A million dollar plus backpay award announced by the Occupational Health & Safety Administration (OSHA) reminds U.S. employer of the growing importance of taking steps to manage whistleblower and other retaliation claims when dealing with employees who have reported possible safety, discrimination or other activities protected under Federal or state whistleblower or other anti-retaliation laws.

On January 17, 2012, OSHA issued an order requiring  AirTran Airways AirTran Airways, a subsidiary of Dallas, Texas-based Southwest Airlines Co., to reinstate and pay more than $1 million in backpay plis interest and compensatory damages to a former pilot who charged AriTran fired him in retaliation for his reporting numerous mechanical concerns.

According to OSHA, the reinstatement and backpay award follows an investigation by OSHA’s Whistleblower Protection Program in which OSHA found reasonable cause to believe that the termination of the pilot, whose name is withheld as part of OSHA’s policy, was an act of retaliation in violation of the whistleblower provision of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, known as AIR21.

According to OSHA, the pilot’s complaint alleged that the airline removed him from flight status on Aug. 23, 2007, pending an investigative hearing regarding a sudden spike in the pilot’s mechanical malfunction reports, or PIREPS. The airline held an internal investigative hearing on Sept. 6, 2007, that lasted 17 minutes. Seven days later, the airline terminated the pilot’s employment, claiming that he did not satisfactorily answer a question regarding the spike in reports. OSHA found that the pilot did not refuse to answer any questions during the hearing, answers to questions were appropriate, and the action taken by the airline was retaliatory.

Either party to the case can file an appeal with the Labor Department’s Office of Administrative Law Judges, but such an appeal does not stay the preliminary reinstatement order.

AirTran Airways is a subsidiary of AirTran Holdings Inc. with headquarters in Orlando. On May 2, 2011, Southwest Airlines completed the acquisition of AirTran Holdings Inc. and now operates AirTran Airways as a wholly-owned subsidiary.

OSHA enforces the whistleblower provision of AIR21, as well as 20 other statutes protecting employees who report violations of various securities, trucking, workplace health and safety, nuclear, pipeline, environmental, rail, maritime, health care, consumer product and food safety laws.  Employees who believe that they have been retaliated against for engaging in protected conduct may file a complaint with the secretary of labor for an investigation by OSHA’s Whistleblower Protection Program.

These whistleblower and anti-retaliation provisions are just a small fraction of the growing list of federal and state laws that provide whistleblower or other anti-retaliation protections to employees and others for reporting known or suspected violations or engaging in other activities protected by the applicable law.  Other examples include federal employment discrimination, securities, tax, customs, immigration, labor, family or military leave, employee benefits, privacy, antitrust, and a wide range of other laws.  Because the prior reporting of information or other exercise or attempted exercise of protected rights often can create presumptions which employers may be required to rebut to avoid whistleblower or other liability under many of these laws, employees increasingly make claims or point to prior reports or activities as a means of challenging or disputing termination or other undesired employer actions. 

To better position themselves to prevent or defend against these types of claims, employers need to be prepared both to demonstrate the appropriateness of their employment and discipline actions, as well as to rebut claims of retaliation.  As part of these efforts, employers among other things should:

Carefully document and administer employee hiring, promotion, discipline and other practices to document their administration in accordance with applicable law based on valid performance based business justifications;

Clearly communicate and educate management and other employees about the employer’s policies against retaliation and procedures for reporting suspected problems;

Review employee terminations and other actions for patterns or other evidence of correlation to prior protected activities by employees that might evidence potential discrimination or other retaliation;

Establish and communicate clear procedures for reporting potential legal or policy violations that might for the basis of retaliation or whistleblower claims;

Conduct prompt, well-documented investigations of all reports of potential compliance or safety concerns, as well as retaliation claims;

Give clear, well-documented instructions to managers and others involved in investigations or other compliance efforts against retaliation or other misconduct;

Establish and administer monitoring and oversight processes and procedures for possible retaliation or other misconduct against protected parties; and

Provide exit interview and other opportunities for employees to share possible retaliation or other concerns with responsible management trained to properly investigate and redress these concerns. 

For Help or More Information

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

• HHS Chides Trustmark Life Insurance Company For “Excessive” Health Premium Increases After Affordable Care Act Rate Audit
• Labor Department Final Rule Defines Recreation Vehical For Longshore & Harbor Workers’ Compensation Act
• Portion of Health Care Costs Paid By Government Programs Rose As Employer Provided & Other Private Health Care Coverage Declined In 2010
• Manufacturer’s Excessive I-9 Documentation Triggers Discrimination Liability
• Comment Deadline 1/31 On HHS Plan To Let States Define ACA “Essential Benefits” That Concerns Many
• Stamer Dallas Bar Journal Article Cautions Employers Must Take Holistic Approach To Address Worker Misclassification Risks
• Employers Urged To Strengthen Worker Classification Defenses As Obama Administration Targets Employers Misclassifying Workers
• 2/27 Deadline For Employers To Comment On DOL Proposed Rule Changes Extending Minimum Wage & Overtime Rules To More Home Caregiver Workers
• NLRB Changes Certification Election Case Procedures
• NLRB Delays Deadline For Employee Labor Rights Poster Requirement To April 30
• New Labor Department Retaliation Guidance Reminder Of Retailiation Risks
• HR Key Player In Managing Countrywide & Other US Discrimination Exposures
• Senator Tells IRS To Fix Proposed Health Care Exchange Premium Tax Credit Regulations
• Labor Department Proposes Changing Minimum Wage & Overtime Rules For Home Caregivers, Keeps Heat On Health Care Employers
• IRS Urges Preparers to Renew PTINs for 2012
• OFCCP Proposed Increased Disability Hiring Targets, Other Tougher Government Contractor Rules another Sign Of Rising Employment Discrimination Risks
• New Guidance On Fiduciary Duties In Handling ACA Group Health Plan Premium Rebates Highlight Advisability Of Tightening Funding Terms & Fund Handling Practices To Manage Fiduciary Risks
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• Insurer Fights Back To HHS Characterization of its Premium Increases As “Excessive”
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• Group Health Plans & Insurer To Get More Time To Meet Affordable Care Act Summary of Benefits and Coverage Requirements
• CMS Final Medicare Rule Imposes Many Conditions On Access To Medicare Claims Data To Evaluate Providers & Suppliers
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• OSHA Silo Safety Citations Heads Up To Grain Operators To Manage Safety
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• EBSA Releases Collection of New M-1 and Other Guidance Impacting Multiple Employer Welfare Plans
• New Obama Administration Affirmative Action Guidance Highlights Organization’s Need To Tighten Nondiscrimination Practices
• Incentives To Get Employee Into Wellness Education Requires Legal Risk Management
• HR Key Player In Managing Rising Risk of Disability, Other Discrimination Suits Under Obama Administration Justice Department
• HHS Chides Insurer For “Excessive” Premium Increases After Affordable Care Act Rate Audit
• IRS U-Tube Video Discusses 2012 Flexible Benefit Plan Rule Change
• Big Penalty for Lender Shows Risks of Violating Military Service or Vets Rights
• OCR 1st HIPAA Privacy, Security & Breach Notification Compliance Audits Begin
• Employers Face New Labor-Management Exposures Under Activist National Labor Relations Board
• Unions Gaining New Power From National Labor Relations Board’s New Activism 
• IRS Exempts Enrolled Retirement Plan Agents From PTIN Requirement

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources available at www.solutionslawpress.com. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2011 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press. All other rights reserved.

HHS Secretary Kathleen Sebelius announced today (January 12, 2012) HHS considers to be unreasonable premium rate increases proposed by Trustmark Life Insurance Company in five states—Alabama, Arizona, Pennsylvania, Virginia, and Wyoming.  According to HHS, the allegedly excessive rate hikes would affect nearly 10,000 residents across these five states.

According to HHS, a review of the health insurance premium disclosures filed by Trustmark Life Insurance Company here found that Trustmark has raised rates by 13 percent in these five states.  For small businesses in Alabama and Arizona, when combined with other rate hikes made over the last 12 months, HHS claims rates have increased by 27.2 percent and 18.1 percent, respectively.   According to HHS, HHS says that an independent review engaged by HHS found that the rate increases were unreasonable because the insurer “would be spending a low percent of premium dollars on actual medical care and quality improvements, and because the justifications were based on unreasonable assumptions.”  HHS is calling upon Trustmark Health Insurance Company to rescind the rates and issue rebates to consumers or publically explain its refusal to do so.  The new rate review procedures allow Trustmark Health Insurance Company and other carriers accused by HHS of making unreasonable rate increases various options to dispute the charges

The rate review and reduction demand by HHS reflects its efforts to use its “rate review” authority from the Affordable Care Act to discourage health insurers from raising health insurance premiums by more than 10 percent.  HHS requires health insurers to notify HHS of rate increases over 10 percent and justify these increases. HHS generally views health insurance premium increases of more than 10 percent as unreasonable.  Under these new rate review powers,

Under the new rate review rules, HHS has the power to review proposed rate reviews and to report its findings but does not have the direct authority to force health insurers to limit premium increases to less than 10 percent or to impose legal or administrative sanctions directly against insurers for making what HHS views as unreasonable premium increases. However, as many as 37 states have the authority to regulate or reject unreasonable premium increases.  In the absence of direct authority to regulate insurer rates, HHS uses its ability to publicize its rate review determinations to invite state regulators and the public to apply pressure to insurers to keep down rate increases. 

In today’s announcement, HHS credits its new rate review powers with helping to prevent health insurance premium increases,  According to HHS, states with the power to regulate insurer premiums increasingly are using this authority.  Examples of how states have used this authority include:

• In New Mexico, the state insurance division denied a request from Presbyterian Healthcare for a 9.7 percent rate hike, lowering it to 4.7 percent;
• In Connecticut, the state stopped Anthem Blue Cross Blue Shield, the state’s largest insurer, from hiking rates by a proposed 12.9 percent, instead limiting it to a 3.9 percent increase;
• In Oregon, the state denied a proposed 22.1 percent rate hike by Regence, limiting it to 12.8 percent.
• In New York, the state denied rate increases from Emblem, Oxford, and Aetna that averaged 12.7 percent, instead holding them to an 8.2 percent increase.
• In Rhode Island, the state denied rate hikes from United Healthcare of New England ranging from 18 to 20.1 percent, instead seeing them cut to 9.6 to 10.6 percent.
• In Pennsylvania, the state held Highmark to rate hikes ranging from 4.9 to 8.3 percent, down from 9.9 percent.

 Targeting health insurers proposing rate increases of 10 or more percent is likely to result in a significant number of reviews.  A Kaiser Family Foundation Employer Health Benefits 2011 Annual Survey found average premiums increased 8% for single coverage and 9% for family coverage through May, 2011.

Companies that HHS finds have made excessive rate increases can either reduce their rate hikes or post a justification on their website within 10 days of the rate review determination.

 For More Information Or Assistance

If you need help reviewing or updating your health benefit program for compliance with ACA or other laws or with any other employment, employee benefit, compensation or internal controls matter, please contact the author of this article, attorney Cynthia Marcotte Stamer.

A 2011 inductee to the American College of Employee Benefits Council, immediate past-Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPPT Employee Benefits & Other Compensation Arrangements, an ABA Joint Committee on Employee Benefits Council Representative, the ABA TIPS Employee Benefit Plan Committee Vice Chair, former ABA Health Law Section Managed Care & Insurance Interest Group Chair, past Southwest Benefits Association Board Member, Employee Benefit News Editorial Advisory Board Member, and a widely published speaker and author,  Ms. Stamer has more than 24 years experience advising businesses, plans, fiduciaries, insurers. plan administrators and other services providers,  and governments on health care, retirement, employment, insurance, and tax program design, administration, defense and policy.   Nationally and internationally known for her creative and highly pragmatic knowledge and work on health benefit and insurance programs, Ms. Stamer’s  experience includes extensive involvement in advising and representing these and other clients on ACA and other health care legislation, regulation, enforcement and administration. 

Widely published on health benefit and other related matters, Ms. Stamer’s insights and articles have appeared in HealthLeaders, Modern Health Care, Managed Care Executive, the Bureau of National Affairs, Aspen Publishers, Business Insurance, Employee Benefit News, the Wall Street Journal, the American Bar Association, Aspen Publishers, World At Work, Spencer Publications, SHRM, the International Foundation, Solutions Law Press and many others.

For additional information about Ms. Stamer and her experience, see www.CynthiaStamer.com.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

• Portion of Health Care Costs Paid By Government Programs Rose As Employer Provided & Other Private Health Care Coverage Declined In 2010
• Manufacturer’s Excessive I-9 Documentation Triggers Discrimination Liability
• Comment Deadline 1/31 On HHS Plan To Let States Define ACA “Essential Benefits” That Concerns Many
• Stamer Dallas Bar Journal Article Cautions Employers Must Take Holistic Approach To Address Worker Misclassification Risks
• Employers Urged To Strengthen Worker Classification Defenses As Obama Administration Targets Employers Misclassifying Workers
• 2/27 Deadline For Employers To Comment On DOL Proposed Rule Changes Extending Minimum Wage & Overtime Rules To More Home Caregiver Workers
• NLRB Changes Certification Election Case Procedures
• NLRB Delays Deadline For Employee Labor Rights Poster Requirement To April 30
• New Labor Department Retaliation Guidance Reminder Of Retailiation Risks
• HR Key Player In Managing Countrywide & Other US Discrimination Exposures
• Senator Tells IRS To Fix Proposed Health Care Exchange Premium Tax Credit Regulations
• Labor Department Proposes Changing Minimum Wage & Overtime Rules For Home Caregivers, Keeps Heat On Health Care Employers
• IRS Urges Preparers to Renew PTINs for 2012
• OFCCP Proposed Increased Disability Hiring Targets, Other Tougher Government Contractor Rules another Sign Of Rising Employment Discrimination Risks
• New Guidance On Fiduciary Duties In Handling ACA Group Health Plan Premium Rebates Highlight Advisability Of Tightening Funding Terms & Fund Handling Practices To Manage Fiduciary Risks
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• Insurer Fights Back To HHS Characterization of its Premium Increases As “Excessive”
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• Group Health Plans & Insurer To Get More Time To Meet Affordable Care Act Summary of Benefits and Coverage Requirements
• CMS Final Medicare Rule Imposes Many Conditions On Access To Medicare Claims Data To Evaluate Providers & Suppliers
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• EBSA Releases Collection of New M-1 and Other Guidance Impacting Multiple Employer Welfare Plans
• New Obama Administration Affirmative Action Guidance Highlights Organization’s Need To Tighten Nondiscrimination Practices
• Incentives To Get Employee Into Wellness Education Requires Legal Risk Management
• HR Key Player In Managing Rising Risk of Disability, Other Discrimination Suits Under Obama Administration Justice Department
• HHS Chides Insurer For “Excessive” Premium Increases After Affordable Care Act Rate Audit
• Big Penalty for Lender Shows Risks of Violating Military Service or Vets Rights
• OCR 1st HIPAA Privacy, Security & Breach Notification Compliance Audits Begin
• Employers Face New Labor-Management Exposures Under Activist National Labor Relations Board
• Unions Gaining New Power From National Labor Relations Board’s New Activism 

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources available at www.solutionslawpress.com. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2011 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press. All other rights reserved.

National Health Expenditures 2010 Highlights

U.S. health care spending grew 3.9 percent in 2010.  Coupled with record slow growth of 3.8 percent in 2009; the 2009-2010 represents the two slowest rates of growth in the fifty-one year history of the National Health Expenditure Accounts.  The Report reflects the following breakdown of these expenditures;

• Hospital Care: Hospital spending increased 4.9 percent to $814.0 billion in 2010 compared to 6.4-percent growth in 2009. Average annual growth in hospital spending between 2007 and 2010 was 5.5 percent. CMS reports this increase was slower than the trend between 2003 and 2006, when spending increased an average of 7.4 percent per year.  Growth in private health insurance spending for hospital services, which in 2010 accounted for 35 percent of all hospital care, slowed considerably in 2010.  The Report states that these trends occurred at the same time median inpatient hospital admissions declined and emergency department and outpatient hospital visits grew more slowly than in 2009.
• Physician and Clinical Services: Spending on physician and clinical services increased 2.5 percent in 2010 to $515.5 billion, a deceleration from 3.3-percent growth in 2009. The 2010 deceleration reflects a decline in utilization, driven by a drop in total physician visits between 2009 and 2010 and a less severe flu season than in 2009.
• Other Professional Services: Spending for other professional services, which includes providers of services such as physical therapy, chiropractic medicine, and mental health, decelerated slightly in 2010, increasing 3.6 percent to $68.4 billion after growth of 3.8 percent in 2009.
• Dental Services: Spending for dental services increased 2.3 percent in 2010 to $104.8 billion compared to growth of only 0.1 percent in 2009. Out-of-pocket spending for dental services (which accounts for over 40 percent of dental spending) increased 0.5 percent in 2010 following a decline of 5.2 percent in 2009.
• Other Health, Residential, and Personal Care Services: Spending for other health, residential, and personal care services grew 5.3 percent in 2010 to $128.5 billion, a deceleration from growth of 7.7 percent in 2009. This category includes expenditures for medical services delivered in non-traditional settings (such as schools or community centers), ambulance providers, and residential mental health and substance abuse facilities.
• Home Health Care: Spending growth for freestanding home health care services slowed in 2010, increasing 6.2 percent to $70.2 billion following growth of 7.5 percent in 2009, as Medicare and Medicaid spending growth slowed in 2010.
• Nursing Care Facilities and Continuing Care Retirement Communities: Spending for freestanding nursing care facilities and continuing care retirement communities increased 3.2 percent in 2010 to $143.1 billion, a deceleration from growth of 4.5 percent in 2009, driven by slower growth in Medicare and Medicaid spending.
• Prescription Drugs: Retail prescription drug spending grew only 1.2 percent to $259.1 billion in 2010, a substantial slowdown from 5.1-percent growth in 2009. The slowdown was driven by slower growth in the volume of drugs consumed, a continued increase in the use of generic medications, loss of patent protection for certain brand name drugs, fewer new drug introductions, and a substantial increase in Medicaid prescription drug rebates.
• Durable Medical Equipment: Spending for durable medical equipment, which includes items such as eyeglasses, contacts and hearing aids, increased 7.3 percent to $37.7 billion in 2010 after increasing 0.8 percent in 2009.
• Other Non-durable Medical Products: Spending for other non-durable medical products, such as over-the-counter medicines, reached $44.8 billion, an increase of 2.6 percent in 2010, the same rate of growth as in 2009.

 Health Spending by Major Sources of Funds

The Report indicates that the portion of health care expenditures financed by private health insurance continued to decline as private health plan enrollment declined.  As a result, the proportion of health care expenditures paid by government programs continued to rise.  The federal government financed 29 percent of total health spending in 2010, a substantial increase from its share of 23 percent in 2007. Meanwhile, the shares of the total health care bill financed by state and local governments (16 percent), private businesses (21 percent), and households (28 percent) declined during the same time period.  Specifically, the Report indicates the following:

• Medicare: Medicare spending grew 5.0 percent in 2010 to $524.6 billion, a deceleration from growth of 7.0 percent in 2009. Spending for fee-for-service (FFS) Medicare grew 5.0 percent in 2010 following growth of 4.5 percent in 2009. Medicare Advantage (MA) spending increased 4.7 percent in 2010, a steep deceleration from 15.6-percent growth in 2009 that resulted from an adjustment to payment rates in 2010.
• Medicaid: Total Medicaid spending grew 7.2 percent in 2010 to $401.4 billion, a deceleration from 8.9-percent growth in 2009, driven primarily by slower growth in enrollment. Federal Medicaid expenditures increased 8.9 percent, while state Medicaid expenditures grew 3.9 percent. This difference in growth was due to approximately $41 billion in enhanced federal aid to states—a result of increased Federal Medical Assistance Percentages (FMAP) mandated by the American Recovery and Reinvestment Act of 2009 (ARRA).
• Private Health Insurance: Growth in total spending for private health insurance premiums slowed in 2010 to 2.4 percent from 2.6 percent in 2009, continuing a deceleration that began in 2003. Growth in aggregate benefit payments also slowed, from 3.7 percent in 2009 to 1.6 percent in 2010. The slowdown reflects a decline in private health insurance enrollment, increases in cost sharing, and a shift by some consumers to plans with lower premiums. However, for the first time in seven years, growth in total premiums exceeded growth in total benefits; as a result, the private health insurance net cost ratio increased from 11.4 percent in 2009 to 12.1 percent in 2010.
• Out-of-Pocket: Out-of-pocket spending grew 1.8 percent in 2010, an acceleration from growth of 0.2 percent in 2009. Faster growth in 2010 partially reflects higher cost-sharing requirements for some employers, consumers’ switching to plans with lower premiums and higher deductibles and/or copayments, and the continued loss of health insurance coverage.

The Report found household health care spending equaled $725.5 billion in 2010 and represented 28 percent of total health spending, slightly lower than its 29 percent share in 2007.  Growth in total private health insurance premiums slowed in 2010 to 2.4 percent from 2.6 percent in 2009, continuing a slowdown that began in 2003.  Despite this deceleration, for the first time in seven years, the growth in premiums exceeded the growth in insurer spending on health care benefits, with the net cost of insurance increasing by 8.4 percent or $11.3 billion in 2010. Out-of-pocket spending by consumers increased 1.8 percent in 2010, accelerating from 0.2-percent growth in 2009. 

The state and local government share of total health spending declined from 18 percent in 2007 to 16 percent in 2010 and totaled $421.1 billion, in part due to the temporary assistance in the Recovery Act.

 Project COPE: Coalition On Patient Empowerment & Coalition For Responsible Health Care Quality

Project COPE: Coalition on Patient Empowerment & the Coalition for Responsible Health Care Quality  are coalitions of individuals and organizations that share the belief that every American and American organization has a stake, and something to contribute to our ability to find and implement the best options for ensuring that the U.S. health care system provides quality, affordable health care.

Health care impacts every individual and every organization in America.  Consequently, every American citizen and organization including but not limited to health care providers, employers, insurer, and community organizations should take part.    The government, health care providers, insurers and community organizations can help by providing education and resources to make understanding and dealing with the realities of illness, disability or aging easier for a patient and their family, the affected employers and others. At the end of the day, however, caring for people requires the human touch.  Americans can best improve health care by not waiting for someone else to step up or speak up. 

Project COPE urges and invites each individual and organization speak up to help communicate and act to make health care work for themselves, their families and others when you can and share your input to help preserve and continue to develop real meaningful improvements to our health care system by joining Project COPE: Coalition for Patient Empowerment here by sharing ideas, tools and other solutions and other resources. 

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters. 

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals.  A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns. 

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations.   She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications.   You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

• New Guidance On Fiduciary Duties In Handling ACA Group Health Plan Premium Rebates Highlight Advisability Of Tightening Funding Terms & Fund Handling Practices To Manage Fiduciary Risks
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• DFW Hospital Council Foundation Among 26 Organizations Selected To Lead Quality Effort
• Group Health Plans & Insurer To Get More Time To Meet Affordable Care Act Summary of Benefits and Coverage Requirements
• CMS Final Medicare Rule Imposes Many Conditions On Access To Medicare Claims Data To Evaluate Providers & Suppliers
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• OSHA Silo Safety Citations Heads Up To Grain Operators To Manage Safety
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• EBSA Releases Collection of New M-1 and Other Guidance Impacting Multiple Employer Welfare Plans
• New Obama Administration Affirmative Action Guidance Highlights Organization’s Need To Tighten Nondiscrimination Practices
• Incentives To Get Employee Into Wellness Education Requires Legal Risk Management
• HR Key Player In Managing Rising Risk of Disability, Other Discrimination Suits Under Obama Administration Justice Department
• HHS Chides Insurer For “Excessive” Premium Increases After Affordable Care Act Rate Audit
• IRS U-Tube Video Discusses 2012 Flexible Benefit Plan Rule Change
• Employers Considering Using New IRS Voluntary Worker Classification Settlement Program To Resolve Payroll Tax Risks Must Also Manage Other Legal Exposures
• Participant Notification Added To Required Procedures For Church Plan Determination Letter Requests
• HHS Credits Affordable Care Act Adult Dependent Child Coverage Rule With Getting 1 Million Young Adults Health Coverage
• 2010 Webcast Series on Federal Employer Employment of Persons With Disabilities Planned
• EBSA Plans To Include Health Care Reform Compliance In Health Plan Audits Beginning In FY 2012; Disputes OIG Criticism Of ACA Enforcement Efforts
• New Labor Department Video Tries To Educate Young Workers About Benefits & Benefit Rights
• Employer Assistance and Resource Network Offers Free Webinars For Employers During October In Honor of Disability Employment Awareness Month on Thursdays in October from 2:00 – 2:30 p.m. Eastern Time. Topics will include Employer Preparedness to Include Veterans with Disabilities
• HHS Projects Medicare Advantage Enrollment Will Rise As Premiums Decline In 2012; Plans Face Increased Regulation & Enforcement
• HHS Credits Health Reform For Getting Health Coverage For Added 1 Million Young Adults
• 4th Circuit Rejects Two Challenges To Affordable Care Act Constitutionality
• Stamer Named Fellow In American College of Employee Benefits Counsel
• ABA TIPS Section Appoints Cynthia Marcotte Stamer Vice Chair of Employee Benefits General Committee
• Affordable Care Act To Require Health Plans Cover Contraception & Other Women’s Health Procedures In 2012
• Company Executives, Plan Sponsors & Others May Face Personal Liability When Others Defraud Plans or Mismanage Employee Benefit Plan Responsibilities
• EEOC Finalizes Updates To Disability Regulations In Response to ADA Amendments Act: Employers Should Manage Risks  
• Employer Charged With Misclassifying & Underpaying Workers To Pay $754,578 FLSA Back pay Settlement
• HHS Imposes 1st HIPAA Privacy Civil Penalty of $4.3 Million
• NLRB Settlement Shows Care Necessary When Employers Use Social Networking & Other Policies Restricting Employee Communications
• Wage & Hour Law Settlements Highlight Rising Wage & Hour Risks of U.S. Employers
• OCR Requires Rhode Island DHS To Provide Translation, Other Services For Limited English, Other Language Impaired Accommodations
• Incentives To Get Employee Into Wellness Education Requires Legal Risk Management
• HHS Chides Insurer For “Excessive” Premium Increases After Affordable Care Act Rate Audit
• Bill Extending Funding For Certain Veteran Medical and Other Projects Heads To President
• Texas Health Care Organizations Among 26 Organizations Receiving Awards To Promote Health Care Quality, Safety & Affordability
• Education Key To Helping Low-Income Families Make Better Health Choices
• Poor Planning & Execution Often Tank Wellness Programs
• Health Care Reform’s Pre-Existing Condition Insurance Plan Covers Fewer Than 50,000 of Millions With Pre-Existing Conditions
• Personal Responsibility: How Should It Play Into Who Gets Help Under Health Care Reform?
• ONC Awards Key Contract To Develop Patient Electronic Consent Trial Project
• Finding Ways To Pay For Mental Health: Kaiser Studies Examine Medicaid & Other Mental Health Financing Needs & Options
• Recap of IRS Employee Plans 2011 1st Quarter Guidance
• CMS Adds “Physician Compare” Feature To Healthcare Provider Directory
• Join Project COPE: Help Develop Real Tools To Meaningfully Empower Patients & Improve Health Care Access, Affordability & Quality

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources available at ww.solutionslawpress.com. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2011 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.

NTHCPA members and friends invited to attend the celebration!

The settlement highlights the growing activism of the Obama Administration in prosecuting national origin discrimination againstU.S.businesses and government agencies, as well as the careful tightrope that U.S.employers must walk to comply with federal employment eligibility verification (I-9) requirements without engaging in improper discrimination.

Garland Settlement

The Justice Department announced December 30^th thatGarland has agreed to pay $10,000 in back pay and civil penalties, and to undergo training on proper employment eligibility verification practices to resolve allegations of illegal national origin discrimination and retaliation against Hispanics. 

The Justice Department had charged Garland violated federal discrimination laws by imposing unnecessary documentary requirements on individuals of Hispanic origin when establishing their eligibility to work in the United States, and by retaliating against a worker for protesting his discriminatory treatment. 

According to the Justice Department complaint, when a naturalized U.S. citizen of Hispanic descent, applied for a job with Garland in May 2009, he presented his unexpired driver’s license and an unrestricted Social Security card—a combination of documents sufficient to prove his identity and his authorization to work in the United States. The complaint alleged that Garland demanded that the he provide his “green card,” even thoughU.S.citizens do not have green cards to prove eligibility to work.   When Garland made further requests for documents, the worker objected to the company’s demands. Garland then rescinded the job offer.   The worker, along with another individual who was denied employment with Garland when the company rejected the individual’s valid documentation, will receive full back pay out of the $10,000 settlement.

The Justice Department’s complaint also charged that Garland required newly hired non-U.S. citizens and foreign-bornU.S.citizens to present specific and added work authorization documents beyond those required by federal law.   While the Immigration and Nationality Act (INA) requires that all employers require employees to present proof of eligibility to work as a condition of employment, it also specifically dictates what collection of documentation that employers must accept as establishing eligibility to work absent some culpable knowledge by the employer of the falsity of the documentation.  Employers that fail to collect and keep the required documentation face significant civil and criminal liability. 

While meeting the required I-9 documentation requirements is a critical responsibility, employers also must exercise care to avoid imposing excessive documentation requirements that would violate the INA’s non-discrimination rules. 

The INA requires employers to treat all authorized workers in the same manner during the hiring process, regardless of their national origin or citizenship status.   In the absence of factual evidence that would cause an employer to reasonably question the validity of documentation that otherwise would satisfy the I-9 documentation requirements, employers generally must accept any combination of documents sufficient to establish eligibility to work under the I-9 rules as sufficient.   

Discrimination Obama Administration Priority

Enforcing discrimination laws is a high priority of the Obama Administration.  Business leaders increasingly must recognize the need to tighten procedures to manage discrimination risks.  

The Garland settlement joins a lengthy list of settlements and other actions by the Obama Administration against businesses and government entities for alleged violations of U.S.civil rights and other nondiscrimination laws.  See, e.g. New Obama Administration Affirmative Action Guidance Highlights Organization’s Need To Tighten Nondiscrimination Practices; OFCCP Proposed Increased Disability Hiring Targets, Other Tougher Government Contractor Rules another Sign Of Rising Employment Discrimination Risks;  Incentives To Get Employee Into Wellness Education Requires Legal Risk Management; New School Racial Accommodation Guidance Gives Important Insights For Schools & Other Organizations On Obama Administration Affirmative Action Enforcement; Justice Department Landlord Suit Shows Businesses Face Rising Disability Discrimination Enforcement Risks.

These regulatory, audit, enforcement and other actions show that private businesses and state and local government agencies alike should exercise special care to prepare to defend their actions against potential disability or other Civil Rights discrimination challenges.  All organizations, whether public or private need to make sure both that their organizations, their policies, and people in form and in action understand and comply with current disability and other nondiscrimination laws.  When reviewing these responsibilities, many state and local governments and private businesses may need to update their understanding of current requirements.

Because the scope and applicability of disability and various other federal nondiscrimination and other laws have been expanded or modified in recent years by statutory, regulatory or enforcement changes, risk management efforts should begin with an assessment of the adequacy of existing policies and practices in light of the latest rules and enforcement actions.  Based on this assessment, business and governmental organizations should update policies and procedures as required, tighten documentation, and conduct ongoing, well-documented audits and training to mitigate exposures. 

In addition to following these general requirements, when dealing with eligibility to work documentation under the I-9 requirements,U.S.employers also should adopt and follow evenhandedly clearly established and communicated policies requiring employees to present required documentation. Employers should treat the I-9 eligibility requirements as satisfied if applicants and employees presenting a combination of documents sufficient under the INA to meet the eligibility to work documentation requirements unless the documents on the face provide a reasonable basis for calling into question the validity of the documentation or the employer otherwise has specific, credible factual information that would prompt a reasonable employer to question the veracity of the documentation presented.  The national origin of the applicant or employee should not be the basis for requiring additional proof or questioning the validity of documentation presented.  

Employers with highly diverse workforces or otherwise concerned about being questioned about compliance with I-9 work documentation requirements should consult with qualified legal counsel about the potential advantages of participating in the E-Verify Program or establishing and administering other uniformly administered practices to verify identity and the validity of documentation presented.  In all cases, such employers should make sure that their I-9 verification practices are carefully tailored and maintain proper documentation to make sure their ability to comply with both the verification and the nondiscrimination requirements of federal law. 

For Help With Compliance, Risk Management & Defense

If you need help in auditing or assessing, updating or defending your organization’s compliance, risk manage or other  internal controls practices or actions, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469)767-8872.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 24 years of work helping employers and other management; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. Her experience includes extensive work helping employers carry out, audit, manage and defend union-management relations, wage and hour, discrimination and other labor and employment laws, privacy and data security, internal investigation and discipline and other workforce and internal controls policies, procedures and actions.  The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer works, publishes and speaks extensively on management, re-engineering, investigations, human resources and workforce, employee benefits, compensation, internal controls and risk management, federal sentencing guideline and other enforcement resolution actions, and related matters.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources at www.solutionslawpress.com.  Examples of recent updates that may be of interest include:

• Comment Deadline 1/31 On HHS Plan To Let States Define ACA “Essential Benefits” That Concerns Many 
• Stamer Dallas Bar Journal Article Cautions Employers Must Take Holistic Approach To Address Worker Misclassification Risks 
• Employers Urged To Strengthen Worker Classification Defenses As Obama Administration Targets Employers Misclassifying Workers
• 2/27 Deadline For Employers To Comment On DOL Proposed Rule Changes Extending Minimum Wage & Overtime Rules To More Home Caregiver Workers
• NLRB Changes Certification Election Case Procedures
• NLRB Delays Deadline For Employee Labor Rights Poster Requirement To April 30
• New Labor Department Retaliation Guidance Reminder Of Retaliation Risks
• HR Key Player In Managing Countrywide & Other US Discrimination Exposures
• Senator Tells IRS To Fix Proposed Health Care Exchange Premium Tax Credit Regulations
• Labor Department Proposes Changing Minimum Wage & Overtime Rules For Home Caregivers, Keeps Heat On Health Care Employers 
• DOL Proposes Tighter Overtime, Minimum Wage Rules For Home Care Workers, Continues Scrutiny Of Health Care Employers
• New Guidance On Fiduciary Duties In Handling ACA Group Health Plan Premium Rebates Highlight Advisability Of Tightening Funding Terms & Fund Handling Practices To Manage Fiduciary Risks
• OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• IRS Releases Guidance on Foreign Financial Asset Reporting
• New NAE Accounting Method Safe Harbor Announced
• Group Health Plans & Insurer To Get More Time To Meet Affordable Care Act Summary of Benefits and Coverage Requirements
• CMS Final Medicare Rule Imposes Many Conditions On Access To Medicare Claims Data To Evaluate Providers & Suppliers
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• OSHA Silo Safety Citations Heads Up To Grain Operators To Manage Safety
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• EBSA Releases Collection of New M-1 and Other Guidance Impacting Multiple Employer Welfare Plans
• New Obama Administration Affirmative Action Guidance Highlights Organization’s Need To Tighten Nondiscrimination Practices
• Incentives To Get Employee Into Wellness Education Requires Legal Risk Management
• 97 Month Prison Sentence For Virginia Businessman Shows Risks of Misleading Investors;
• Executive’s Sentencing Reminder To Government Contractors, Subcontractors of Need To Manage Bid Rigging & Other Compliance Risks;
• Improving the Effectiveness of Compliance & Risk Management By Getting HR On The Compliance Team;
• IRS Establishes Safe Harbor Election for Allocating Success-Based Fees Paid On Certain Business Transactions
• Plan Sponsors. Their Owners & Management & Others Risk Personal Liability If Others Defraud Plans or Mismanage Employee Benefit Plan Responsibilities
• Safeguarding Yourself From Liability For Another’s Employee Benefit Plan Embezzlement Or Other Misconduct
• Former Manager 9th Employee Sentenced For Involvement In Maxim Medicare False Claims Action
• Workforce Reductions May Trigger Plant Closing & Union Notice, Benefit, & Other Obligations

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 at here or e-mailing this information here.   

©2011 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.

As part of its sweeping health care reforms, the Affordable Care Act requires that health insurance plans offered in the individual and small group markets, both inside and outside of the Affordable Insurance Exchanges (Exchanges), offer a comprehensive package of items and services, known as “essential health benefits.” The definition of “essential health benefits” also has significant implications on employers. Under the Affordable Care Act, employers that fail to provide health coverage through an insured or self-insured group health plan that provides the required package of essential health benefits will be required to make payments to help subsidize the cost for their employees to purchase qualifying health care coverage through one of the health care exchanges established pursuant to the Affordable Care Act.

HHS announced its proposal for state determination of the meaning of essential benefits in an Essential Health Benefits Bulletinc (Bulletin) published December 16, 2011. The Bulletin only addresses the services and items covered as “essential benefits” by a health plan, not the cost sharing, such as deductibles, copayments, and coinsurance.  HHS says it will address the cost-sharing features in future bulletins and cost-sharing rules will determine the actuarial value of the plan.  

While HHS touts its proposal for allowing flexibility to the states, many employers, insurers, union and employer-sponsored health plans and others are concerned.  Organizations and individuals concerned about the proposal or its implications should act quickly to prepare and submit comments reflecting their concerns by the January 31, 2012 comment deadline.

HHS Proposal Allows State-By-State Essential Benefit Definition

As proposed in the Bulletin, HHS would give states the flexibility to decide the items and services included in the essential health benefits package required within their states in accordance with the guidance outlined in the Bulletin.

Within the limits established by HHS, states would decide the package of benefits required to be offered as “essential benefits” within their state by selecting a benchmark plan for to set the essential benefit definition for their states.  In choosing the benchmark plan that will decide the required essential benefits for their state, states would be required to choose from one of four allowable health insurance plan options set by HHS:

• One of the three largest small group plans in the state;
• One of the three largest state employee health plans;
• One of the three largest federal employee health plan options; or
• The largest HMO plan offered in the state’s commercial market. 

The benefits and services included in the health insurance plan selected by the state would be the essential health benefits package. 

When picking a benchmark plan, HHS intends to continue to require that the states make sure their essential health benefits package at least covers items and services in at least ten categories of care specifically listed as in the Affordable Care Act as included in the definition of essential benefits. These categories are:

Essential health benefits must include items and services within at least the following 10 categories:

• Ambulatory patient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Laboratory services
• Preventive and wellness services and chronic disease management, and
• Pediatric services, including oral and vision care.

Consequently, if a state selects a plan that does not cover all ten categories of care, HHS intends to require the state to examine other benchmark insurance plans, including the Federal Employee Health Benefits Plan, to determine the type of benefits that will be included in the essential health benefits package.

Proposal Prompts Many Questions & Concerns

HHS says that its proposed approach to allowing states to decide the definition of essential benefits “would give states the flexibility to select a plan that would be equal in scope to the services covered by a typical employer plan in their state” while allowing states and insurers to keep the flexibility to evolve the benefits package with the market as innovative plan designs emerge. However the proposal is drawing criticism from many.

When Congress enacted the Affordable Care Act, supporters touted it as ensuring that all Americans would have access to a uniform set of core benefits that the Act refers to as “essential benefits” while promoting efficiency by providing a uniform set of mandate benefits to be provided by all group health plans, health insurers and health insurance exchanges.

The proposal has raised many questions among employers and unions that sponsor self-insured group heath plans for employees and those involved in their design and administration. Since 1974, the preemptive provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA) generally have exempted single employer self-insured group health plans and their insurers from the administrative and cost burdens of complying with state insurance laws and regulations. 

Among other things, critics complain that the proposal to forgo a uniform national definition will:

• Drive up costs by requiring states to use as a benchmark plan programs that are much richer and most costly than the insured or self-insured benefit plans offered by most employers;
• Undermine cost savings that would have resulted from the use of a uniform national definition of essential benefits;
• Subject insurers, health plans, and employers and unions to conflicting regulatory obligations, create disparities;

Proposal Prompts Many Questions & Concerns

Organizations and individuals concerned about the proposal in the Bulletin will need to move quickly to share their concerns with HHS. Comments are due by January 31, 2012.  Parties wishing to comment can send their comments to:EssentialHealthBenefits@cms.hhs.gov.

Cynthia Marcotte Stamer’s cautions that before taking advantage of a new Internal Revenue Service program offering employers the opportunity to resolve potential payroll tax liabilities arising from the misclassification of workers, employers should consider and develop a risk management their overall worker misclassification liability exposures. 

Ms. Stamer discusses the need for employers to take a holistic approach to assessing and addressing worker classification risks in her article, “New IRS Worker Classification Settlement Program and its Risks,” in the January, 2011 issue of the Dallas Bar Journal To read her article, see page 8 of the January, 2012 Dallas Bar Journal here.

U.S employers that misclassify workers as independent contractors, as exempt for payroll or other tax, wage and hour, immigration, and a wide range of other legal purposes or otherwise increasingly risk investigation and enforcement from federal and state agencies targeting perceived misclassification abuses.  While U.S. employers should review and correct as needed worker misclassifications that could result in violations  laws in light of the growing enforcement emphasis and interagency coordination targeting employers that violate federal or state tax, labor and other laws by misclassifying workers, employers should evaluate and address these concerns on a holistic, rather than peice meal basis.The Obama Administration is targeting employers that misclassify workers for enforcement.

Agency officials and members of Congress have sent numerous messages to U.S. employers to clean up their worker classification practices.  For instance, Labor Department enforcement actions increasingly show its employer misclassification audit and enforcement emphasis.  See, e.g.Employer Charged With Misclassifying & Underpaying Workers To Pay $754,578 FLSA Backpay Settlement; $1 Million + FLSA Overtime Settlement Shows Employers Should Tighten On-Call, Other Wage & Hour Practices;   New IRS Voluntary IRS Settlement Program Offers New Option For Resolving Payroll Tax Risks Of Misclassification But Employers Also Must Manage Other Legal Risks; Medical Resident Stipend Ruling Shows Health Care, Other Employers Should Review Payroll Practices; Employment Tax Takes Center Stage as IRS Begins National Research Project , Executive Compensation Audits;  

While these and other agencies continue to keep the heat up on employers that misclassify workers, Congress also continues to hear testimony and consider legislation that would further clarify and tighten worker classification rules.  See e.g., Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; New IRS Worker Classification Settlement Program and Its Risks.  Agency officials arefueling and responding to Congressional worker classification concerns by highlighting issues in Congressional testimony and other communications.  In her November 3, 2011 testimony to the House Subcommittee on Workforce Protections Committee on Education and the Workforce, for instance, U.S. Labor Department Wage & Hour Division (WHD) Deputy Administrator (WHD) Nancy Leppink  testified that “employee misclassification is a serious and, according to all available evidence, growing problem” that the Obama Administration is “committed to working to end.”  See Testimony of Nancy J. Leppink, Deputy Wage and Hour Administrator, Wage and Hour Division, U.S. Department of Labor before the Subcommittee on Workforce Protections, Committee on Education and the Workforce, U.S. House of Representatives (November 3, 2011).

Her testimony also makes clear that interagency coöperation and sharing of information among agencies is an increasingly valuable tool to this effort. Ms. Leppink told the Subcommittee that the Labor Department is a part of a multi-agency Misclassification Initiative that seeks to strengthen and coördinate Federal and State efforts to enforce violations of the law that result from employee misclassification.

According to Ms. Leppink, the WHD’s exchange of information about investigations with other law enforcement agencies is as “particularly important with respect to our efforts to combat the violations of our laws that occur because of employees who are misclassified as independent contractors or other non-employees.” On September 19, 2011 the Labor Department and Internal Revenue Service (IRS) signed a Memorandum of Understanding (MOU) to share information about investigations with each other.  The MOU helps the IRS investigate if employers the Labor Department has found in violation of federal labor laws have paid the proper employment taxes. Similarly, the WHD also entered into MOUs with several state labor agencies that allow the Labor Department to share information about its investigations and coordinate misclassification enforcement when appropriate.

“These agreements mean that all levels of government are working together to solve this critical problem,” she said.

Employers Urged To Audit & Strengthen Worker Classification Practices

As Federal and state regulators take aim at misclassification abuses, U.S. employers need to review each arrangement where their business receives services that the business treats as not employed by their business, as well as any employees of their business that the business treats as exempt employees keeping in mind that they generally will bear the burden of proving the appropriateness of that characterization for most purposes of law.  The coordination and interrelationship of issues that Ms. Leppink testified about in her November 3 Subscommittee testimony shows that employers need to take a holistic approach in evaluating and addressing their worker classification exposures.

To guard against these and other growing risks of worker classification, employers receiving services from workers who are not considered employees for purposes of income or payroll should review within the scope of attorney-client privilege the defensibility of their existing worker classification, employee benefit, fringe benefit, employment, wage and hour, and other workforce policies and consult with qualified legal counsel about the advisability to adjust these practices to mitigate exposures to potential IRS, Labor Department or other penalties associated with worker misclassification.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

• New Labor Department Retaliation Guidance Reminder Of Retailiation Risks
• HR Key Player In Managing Countrywide & Other US Discrimination Exposures
• Senator Tells IRS To Fix Proposed Health Care Exchange Premium Tax Credit Regulations
• Labor Department Proposes Changing Minimum Wage & Overtime Rules For Home Caregivers, Keeps Heat On Health Care Employers
• IRS Urges Preparers to Renew PTINs for 2012
• OFCCP Proposed Increased Disability Hiring Targets, Other Tougher Government Contractor Rules another Sign Of Rising Employment Discrimination Risks
• New Guidance On Fiduciary Duties In Handling ACA Group Health Plan Premium Rebates Highlight Advisability Of Tightening Funding Terms & Fund Handling Practices To Manage Fiduciary Risks
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• Insurer Fights Back To HHS Characterization of its Premium Increases As “Excessive”
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• Group Health Plans & Insurer To Get More Time To Meet Affordable Care Act Summary of Benefits and Coverage Requirements
• CMS Final Medicare Rule Imposes Many Conditions On Access To Medicare Claims Data To Evaluate Providers & Suppliers
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• OSHA Silo Safety Citations Heads Up To Grain Operators To Manage Safety
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• EBSA Releases Collection of New M-1 and Other Guidance Impacting Multiple Employer Welfare Plans
• New Obama Administration Affirmative Action Guidance Highlights Organization’s Need To Tighten Nondiscrimination Practices
• Incentives To Get Employee Into Wellness Education Requires Legal Risk Management
• HR Key Player In Managing Rising Risk of Disability, Other Discrimination Suits Under Obama Administration Justice Department
• HHS Chides Insurer For “Excessive” Premium Increases After Affordable Care Act Rate Audit
• IRS U-Tube Video Discusses 2012 Flexible Benefit Plan Rule Change
• Big Penalty for Lender Shows Risks of Violating Military Service or Vets Rights
• OCR 1st HIPAA Privacy, Security & Breach Notification Compliance Audits Begin
• Employers Face New Labor-Management Exposures Under Activist National Labor Relations Board
• Unions Gaining New Power From National Labor Relations Board’s New Activism 
• IRS Exempts Enrolled Retirement Plan Agents From PTIN Requirement

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources available at www.solutionslawpress.com. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2011 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press. All other rights reserved.

U.S employers that misclassify workers as independent contractors, as exempt for wage and hour law purposes or otherwise increasingly risk investigation and enforcement from federal and state agencies targeting perceived misclassification abuses.

U.S. employers should review and correct as needed worker misclassifications that could result in violations of federal wage and hour or other employment, tax or other laws in light of the growing enforcement emphasis and interagency coordination targeting employers that violate federal or state tax, labor and other laws by misclassifying workers.  Testimony of a top Labor Department official confirms that the Obama Administration has employers that misclassify workers in its sights and is ready to take swift action to punish their noncompliance. 

Review and management of these issues is particularly timely in light of the opening by the Internal Revenue Service (IRS) of a new settlement program for resolving payroll tax issues resulting from misclassification.  Given broader labor and other risks, however, before taking advantage of a new Internal Revenue Service program offering employers the opportunity to resolve potential payroll tax liabilities arising from the misclassification of workers, employers should consider and develop a risk management their overall worker misclassification liability exposures.  See “New IRS Worker Classification Settlement Program and its Risks,” in the January, 2011 issue of the Dallas Bar Journal To read her article, see page 8 of the January, 2012 Dallas Bar Journal here.

Aggressive Employer Worker Classification Practices Under Seige

U.S employers that misclassify workers as independent contractors, as exempt for wage and hour law purposes or otherwise increasingly risk investigation and enforcement from federal and state agencies targeting perceived misclassification abuses.

The Obama Administration is targeting employers that misclassify workers for enforcement.

Agency officials and members of Congress have sent numerous messages to U.S. employers to clean up their worker classification practices.  For instance, Labor Department enforcement actions increasingly show its employer misclassification audit and enforcement emphasis.  See, e.g.Employer Charged With Misclassifying & Underpaying Workers To Pay $754,578 FLSA Backpay Settlement; $1 Million + FLSA Overtime Settlement Shows Employers Should Tighten On-Call, Other Wage & Hour Practices.

Meanwhile, the Internal Revenue Service (IRS) continues to conduct worker classification audits while encouraging employers to self correct existing payroll tax misclassifications by participating in a new Voluntary Worker Classification Settlement Program (“Settlement Program”) announced in September. However the limited scope of the relief provided makes use of the program challenging for most employers. See New IRS Voluntary IRS Settlement Program Offers New Option For Resolving Payroll Tax Risks Of Misclassification But Employers Also Must Manage Other Legal Risks; Medical Resident Stipend Ruling Shows Health Care, Other Employers Should Review Payroll Practices; Employment Tax Takes Center Stage as IRS Begins National Research Project , Executive Compensation Audits.  

While these and other agencies continue to keep the heat up on employers that misclassify workers, Congress also continues to consider legislation that would further clarify and tighten worker classification rules.  See e.g., Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; New IRS Worker Classification Settlement Program and Its Risks.

In her November 3, 2011 testimony to the House Subcommittee on Workforce Protections Committee on Education and the Workforce, U.S. Labor Department Wage & Hour Division (WHD) Deputy Administrator (WHD) Nancy Leppink confirmed that the Labor Department is joining a growing list of federal and state agencies that are making ending employee misclassification an audit and enforcement priority.  testified that “employee misclassification is a serious and, according to all available evidence, growing problem” that the Obama Administration is “committed to working to end.”  See Testimony of Nancy J. Leppink, Deputy Wage and Hour Administrator, Wage and Hour Division, U.S. Department of Labor before the Subcommittee on Workforce Protections, Committee on Education and the Workforce, U.S. House of Representatives (November 3, 2011).

Her testimony also makes clear that interagency coöperation and sharing of information among agencies is an increasingly valuable tool to this effort. Ms. Leppink told the Subcommittee that the Labor Department is a part of a multi-agency Misclassification Initiative that seeks to strengthen and coördinate Federal and State efforts to enforce violations of the law that result from employee misclassification.

According to Ms. Leppink, the WHD’s exchange of information about investigations with other law enforcement agencies is as “particularly important with respect to our efforts to combat the violations of our laws that occur because of employees who are misclassified as independent contractors or other non-employees.” On September 19, 2011 the Labor Department and Internal Revenue Service (IRS) signed a Memorandum of Understanding (MOU) to share information about investigations with each other.  The MOU helps the IRS investigate if employers the Labor Department has found in violation of federal labor laws have paid the proper employment taxes. Similarly, the WHD also entered into MOUs with several state labor agencies that allow the Labor Department to share information about its investigations and coordinate misclassification enforcement when appropriate.

“These agreements mean that all levels of government are working together to solve this critical problem,” she said.

Employers Urged To Audit & Strengthen Worker Classification Practices

As Federal and state regulators take aim at misclassification abuses, U.S. employers need to review each arrangement where their business receives services that the business treats as not employed by their business, as well as any employees of their business that the business treats as exempt employees keeping in mind that they generally will bear the burden of proving the appropriateness of that characterization for most purposes of law.  

To guard against these and other growing risks of worker classification, employers receiving services from workers who are not considered employees for purposes of income or payroll should review within the scope of attorney-client privilege the defensibility of their existing worker classification, employee benefit, fringe benefit, employment, wage and hour, and other workforce policies and consult with qualified legal counsel about the advisability to adjust these practices to mitigate exposures to potential IRS, Labor Department or other penalties associated with worker misclassification.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

• New Labor Department Retaliation Guidance Reminder Of Retailiation Risks
• HR Key Player In Managing Countrywide & Other US Discrimination Exposures
• Senator Tells IRS To Fix Proposed Health Care Exchange Premium Tax Credit Regulations
• Labor Department Proposes Changing Minimum Wage & Overtime Rules For Home Caregivers, Keeps Heat On Health Care Employers
• IRS Urges Preparers to Renew PTINs for 2012
• OFCCP Proposed Increased Disability Hiring Targets, Other Tougher Government Contractor Rules another Sign Of Rising Employment Discrimination Risks
• New Guidance On Fiduciary Duties In Handling ACA Group Health Plan Premium Rebates Highlight Advisability Of Tightening Funding Terms & Fund Handling Practices To Manage Fiduciary Risks
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• Insurer Fights Back To HHS Characterization of its Premium Increases As “Excessive”
• Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released
• Group Health Plans & Insurer To Get More Time To Meet Affordable Care Act Summary of Benefits and Coverage Requirements
• CMS Final Medicare Rule Imposes Many Conditions On Access To Medicare Claims Data To Evaluate Providers & Suppliers
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• OSHA Silo Safety Citations Heads Up To Grain Operators To Manage Safety
• OSHA Updates Safety Resources To Prevent Construction, Other “Top 10″ Exposures
• EBSA Releases Collection of New M-1 and Other Guidance Impacting Multiple Employer Welfare Plans
• New Obama Administration Affirmative Action Guidance Highlights Organization’s Need To Tighten Nondiscrimination Practices
• Incentives To Get Employee Into Wellness Education Requires Legal Risk Management
• HR Key Player In Managing Rising Risk of Disability, Other Discrimination Suits Under Obama Administration Justice Department
• HHS Chides Insurer For “Excessive” Premium Increases After Affordable Care Act Rate Audit
• IRS U-Tube Video Discusses 2012 Flexible Benefit Plan Rule Change
• Big Penalty for Lender Shows Risks of Violating Military Service or Vets Rights
• OCR 1st HIPAA Privacy, Security & Breach Notification Compliance Audits Begin
• Employers Face New Labor-Management Exposures Under Activist National Labor Relations Board
• Unions Gaining New Power From National Labor Relations Board’s New Activism 
• IRS Exempts Enrolled Retirement Plan Agents From PTIN Requirement

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources available at www.solutionslawpress.com. 

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©2011 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press. All other rights reserved.