Hospital To Pay $75K For Refusing To Hire Disabled Child Care Worker

March 10, 2014

Osceola Community Hospital Refused To Hire Child Care Worker With Cerebral Palsy Who Had Worked As Volunteer

Osceola Community Hospital in Sibley, Iowa will pay $75,000 and furnish other relief to settle an Americans With Disabilities Act (ADA) disability discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC) for its refusal to hire a child care worker with cerebral palsy.  The case shows both the need for health care and other employers to have sufficient evidence to support decisions not to hire disabled workers for safety reasons as well as the potential risks that hospitals or other face when refusing to hire disabled individuals who have been allowed to work as volunteers in their organizations.

The EEOC charged a day care center operated by the hospital, Bright Beginnings of Osceola County, unlawfully failed to hire a volunteer employee into a paid position for which she was qualified because of her cerebral palsy.  Although the woman who brought the charge of discrimination against the hospital already volunteered in the day care center and held a job driving a school bus, the EEOC’s investigation revealed the county refused to hire her into a paying job in the center out of an unfounded fear that her disability meant that she could not safely care for the children.

Judge Mark Bennett entered a consent decree on February, 28, 2014, resolving the brought by the EEOC in EEOC v. Osceola Community Hospital d/b/a Bright Beginnings of Osceola County, Civil Action No. 5:12-cv-4087 (N.D. Iowa, Sept. 26, 2012 that orders Osceola Community Hospital to pay $75,000 to the discrimination victim.  The decree also requires the hospital to institute a policy prohibiting discrimination on the basis of disability and to distribute the policy to all of its employees.  The hospital also must train its employees and report regularly to the EEOC on its compliance with the ADA.

The lawsuit provides another example to health care and other employers of their growing exposure to disability discrimination claims under the ADA.  The EEOC action and lawsuit highlights the importance of employers ensuring that decisions to refuse to hire disabled workers for safety reasons are based upon appropriate evidence of actual safety concerns that prevent the worker from safely performing the assigned duties with or without reasonable accommodation.

The fact that the worker in this case had in fact worked as a volunteer likely created additional challenges in defending the decision.  The use of volunteer workers in health industry businesses is a common practice that may justify special care before those organizations deny employment to a former volunteer on the basis of safety concerns associated with the disabilities of the applicant or worker both to document the reasonable basis of the safety concern and that the concern could not be adequately resolved through reasonable accommodation.

Eenforcing federal discrimination laws is a high priority of the Obama Administration. The Departments of Labor, Health & Human Services, Education, Justice, Housing & Urban Development, and others all have both increased enforcement, audits and public outreach, as well as have sought or are proposing tighter regulations.

The expanding applicability of nondiscrimination rules coupled with the wave of new policies and regulatory and enforcement actions should alert private businesses and state and local government agencies of the need to exercise special care to prepare to defend their actions against potential disability or other Civil Rights discrimination challenges under employment and a broad range of other laws.

Health care and organizations, public or private, government contractor or not, should act to ensure both that their organizations, their policies, and people in form and in action understand and comply with current disability discrimination laws and that these compliance activities are well-documented to help defend against potential charges or other challenges.  Because of changing regulatory and enforcement trends, organizations and their leaders should avoid assuming the adequacy of current compliance and risk management. Most organization should reevaluate their assessments concerning whether their organization is a federal government contractor or subcontractor to minimize the risk of overlooking critical obligations.

Many organizations need to update their understanding, policies and practices in light of tightening rules and enforcement. The scope and applicability of federal nondiscrimination and other laws have been expanded or modified in recent years by the differences in perspectives of the Obama Administration from the Bush Administration, as well as statutory, regulatory, judicial precedent and enforcement changes.  In addition, all organization should conduct well-documented periodic training and take other actions to monitor and enforce compliance by staff, contractors and others with whom they do business.

For Help With Compliance & Risk Management and 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 private and governmental organizations and their management; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; schools and other governmental agencies and others design, administer and defend innovative compliance, risk management, workforce, compensation, employee benefit, privacy, procurement and other management policies and practices. Her experience includes extensive work helping employers implement, audit, manage and defend union-management relations, wage and hour, discrimination and other labor and employment laws, procurement, conflict of interest, discrimination management, 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, reengineering, 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 additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.

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:

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.

©2014 Cynthia Marcotte Stamer.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


OFCCP Posts Additional FAQs on the Implementation of the VEVRAA and Section 503 Final Rules

December 26, 2013

The Office of FCCP posted a third round of Frequently Asked Questions (FAQs) answering questions from contractors and the general public about provisions in the recently published Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act (Section 503) Final Rules.  These FAQs address implementation issues, such as the schedule for contractors to come into compliance with the affirmative action requirements of Subpart C of the new regulations.  These latest FAQs, published on the OFCCP Web site and marked with a “NEW” banner, are part of a series of FAQs, guidance materials, and resources that OFCCP is providing to contractors and the public between now and the March 24, 2014, effective date of the new rules.

The VEVRAA FAQs are available here. The Section 503 FAQs are available here.

For Assistance or More Information

If you have questions or need help with these or 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 25 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 about 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, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other 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. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  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 Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. 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 here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


OFCCP Posts Additional FAQs on the Implementation of the VEVRAA and Section 503 Final Rules

December 26, 2013

The Office of Federal Contract Compliance Programs (OFCCP) posted a third round of Frequently Asked Questions (FAQs) answering questions from contractors and the general public about provisions in the recently published Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act (Section 503) Final Rules.  These FAQs address implementation issues, such as the schedule for contractors to come into compliance with the affirmative action requirements of Subpart C of the new regulations.  These latest FAQs, published on the OFCCP Web site and marked with a “NEW” banner, are part of a series of FAQs, guidance materials, and resources that OFCCP is providing to contractors and the public between now and the March 24, 2014, effective date of the new rules.

The VEVRAA FAQs are available at here. The Section 503 FAQs are available at here

For Assistance or More Information

If you have questions or need help with these or 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 25 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 about 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, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other 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. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  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 Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. 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 here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification

December 26, 2013

Health Care Reform Adds Fuel To Enforcement Fire

Employers must ensure they can defend their treatment of workers as as independent contractors or otherwise exempt from wage and hour and overtime requirements and take other steps to manage wage and hour risks that can arise under the Fair Labor Standards Act (FLSA) and other laws to when caught misclassifying workers.  That’s the clear message the U.S. Department of Labor (Labor Department) is sending to employers by filing lawsuits against employers like the one it recently announced against Wang’s Partner Inc., doing business as Hibachi Grill and Supreme Buffet in Jonesboro, and its owner, Shu Wang, to recover $1,997,726 in back wages and liquidated damages for 84 employees.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. The requirements generally apply to any workers that the employer who receives its services cannot prove is not its common law employee or an exempt employee within the meaning of the FLSA.  In general, “hours worked” includes all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Additionally, the law requires that accurate records of employees’ wages, hours and other conditions of employment be maintained. These requirements generally apply for all workers who the facts and circumstances reflect are common law employees and otherwise do not qualify as exempt employees under the FLSA.  Violations of these requirements can result significant backpay and other damage awards to private plaintiffs, backpay and penalties assessments or settlements from Labor Department suits, and, if the violation is found willful, criminal liability.

Wang’s Partner Inc. Suit

The lawsuit against Want’s Partner Inc. shows employers the importance of avoiding improperly classifying workers as independent contractors for purposes of the FLSA. Employers that inappropriately classify workers as independent contractors often fail to maintain appropriate time and other records, pay minimum wage and overtime and violate other FLSA requirements.  In general, a business receiving services of a worker generally bears the burden of providing that the worker is not its common law employee under the applicable facts and circumstances test applicable under the FLSA.

As in many other enforcement areas, the Labor Department Wage and Hour Division in recent years has stepped up its scrutiny of employer relationships with workers treated as independent contractors.  The Labor Department and many other agencies increasingly view the misclassification of workers as something other than employees, such as independent contractors, as a serious problem for affected employees, employers and to the entire economy.  According to the Labor Department, misclassified employees are often denied access to critical benefits and protections, such as family and medical leave, overtime, minimum wage and unemployment insurance and other rights.  The Labor Department also says employee misclassification also generates substantial losses to state and federal treasuries, and to the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds. To address these and other concerns, the Labor Department has joined other agencies like the Internal Revenue Service increasingly is challenging employers’ treatment of workers as exempt from FLSA and other legal obligations as independent contractors or otherwise.

The lawsuit in the Northern District of Georgia against Wang’s Partner, Inc. illustrates this trend.  One of the growing number of lawsuits and other enforcement actions resulting from this trend, the suit shows the significant exposures that an employer risks by misclassifying workers as independent contractors or otherwise exempt from the FLSA. The Labor Department says an investigation revealed that Wang’s Partner Inc. misclassified workers as independent contractors and engaged in numerous violations of the FLSA.  The Labor Department seeks $1,997,726 in back wages and liquidated damages for 84 employees.

The Labor Department says investigators from the division’s Atlanta district office found that the employer misclassified servers as independent contractors, failed to pay servers and kitchen staff at least the federal minimum wage of $7.25 per hour and failed to pay overtime compensation at time and one-half employees’ regular rates for hours worked beyond 40 in a work week. Additionally, the employer did not maintain accurate records of hours worked and wages paid.

In announcing the Wang’s Partner Inc. lawsuit, the Labor Department warned employers against similar misclassification of workers.  “The U.S. Department of Labor is committed to ensuring that all workers receive the wages to which they are legally entitled,” said Secretary of Labor Thomas E. Perez. “We will not stand by while employers use business models that hurt workers, their families and law-abiding employers. This lawsuit illustrates that the department will use every enforcement tool necessary to resolve cases where employees are unlawfully treated as independent contractors, and vulnerable workers are not paid the minimum wage.”

 FLSA Violations Generally Costly;  Enforcement Rising

The Labor Department’s prosecutions against employers arising from misclassification of workers document the Labor Department is acting in accordance with this warning.  In recent years, misclassification of workers increasingly has become an element in its FLSA and other enforcement actions.  According to the Labor Department, misclassified employees are often denied access to critical benefits and protections, such as family and medical leave, overtime, minimum wage and unemployment insurance and other rights.  The Labor Department also says employee misclassification also generates substantial losses to state and federal treasuries, and to the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds. To address these and other concerns, the Labor Department has joined other agencies like the Internal Revenue Service increasingly is challenging employers’ treatment of workers as exempt from FLSA and other legal obligations as independent contractors or otherwise.Whether due to mischaracterization of workers as independent contractors or as common law employees that qualify as exempt under the FLSA rules, the Labor Department increasingly is acting on its promise to go after employers that violate the FLSA based on worker misclassifications.

In 2012, for instance, First Republic Bank paid $1,009,643.93 in overtime back wages for 392 First Republic Bank employees in California, Connecticut, Massachusetts, New York and Oregon after the Labor Department found the San Francisco-based bank wrongly classified the employees as exempt from the FLSA’s overtime and recordkeeping requirements, resulting in violations of the Fair Labor Standards Act’s overtime and record-keeping provisions.  The Labor Department announced the settlement resulting in the payment on November 27, 2012.

The settlement came after an investigation by the Labor Department’s Wage and Hour Division found that the San Francisco-based bank wrongly classified the employees as exempt from overtime, resulting in violations of the FLSA’s overtime and record-keeping provisions.

In announcing the settlement with First Republic Bank, the Labor Department warned employers to confirm the appropriateness of their classification of workers.  “It is essential that employers take the time to carefully assess the FLSA classification of their workforce,” said Secretary of Labor Hilda L. Solis in the Labor Department’s announcement of the settlement. “As this investigation demonstrates, improper classification results in improper wages and causes workers real economic harm.”

The Wang’s Partner Inc and First Republic Bank enforcement actions are not unique.  The Labor Department and private plaintiffs alike regularly target employers that use aggressive worker classification or other pay practices to avoid paying minimum wage or overtime to workers.  Under the Obama Administration, DOL officials have made it a priority to enforce overtime, record keeping, worker classification and other wage and hour law requirements.  See e.g.,  Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Million+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For EmployersQuest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay

In an effort to further promote compliance and enforcement of these rules,  the Labor Department is using  smart phone applications, social media and a host of other new tools to educate and recruit workers in its effort to find and prosecute violators. See, e.g. New Employee Smart Phone App New Tool In Labor Department’s Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers.    As a result of these effort, employers violating the FLSA now face heightened risk of enforcement from both the  Labor Department and private litigation.

Health Care Reform Adds Risks, Fuels More Enforcement

The rollout of new health benefit mandates as part of the sweeping reforms enacted under the Patient Protection and Affordable Care Act (ACA) is further expanding the liability of misclassification and the risk of enforcement against employers.

Among other things, the employer mandates of ACA, now delayed until 2015, generally will require employers of 50 or more full-time employees either to provide health coverage meeting the requirements of ACA or pay the “employer penalty” established under Internal Revenue Code Section 4980H.  While the rule now is delayed until 2015, the employment data for 2014 will be used to determine what employees that an employer must take into account for purposes of this rule.  ACA generally relies on the common law employment tests used under the FLSA to make this determination.  It also requires employers provide other rights to workers who are considered common law employees under these rules.

Employers Should Strengthen Practices For Defensibility

 To minimize exposure under the FLSA, employers should review and document the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws and take other actions to minimize their potential liability under applicable wages and hour laws.  Steps advisable as part of this process include, but are not necessarily limited to:

  • Audit of each position current classified as exempt to assess its continued sustainability and to develop documentation justifying that characterization;
  • Audit characterization of workers obtained from staffing, employee leasing, independent contractor and other arrangements and implement contractual and other oversight arrangements to minimize risks that these relationships could create if workers are recharacterized as employed by the employer receiving these services;
  • Review the characterization of on-call and other time demands placed on employees to confirm that all compensable time is properly identified, tracked, documented, compensated and reported;
  • Review of existing practices for tracking compensable hours and paying non-exempt employees for compliance with applicable regulations and to identify opportunities to minimize costs and liabilities arising out of the regulatory mandates;
  • If the audit raises questions about the appropriateness of the classification of an employee as exempt, self-initiation of proper corrective action after consultation with qualified legal counsel;
  • Review of existing documentation and record keeping practices for hourly employees;
  • Exploration of available options and alternatives for calculating required wage payments to non-exempt employees; and
  • Re-engineering of work rules and other practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures.

Because of the potentially significant liability exposure, employers generally will want to consult with qualified legal counsel before starting their risk assessment and assess risks and claims within the scope of attorney-client privilege to help protect the ability to claim attorney-client privilege or other evidentiary protections to help shelter conversations or certain other sensitive risk activities from discovery under the rules of evidence.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, 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 23 years of work helping employers; 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. 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, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance 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, Inc.

Solutions Law Press, Inc.™ 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 in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

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 here. For important information about this communication click here.

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.

©2012 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


OIG 2013 Top Management Challenges List Signals Tightening of Labor Department Enforcement

December 26, 2013

Employers should expect heighten scrutiny and enforcement in the labor law areas identified in the “2013 Top Management Challenges Facing the Department List” recently published by the U.S. Department of Labor Office of Inspector General.  Employers can expect to see the Labor Department and its component agencies acting to tighten oversight and enforcement in these areas in response to the OIG list.

For 2013, the OIG identified the following as the most serious management and performance challenges facing the Department:

  • Protecting the Safety and Health of Workers
  • Protecting the Safety and Health of Miners
  • Improving Performance Accountability of Workforce Investment Act Grants
  • Ensuring the Effectiveness of the Job Corps Program
  • Reducing Improper Payments
  • Ensuring the Security of Employee Benefit Plan Assets
  • Securing and Protecting Information Management Systems
  • Ensuring the Effectiveness of Veterans’ Employment and Training Service Programs

In the report accompanying the OIG list, the OIG presents the challenge, the OIG’s assessment of the Department’s progress in addressing the challenge, and what remains to be done. These top management challenges are intended to identify and help resolve serious weaknesses in areas that involve substantial resources and provide critical services to the public. Typically, the identification of an area of concern by the OIG prompts tightening of processes and enforcement.

For Assistance or More Information

If you have questions or need help with these or 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 25 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 about 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, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other 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. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  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 Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. 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 here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


DOL Sues PBI Bank For Alleged Fiduciary Breach In Sale of ESOP Stock

December 26, 2013

Labor Department files suit to restore losses to the Miller’s Health Systems Employee Stock Ownership Plan

Bank or other plan trustees and fiduciaries of Employee Stock Ownership Plans or other employee benefit plans holding company stock, sponsoring employers and their management should heed the new Perez v. PBI Bank, Inc. lawsuit filed by the U.S. Department of Labor of the importance of not running afoul of the fiduciary responsibility rules of the Employee Retirement Income Security Act when conducting business sales, bankruptcies or other corporate business transactions involving stock or other plan assets.

The U.S. Department of Labor filed the PBI Bank, Inc.  in U.S. District Court to recover losses to the Miller’s Health Systems, Inc., Employee Stock Ownership Plan. The suit alleges that PBI Bank, Inc., the trustee of the plan, authorized the purchase of company stock for $40 million, an amount far in excess of the fair market value of the stock. The suit also alleges that PBI Bank approved financing for the transaction at an excessive interest rate. Miller’s Health is a Warsaw-based company that manages long-term care and assisted-living facilities. The lawsuit also seeks to remove PBI as a fiduciary and service provider of the plan and to permanently bar it from serving as a fiduciary or service provider to ERISA-covered plans in the future.

ERISA’s fiduciary responsibility rules generally require trustees and other fiduciaries of employee stock ownership or other employee benefit plans to act prudently and for the exclusive benefit of participants and beneficiaries and abstain from self-dealing or prohibited transactions involving the plan.  Fiduciaries that violate these rules risk personal liability for damages incurred by the plan, restoration of profits realized from prohibited transactions or other fiduciary breaches, as well as attorneys fees and other costs as well as disqualification from serving as a fiduciary for employee benefit plans and other potential civil or criminal relief.

The PBI Bank, Inc. case highlights how these risks can arise when a trustee or other fiduciary is asked to approve the sale of company stock held as a plan asset of an employee stock ownership or other employee benefit plan.

An investigation by the Chicago Regional Office of the department’s Employee Benefits Security Administration focused on a September 2007 stock purchase. The suit alleges that PBI violated ERISA by imprudently and disloyally approving the purchase of stock by the plan.  The suit seeks to require PBI to restore all losses suffered by the ESOP, plus interest. As of September 30, 2012, the ESOP had 2,939 participants and assets of $12,848,000.

At the time of the stock purchase, Miller’s Health managed 31 long-term care facilities under the name of Miller’s Mary Manor and 10 assisted living facilities under the name Miller’s Senior Living. Miller’s Health also operated Theracare, Inc., an Indiana corporation, which primarily provided physical and occupational therapy and speech-language pathology to residents in Miller’s Health facilities.

After conducting its investigation, the department concluded that, as a result of the design of the transaction and the fiduciary breaches of PBI, the stock purchase was not for the primary benefit of participants and did not promote employee ownership in Miller’s Health. As a result, the department concluded that PBI was responsible and liable for violations of the Employee Retirement Income Security Act.

When announcing the lawsuit, Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi said,  “Fiduciaries must act with undivided loyalty to plan participants.  When it comes to ESOP stock purchases, they must ensure that the plan receives full value for its money.”

The PBI Bank suit highlights the challenges that trustees and other fiduciaries often face when dealing with employee stock ownership or other employee benefit plans holding stock of the sponsoring company.  Valuation, purchase, sale, and other decisions about the stock fall within the prudence, exclusive benefit and other fiduciary responsibility rules of ERISA.  These duties attach when the stock is purchased and continue thereafter as long as the stock remains a plan asset.  Additionally sales or other transactions which result in the sale or other disbursement of the stock as asset of the plan, as well as a decision to continue to hold the stock during market or value changes also trigger these responsibilities.

A trustee or other fiduciary exercising discretion or control in name or functionally generally must be prepared to prove not only that its actions are prudent, but also that the value of the stock and other actions involving the plan and its assets were made for the exclusive benefit of the plan and its participants and beneficiaries.   Because of the special issues and perception of potential conflict of interest that often inherently arise when a trustee or other fiduciary makes or influences decisions involving stock held by an employee stock ownership or other ERISA-covered plan, fiduciaries involved in these transactions should exercise particular care to act, and document appropriate evidence that he or it complied with these and other fiduciary requirements.

For Assistance or More Information

If you have questions or need help with these or 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 25 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 about 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, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other 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. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  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 Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. 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 here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


Agencies Proposes To Treat Certain EAP, Dental and Vision Only Plans As ACA & HIPAA Excepted Benefits

December 26, 2013

February 24, 2014 is the deadline for interested employers, health insurers and plans, administrators and others to comment on proposed changes to rules defining what arrangements qualify as “excepted benefits” for purposes of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) eligibility, nondiscrimination and other portability mandates and the Patient Protection and Affordable Care Act (ACA) health coverage reform mandates jointly published December 24, 2013 by Internal Revenue Service (IRS) , the Employee Benefits Security Administration (EBSA), and the Health and Human Services Department (HHS)(collectively the “Agencies”).

The Proposed Amendments To Excepted Benefits Regulation (Proposed Rule) published by the Agencies jointly in the December 24, 2013 Federal Register would add certain employee assistance programs (EAPs) and certain vision and dental only plans as  excepted benefits for purposes of HIPAA and ACA and make certain other changes to the excepted benefits definition . The Proposed Regulations would also provide added options for employees and employers in connection with ACA.

The definition of “excepted benefits” is critical for employers and insurers as   HIPAA and ACA exempt from certain of their mandates arrangements that qualify as excepted benefits under the Agencies rules.    Since the passage of the Affordable Care Act, ambiguities and confusion have persisted about when and if certain arrangements qualify as excepted benefits.  Since HIPAA took effect, widespread abuse, debate and confusion about the treatment of certain mini-med and certain other benefit plans as excepted benefits prompted the Agencies to publish additional guidance.  Despite this guidance, many continue to debate the treatment of certain of these and other arrangements.  As the effective date of ACA’s employer and individual mandates and Heath Insurance Exchange premium tax credits, employers, employees and other stakeholders expressed concerns that the past HIPAA definition of excepted health benefits needed updating to prevent undesirable consequences for employees offered these arrangements.

The Proposed Regulations would amend current regulations to treat certain EAPs as excepted benefits, effective immediately. EAPs are typically free programs offered by employers that can provide wide-ranging benefits to address circumstances that might otherwise adversely affect employees’ work and health. Benefits may include short-term substance abuse or mental health counseling or referral services, as well as financial counseling and legal services. Under the Proposed Regulations, EAPs would be considered excepted benefits if the program is free to employees and does not provide significant benefits in the nature of medical care or treatment. As excepted benefits, EAPs would be exempt from private insurance market reforms, and EAP coverage would not make individuals ineligible for a premium tax credit under ACA for enrolling in qualified health plans through the Health Insurance Marketplaces created by ACA.

Similarly, under the Proposed Regulations, vision and dental benefits provided by employers on a self-insured basis would be able to qualify as excepted benefits effective immediately under the conditions specified in the Proposed Regulations, even if they do not require contributions from employees. Insured vision and dental benefits, as well as self-insured vision and dental coverage that requires employee contributions, already qualify as excepted benefits.

The proposal to treat EAPs and stand alone dental and vision benefits require that the arrangements meet the specific requirements set forth in the Proposed Regulations.  For instance, to keep benefits like dental benefits and vision benefits from coming under ACA mandates, an employer must offer the benefits separately from any group health plan and charge a separate premium for the excepted benefits.

Effective for plan years starting in 2015, the Proposed Regulations also would treat as excepted benefits certain limited coverage provided by plan sponsors that “wraps around” an individual market policy. The “wraparound” coverage would be available to employees for whom the plan sponsor’s primary group health coverage is not affordable and who instead get coverage through a nongrandfathered individual market policy. The wraparound coverage would provide extra benefits or broader networks, and may also reduce cost sharing. The proposal in the Proposed Regulations would not allow the wraparound coverage to substitute for employment-based coverage. The value of the wraparound coverage could not exceed 15 percent of the value of the primary coverage offered by the plan sponsor, which the Proposed Regulations would require to be affordable for at least the majority of employees.

The Obama administration may create a new type of benefit program for employers that send some workers to the individual exchanges to get health coverage.

A “limited wraparound plan” would give employers a way to beef up the benefits of some workers who get their coverage from an individual exchange rather than enrolling in the employer’s group health plan.

 

Some employers provide dental and vision plans along with health plans, without charging workers extra. The employers complained that they might have to start collecting small premiums just to keep their dental and vision plans from becoming PPACA plans.

The federal agencies have proposed letting employers keep the self-insured dental and vision benefits out from under PPACA without having to collect separate premiums.

The federal agencies also have made good on previous promises to clarify the rules stating how sponsors of employee assistance plans can keep the EAPs from becoming PPACA plans.

In the section on limited wraparound plans, the agencies talk about strategies for keeping the plans from giving employers a way to drop their group health plans and send all workers to the individual health insurance exchanges.

To offer a wraparound plan, an employer would have to offer a good group health plan. The employer could offer the wraparound plan benefits only to workers who bought “qualified health plan” coverage from an exchange because they found that the group health coverage was unaffordable.

An employer could use a wraparound plan to give workers with QHP coverage benefits similar to what workers in the group health plan have.

The cost of the wraparound coverage would have to be 15 percent or less of the cost of the group health coverage.

Speak Up On The Proposed Changes

Employers, health plan fiduciaries and administrators, health insurers, and others concerned about the scope and effect of the excepted benefit definition should review the proposed changes as soon as possible and provide comments to encourage tailoring the definition optimally.  Input on the proposed changes and other feedback on the definition of excepted benefits and its effect on health care coverage or other health care coverage or reform concerns should be carefully prepared and submitted to the Agencies as well as where appropriate, with Congress.  In addition , we also encourage you and others to help understand the rules and their implications by sharing your thoughts on these and other concerns in the Coalition For Responsible Health Care Policy linkedin group.  The Coalition for Responsible Health Care Policy is a group hosted by Solutions Law Press, Inc. hosts to  provides a resource that concerned Americans can use to share, monitor and discuss the Health Care Reform law and other health care, insurance and related laws, regulations, policies and practices and options for promoting access to quality, affordable healthcare through the design, administration and enforcement of these regulations.

For Assistance or More Information

If you have questions or need help with these or 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 25 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 about 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, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other 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. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  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 Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. 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 here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


1/1/14 Exchange Enrollment Deadline Extended As Enrollment Still Lags

December 24, 2013

With enrollment in the new Federal and State Health Insurance Exchanges, which the Obama Administration calls “Marketplaces” lagging and Americans attempting to use the Federal and state Exchange enrollment platforms continuing to experience technical “glitches,” the Obama Administration is extending again the deadline for Americans who want to get  health coverage offered through the Exchanges to begin January 1, 2014.

The Administration quietly revised the Exchange enrollment page at Healthcare.gov to instructs visitors that Americans who weren’t able to enroll in an insurance plan by December 23 because of problems you had using HealthCare.gov and want coverage that starts January 1, 2014 to contact the Marketplace Call Center at 1-800-318-2596 (available 24/7; closed December 25. TTY: 1-855-889-4325).

Are you concerned about health care coverage or other health care issues or policy concerns?  Join the discussion and share your input by joining Project COPE: Coalition for Patient Empowerment here.

About Project COPE: The Coalition On Patient Empowerment & Its  Coalition on Responsible Health Policy

Sharing and promoting the use of practical practices, tools, information and ideas that patients and their families, health care providers, employers, health plans, communities and policymakers can share and offer to help patients, their families and others in their care communities to understand and work together to better help the patients, their family and their professional and private care community plan for and manage these  needs is the purpose of Project COPE, The Coalition on Patient Empowerment & It’s Affiliate, the Coalition on Responsible Health Policy.

The best opportunity to improve access to quality, affordable health care for all Americans is for every American, and every employer, insurer, and community organization to seize the opportunity to be good Samaritans.  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:  Step up and help bridge the gap when you or your organization can. Speak up to help communicate and facilitate when you can.  Building health care neighborhoods filled with good neighbors throughout the community is the key.

The outcome of this latest health care reform push is only a small part of a continuing process.  Whether or not the Affordable Care Act makes financing care better or worse, the same challenges exist.  The real meaning of the enacted reforms will be determined largely by the shaping and implementation of regulations and enforcement actions which generally are conducted outside the public eye.  Americans individually and collectively clearly should monitor and continue to provide input through this critical time to help shape constructive rather than obstructive policy. Regardless of how the policy ultimately evolves, however, Americans, American businesses, and American communities still will need to roll up their sleeves and work to deal with the realities of dealing with ill, aging and disabled people and their families.  While the reimbursement and coverage map will change and new government mandates will confine providers, payers and patients, the practical needs and challenges of patients and families will be the same and confusion about the new configuration will create new challenges as patients, providers and payers work through the changes.

We also encourage you and others to help develop real meaningful improvements by joining Project COPE: Coalition for Patient Empowerment here by sharing ideas, tools and other solutions and other resources. The Coalition For Responsible Health Care Policy provides a resource that concerned Americans can use to share, monitor and discuss the Health Care Reform law and other health care, insurance and related laws, regulations, policies and practices and options for promoting access to quality, affordable healthcare through the design, administration and enforcement of these regulations.

For Assistance or More Information

If you have questions or need help with these or 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 25 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 about 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, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other 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. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  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 Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. 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 here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


Businesses Performing Income, Payroll Tax Duties For Employers Confirm Compliance With Updated IRS Procedures

December 14, 2013

Payroll, staffing employee leasing and other businesses that provide workers, staffing, payroll or other related services and the businesses that use these services should review their status to determine if the service provider might be considered to act as the “agent” of their client businesses for purposes of the withholding of income taxes from wages and/or the collection, reporting and payment of income and employment taxes on behalf of another employer business and if so, their responsibilities as agents for these purposes under Revenue Procedure 2013-39

The Internal Revenue Service (IRS) recently released Revenue Procedure 2013-39.  It describes and updates the procedure for requesting the IRS authorize a person to act as agent under section 3504 of the Internal Revenue Code (Code) and §31.3504-1 of the Employment Tax Regulations for purposes of Chapters 21, 22, 24, and 25 of the Code. Special instructions are also set forth for agents authorized to perform acts for purposes of Chapter 23 of the Code.

Chapters 21, 22, 23, 24, and 25 of the Code impose obligations on employers with regard to employment taxes. Specifically, Chapter 21 imposes Federal Insurance Contributions Act (FICA) tax, Chapter 22 imposes Railroad Retirement Tax Act (RRTA) tax, Chapter 23 imposes Federal Unemployment Tax Act (FUTA) tax.  Meanwhile, Chapter 24 imposes Collection of Income Tax at Source on Wages (income tax withholding), and Chapter 25 provides general provisions on employment taxes.

While these Code provisions generally impose these obligations on the common law employer of the employee with respect to whose wages the taxes arise, Section 3504 of the Code authorizes the Secretary to issue regulations to authorize a fiduciary, agent, or other person (“agent”) who has the control of, receives, has custody of, disposes of, or pays the wages of an employee or group of employees, employed by one or more employers, to perform certain specified acts required of employers. Under section 3504, all provisions of law (including penalties) applicable with respect to an employer are applicable to the agent and stay applicable to the common law employer. Accordingly, both the agent and employer are liable for the employment taxes and penalties associated with violations of these requirements.

In addition to updating the procedures generally applicable for parties to act as agents of employers for purposes of income and payroll taxes generally, the Revenue Procedure also sets forth special rules for agents dealing with home health workers as well as certain other special circumstances.

Businesses that could be considered to act as agents of another business should carefully review their status to determine whether their organization could be considered an agent for purposes of these rules either because they openly perform these responsibilities as a declared agent in accordance with current IRS procedures, or because the facts and circumstances under which their business acts as an employee leasing, staffing, professional employment organization (PEO) create a risk that workers treated as employed by the service provider could in fact be recharacterized on audit as common law employees of the customer.

Beyond the employer responsibilities under existing income and employment tax rules, proper classification also may have implications on the parties responsibilities under the employer shared responsibility rules of Code Section 4980H.  In Notice 2013-54, the IRS stated that the IRS might be willing to recognize health coverage provided by a staffing, employee leasing or other firm to a worker where the facts and circumstances reflect that the common law employer of the worker in fact is the customer of the staffing company as coverage provided by the common law employer.  In comments made at an American Bar Association Joint Tax and RPTE Meeting this Fall, however, IRS representatives also commented that they contemplated that this ability would be limited to situations where the staffing entity or other service provider registers as the agent of the customer which was the common law employer of the workers.  Businesses must await further clarifying guidance about whether and how the IRS ultimately implements these rules.

For Assistance or More Information

If you have questions or need help with these or 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 25 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 about 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, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other 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. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  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 Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. 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 here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


IRS To Tax Health Insurers On Assessments To Cover ACA Section 9010 Annual Fee

December 10, 2013

The Internal Revenue Service (IRS) plans to tax insurers in the business of providing health insurance on individuals in the U.S. (Health Insurers) on amounts that the health insurer collects from policyholders to offset a new annual fee that the Patient Protection and Affordable Care Act (ACA) imposes on these insurers.

 Section 9010 of ACA imposes an annual fee on insurers as part of its funding provisions.   In response to this new obligation, Health Insurers generally are passing along all or part of the expense of paying the mandated annual fee on to customers through various means.

According to Internal Revenue Service guidance scheduled for official publication on December 16, 2013, the IRS will require Health Insurers to include amounts collected by the insurer to offset the annual fee cost in income for purposes of determining federal tax liability.  Revenue Ruling 2013-27 says that the IRS will require a Health Insurer to include in its gross income amounts it collects from policyholders to offset the cost of the annual fee imposed under ACA Section 9010.

Health insurers will need to take into account that the IRS plans to tax the collected amounts when doing financial forecasting and to make proper arrangements to track, report and pay applicable taxes resulting from the collection of these amounts.

For Assistance or More Information

If you have questions or need help with these or 2014 health plan decision-making or preparation, or with 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 25 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 about 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, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other 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. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  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 Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. 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 here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


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