased through state-run marketplaces.

At first blush, this might not sound all that important to employers, but it very well could be.  If this ruling holds, then it would undercut the ability of the IRS to impose the employer shared responsibility/“play or pay” penalties.

Recall

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Fourth Circuit Latest To Hold That Remand to Plan Administrator Is Not Immediately Appealable

May 2, 2012

Authors

Bard Brockman

Fourth Circuit Latest To Hold That Remand to Plan Administrator Is Not Immediately Appealable

May 2, 2012

by: Bard Brockman

The Fourth Circuit Court of Appeals recently joined five other judicial circuits in ruling that a district court’s remand of a benefits claim to the plan administrator is not immediately appealable. A copy of the Fourth Circuit’s decision in Dickens v. Aetna Life Ins. Co. (4th Cir. Apr. 20, 2012) can be viewed by clicking here. The ruling comes on the heels on a similar ruling by the Eleventh Circuit in Young v. Prudential Ins. Co. of Am., 671 F.3d 1213 (11th Cir. Feb. 21, 2012), which we summarized earlier.

In Dickens, the plaintiff applied for long-term disability benefits after being diagnosed with clinical depression, anxiety, insomnia, among other conditions. A predecessor plan administrator granted the LTD benefits in 2004. Four years later, the successor plan administrator, Aetna, terminated the benefits on the grounds that the plaintiff no longer suffered from a debilitating illness.

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Preventing Assignment of Health Plan Benefits

March 22, 2012

Authors

benefitsbclp

Preventing Assignment of Health Plan Benefits

March 22, 2012

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

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Are Unpaid Employer Contributions Considered Plan Assets?

December 8, 2011

Authors

benefitsbclp

Are Unpaid Employer Contributions Considered Plan Assets?

December 8, 2011

by: benefitsbclp

Department of Labor regulations provide that deductions for an employee’s wages are assets of an ERISA fund as soon as these amounts can be segregated from the employer’s general assets. While no similar regulations exist regarding unpaid employer contributions, a recent district court case concluded that case law has developed the following general rule in the context of a multiemployer plan: “unpaid employer contributions are not assets of a fund unless the agreement between the fund and the employer specifically and clearly declares otherwise.” West Virginia Laborers’ Pension Trust Fund v. Owens Pipeline Service LLC, S.D.W.Va., No. 2:10-cv-00131, Nov. 18, 2011 (citing ITPE Pension Fund v. Hall, 334 F.3d 1011, 1013 (11th Cir. 2003)).

In the Owens case, the defendant, the company president and sole shareholder of the corporation, decided to make payments on a piece of equipment instead of making contributions to four multiemployer pension

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