In This Issue:

• Federal Court Rules on Case Involving FMLA and COBRA
• Application and Instructions for Expedited Review of Denial of COBRA Subsidy
• EBSA Issues Final Rule on Disclosures to Multiemployer Plan Participants
• DOL Proposes New Investment Advice Rule
• TPA Determined to be ERISA Plan Fiduciary
• IRS Issues Private Letter Ruling Regarding Retiree Coverage for Non-Dependent Domestic Partner
• OCR Posts List of PHI Breaches Affecting More than 500
• State Updates: CT, IA and NY

Federal Court Rules on Case Involving FMLA and COBRA

The U.S. District Court for the Eastern District of Arkansas issued a ruling in the case of Hearst v. Progressive Foam Technologies, Inc., 2010 WL 143751 (E.D. Ark. 2010), in which an employee was terminated after exhausting all leave under the Family Medical Leave Act (FMLA). The court opined that the employer provided clear instructions requiring the employee to provide updates of his status and return-to-work dates. Since the employee did not provide this update and did not show up for work on his expected return date, the employer terminated his employment. The court determined that his termination was not a violation of his rights under FMLA, but rather his termination was merited by his violation of the employer's leave policy. The employee also asserted that the employer failed to notify of his COBRA rights following termination of employment. However, sufficient evidence in the form of date stamped records was provided to the court which proved that the COBRA notice was mailed to the employee's correct address two days following his termination. This created a presumption of receipt, despite the employee stating that he never received the notice.

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Application and Instructions for Expedited Review of Denial of COBRA Subsidy

Both the Department of Labor (DOL) and Centers for Medicare & Medicaid Services (CMS) have updated their websites to include an updated application and instructions to be used by individuals requesting a review of a denial of a COBRA premium subsidy. The DOL is required to make a determination within 15 business days after receipt of an application for review. The CMS website applies to individuals covered by group health plans of federal, state, and local government employers or group health plans subject to comparable state law.

Click here to view DOL website for use by participants covered by COBRA.

Click here to view CMS website for use by participants covered by governmental or state continuation coverage.

EBSA Issues Final Rule on Disclosures to Multiemployer Plan Participants

The DOL's Employee Benefits Security Administration (EBSA) has issued a final rule on the disclosure of funding and other financial information to workers participating in multiemployer retirement plans.

The regulation requires the administrator of a multiemployer pension plan to furnish copies of requested financial and actuarial reports of the plan, on the written request of any plan participant, beneficiary, employee representative or any employer that has an obligation to contribute to the plan. Periodic actuarial reports, quarterly, semi-annual, or annual financial reports, and certain applications filed with the Secretary of the Treasury and related determinations (amortization extensions) are required to be provided upon request. A plan administrator must furnish the requested documents within 30 days from the request. The Secretary of Labor may assess a civil penalty against any person of up to $1,000 a day for each violation. A plan is not required to provide more than one copy of any document during any one 12-month period, and it may impose a reasonable charge on the requester to cover the cost of copying and mailing a document. This rule is published in the March 2, 2010 Federal Register and is effective on April 1, 2010.

Click here to view the text of the regulation.

Click here to view a fact sheet.

DOL Proposes New Investment Advice Rule

The DOL has issued a new proposed rule regarding investment advice as required to be issued pursuant to the Pension Protection Act (PPA). Although investment advice guidance incorporating other provisions had previously been issued, delayed several times, and then withdrawn, this proposed advice is limited to the implementation of the PPA statutory exemption relating to investment advice.

The proposed regulation allows investment advice to be given under the statutory exemption in two ways. The first is through the use of a computer model certified as unbiased. The other way is through an adviser compensated on a level-fee basis, meaning that the fees do not vary based on investments selected by the participant. The purpose of the proposed regulation is to benefit plan participants by facilitating the availability of quality, expert investment advice to more retirement plan participants.

The regulation contains some key safeguards and conditions, according to the fact sheet, including such items as recordkeeping requirements, unbiased selection and certification of computer models used and selected independently by plan fiduciaries, clarification of fees received by advisers, and establishing an annual audit and requiring disclosures to plan participants.

The proposed rule is published in the Federal Register dated March 2, 2010 and is open to comments until May 5, 2010.

Click here to view the text of the regulation.

Click here to view a fact sheet.

TPA Determined to be ERISA Plan Fiduciary

Loomis Co. was the third party claims administrator (TPA) for a group health plan sponsored by Hartsfield, Titus, & Donnelly LLC. Loomis Co. paid infertility and mental health related claims in excess of the plan's limitations. The plan sponsor Hartsfield sued Loomis for breach of fiduciary duty. Loomis argued that they were not a plan fiduciary as stated in their service agreement. The U.S. District Court of New Jersey ruled that Loomis was a fiduciary of the plan because it exercises discretionary control over the plan's assets. The Court further stated that a fiduciary is determined to be such because of the duties it performs and it cannot disclaim its fiduciary status in an agreement or otherwise.

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IRS Issues Private Letter Ruling Regarding Retiree Coverage for Non-Dependent Domestic Partner

In Private Letter Ruling 201003007, the IRS reviewed a union-negotiated retiree health plan. Employees pre-funded the health plan with pre-tax contributions for coverage for themselves, spouses, domestic partners, and tax dependents. The IRS ruled that the contributions for a domestic partner must be treated as taxable income if the domestic partner is not a tax dependent under Section 152 of the Internal Revenue Code.

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OCR Posts List of PHI Breaches Affecting More than 500

As required by the Health Information Technology for Economic and Clinical Health (HITECH) Act, the Office of Civil Rights (OCR) under the Department of Health and Human Services has posted on its website a list of entities that have experienced a security breach of unsecured protected health information. The list includes the name of the entity, the date of the breach, the type of information breached, and the number of affected individuals. This serves as a reminder for group health plans and business associates to implement the proper procedures to safeguard participant PHI.

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This material was created by NFP, its subsidiaries, or affiliates for distribution by their Registered Representatives, Investment Advisor Representatives, and/or Agents. This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP Securities, Inc. nor NFP Benefits Partners offer legal or tax services. The information contained in this edition is issued for informational purposes only and has been collected from regulations, statutes, laws, court decisions and administrative rulings and should not be viewed as interpretation or relied upon as legal or tax advice. This information is known to be current as of the initial date of distribution. Please note that changes to the legislation, regulations, statutes, policies, etc., may have occurred and are not reflected herein.

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