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Health Plans, Other Covered Entities Have Continuing Duty To Reevaluate HIPAA Enterprise Risk To PHI & Address Security Risks & Other Compliance Concern On Ongoing Basis

October 27, 2016

Compliance with the Privacy and Security Rules of the Health Insurance Portability & Accountability Act (HIPAA) is a living process that requires employer and other health plans, health insurers, health care providers and healthcare clearinghouses to recurrently reevaluate their HIPAA enterprise risk and timely act to mitigate security threats to electronic (ePHI) and other protected health information and other HIPAA compliance concerns on an ongoing basis. That’s the clear take away applicable to all HIPAA-Covered Entities and business associates from the St. Joseph Health Resolution Agreement and Corrective Action Plan (SJH Settlement) and the Oregon Health & Science University Resolution Agreement and Corrective Action Plan (OHSU Settlement) announced by the Department of Health & Human Services Office of Civil Rights (OCR) in the past 30 days. Health plans, their sponsors, fiduciaries and vendors, health care providers and health care clearinghouses should carefully heed this message and in response take documented steps to ensure

Their existing policies, practices and procedures properly are updated in response to changing guidance and events;
They in place the current, comprehensive enterprise risk assessment along with a mitigation plan documenting actions taken to address these risks;
Ensure that the organization has and is administering appropriate, documented processes and procedures to ensure that the organization reassesses its enterprise risk assessment and compliance on a timely basis as warranted by changes or other events that could impact ePHI, regulatory developments or other events that might impact its compliance; and
Have an appropriate, documented process for oversight by C-level management.

OHSU Charges & Settlement

The OHSU Settlement Agreement announced by OCR on September 23, 2016 requires OHSU to pay a $2.7 million settlement payment and adopt and implement a comprehensive three-year corrective action plan to address “widespread and diverse” HIPAA compliance problems OCR reports uncovering while investigating multiple HIPAA breach reports the large public academic health center and research university centered in Portland, Oregon.

OCR began investigating OHSU after the large public academic health center and research university centered in Portland, Oregon, submitted three HIPAA breach reports affecting thousands of individuals, including two reports involving unencrypted laptops and another large breach involving a stolen unencrypted thumb drive:

On March 23, 2013, HHS received notification from OHSU regarding a breach of its unsecured electronic protected health information (“ePHI”) resulting from a stolen laptop computer;
On July 28, 2013, HHS received notification from OHSU regarding a breach of its ePHI resulting from storing ePHI at an internet-based service provider without a business associate agreement; and.

These incidents each garnered significant local and national press coverage. OCR’s investigation uncovered evidence of widespread vulnerabilities within OHSU’s HIPAA compliance program, including the storage of the ePHI of more than 3,000 individuals on a cloud-based server without a business associate agreement. OCR found significant risk of harm to 1,361 of these individuals due to the sensitive nature of their diagnoses.

OCR’s investigation showed the reported breaches resulted from widespread, long-term, systematic and unresolved HIPAA violations by OHSU that OCR attributed to an inadequate commitment to and oversight of HIPAA compliance by OHSU C-level management which resulted in the failure by OHSU to appropriately monitor the adequacy of its ongoing compliance and to assess and address changes in its enterprise-wide risk and compliance obligations on an ongoing basis. OHSU performed risk analyses in 2003, 2005, 2006, 2008, 2010, and 2013, but OCR’s investigation found that these analyses did not cover all ePHI in OHSU’s enterprise, as required by the Security Rule. While the analyses identified vulnerabilities and risks to ePHI located in many areas of the organization, OHSU did not act in a timely manner to implement measures to address these documented risks and vulnerabilities to a reasonable and appropriate level. OHSU also lacked policies and procedures to prevent, detect, contain, and correct security violations and failed to implement a mechanism to encrypt and decrypt ePHI or an equivalent alternative measure for ePHI maintained on its workstations, despite having identified this lack of encryption as a risk.

OCR concluded that the reported breaches were the result of long-standing, systematic deficiences in OHSU’s processes and procedures for HIPAA compliance, including the following:

While OHSU reportedly performed risk analyses in 2003, 2005, 2006, 2008, 2010, and 2013, OCR says its investigation found that these analyses did not cover all ePHI in OHSU’s enterprise, as required by the Security Rule;
While the analyses identified vulnerabilities and risks to ePHI located in many areas of the organization, OHSU did not act in a timely manner to implement measures to address these documented risks and vulnerabilities to a reasonable and appropriate level;
OHSU also lacked policies and procedures to prevent, detect, contain, and correct security violations and failed to implement a mechanism to encrypt and decrypt ePHI or an equivalent alternative measure for ePHI maintained on its workstations, despite having identified this lack of encryption as a risk;
OHSU failed to comply with its duty under HIPAA to enter into a business associate agreement with a vendor before allowing a vendor business associate to store ePHI; and
The absence of meaningful C-suite leadership oversight and commitment to HIPAA compliance.

Based on these investigations, OCR concluded that while OHSU initially adopted HIPAA Policies, the reported breaches were the result of a series of widespread and ongoing breaches of HIPAA resulted including the following:

From January 5, 2011, until July 3, 2013, OHSU disclosed the ePHI of 3,044 individuals in violation of Privacy Rules §§160.103 and 164.502(a) when workforce members disclosed the ePHI to a third party internet-based service provider without obtaining a business associate agreement or other satisfactory assurance that the internet-based service provider would safeguard the ePHI;
From January 5, 2011 until July 3, 2013 OHSU failed to obtain a business associate agreement from an internet-based service provider that was storing ePHI on its behalf as a business associate as required by 45 C.F.R. § 164.308(b);
From January 5, 2011 until July 3, 2013 OHSU failed to implement policies and procedures to prevent, detect, contain, and correct security violations as required under Privacy Rule § 164.308(a)(1)(i);
From July 12, 2010 to present, OHSU failed to implement a mechanism to encrypt and decrypt ePHI or an equivalent alternative measure for all ePHI maintained in OHSU’s enterprise as required by Privacy Rules §§ 164.312(a)(2)(iv) and 164.306(d)(3)); and
From May 29, 2013 until July 3, 2013, OHSU failed to implement policies and procedures to address security incidents in violation of Privacy Rule § 164.308(a)(6)(i).

According to statements made by OCR Director Jocelyn Samuels in OCR’s announcement of the OHSU Settlement, the breaches should not have happened. “From well-publicized large scale breaches and findings in their own risk analyses, OHSU had every opportunity to address security management processes that were insufficient,” said OCR Director Jocelyn Samuels. OCR’s announcement also signals that OCR views inadequate commitment and oversight by OHSU’s senior management to have played a key role in the creation and perpetuation of the OHSU violations. It quotes OCR Director Jocelyn Samuels as stating, “This settlement underscores the importance of leadership engagement and why it is so critical for the C-suite to take HIPAA compliance seriously.”

OCR’s announcement of the OHSU Settlement emphasizes its determination that a lack of commitment and oversight by C-level management resulted in the failure by OHSU to periodically perform a comprehensive enterprise risk analysis and to reevaluate and update that analysis and its policies, practices, procedures and training as warranted by changing events and guidance.

To resolve the HIPAA charges, the OHSU Settlement requires OHSU to pay OCR $2,700,000 as well as take a long series of corrective actions detailed in the Corrective Action Plan incorporated into the Settlement Agreement. The requirements of the Corrective Action Plan both seek to address the specific weaknesses that lead to the breaches of unsecured ePHI reported by OHSU in its breach notifications as well as the broader deficiencies in OHSU’s overall HIPAA compliance practice by requiring among other things that OHSU:

Conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of ePHI at all OHSU facilities and on all systems, networks, and devices that create, receive, maintain, or transmit ePHI;.
Develop and present to OCR for approval a comprehensive written risk management plan that explains OHSU’s strategy for implementing security measures sufficient to reduce the risks and vulnerabilities identified in the risk analysis to a reasonable and appropriate level based on OHSU’s circumstances as well as a comprehensive, enterprise-wide plan to implement effective oversight of OHSU workforce members to ensure their adherence to HIPAA Rules and OHSU’s internal privacy and security policies and procedures with specific timelines for their expected completion and compensating controls identified in the interim to safeguard OHSU’s ePHI;
Implement and administer the written risk management plan and other safeguards as approved by OCR;
Provide updates to OCR about OHSU’s implementation of required encryption including a Mobile Device Management (MDM) solution that ensures all OHSU- owned and personally-owned mobile devices (tablets, smart phones, and other mobile devices) that access ePHI on OHSU’s secure network are encrypted other than mobile devices for which OHSU has granted exceptions based on documented evidence of the implementation of alternative reasonable compensating controls to protect the ePHI on such devices;
Report to OCR on OHSU’s efforts to a solution to enforce encryption of ePHI on OHSU-owned and personally- owned devices (laptops, desktops, and medical equipment) connecting to OHSU’s secure wired and wireless networks except for any devices for which OHSU has granted exceptions to the encryption requirement;
Report to OCR about its implementation of policies that prohibit the transfer of data containing ePHI from OHSU-owned and personally-owned devices to unencrypted removable storage devices (USB drives and portable hard drives) and implementation of a technical solution that enforces the policies prohibiting transfers of this type when attached to the OHSU secure network, except for any removable storage devices for which OHSU has granted exceptions based on documented evidence of reasonable compensating controls that have been implemented to protect the ePHI on such devices;
Send a communication to all members of the OHSU community describing its commitment to enterprise encryption;
Prepare to the satisfaction of OCR security awareness training materials needed to implement its security management processing including specific privacy and security awareness related to a) use of internet-based information storage services; b) disclosures to third party entities that require a business associate agreement or other reasonable assurance in place to ensure that the business associate will safeguard the protected health information (PHI) and/or ePHI; c) regarding managers, effective oversight of workforce members’ uses and disclosures of PHI, including ePHI, to ensure the workforce members’ compliance with the Privacy and Security Rules and OHSU’s internal policies and procedures; d) security incident reporting; and e) password management;
Initially train all workforce members with access to PHI and/or ePHI with 120 days of OCR’s approval of the training and thereafter ensure that new workforce members are trained with 15 days of hire and that all workforce members subsequently continue to receive training on an on-going basis;
Review the security awareness training materials annually, and, where appropriate, update the training to reflect changes in Federal law or HHS guidance, any issues discovered during audits or reviews, and any other relevant developments;
Management oversight and supervision of the implementation and administration of the corrective actions required by the Corrective Action Plan and HIPAA compliance; and

Management reporting to OCR on its actions and compliance with the Corrective Action Plan.

SJH Settlement

Similarly, the SJH Settlement OCR announced on October 18, 2016 with St. Joseph Health (SJH) requires SJH to pay a $2.4 million plus settlement payment, conduct an enterprise-wide risk analysis and implement and administer a comprehensive correction plan to settle OCR charges that SJH violated HIPAA by allowing files containing ePHI of 31,800 individuals that SJH created for its participation in the Medicare meaningful use program to be publicly accessible on the internet from February 1, 2011, until February 13, 2012.

A nonprofit integrated Catholic health care delivery system sponsored by the St. Joseph Health Ministry, who through its 24,000 employees and 6,000 physicians provides a range of health care services to more than 137,000 inpatients and 3.6 million outpatients each year at SHS’ 4 acute care hospitals, home health agencies, hospice care, outpatient services, skilled nursing facilities, community clinics and physician organizations located throughout California and in parts of Texas and New Mexico.

OCR’s charges against SJH arose out of OCR’s investigation into a 2012 breach notification report SJS filed with OCR. On February 14, 2012, SJH reported to OCR that files containing electronic protected health information (ePHI) of 31,800 individuals from five of the SJH hospitals-St. Jude Medical Center, Mission Hospital, Queen of the Valley Medical Center, Santa Rosa Memorial Hospital, and Petaluma Valley Hospital that SJH created for its participation in the meaningful use program were publicly accessible on the internet from February 1, 2011, until February 13, 2012, via Google and possibly other internet search engines.

SJH’s report to OCR indicated that this public access resulted from a configuration within its network server in which PDF files containing following patient information were uploaded: patient names; BMI; blood pressure; lab results; smoking status; diagnoses lists; medication allergies; advance directive status and demographic information (language, ethnicity, race, sex, and birth date). The server SJH purchased to store the files included a file sharing application whose default settings allowed anyone with an internet connection to access them. Upon implementation of this server and the file sharing application, SJH did not examine or modify it. As a result, the public had unrestricted access to PDF files containing the ePHI of 31,800 individuals, including patient names, health statuses, diagnoses, and demographic information from February 14, 2012 until SJH blocked external access to the ePHI when it shut down the application February 13, 2012.

OCR’s investigation indicated the following potential violations of the HIPAA Rules:

From February 1, 2011 to February 13, 2012, SJH potentially disclosed the PHI of 31,800 individuals;
Evidence indicated that SJH failed to conduct an evaluation in response to the environmental and operational changes presented by implementation of a new server for its meaningful use project, thereby compromising the security of ePHI;
Although SJH hired a number of contractors to assess the risks and vulnerabilities to the confidentiality, integrity and availability of ePHI held by SJH, evidence indicated that this was conducted in a patchwork fashion and did not result in an enterprise-wide risk analysis, as required by the HIPAA Security Rule.

To resolve charges resulting from these findings, the SJH Resolution Agreement requires SJH to pay OCR a $2,140,500 settlement payment and adopt a comprehensive corrective action plan which among other things, requires SJH to conduct an enterprise-wide risk analysis, develop and implement a risk management plan, revise its policies and procedures, and train its staff on these policies and procedures. SJH’s Chief Executive Officer, Annette M. Walker, is named in the Corrective Action Plan as the SJH authorized representative and contact person responsible for overseeing the CAP implementation.

Among other things, the Corrective Action Plan specifically requires that SJH:

Within 240 days, conduct an enterprise-wide analysis and provide a report to OCR which includes a complete inventory of all electronic equipment, data systems, and applications that contain or store ePHI, and prepare and deliver to OCR for review an enterprise-wide risk analysis that identifies all security risks and vulnerabilities that incorporates all electronic equipment, data systems, and applications controlled, administered, or owned by SJH, its workforce members, and affiliated staff that contains, stores, transmits, or receives electronic protected health information (ePHJ);
Revise this risk analysis plan as directed by OCR based on its review of the presented risk analysis;
Develop and implement to the satisfaction of OCR an organization-wide risk management plan to address and mitigate any security risks and vulnerabilities identified in the risk analysis;
Distribute the risk management plan as finally approved by OCR to to workforce members involved with implementation of the plan within 30 days of OCR approval;
Revise to OCR’s satisfaction, adopt and implement within 30 days of OCR’s approval compliant HIPAA policies and procedures;
Prepare for review of OCR training materials and once approved by OCR, provide initial training to required workforce members, and obtain certification of completion of that training from each required workforce member within 60 days of OCR’s approval of the training and thereafter at least annually as long as the Corrective Action Plan remains in force;
Promptly conduct a documented investigation of any information indicating a potential workforce member violation of the new HIPAA policies in the manner required by OCR and if the investigation confirms a violation (Reportable Event), notify OCR of the relevant facts, findings, corrective actions and sanctions imposed against the violating workforce member in the manner required by the Corrective Action Plan;
Submit annual report to OCR signed and attested to by an SJH officer, which contains the information and attestations of compliance with the requirements of the Corrective Action Plan in accordance with the Corrective Action Plan;
Retain for inspection and copying and provide to OCR upon request all documents and records relating to compliance with this Corrective Action Plan for six (6) years from the Effective Date of the SJH Settlement Agreement.

Take Away For Other Covered Entities & Business Associates

The OHSU and SJH Settlement Agreements send a clear message to all Covered Entities and business associates that they must be prepared to demonstrate not only that their initial adoption and implementation of required HIPAA Privacy and Security policies and safeguards, but also that their organization’s leadership needs to be prepared to demonstrate their commitment to HIPAA compliance by making adequate provision for HIPAA compliance, and appropriately monitoring developments that could impact the adequacy of their existing measures and timely update their systems and security, policies, procedures, training and other relevant safeguards.

The Settlements make clear that Covered Entities and their business associates should ensure that their organization possesses a well-documented current enterprise-wide risk assessment, as well as has in place and is administering as necessary to maintain the currency and adequacy of its risk assessment strong practices for conducting documented evaluations of their own HIPAA security, policies, practices, audits and investigations and other procedures necessary to comply with HIPAA, taking into account recent OCR guidance, its initiation of its Phase II audit program, the insights offered by OCR’s ever growing list of enforcement actions and compliance tools, as well as changes in systems, documentation, software, equipment or other occurrences within the operations of the Covered Entity or business associate’s operations that could impact the currency and adequacy of its risk assessment or otherwise raise compliance risks.

In this respect, Covered Entities and business associates are encouraged to take special note of the advisability of specifically reviewing and updating their HIPAA policies, practices, business associate agreements, training, oversight and documentation to in response to the guidance and insight that OCR provides, including:

A series of recent OCR Resolution Agreements emphasizing the need for Covered Entities and their Business Associates to verify that have in place, and review and update as necessary business associate agreements e.g. HIPAA Settlement Illustrates The Importance Of Reviewing And Updating, As Necessary, Business Associate Agreements (September 23, 2016); Business Associate’s Failure to Safeguard Nursing Home Residents’ PHI Leads to $650,000 HIPAA Settlement (June 29, 2016);
Clarification of Permissible Fees for HIPAA Right of Access – Flat Rate Option Up to $6.50 is Not a Cap on All Fees for Copies of PHI (May 23, 2016)
Guidance On HIPAA & Cloud Computing released October 6, 2016, which provides guidance for Covered Entities and business associates about contracting and other procedures that HIPAA-regulated Covered Entities and their business associates should implement when contracting for and using Cloud Computing Services;
Joint Guidance published October 21, 2016 by the Federal Trade Commission and OCR reminding Covered Entities and their business associates of the need to ensure that in addition to fulfilling the technical content requirements of HIPAA, their HIPAA authorizations, privacy practices notices and other HIPAA notices and communications are written and presented in plan language, include required specific terms and descriptions and in a manner that does not mislead individuals about their rights or about what is happening with their PHI. Furthermore, where Covered Entities and their business associates contemplate that businesses associates may request that individuals sign HIPAA authorizations, Covered Entities and their business associates should the Covered Entity and business associate have in place a current, signed HIPAA-compliant business associate agreement that that expressly authorizes the business associate to request the HIPAA authorization in light of statements in the Joint Guidance indicating that OCR views the Privacy Rules as prohibiting a business associate from asking a consumer to sign a HIPAA authorization unless its business associate contract expressly permits the business associate to do so; and
Other OCR enforcement actions, tools and guidance. See, e.g. All Covered Entities Should Learn Lessons From Mississippi Medical Center’s $2.75 Million HIPAA Resolution Agreement; Providers, Health Plans Should Confirm Copy Charges Comply With New OCR HIPAA Guidance; $2 Million+ HIPAA Settlement, FAQ Warn Providers Protect PHI From Media, Other Recording Or Use; Addressing Gaps in Cybersecurity: OCR Releases Crosswalk Between HIPAA Security Rule and NIST Cybersecurity Framework; HIPAA Security Rule Crosswalk to NIST Cybersecurity Framework.

Employer and other health plan sponsors, health plan fiduciaries and business associates, and their service providers also generally will want to consider their responsibilities to provide and enforce employer certifications, as well as the fiduciary obligations health plan fiduciaries under the fiduciary responsibility rules of the Employee Retirement Income Security Act (ERISA). Among other things, wrongful disclosure of PHI to a sponsoring employer or others could violate HIPAA or other plan terms. Furthermore, Department of Labor officials have indicated stated that a fiduciary’s general fiduciary responsibilities can apply to the protection and administration of PHI and other health plan information as well as create a duty by a responsible fiduciary to prudently investigate and take steps to address breaches or other potential concerns that place PHI at risk. See, HIPAA Settlement Warns Health Plans, Sponsoring Employers & Business Associates To Manage HIPAA Risks.

Furthermore, as breaches of PHI and other violations of HIPAA also frequently give rise to responsibilities or risks under a broad range of other federal and state laws medical and financial privacy and data security, Medicare and other terms of federal program participation, medical credentialing, licensure and ethics, insurance and Employee Retirement Income Security Act fiduciary responsibilities in the case of health plans, contractual, tort and other exposures, Covered Entities and their business associates also generally are best served to take into account these other responsibilities and exposures in conjunction with the design and administration of their HIPAA compliance and risk management policies and practices.

Covered Entities and their business associates also should seek advice from legal counsel regarding the adequacy of their compliance, investigatory, training, management oversight, training, reporting, documentation, document retention and other processes and procedures that could reduce risks of HIPAA violations and position the organization to effectively and more efficiently respond to a potential breach, audit, investigation or enforcement action and mitigate the costs and potential liability exposures that increasingly attends these events. In addition, given the typically high financial, operational and legal costs typically incurred to conduct investigations, report and redress breaches, and respond to OCR audits or investigations, much less make any payments and implement any corrective actions required to settle OCR changes, most Covered Entities and their business associations will want to consider the advisability and adequacy of insurance and other sources of funding or indemnification for the often substantial costs that often attend a HIPAA breach, audit or enforcement event. Since HIPAA violations under certain circumstances also can give rise to felony criminal liability, boards of directors and other leaders of Covered Entities and business associates also will want to ensure that their HIPAA compliance policies and practices also are incorporated and monitored by management as part of their organization’s overall Federal Sentencing Guideline Compliance programs and practices.

About The Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,”“Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for work, teachings and publications on HIPAA and other privacy and data security concerns earned in connection with her more than 28 years’ of involvement advising and representing business and government clients domestically and internationally about workforce and human resources, employee benefits; health care; insurance and financial; privacy and data security and other performance management, regulatory, internal controls and other compliance, risk management, public policy and operational other key concerns.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a Fellow in the American College of Employee Benefit Counsel, past Group Chair and current Defined Contribution Plans Committee Co-Chair, Groups and Substantive Committee and Membership Committee Members, past Welfare Plans Committee Chair and Co-Chair, and former Fiduciary Responsibility Vice Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current ABA International Section Life Sciences Committee Vice Chair, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, former ABA Joint Committee on Employee Benefits Council Representative and Marketing Committee Chair and a prolific author and highly popular speaker and consultant, Ms. Stamer helps management manage.

Ms. Stamer’s legal and management consulting work throughout her nearly 30-year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

As a core component of her work, Ms. Stamer has worked extensively throughout her career with health care providers, health plans, health care clearinghouses, their business associates, employers, banks and other financial institutions, their technology and other vendors and service providers, and others on legal and operational risk management and compliance with HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and concerns; prevention, investigation, response, mitigation and resolution of known or suspected data or privacy breaches or other incidents; defending investigations or other actions by plaintiffs, OCR, FTC, state attorneys’ general and other federal or state agencies; reporting and redressing known or suspected breaches or other violations; business associate and other contracting; insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.

Beyond her extensive involvement advising and representing clients on privacy and data security concerns and other health industry matters, Ms. Stamer also has served for several years as a scrivener for the ABA JCEB’s meeting with OCR, the Chair of the Southern California ISSA Health Care Privacy & Security Summit, and an editorial advisory board member, author, program chair or steering committee member, and faculties for a multitude of other programs and publications regarding privacy, data security, technology and other compliance, risk management and operational concerns in the health care, health and other insurance, employee benefits and human resources, retail, financial services and other arenas.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares shared her thought leadership, experience and advocacy on HIPAA and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association, Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Board Compliance Chair and Board member of the National Kidney Foundation of North Texas, current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management. Examples of her many highly regarded publications on these matters include “Protecting & Using Patient Data In Disease Management: Opportunities, Liabilities And Prescriptions,” “Privacy Invasions of Medical Care-An Emerging Perspective,” “Cybercrime and Identity Theft: Health Information Security: Beyond HIPAA,” as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clientson the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

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Posted by Cynthia Marcotte Stamer

New ACA Student Health Insurance Guidance Allows College Payment Of Working Students’ Student Health Insurance Premiums Post 2016

October 21, 2016

Colleges and other institutions of higher education within the meaning of the Higher Education Act of 1965 (schools) may continue until further notice to pay or subsidize student health insurance coverage premiums for students performing work-study or other services for the school as part of their financial aid package without fear of prosecution for violation of the group market reform requirements of the Patient Protection & Affordable Care Act (ACA), according to ACA guidance jointly published by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Tri-Agencies) today.

Many schools have arrangements in place with insurers under which students can purchase individual policies providing health insurance coverage (“student health insurance coverage”), which are individual policies required to comply with the individual market reforms of the ACA other than as provided in the student health insurance guidance issued by HHS. See 45 CFR 147.145.

Of course, the agreement between the college and the student health insurance coverage issuer makes the coverage available for purchase by most if not all students attending the school by paying the specified premium. In some cases, however, the school might include in a student’s financial aid package a reduction to the cost of coverage of the otherwise applicable premium for student health insurance through a credit, offset, reimbursement, stipend, or similar arrangement (a premium reduction arrangement). If the student also performs services under a workstudy or other relationship, however, Tri-Agency guidance interpreting the Group Market Reforms could present a problem unless qualifies for an exemption from the Tri-Agencies’ interpretation of the Group Market Reforms as prohibited employers from paying or reimbursing individual health insurance policy premiums of employees..

The Tri-Agencies’ first announced their interpretation of the Group Market Reforms as prohibiting employer reimbursement of individual health insurance premiums in 2013. Technical Release 2013-03 announced that employers sponsoring arrangements under which the employer directly pays or reimburses premiums for employees’ individual health insurance coverage directly, or through a cafeteria plan pre-tax premium program, health flexible spending account arrangement (health FSA), health reimbursement arrangement (HRA), or other employer arrangement would incur excise taxes liability under section 4980D of the Internal Revenue Code and other penalties and liabilities for violating the ACA Group Market Reform rules. This Tri-Agency Guidance states that because by their very definition, these arrangements promise to reimburse or pay medical expenses on the employee’s behalf only up to a certain dollar amount each year, employer-sponsored arrangements that pay or reimburse employees for individual health insurance premiums generally violate the prohibition on annual dollar limits under Public Health Services (PHS) Act section 2711 and the requirement to provide certain preventive services without cost sharing under PHS Act section 2713 unless properly integrated with a group health plan that otherwise complies with ACA requirements. Furthermore, because the Tri-Agencies also construe the ACA market reforms as preventing the integration of EPPs and individual health insurance coverage, the Tri-Agencies’ guidance also states that an arrangement through which an employer reimburses or directly pays the premium for individual coverage violates the ACA market reform rules. Accordingly, unless otherwise exempted from coverage, this Tri-Agency guidance would prohibit schools from reimbursing students providing services to the school for student health insurance premiums.

Under Tri-Agency guidance published in February, 2016, the Tri-Agencies previously announced they would not that a premium reduction arrangement provided by a school to a student fails to satisfy PHS Act section 2711 or 2713 if the arrangement is offered in connection with other student health coverage (insured or self-insured) for a plan year or policy year beginning before January 1, 2017, but until October 21, 2016, did not address the post-2016 treatment of these arrangements . See Technical Release 2016-01; Notice 2016-17, Insurance Standards Bulletin, Application of the Market Reforms and Other Provisions of the Affordable Care Act to Student Health Coverage.

Under guidance jointly published October 21, 2016, however, the Tri-Agencies extended their policy of non-enforcement with respect to school student health insurance premium reimbursement arrangements beyond its previously announced December 31, 2016 expiration date. FAQs About Affordable Care Act Implementation Part 33 (“FAQ 33”) jointly published by the Tri-Agencies states that “pending further guidance, the Tri-Agencies consider it appropriate to further extend the enforcement relief provided in the February 5, 2016 guidance and will not assert that a premium reduction arrangement offered by an institution of higher education fails to satisfy PHS Act section 2711 or 2713 if the arrangement is offered in connection with student health coverage (insured or self-insured).

About The Author

Cynthia Marcotte Stamer is a noted Texas-based management lawyer and consultant, author, lecture and policy advocate, recognized for her nearly 30-years of cutting edge management work as among the “Top Rated Labor & Employment Lawyers in Texas” by LexisNexis® Martindale-Hubbell® and as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,”“Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine.

For additional information about this topic or Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal control and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at http://www.Solutionslawpress.com.

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 h ere. ©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™. All other rights reserved.

IMPORTANT NOTICES

These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department 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

Comments Off on New ACA Student Health Insurance Guidance Allows College Payment Of Working Students’ Student Health Insurance Premiums Post 2016 | 105(h), 4980D, 6039D, ACA, Affordable Care Act, Cafeteria Plans, compliance, Employee Benefits, Employer, Employers, Employment, ERISA, health benefit, health insurance, Health Plans, health reform, HR, Human Resources, Insurance, insurers, Internal Controls, Patient Protection and Affordabel Care Act, Uncategorized | Tagged: ACA, College, employer payment plan, Financial Aid, higher education, HRA, HSA, premium reimbursement, Schools | Permalink
Posted by Cynthia Marcotte Stamer

ERISA Violations Cost More Now

October 19, 2016

ERISA Civil Penalties For Employers, Fiduciaries & Plan Administrators Rose August 1

Employer and other employee benefit plan sponsors, fiduciaries and administrators required by the Department of Labor Employee Benefit Security Administration (EBSA) to pay a civil monetary penalty for a post-November 2, 2015 violation of the employee benefit related obligations of the Employee Retirement Income Security Act (ERISA) should expect to pay more if EBSA assesses the penalty after August 1, 2016.

In 2015, Congress passed the Federal Civil Penalties Inflation Adjustment Act Improvements Act, which requires the Department of Labor (DOL) and other agencies adjust their penalties for inflation each year. In response to this mandate, the DOL has published two interim final rules to adjust its penalties for inflation effective August 1:

Federal Civil Penalties Inflation Adjustment Act Catch-Up Adjustments, which is DOL-only rule covering the vast majority of penalties assessed by a number of the DOL’s agencies including the DOL’s Employee Benefits Security Administration, Mine Safety and Health Administration, Occupational Safety and Health Administration, Office of Workers’ Compensation Programs, and Wage and Hour Division; and
Federal Civil Penalties Inflation Adjustment Act Catch-Up Adjustments: H-2B Temporary Non-agricultural Worker Program, which will be issued jointly with the Department of Homeland Security to adjust penalties associated with the H-2B temporary guest worker program

Both rules define rules that DOL plans to use to apply the 2015 Inflation Adjustment Act’s formula on how to determine the proper adjustment for each penalty effective August 1, 2016 to civil penalties that DOL can access against employers for violations.

The new method will adjust penalties for inflation, though the amount of the increase is capped at 150 percent of the existing penalty amount. The baseline is the last increase other than for inflation. The following chart shows the new civil penalty amounts assessable by EBSA after August 1, 2016 for post November 2, 2015 ERISA violations.

ERISA Civil Monetary Penalties Effective 8/16/2016 The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requires federal agencies to increase the amounts of civil monetary penalties annually for inflation. The new penalties under the Employee Retirement Income Security Act of 1974 (ERISA) shown below took effect August 16, 2016 and apply to a penalty assessed after August 1, 2016 that relates to a violation that occurred after November 2, 2015.
Offending Party	Action in Question	ERISA Section	Penalty As of August 15, 2016	Penalty Effective August 16, 2016
Employer	Failure to maintain records or furnish information sufficient to determine benefits	209(b)	$11 per employee	$28 per employee
Plan administrator	Failure/refusal to file annual report (Form 5500) with DOL	502(c)(2)	$1,100 per day	$2,063 per day
Administrator of multiemployer plan	Failure to certify endangered or critical (funding) status	502(c)(2)	$1,100 per day	$2,063 per day
Single-employer defined benefit plan	Failure to provide notice of funding-based limit on certain forms of distribution	101(j) and 502(c)(4)	$1,000 per day	$1,632 per day
Administrator of multiemployer plan	Failure to provide financial and actuarial reports on written request	101(k) and 502(c)(4)	$1,000 per day	$1,632 per day
Sponsor/Administrator of multiemployer plan	Failure to provide timely estimate of withdrawal liability upon request	101(l) and 502(c)(4)	$1,000 per day	$1,632 per day
Administrator of 401(k) plan with automatic contribution arrangement	Failure to provide notice to participants of their rights and obligations under the arrangement before the start of the plan year	514(e)(3) and 502(c)(4)	$1,000 per day	$1,632 per day
Multiple employer welfare arrangement (MEWA)	Failure/refusal to meet applicable reporting and disclosure requirements	502(c)(5)	$1,100 per day	$1,502 per day
Plan administrator	Failure to provide benefit plan information (including SPD) to DOL	502(c)(6)	$110 per day; capped at $1,100 per request	$147 per day; capped at $1,472 per request
Administrator of defined contribution plan with participant-directed investments	Failure/refusal to provide participants and beneficiaries with “blackout” notice or notice of right to divest employer securities	502(c)(7)	$100 per day per required recipient	$131 per day per required recipient
Underfunded multiemployer pension plan	Failure to timely adopt a funding improvement or rehabilitation plan or to meet benchmarks by the end of the improvement period	502(c)(8)	$1,100 per day	$1,296 per day
Employer	Failure to disclose group health plan benefits to states re Medicaid/CHIP eligible individuals	502(c)(9)	$100 per employee per day	$110 per employee per day
Employer	Failure to provide employees with written notice of opportunities for state-provided premium assistance for health coverage	502(c)(9)	$100 per employee per day	$110 per employee per day
Group health plan or plan’s health insurance issuer	Failure to follow genetic information protocols	502(c)(10)	$100 per participant per day	$110 per participant per day
Group health plan or plan’s health insurance issuer	Failure to follow genetic information protocols, where de minimis failure is not corrected before plan receives notice of violation from DOL	502(c)(10)	Minimum penalty is $2,500	Minimum penalty is $2,745
Group health plan or plan’s health insurance issuer	Failure to follow genetic information protocols, where violation is more than de minimis	502(c)(10)	Minimum penalty is $15,000	Minimum penalty is $16,473
Group health plan or plan’s health insurance issuer	Failure to follow genetic information protocols due to reasonable cause, not willful neglect	502(c)(10)	Maximum penalty is $500,000	Maximum penalty is $549,095
Plan fiduciary	Making improper distribution	502(m)	$10,000 per improper distribution	$15,909 per improper distribution
Group health plan	Willful failure to provide summary of benefits coverage to participant or beneficiary	715 and new Labor Reg. §2575.2(m)	$1,000 per failure	$1,087 per failure
Sponsor of Cooperative and Small Employer Charity (CSEC) plan	Failure to establish or update a funding restoration plan	502(c)(12)	$100 per day	$100 per day (no change)

The civil penalty increase provides yet another reason for employer and other plan sponsors,. fiduciaries and administrators to strive to prevent ERISA violations.

About The Author

Cynthia Marcotte Stamer is a noted Texas-based management lawyer and consultant, author, lecture and policy advocate, recognized for her nearly 30-years of cutting edge management work as among the “Top Rated Labor & Employment Lawyers in Texas” by LexisNexis® Martindale-Hubbell® and as among the “Best Lawyers In Dallas” for her work in the field of “Tax: Erisa & Employee Benefits” and “Health Care” by D Magazine.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a Fellow in the American College of Employee Benefit Counsel, past Chair and current committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, a former ABA Joint Committee on Employee Benefits Council Representative and , Ms. Stamer helps management manage.

Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, expat and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.
Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.

Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer serves on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and as an editorial advisor and contributing author of many other publications. Her leadership involvements with the American Bar Association (ABA) include year’s serving many years as a Joint Committee on Employee Benefits Council representative; ABA RPTE Section current Practice Management Vice Chair and Substantive Groups & Committees Committee Member, RPTE Employee Benefits & Other Compensation Committee Past Group Chair and Diversity Award Recipient, current Defined Contribution Plans Committee Co-Chair, and past Welfare Benefit Plans Committee Chair Co-Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; International Section Life Sciences Committee Policy Vice Chair; and a speaker, contributing author, comment chair and contributor to numerous Labor, Tax, RPTE, Health Law, TIPS, International and other Section publications, programs and task forces. Other selected service involvements of note include Vice President of the North Texas Healthcare Compliance Professionals Association; past EO Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former Southwest Benefits Association Board of Directors member, Continuing Education Chair and Treasurer; former Texas Association of Business BACPAC Committee Member, Executive Committee member, Regional Chair and Dallas Chapter Chair; former Society of Human Resources Region 4 Chair and Consultants Forum Board Member and Dallas HR Public Policy Committee Chair; former National Board Member and Dallas Chapter President of Web Network of Benefit Professionals; former Dallas Business League President and others. For additional information about Ms. Stamer, seeCynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal control and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at Solutionslawpress.com including:

OFCCP Ups Government Contractor Vet Hiring Targets
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Final Investment Advice Fiduciary Rules Mean Work For Employers, Fiduciaries & Advisors
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Expect New Fed Regs To Increase Childcare Costs
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Check Health Plan Privacy For New Guidance Compliance
Marketplace Data Deficiencies Signal Employer ACA Headaches
SCOTUS: States Can’t Require Reporting of ERISA Health Plan Data
IRS OK’s Skipping Certain 2015 Form 5500 Questions
DOL Proposes Changes To Summary of Benefit & Coverage Rules
More proof government should stay out of healthcare
Health Care Quality: Different Meaning For Care Vs. Coverage
IRS Changes Plan Qualification Procedures, Returns, Other Procedures
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Improve HR Value To Company By Making HR A Performance Rather Than People Department
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Legal Review Of Health Plan Documents, Processes Needed To Mitigate Employer’s Excise Tax & Other Health Plan Risks
EEOC ADA Suit Against Magnolia Health Highlights US Employer’s Growing Disability Discrimination Risks
Proposed OSHA Regs Will Clarify Employer’s Continuing Duty To Ensure OSHA 300 Log Completeness
10 Practical Pointers To Use Law To Better Strengthen The Legal Defensibility Of Your Business & Its Leaders

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. ©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc. ™. All other rights reserved.

Comments Off on ERISA Violations Cost More Now | Civil Monetary Penalties, Employer, Employers, ERISA, fiduciary duty, Fiduciary Responsibility, health plan, Health Plans, pension plan, Plan Admistrator, retirement plan, Retirement Plans, Uncategorized | Permalink
Posted by Cynthia Marcotte Stamer

IRS Qualified Plan Correction Procedures Changing 1/1/17

October 13, 2016

Employers and other plan sponsors of tax-qualified 401(k) and other defined contribution or defined benefit plans (retirement plans) and others working to avoid plan disqualification by correcting plan documentation, administration or other problems that otherwise could disqualify their program for tax qualified treatment under the Internal Revenue Code (Code) under the Internal Revenue Service (IRS) Employee Plans Compliance Resolution System (EPCRS) or the Audit Closing Agreement Program (Audit CAP) modified rules beginning January 1, 2017, under changes announced by the IRS in Revenue Procedure 2016-51 on September 29, 2016.

The EPCRS and Audit CAP programs are two IRS correction programs commonly used to preserve the tax qualified status of a retirement plan affected by plan documentation, administration or other deficiencies that otherwise would result in the plan ceasing to qualify as a tax retirement plan under the Code. The EPCRS program generally is available to correct and resolve certain qualification concerns not eligible for self-correction that retirement plan sponsors or plans self-identify and disclose to the IRS in accordance with the EPCRS correction procedures, In contrast, the Audit CAP program provides an avenue that may provide a pathway for a plan sponsor of a retirement plan with significant problems in its compliance with the Code’s qualification requirements that are discovered by the IRS on audit or during the determination letter application process to preserve the tax benefits associated with maintaining a retirement plan in compliance with the Code’s tax qualification requirements by entering into a Closing Agreement pursuant to which the problems are corrected and paying a reasonable sanction to the IRS based directly on the amount of tax benefits preserved and the nature, extent and severity of the failure, taking into account the extent to which correction occurred before audit.

Key changes to the EPCRS correction procedures scheduled to take effect on January 1, 2017 under Revenue Procedure 2016-51 include the following:

The IRS no longer will permit determination letter applications when applying the correction programs under EPCRS;
The requirement for a plan sponsor to submit a determination letter application to the IRS when correcting qualification failures that include a plan amendment no longer will apply; and
Fees associated with the Voluntary Correction Program (VCP) after December 31, 2017 will be user fees and no longer set forth in the EPCRS revenue procedure. For VCP submissions made in 2016, refer to Proc. 2016-8 and Rev. Proc. 2013-12 to determine the applicable user fee and after 2016, refer to the annual Employee Plans user fees revenue procedure to determine VCP user fees for that year. Availability of Self-Correction Program (SCP) for significant failures has been modified to provide that, for qualified individually designed plans, a determination letter need not be current to satisfy the Favorable Letter requirement

In addition to its announcements of changes to the EPCRS correction program Revenue Procedures 2016-51 also announces various modifications to the Audit CAP program, including:

A revised approach to determining Audit CAP sanctions under which

Sanctions, generally, will not be less than the fees associated with voluntary compliance under the EPCRS program;
The required reasonable sanction will no longer be a negotiated percentage of the maximum payment amount (MPA). Instead, auditors will review facts and circumstances and the MPA amount is simply one factor to consider. In addition, there are revised, additional factors that IRS considers;
New factors used in determining sanctions for late amender failures will apply;
For late amender failures discovered by the IRS, while reviewing a determination letter application, a new approach to determining the applicable sanction will apply;
The IRS will not provide partial refunds for certain Anonymous Submissions

Beyond specific modifications to the EPCRS and Audit CAP procedures, Revenue Procedures 2016-51 also:

Updates citations and cross-references for several items previously contained in Rev. Proc. 2013-12; and
Invites public comments on recovery of overpayments and on expanding EPCRS correction rules to provide additional guidance on the recovery or recoupment of overpayments.

Revenue Procedures 2016-51 is effective January 1, 2017. Plan sponsors may not elect to apply provisions before January 1, 2017. Rev. Proc. 2013-12, as modified by Rev. Proc. 2015-27 and Rev. Proc. 2015-28, are in effect for 2016. When Revenue Procedure 2016-51 takes effect on January 1, 2017:

Proc. 2013-12 no longer applies as of January 1, 2017; and
Provisions of Rev. Proc. 2015-27 and Rev. Proc. 2015-28 concerning EPCRS and other older revenue procedures will no longer apply.

About The Author

For additional information about this topic or Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal control and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at http://www.Solutionslawpress.com.

Comments Off on IRS Qualified Plan Correction Procedures Changing 1/1/17 | 401(k), compensation, compliance, defined benefit plan, Defined Benefit Plans, defined contribution plan, Defined Contribution Plans, Employee Benefits, Employer, Employers, Employment, ERISA, IRC, Retirement Plans, Uncategorized | Tagged: 401(k), Audits, Compensation, defined benefit plan, defined contribution plan, employee benefit plan, Employee Benefits, E{CRS, Plan Audits, plan qualification, Qualified Plan, Tax | Permalink
Posted by Cynthia Marcotte Stamer

DOL Invites FLSA Section 14(c) Certificateholders Test Prototype Application

October 12, 2016

The Department of Labor Wage and Hour Division is seeking input from Fair Labor Standards Act (FLSA) section 14(c) certificate holders to help to develop an online application to replace our current paper-based system. DOL hopes moving to a digital format will streamline the process, and make the transmission of information more convenient, efficient and secure for everyone.

DOL is looking for 8 current section 14(c) certificate holders to participate in some testing of its prototype as it moves forward. It hopes input early in the process will help DOL identify where to improve the product to ensure the final version meets your needs.

Participants volunteering will be asked to visit a prototype website, complete several short tasks, and answer questions about their experience and perceptions of the website.including how easy the application is to use.

DOL says if you volunteer to participate, and you are selected, DOL will contact you to schedule one or more one hour sessions at times convenient for you. You must have a computer and an Internet connection to participate. Each session will be conducted online using video conferencing accessible through your office or home computer. No travel is required.

If you are a current section 14(c) certificate holders to volunteer and interested, email WHDNOComm@dol.gov with the name of your organization, along with the name, email address, and phone number of the point of contact volunteering. DOL will contact the volunteers selected to participate.

Comments Off on DOL Invites FLSA Section 14(c) Certificateholders Test Prototype Application | compensation, Employer, Employers, Fair Labor Standards Act, Uncategorized | Permalink
Posted by Cynthia Marcotte Stamer

William Cowen New NLRB Regional Director In Southern California

September 29, 2016

William B. Cowen has been named the new Regional Director for the National Labor Relations Board Region 21 Office in Los Angeles. In his new position, Mr. Cowen will be responsible for enforcing the National Labor Relations Act in Southern California.

Since beginning his career at the Board in 1979, Mr. Cowen has served in various capacities throughout the Agency at both headquarters and in the field until he left to enter private practice in 1985.

In private practice, he was an attorney and principal of Institutional Labor Advisors, LLC which he founded in 1997. He was also founding member of Cowen and Associates in McLean, VA, which he established in 1996. Prior to this, Mr. Cowen was a partner with Coleman, Coxson, Penello, Fogleman & Cowen, P.C. from 1992 to 1996 and served as an attorney with Thompson and Hutson from 1985 to 1992.

Mr. Cowen was appointed by President George W. Bush to serve as a Board Member from January 22, 2002 to November 22, 2002. He then acted as Executive Assistant (Chief of Staff) to NLRB Chairman Robert J. Battista. Since 2006, Mr. Cowen has served as the Board’s Solicitor.

Mr. Cowen holds a B.A. degree in Mathematics from Case Western Reserve University in Cleveland, OH, graduating in 1976, and he received a Masters of Theological Studies degree from Wesley Theological Seminary in 2005. Mr. Cowen received his J.D. from Cleveland-Marshall College of Law, Cleveland State University, in 1979.

Mr. Cowen and his wife, Catrina Yong Cowen, will be relocating to Southern California from Arlington, Virginia.

The National Labor Relations Board is an independent federal agency vested with the power to safeguard employees’ rights to organize and to determine whether to have unions as their bargaining representative. The Agency also acts to prevent and remedy unfair labor practices committed by private sector employers and unions.

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Posted by Cynthia Marcotte Stamer

Manage Retaliation Risks In Response To Updated EEOC Enforcement Guidance, Rising Retaliation Claims

August 31, 2016

U.S. employers, employment agencies, unions, their benefit plans and fiduciaries, and their management and service providers should move quickly to review and strengthen their employment and other practices to guard against a foreseeable surge in employee retaliation claims and judgements likely to follow the August 30, 2016 issuance by the Equal Employment Opportunity Commission (EEOC) of its new final EEOC Enforcement Guidance on Retaliation and Related Issues and concurrently published Question and Answer Guidance(Guidance).

Updating and superceding 2008 guidance previously set forth in the Retaliation Chapter of the EEOC Enforcement Manual, the Guidance details the EEOC’s current policy for investigating and enforcing the retaliation prohibitions under each of the equal employment opportunity (EEO) laws enforced by EEOC, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), Title V of the Americans with Disabilities Act (ADA), Section 501 of the Rehabilitation Act, the Equal Pay Act (EPA) and Title II of the Genetic Information Nondiscrimination Act (GINA) as well as the ADA’s separate “interference” prohibitions, which prohibit coercion, threats, or other acts that interfere with the exercise of ADA rights. Among other things, the Guidance discusses :

What “retaliation means” and the scope of employee activity protected by the prohibitions against retaliation included in all laws enforced by the EEOC as well as the interference prohibitions of the ADA;
Legal analysis the EEOC will use to determine if evidence supports a claim of retaliation against an employer or other party;
Detailed examples of employer actions that the EEOC says may constitute prohibited retaliation; and
Remedies available for retaliation.

Understanding and properly responding to the Guidance is critically important for employers and other subject to the EEO laws because in light of the substantial and growing liability exposures retaliation claims present and the likely that the issuance of the Guidance will further fuel these risks.

Even before the EEOC published the Guidance, retaliation and interference exposures were a substantial source of concern for most employers. Employers, employment agencies and unions caught engaging in prohibited retaliation or intimidation in violation of EEO laws can incur compensatory and (except for governmental employers) punitive damage awards, back pay, front pay, reinstatement into a job or other equitable remedies, injunctive or administrative orders requiring changes in employer policies and procedures, managerial training, reporting to the EEOC and other corrective measures, as well as substantial investigation and defense costs.

These substantial liability exposures have become particularly concerning as retaliation and interference claims also have become increasingly common over the past decade. According to the EEOC, for example, EEO law retaliation charges have remained the most frequently alleged basis of charges filed with the EEOC since 2009 and in Fiscal Year 2015 accounted for 44.5 percent of all employment discrimination charges received by EEOC.
Since the EEOC’s issuance of the Retaliation Regs are likely to encourage additional retaliation or interference claims, employers, employment agencies, unions and their management, service providers and agents should quickly to evaluate the updated guidance provided in the Retaliation Reg and act to mitigate their exposure to retaliation retaliation and interference claims under these EEO laws.

Retaliation Risks Under EEO Laws

Federal EEO laws generally prohibit employers, employment agencies, or unions from punishing or taking other adverse actions against job applicants or employees for “asserting their rights” (often referred to as “protected activity”) to be free from harassment or other prohibited employment discrimination as well as certain other conduct. Such claims generally are referred to as “retaliation claims.”
Prohibited retaliation in violation of EEO laws occurs when an employer, employment agency or union takes a materially adverse action because an applicant or employee asserts rights or engages in certain other activities protected by the EEO laws.

To prevail in a retaliation claim, an applicant, employee or other individual generally must show that:

The individual engaged in prior protected activity;
The employer, employment agency or union took a materially adverse action; and
More likely than not, retaliation caused the adverse action by the employer, employment agency or union.

Persons Protected By EEO Retaliation Rules

EEO retaliation prohibitions protect both applicants and current and former employees (full-time, part-time, probationary, seasonal, and temporary) against retaliation under the EEO laws. The retaliation prohibitions bar an employer from refusing to hire or otherwise taking adverse action against any current or former applicant or employee because of his EEO complaint or other protected activity under applicable EEO laws. The EEOC interprets the retaliation rules as prohibiting an employer from giving a false negative job reference to punish a former employee for making an EEO complaint or engaging in other protected activity as well as as prohibiting an employer from refusing to hire or otherwise retaliating or discriminating against an applicant or employee based on a complaint made or other protected activity engaged against any a prior employer. The Guidance also makes clear that the retaliation prohibitions apply regardless of an applicant or employee’s citizenship or work authorization status.

Protected Activity

“Protected activity” generally means either participating in an EEO process or reasonably opposing conduct made unlawful by an EEO law.

The prohibition against an employer retaliating against an individual for “participating” in an EEO process means that an employer cannot punish an applicant or employee for filing an EEO complaint, serving as a witness, or participating in any other way in an EEO matter, even if the underlying discrimination allegation is unsuccessful or untimely. As a part of these prohibitions, the EEOC says that an employer, employment agency or union is not allowed to do anything in response to EEO activity that would discourage someone from resisting or complaining about future discrimination. For example, depending on the facts of the particular case, it could be retaliation because of the employee’s EEO activity for an employer to:

Reprimand an employee or give a performance evaluation that is lower than it should be;
Transfer the employee to a less desirable position;
Engage in verbal or physical abuse;
Threaten to make, or actually make reports to authorities (such as reporting immigration status or contacting the police);
Increase scrutiny;
Spread false rumors, treat a family member negatively (for example, cancel a contract with the person’s spouse); or
Take action that makes the person’s work more difficult (for example, punishing an employee for an EEO complaint by purposefully changing his work schedule to conflict with family responsibilities).

The Guidance clearly states that the EEOC views participating in any capacity in a complaint process or other protected equal employment opportunity as protected activity which is protected from retaliation under all circumstances. The EEOC views other acts to oppose discrimination also as protected as long as the employee was acting on a reasonable belief that something in the workplace may violate EEO laws, even if he or she did not use legal terminology to describe the issue. EEOC’s view is that protections against retaliation extend to participation in an employer’s internal EEO complaint process, even if a charge of discrimination has not yet been filed with the EEOC. The EEOC also takes the position that participation in the EEO process is protected whether or not the EEO allegation is based on a reasonable, good faith belief that a violation occurred. While an employer is free to bring these to light in the EEO matter where it may rightly affect the outcome, the Retaliation Regs state it is unlawful retaliation for an employer to take matters into its own hands and impose consequences for participating in an EEO matter.

In addition to prohibition for participation in protected activities, EEO law also prohibits retaliation against an individual for “opposing” a perceived unlawful EEO practice. The EEOC construes prohibition against retaliation for opposition as prohibiting an employer or other covered entity from punishing an applicant or employee for communicating or taking other action in opposition of a perceived EEO violation if the individual acted reasonably and based on a reasonable good faith belief that the conduct opposed is or could become unlawful if repeated.

According to the EEOC, opposition also can be protected even if it is informal or does not include the words “harassment,” “discrimination,” or other legal terminology. A communication or act may be protected opposition as long as the circumstances show that the individual is conveying resistance to a perceived potential EEO violation such as, for example:

Complaining or threatening to complain about alleged discrimination against oneself or others;
Taking part in an internal or external investigation of employment discrimination, including harassment;
Filing or being a witness in a charge, complaint, or lawsuit alleging discrimination;
Communicating with a supervisor or manager about employment discrimination, including harassment;
Answering questions during an employer investigation of alleged harassment;
Refusing to follow orders that would result in discrimination;
Resisting sexual advances, or intervening to protect others;
Reporting an instance of harassment to a supervisor;
Requesting accommodation of a disability or for a religious practice;
Asking managers or co-workers about salary information to uncover potentially discriminatory wages;
Providing information in an employer’s internal investigation of an EEO matter;
Refusing to obey an order reasonably believed to be discriminatory;
Advising an employer on EEO compliance;
Resisting sexual advances or intervening to protect others;
Passive resistance (allowing others to express opposition);
Requesting reasonable accommodation for disability or religion;
Complaining to management about EEO-related compensation disparities;
Talking to coworkers to gather information or evidence in support of a potential EEO claim; or
Other acts of opposition.

In order for the protection against opposition to apply, however, the individual must act with a reasonable good faith belief that the conduct opposed is unlawful or could become unlawful if repeated. Opposition not based on such a good faith belief is not protected. Employers should note that the EEOC takes the position that opposition by an employee could qualify as reasonable opposition protected against retaliation when an employee or applicant complains about behavior that is not yet legally harassment (i.e., even if the mistreatment has not yet become severe or pervasive) or to complain about conduct the employee believes violates the EEO laws if the EEOC has adopted that interpretation, even if some courts disagree with the EEOC on the issue.

Furthermore, an individual opposing a perceived violation of an EEO law is disqualified for protection against retaliation for his opposition unless the individual behaves in a reasonable manner when expressing his opposition. For example, threats of violence, or badgering a subordinate employee to give a witness statement, are not protected opposition.

Subject to these conditions, however, the Guidance states that retaliation for opposing perceived unlawful EEOC practices need not be applied directly to the employee to qualify for protection. If an employer, employment agency or union takes an action against someone else, such as a family member or close friend, in order to retaliate against an employee, the EEOC says both individuals would have a legal claim against the employer.

Moreover, according to the EEOC, the prohibitions against retaliation for participation and opposition apply regardless of whether the person is suffers the retaliation for acting as a witness or otherwise participating in the investigation of a prohibited practice regarding an EEO complaint brought by others, or for complaining of conduct that directly affects himself.

Materially Adverse Action

To fall within EEO law prohibitions against retaliation, the retaliatory actions must be “materially adverse,” which the Guidance defines to include any action that under the facts and circumstances might deter a reasonable person from engaging in protected activity. This definition of “materially adverse” sweeps broadly to include more than employment actions such as denial of promotion, non-hire, denial of job benefits, demotion, suspension, discharge, or other actions that can be challenged directly as employment discrimination. It also encompasses within the scope of retaliation employer action that is work-related, as well as other actions with no tangible effect on employment, or even an action that takes place exclusively outside of work, as long as it may well dissuade a reasonable person from engaging in protected activity.

Whether an action is materially adverse depends on the facts and circumstances of the particular case. The U.S. Supreme Court has held that transferring a worker to a harder, dirtier job within the same pay grade, and suspending her without pay for more than a month (even though the pay was later reimbursed) were both “materially adverse actions” that could be challenged as retaliation. The Supreme Court has also said that actionable retaliation includes: the FBI’s refusing to investigate death threats against an agent; the filing of false criminal charges against a former employee; changing the work schedule of a parent who has caretaking responsibilities for school-age children; and excluding an employee from a weekly training lunch that contributes to professional advancement.

In contrast, a petty slight, minor annoyance, trivial punishment, or any other action that is not likely to dissuade an employee from engaging in protected activity in the circumstances is not “materially adverse.” For example, courts have concluded on the facts of given cases that temporarily transferring an employee from an office to a cubicle was not a materially adverse action and that occasional brief delays by an employer in issuing refund checks to an employee that involved small amounts of money were not materially adverse.

The facts and circumstances of each case determine whether a particular action is retaliatory in that context. For this reason, the same action may be retaliatory in one case but not in another. Depending on the facts, other examples of “materially adverse” actions may include:

Work-related threats, warnings, or reprimands;
Negative or lowered evaluations;
Transfers to less prestigious or desirable work or work locations;
Making false reports to government authorities or in the media;
Filing a civil action;
Threatening reassignment;
Scrutinizing work or attendance more closely than that of other employees, without justification;
Removing supervisory responsibilities;
Engaging in abusive verbal or physical behavior that is reasonably likely to deter protected activity, even if it is not yet “severe or pervasive” as required for a hostile work environment;
Requiring re-verification of work status, making threats of deportation, or initiating other action with immigration authorities because of protected activity;
Terminating a union grievance process or other action to block access to otherwise available remedial mechanisms; or
Taking (or threatening to take) a materially adverse action against a close family member (who would then also have a retaliation claim, even if not an employee).

ADA Interference Claims

In addition to the need to manage potential exposures for prohibited retaliation, employers, employment agencies and unions also should be careful to manage their exposure to potential liability arising from claims for wrongful interference and individual’s exercise of the disability rights or protections granted under the ADA.

The ADA generally prohibits disability discrimination, limits an employer’s ability to ask for medical information, requires confidentiality of medical information, and gives employees who have disabilities the right to reasonable accommodations at work absent undue hardship and like other EEO laws, prohibits retaliation. In addition to its prohibitions against retaliation, however, the ADA also more broadly prohibits “interference” with statutory rights under the ADA.

Interference is broader than retaliation. The ADA’s interference provision makes it unlawful to coerce, intimidate, threaten, or otherwise interfere with an individual’s exercise of ADA rights, or with an individual who is assisting another to exercise ADA rights.

In addition, the ADA also prohibits employers from interfering with ADA rights by doing anything that makes it more difficult for an applicant or employee to assert any of these rights such as using threats or other actions to discourage someone from asking for, or keeping, a reasonable accommodation; intimidating an applicant or employee into undergoing an unlawful medical examination; or pressuring an applicant or employee not to file a disability discrimination complaint.

Prohibited interference may be actionable under the ADA even if ineffective and even if the person subjected to intimidation goes on to exercise his ADA rights.

While acknowledging that some employer actions may be both retaliation and interference, or may overlap with unlawful denial of accommodation, the Guidance identifies the following actions as examples of interference prohibited under the ADA:
Coercing an individual to relinquish or forgo an accommodation to which he or she is otherwise entitled;
Intimidating an applicant from requesting accommodation for the application process by indicating that such a request will result in the applicant not being hired;
Threatening an employee with loss of employment or other adverse treatment if he does not “voluntarily” submit to a medical examination or inquiry that is otherwise prohibited under the statute;
Issuing a policy or requirement that purports to limit an employee’s rights to invoke ADA protections (e.g., a fixed leave policy that states “no exceptions will be made for any reason”);
Interfering with a former employee’s right to file an ADA lawsuit against the former employer by stating that a negative job reference will be given to prospective employers if the suit is filed; and
Subjecting an employee to unwarranted discipline, demotion, or other adverse treatment because he assisted a coworker in requesting reasonable accommodation.

According to the EEOC, a threat does not have to be carried out in order to violate the interference provision, and an individual does not actually have to be deterred from exercising or enjoying ADA rights in order for the interference to be actionable.

Strategies To Help Deter Or Rebut Retaliation Charges

Even though individuals claiming retaliation technically bear the burden of proving more likely than not that he suffered an adverse employment action more probably than not as a result of retaliation, an employer, employment agency or union charged with illegal retaliation frequently need to rebut or undermine a claimant’s evidence of retaliation by having and introducing admissible evidence that it a non-retaliatory reason for taking the challenged action such as evidence that:

The employer was not, in fact, aware of the protected activity;
There was a legitimate non-retaliatory motive for the challenged action, that the employer can demonstrate, such as poor performance; inadequate qualifications for position sought; qualifications, application, or interview performance inferior to the selectee; negative job references (provided they set forth legitimate reasons for not hiring or promoting an individual); misconduct (e.g., threats, insubordination, unexcused absences, employee dishonesty, abusive or threatening conduct, or theft); or reduction in force or other downsizing;
Similarly-situated applicants or employees who did not engage in protected activity were similarly treated;
Where the “but-for” causation standard applies, there is evidence that the challenged adverse action would have occurred anyway, despite the existence of a retaliatory motive; or
Other credible evidence showing a legitimate, non-discriminatory and non-retalitory motive behind the action.

It is important that employer other other potential defendants in retaliation actions recognize and take appropriate steps to create and retain evidence documenting these or other legitimate business reasons justifying the action prior to taking adverse action. Many employer or other defendants charged with discrimination or retaliation discover too late that a rule of evidence commonly referred to as the “After Acquired Evidence Doctrine” often prevents an employer or other defendant from using documentation or other evidence of motive created after the adverse action occurs. Consequently, employer and other potential targets of retaliation claims before taking the adverse action would be wise to carefully collect, document and retain the evidence and analysis showing their adverse action was taken for a legitimate, nonretalitory, nondiscriminatory reason rather than for any retaliatory purpose.

Other Defensive Actions & Strategies

Beyond taking care to document and retain evidence of its legitimate motivations for taking an adverse employment action, employers, employment agencies and unions interested in avoiding or enhancing their defenses against retaliation or interference claims also may find it helpful to:

Maintain a written, plain-language anti-retaliation and anti-interference policy that provides practical guidance on the employer’s expectations with user-friendly examples of what to do and not to do;
Send a message from top management that retaliation and interference are prohibited and will not be tolerated;
Ensure that top management understands and complies with policies against prohibited discrimination, retaliation and interference;
Consistently and fairly administer all equal employment opportunity and other policies and procedures in accordance with applicable laws in a documented, defensible manner;
Post and provide all required posters or other equal employment opportunity notices;
Timely and accurately complete and file all required EEO reports;
Clearly communicate orally and in writing the policy against prohibited retaliation and interference, as well as procedures for reporting, investigating and addressing concerns about potential violations of these policies in corporate policies as well as to employees complaining or participating in investigations or other protected activities;
Conduct documented training for all managers, supervisors and other employees and agents of the employer about policies against prohibited discrimination, retaliation, and interference including, as necessary, specific education about specific behaviors or situations that could raise retaliation or interference concerns, when and how to report or respond to such concerns and other actions to take to prevent or stop potential retaliation and interference;
Establish and administer clear policies and procedures for reporting and investigating claims or other indicators of potential prohibited employment discrimination, retaliation, interference including appropriate procedures for monitoring and protecting applicants and workers who have made claims of discrimination or have a record of involvement in activities that might qualify for corrective action;
Review performance, compensation and other criteria for potential evidence of overt or hidden bias or other evidence of potential prohibited retaliation or interference and take documented corrective action as needed to prevent improper bias from adversely corrupting decision-making process;
Conduct timely, well-documented investigations of all reports or other evidence of suspected discrimination, retaliation, and interference including any disciplinary, remedial or corrective action taken or foregone and the justification underlying these actions;
Obtain and enforce contractual reassurances from recruiting, staffing and other contractors to adhere to, and cooperate with the employer in its investigation and redress of the nondiscrimination, data collection and reporting, anti-retaliation and anti-interference requirements of equal employment opportunity and other laws;
Incorporate appropriate inquiries and other procedures for documented evaluating and monitoring that hiring, staffing, performance review, promotion, demotion, discipline, termination and other employment decisions and actions for evidence or other indicators of potential prohibited discrimination, retaliation, interference or other prohibited conduct and take corrective action as necessary based on the evidence developed; and
Designate appropriately empowered and trained members of the management of the employer to receive and investigate complaints and other potential concerns;
Arrange for an unbiased third party review of the adverse action or the performance or other decision criteria, processes and analysis that the employer or other defendant contemplates relying on to decide and implement employment decisions for indicators of potential discriminatory, retaliatory or other illegal or undesirable biasand take corrective action as needed to address those concerns before undertaking employment actions;
Evaluate and allocate appropriate funds within the employer’s budget to support the employer’s compliance efforts as well as to provide for the availability of sufficient funds to investigate and defend potential charges or public or private charges of illegal discrimination, retaliation or interference through the purchase of employment practices liablity or other insurance coverages or otherwise;
If a manager or other party recommends an adverse action in the wake of an employee’s filing of an EEOC charge or participation in other protected activity, conducting or arranging for an another party to ndependently evaluate whether the adverse action is appropriate;
Proactively seek assistance from qualified legal counsel with the design and review of policies, practices and operations, investigation and analysis of internal or external complaints or other concerns about potential prohibited discrimination, retaliation or interference, review and execution of termination, discipline or other workforce events to mitigate discrimination, retaliation or interference risks as well as the defense of EEOC or private enforcement actions; and
Be ever diligent in your efforts to prevent, detect and redress actions or situations that could be a basis for retaliation or interference claims.

About The Author

Cynthia Marcotte Stamer is a noted Texas-based management lawyer and consultant, author, lecture and policy advocate, recognized for her nearly 30-years of cutting edge management work as among the “Top Rated Labor & Employment Lawyers in Texas” by LexisNexis® Martindale-Hubbell® and as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,”“Tax: Erisa & Employee Benefits” “Health Care” and “Business and Commercial Law” by D Magazine.

For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal control and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at www.Solutionslawpress.com.

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. ©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™. All other rights reserved.

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Posted by Cynthia Marcotte Stamer

Criminal Conviction Of Plan Trustee, Outside Legal Counsel Shows Risks of Retaliating Against Whistleblowers For Reporting ERISA Violations

August 1, 2016

The U.S. Department of Labor’s just announced successful whistleblower prosecution in Perez v. Scott Brain, et al of an employee benefit plan trustee, and an individual lawyer and her law firm that served as the employee benefit plan’s outside legal counsel of violating the fiduciary responsibility and whistleblower rules of the Employee Retirement Income Security Act of 1974 (ERISA) illustrates why employee benefit plan sponsors, trustees or other fiduciaries, their management, legal counsel, auditors and other service providers must both prudently investigate whistleblower allegations or other evidence of potential wrongdoing involving their employee benefit plans and resist the temptation to retaliate against employees or others for reporting or cooperating in the investigation of alleged improprieties involving an employee benefit plan.

The Brain decision highlights the care that employee benefit plan sponsors, fiduciaries, advisors and service providers and their management must use when responding to allegations or other evidence of wrongdoing relating to an employee benefit plan or its administration, investigating and addressing alleged misconduct or other performance or disciplinary concerns involving parties whose report or involvement in investigations of ERISA or other misconduct could form the basis of a potential ERISA 510 or other retaliation complaint.

The decision also makes clear that outside legal counsel advising an employee benefit plan or its fiduciaries in relation to the investigation or response to charges of ERISA misconduct involving an employee benefit plan must use care to avoid actions that could render them liable for participation in acts of illegal retaliation, violating their duty of loyalty to the plan by allowing themselves to become involved in a conflict of interest when investigating or defending potential wrongdoing involving an employee benefit plan, or engaging in other discretionary actions that could constitute a breach of fiduciary duty in violation of ERISA.

In Perez v. Scott Brain, et al., the U.S. District Court for the Central District of California ruled that Cement Masons Southern California Trust Fund’s trustee and Cement Masons Local 600 business manager, Scott Brain (Brain) and outside trust fund legal counsel, Melissa Cook, violated sections 510 and 404 of ERISA by causing the firing a trust fund employee Cheryle Robbins (Robbins) and an employee of the plan’s third party administrator, Cory Rice (Rice), in retaliation for their involvement in filing an internal complaint about and cooperating with the Labor Department’s Employee Benefit Security Administration’s federal criminal investigation of reports of Brain’s wrongful interference as a trustee with collections and contributions from unionized employers.

In 2011, Robbins, director of the trust funds’ audit and collections department, responded to a federal criminal investigation into Brain’s activities with contractors. The same year, she and Rice, who worked for the third-party administrator to the trust fund, American Benefit Plan Administrators, now, Zenith American Solutions (Zenith), participated in an effort to complain about Brain’s interference with efforts to collect delinquent contributions from contractors. Within weeks of this conduct, Robbins was suspended from her employment with the trust fund. Less than six months later, both Robbins and Rice were fired.

The court’s 71-page decision chronicles the coordinated retaliatory campaign orchestrated by Brain and Cook that led to Robbins’ suspension and firing by the employee benefit plan as well as the termination of Cook by his employer, Zenith..

With respect to Robbins’ suspension, the court found that the evidence showed Brain and Cook “were very upset with Robbins due to her contact with the [Department of Labor],” and that Brain and Cook “used their positions and influence to cause the other trustees to vote in favor of” suspending Robbins. To do so, the court explained, Brain and Cook “took the lead at the . . . [b]oard meeting with respect to the discussion of Robbins’ contact with the [Department of Labor]” and “created an environment that was hostile to her,” which “caused the trustees to vote to place her on leave.” The court noted that the two “‘set in motion’ the decision by the Joint Board to put Robbins on leave [.]”

As for Rice’s firing, the court explained how Brain and Cook retaliated against Rice by pressuring his employer, Zenith, into firing Rice and manipulating the Zenith relationship to deter Zenith from rehiring Rice in retaliation for his involvement in efforts to make an internal complaint about Brain.

Based upon evidence introduced during a five-day trial, the District Court ruled that Brain, Cook and Cook’s law firm violated ERISA section 510 by suspending and then discharging Robbins, and causing Zenith to refuse to hire Robbins and to discharge Rice in retaliation for their participation in reporting Brian’s misconduct to the General President of the Operative Plasterers’ and Cement Masons’ International Association and because Robbins participated in a federal criminal investigation of Brain. Specifically, the District Court ruled:

Brain, Cook and Cook’s law firm wrongfully retaliated against Robbins in violation of ERISA 510 for her communications with the DOL by placing her on administrative leave; causing the work performed by the department that Robbins previously managed to be outsourced to Zenith and by causing Zenith not to hire Robbins to participate in its work;
Brain, Cook and Cook’s law firm wrongfully retaliated against Rice in violation of ERISA 510 by causing Zenith to terminate Cook;
Brain breached his fiduciary duty under ERISA 404 by retaliating against Robbins and causing her to be placed on administrative leave and that Cook knowingly participated in that breach.

The court held that Brain and Cook’s retaliatory conduct violated section 510 of ERISA, which prohibits retaliation against whistleblowers for complaining of ERISA violations or cooperating with a governmental investigation of such violations. The court also held that the couple’s retaliation against Robbins breached Brain’s fiduciary duties under ERISA section 404 to the trust funds and that Cook participated knowingly in that breach.

In reaching its decision, the court rejected attorney Cook’s argument that she was somehow immunized from her unlawful conduct because she was an attorney to the trust funds. Among other things, the court noted the “apparent conflict of interest” Cook had in representing the trust funds while being in an undisclosed “romantic relationship” with Brain, which existed as defendants carried out their retaliatory scheme. Reminding lawyers of their ethical duties in California, the court cited California Rule of Professional Conduct 3-310(B), which the court explained “requires that an attorney disclose to a client any personal relationship or interest that he or she knows, or with the exercise of reasonable diligence should know, could substantially affect her his or her professional judgment in advising the client.”

As punishing for these criminal violations of ERISA, the District Court ordered the permanent removal of Brain as a trustee. It also ordered the permanent barring of Brain, Cook and her law firm from serving the Cement Masons Southern California Trust Funds. In addition, the court ordered Cook and her law firm to repay all attorneys’ fees she billed the trust funds for the actions she took in retaliating against whistleblowers Robbins and Rice. These criminal sanctions were in addition to the $630,000 civil damage award that the Labor Department previously secured in lost wages and damages for Robbins, Rice and another worker victimized by Brain and Cook in August 2015.

In addition to its successful prosecution of Brain, Cook and Cook’s law firm on these charges, the DOL also had sought, but failed to convince the District Court based on the evidence presented at trial to find Brain, Cook, Cook’s law firm and Brain’s fellow trust fund trustee Local 600 business agent and Joint Board of Trustees member Jaime Briceno guilty of wrongful retaliation against another alleged whistleblower or Briceno of breaching his fiduciary duties under ERISA by failing to prudently investigate Robbins’ allegations against Brain; or by voting to use assets of the Trust Funds to pay the cost of the settlement of the civil action brought by Robbins. The District Court also refused to consider a newly raised charge that Brain breached his fiduciary duty by failing to collect all monies owed to the Trust Funds on the grounds that the Labor Department had failed to timely raise the charge. While the court refused to convict Briceno, Brain, Cook or Cook’s law firm on the additional charges, the Labor Department’s prosecution of these claims illustrates that along with abstaining from retaliating against ERISA whistleblowers, employee benefit plan fiduciaries also should position themselves to defend against potential breach of fiduciary duty claims based on alleged inadequacies in their investigation or response to reports or other evidence of misconduct involving the plan by prudently investigating and acting to redress allegations or other evidence of potential wrongdoing in the administration of employee benefit plans or their assets.

About The Author

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, the author of this update, attorney Cynthia Marcotte Stamer, is AV-Preeminent (the highest) rated attorney repeatedly recognized as a Martindale-Hubble as a “LEGAL LEADER™” and “Texas Top Rated Lawyer” in Health Care Law, Labor and Employment Law, and Business & Commercial Law and among the “Best Lawyers In Dallas” in ERISA, Labor and Employment and Healthcare Law by D Magazine for her nearly 30 years of experience and knowledge representing and advising employers, employee benefit plans, their sponsors, fiduciaries, service providers and vendors and others on these and other planning, business transaction and contracting, administration, compliance, risk management, audits, investigations, government and private litigation and other enforcement and other related matters.

past Chair and current committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, a former ABA Joint Committee on Employee Benefits Council Representative ,

Ms. Stamer’s legal and management consulting work throughout her nearly 30-year career has focused on helping management manage. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, she de[;pus jer her extensive legal and operational knowledge and experience to help organizations and their management use the law and process to manage people, process, compliance, operations and risk.

As a key part of this work, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

A former lead consultant to the Government of Bolivia on its Social Security reform law Ms. Stamer also is well-known for her leadership on U.S. health and pension, wage and hour, tax, workforce, tax, education, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer for many years acted as the scribe responsible for leading the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights annual agency meeting and regularly participates in the OCR and other JCEB annual agency meetings, and participates in the development and submission of comments and other input to the agencies on regulatory, enforcement and other concerns. She also works as a policy advisor and advocate to many business, professional and civic organizations.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer serves on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and as an editorial advisor and contributing author of many other publications. Her leadership involvements with the American Bar Association (ABA) include year’s serving many years as a Joint Committee on Employee Benefits Council representative; ABA RPTE Section current Practice Management Vice Chair and Substantive Groups & Committees Committee Member, RPTE Employee Benefits & Other Compensation Committee Past Group Chair and Diversity Award Recipient, current Defined Contribution Plans Committee Co-Chair, and past Welfare Benefit Plans Committee Chair Co-Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; International Section Life Sciences Committee Policy Vice Chair; and a speaker, contributing author, comment chair and contributor to numerous Labor, Tax, RPTE, Health Law, TIPS, International and other Section publications, programs and task forces. Other selected service involvements of note include Vice President of the North Texas Healthcare Compliance Professionals Association; past EO Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former Southwest Benefits Association Board of Directors member, Continuing Education Chair and Treasurer; former Texas Association of Business BACPAC Committee Member, Executive Committee member, Regional Chair and Dallas Chapter Chair; former Society of Human Resources Region 4 Chair and Consultants Forum Board Member and Dallas HR Public Policy Committee Chair; former National Board Member and Dallas Chapter President of Web Network of Benefit Professionals; former Dallas Business League President and others. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

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Posted by Cynthia Marcotte Stamer

Health Plans & Other HIPAA Entities Should Learn From $2.75M UMMC HIPAA Settlement

July 28, 2016

Employers, insurers and other health plan sponsors or issuers (health plans), health care providers, healthcare clearinghouses (covered entities) and their business associates should reevaluate the adequacy of their practices and procedures for the protection of electronic protected health information (ePHI) on or accessible through laptops or other mobile devices in light of the $2.75 million penalty and other schooling the Department of Health and Human Services Office for Civil Rights (OCR) just gave the University of Mississippi (UM) Medical Center (UMMC) documented in a July 7, 2016 Resolution Agreement and Corrective Action Plan (Resolution Agreement) resolving OCR charges of multiple violations of the privacy, security and breach notification requirements of the Health Insurance Portability and Accountability Act (HIPAA) OCR says it uncovered while investigating UMMC’s breach notification report to OCR of the loss a laptop containing 328 files containing the ePHI of an estimated 10,000 patients.

UMMC Report of Missing Laptop Leads To Multiple Charges & Resolution Agreement

Mississippi’s sole public academic health science center, UMMC provides patient care in four specialized hospitals on the Jackson campus and at clinics throughout Jackson and the State as well as conducts medical education and research functions. Its designated health care component, UMMC, includes University Hospital, the site of the breach in this case, located on the main UMMC campus in Jackson.

The settlement agreed to by UMMC stems from charges resulting from an OCR investigation of UMMC triggered by a breach of unsecured electronic protected health information (“ePHI”) affecting approximately 10,000 individuals.

Like many prior resolution agreements previously announced by OCR, UMMC’s HIPAA woes came to light after a laptop went missing. OCR learned of the breach and opened its investigation in response to a March 21, 2013 notification UMMC filed with OCR. UMMC made the breach notification to comply with HIPAA’s Breach Notification Rule requirement that health care providers, health plans and healthcare clearinghouses (Covered Entities) timely notify affected individuals, OCR and others of breaches of unsecured ePHI.

UMMC’s breach notification disclosed that UMMC’s privacy officer had discovered a password-protected laptop containing ePHI of thousands of UMMC patients missing from UMMC’s Medical Intensive Care Unit (MICU). UMMC additionally reported that based on its investigation, UMMC believed that the missing laptop likely was stolen by a visitor to the MICU who had inquired about borrowing one of the laptops.

After discovering the loss, UMMC disclosed the breach to local media and on its website and notified OCR of the breach but apparently did not individually notify the subjects of the missing ePHI.

In keeping with its announced policy of investigating all breach reports impacting 500 or more individuals, OCR opened an investigation into UMMC’s breach report. Based on this investigation, OCR concluded that while the laptop apparently was password protected, UMMC had breached the Security Rules because ePHI stored on a UMMC network drive was vulnerable to unauthorized access via UMMC’s wireless network because users could use a generic username and password to access an active directory containing 67,000 files including 328 files containing the ePHI of an estimated 10,000 patients.

While OCR’s investigation confirmed that UMMC had implemented policies and procedures pursuant to the HIPAA Rules, OCR’s additionally found that the theft of the laptop that prompted UMMC’s breach report resulted from broad deficiencies in UMMC’s implementation and administration of these policies and its practices.

Based on these findings, OCR charged UMMC with the following HIPAA violations:

From the compliance date of the Security Rule, April 20, 2005, through the settlement date, UMMC violated 45 C.F.R. §164.308(a)(1)(i) by failing to implement policies and procedures to prevent, detect, contain, and correct security violations, including conducting an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of all of the ePHI it holds, and implementing security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level;
From January 19, 2013, until March 1, 2014, UMMC violated 45 C.F.R. §164.310(c) by failing to implement physical safeguards for all workstations that access ePHI to restrict access to authorized users;
From the compliance date of the Security Rule, April 20, 2005, to March 14, 2013, UM violated 45 C.F.R. § 164.312 (a)(2)(i) by failing to assign a unique user name and/or number for identifying and tracking user identity in information systems containing ePHI including, for example, allowing workforce members to access ePHI on a shared department network drive through a generic account, preventing UMMC from tracking which specific users were accessing ePHI; and
While UMMC provided notification on UMMC’s website and in local media outlets following the discovery of the reported breach of unsecured ePHI,, UMMC violated the Breach Notification Rule by failing to notify each individual whose unsecured ePHI was reasonably believed to have been accessed, acquired, used, or disclosed as a result of the breach.

Finally, OCR determined that UMMC was aware of risks and vulnerabilities to its systems as far back as April 2005, yet took no significant risk management activity until after the breach, due largely to organizational deficiencies and insufficient institutional oversight.

To resolve these charges, UMMC agrees in the Resolution Agreement to pay OCR $2.75 million and implement a comprehensive compliance plan which among other things, requires UMMC to conduct a sweeping review and correct its HIPAA privacy, security and breach notification policies and their implementation and administration to comply with HIPAA as well as implement and administer detailed management and OCR oversight and reporting processes over the implementation and administration of these procedures.

Lessons For Other Covered Entities From UMMC Resolution Agreement

The UMMC charges and Resolution Agreement contains several key lessons for other covered entities and their business associates, which OCR’s July 21, 2016 announcement warns other covered entities and business associates to heed..

Certainly, the $2.75 million settlement amount reaffirms that covered entities and their business associates risk substantial liability for failing to properly assess and protect the security of ePHI in accordance with HIPAA’s Privacy and Security Rule.

Furthermore, the charges and Resolution Agreement also adds a new twist to OCR’s now well established to stiffly sanction covered entities and their business associates that fail appropriately assess and address risks to the security of their ePHI on or accessible from laptops or other mobile devices. Through previous resolution agreements and guidance, OCR has made clear that it interprets the HIPAA Security Rule as generally requiring that covered entities and business associates encrypt all laptops or other mobile devices containing ePHI. The UMMC charges and Resolution Agreement makes clear that the responsibility to protect ePHI on or accessible through laptops or other mobile devices does not end with encryption. Rather, the Resolution Agreement makes clear that covered entities and their business associates also must take appropriate, well-documented steps to monitor, assess, identify, and timely and effectively address other potential risks to the security of the ePHI.

The Resolution Agreement makes clear that these additional responsibilities include, but are not necessarily limited to ensuring that proper safeguards are implemented and enforced to secure access not only to the ePHI contained on the laptop as well as other data bases and systems containing ePHI accessible through the laptop. In this respect, the Resolution Agreement particularly highlights the need for covered entities and their business associates to assess risks and take appropriate steps:

To safeguard the physical security of laptops and other mobile devices;
To prevent the use of generic or other unsecure passwords to access ePHI on or accessible through the laptop or other mobile device;
To establish and administer appropriate, well-documented processes for assessing and addressing the adequacy of safeguards for and potential threats to the security of ePHI both initially and on an ongoing basis in a manner that meaningfully assesses the actual risks and effectiveness of safeguards against these risks, including those resulting from nonadherence to required safeguards and practices such as the sharing of passwords, changing systems or circumstances, and other developments that potentially threaten the adequacy of ePHI security.

Furthermore, OCR’s July 21, 2016 press release concerning the Resolution Agreement also sends a clear message to all covered entities and business associates that OCR views HIPAA as requiring organizations not only to adopt written policies and procedures that comply on paper or in theory with HIPAA, but also to take steps to monitor and maintain the effectiveness of their safeguard by continuously assessing and monitoring their HIPAA risks and acting as necessary to ensure that required safeguards of protected health information and ePHI and other HIPAA requirements are effectively implemented and administered in operation as well as form.

In OCR’s Press Release announcing the Resolution Agreement, OCR Director Jocelyn Samuels. Stated, “We at OCR remain particularly concerned with unaddressed risks that may lead to impermissible access to ePHI.” She also warned “In addition to identifying risks and vulnerabilities to their ePHI, entities must also implement reasonable and appropriate safeguards to address them within an appropriate time frame.”

Additionally, the Resolution Agreement also illustrates need for covered entities and business associates to timely provide all individual and other notifications and otherwise fully comply with all requirements of the Breach Notification Rules.

Since the risk of a breach is ever-present even for Covered Entities and business associates exercising the highest degree of care to safeguard PHI and maintain compliance with HIPAA, Covered Entities and business associates are wise to take steps to position themselves to be able to demonstrate the adequacy of both their written policies and procedures and the effectiveness of their implementation and enforcement including ongoing documented practices for assessing, monitoring and addressing security risks and other compliance concerns as well as prepare to comply with the breach notification requirements in the event they experience their own breach of unsecured ePHI.

About The Author

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, current American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, former scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and JCEB Council Representative, former Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, the former Board President and Treasurer of the Richardson Development Center for Children Early Childhood Intervention Agency, and past Board Compliance Chair of the National Kidney Foundation of North Texas, and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, the author of this update, attorney Cynthia Marcotte Stamer, is AV-Preeminent (the highest) rated attorney repeatedly recognized for her nearly 30 years of experience and knowledge representing and advising healthcare, health plan and other health industry and others on these and other regulatory, workforce, risk management, technology, public policy and operations matters as a Martindale-Hubble as a “LEGAL LEADER™” and “Texas Top Rated Lawyer” in Health Care Law, Labor and Employment Law, and Business & Commercial Law and among the “Best Lawyers In Dallas” by D Magazine.

Ms. Stamer’s health industry experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

Ms. Stamer also is known for her experience in HIPAA and other privacy and data security and breach concerns. The scribe for ABA JCEB annual agency meeting with OCR for many years, Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA, FACTA, trade secret and other information privacy and data security rules, including the establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health care providers, health insurers, health plans, technology and other vendors, and others. In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can get more information about her health industry experience here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.

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Posted by Cynthia Marcotte Stamer

Employers Must Tread Carefully To Manage Foreign Worker Employment & Employment Discrimination Explosures

June 23, 2016

A $180,000 wrongful termination settlement that Foothill Packing, Inc. just paid to settle Department of Labor charges illustrates the potential Catch-22 tightrope that employers must walk when choosing between citizens and resident aliens with visas for hiring and firing decisions.

The Foothill wrongful termination settlement resolving H-2A visa rule violation charges illustrates an often overlooked side of the potential Catch-22 that U.S. employers can face when making hiring and other employment choices between work-eligible foreign and U.S. citizen employees or candidates.

Usually, we hear about employers nailed for employment discrimination against noncitizens. This time, firing U.S. citizens and keeping foreign workers was the problem.

Employers Must Juggle Many Duties When Dealing With Foreign Applicants & Workers

The H-2A visa program requirements established by the labor provisions of the of the Immigration and Nationality Act and provisions of the Migrant and Seasonal Agricultural Worker Protection Act (H-2A visa program) allows companies and farm labor contractors to bring in foreign agricultural workers on a temporary basis when an adequate amount of qualified U.S. workers cannot be found to perform the work. As a condition to qualifying to hire foreign workers under the program, the H-2A program explicitly requires all jobs in this country must be offered to U.S. citizens before an employer may receive authorization to hire foreign workers. To fulfill this requirement, an employer must demonstrate that it made required efforts to hire U.S. workers prior to having their visas approved. Employers also must not give H-2A workers preferential treatment or wrongfully discharge U.S. workers.

The H-2A visa program requirement that employers offer work to available U.S. workers before seeking to employ foreign workers under a H-2A visa exists concurrent with the national origin and race discrimination prohibitions of Title VII of the Civil Rights Act. Title VII, among other things, generally prohibits U.S. employers from discriminating in hiring or other terms and conditions of employment based on a worker’s national origin, ancestry or race. The national origin discrimination prohibitions of Title VII of the Civil Rights Act generally extend to any discriminatory employment decision by an is covered by Title VII, including recruitment, hiring, promotion, transfer, wages and benefits, work assignments, leave, training and apprenticeship programs, discipline and layoff and termination.

Beyond the national origin, race and other nondiscrimination requirements of Title VII, employers dealing with workers who are not U.S. citizens also generally are accountable for complying with various other nondiscrimination and other employment laws including but not limited to the following:

The Immigration Reform and Control Act of 1986 (IRCA), which prohibits employers with four or more employees from discriminating because of citizenship status against U.S. citizens and certain classes of foreign nationals authorized to work in the United States with respect to hiring, referral, or discharge. IRCA also prohibits national origin discrimination by employers with between four and fourteen employees.
The Fair Labor Standards Act (FLSA): The FLSA requires, among other things, that covered workers, including those who are not U.S. citizens, be paid no less than the federally designated minimum wage.
Employment of foreign nationals under special visa programs, such as H-1B and H-2A visas, also may be subject to certain requirements related to wages, working conditions, or other aspects of employment.
When making employment decisions and taking hiring or other employment actions involving foreign workers on H-2A visas or otherwise, employers must understand and tread carefully to comply with all of these requirements.

DOL Chared Foothill Violated H-2A Visa Program By Retaining Foreign Workers While Terminating U.S. Citizens

According to the June 13, 2016 U.S. Department of Labor Wage and Hour Division (DOL) announcement of the Foothill settlement, DOL investigators determined that Foothill, a packing and labeling company, violated the H-2 visa program by terminating 18 workers, who were U.S. citizens, that Foothill claimed failed to meet production standards when the investigation found that many of the terminated workers consistently exceeded the production of many of the foreign workers Foothill continued to employ to the same jobs. In reaching this finding, the DOL interpreted the H-2A visa program requirement that H-2A program’s prohibition against providing preferential treatment to foreign worker as extending to layoffs.

To resolve the charges, Foothill Packing paid $180,000 in back wages to the 18 terminated workers and also paid $55,000 in penalties for the violations of H-2A provisions of the Immigration and Nationality Act, and provisions of the Migrant and Seasonal Agricultural Worker Protection Act. The settlement agreement also requires Foothill to:

Designate a staff member whose primary job duties consist of monitoring and reporting the firm’s compliance with all H-2A regulatory requirements;
Provide annual training to all frontline supervisors involved with the H-2A program;
Provide detailed reasons for any future terminations to the U.S. Department of Labor; and
Otherwise comply with the labor provisions of the requirements of the H-2A Visa Program.

Reconciliation Of H-2A Visa Rules With Civil Rights Act Nondiscrimination Rules

The key to reconciling the H-2A visa program requirement that employers show preference to U.S. workers over H-2A visa workers in hiring and retaining workers and the race and national origin employment discrimination prohibitions of Title VII is understanding that Title VII’s protections are construed and enforced as extending to all work-eligible workers in the United States, whether born in the United States or abroad and regardless of citizenship status.

While Title VII does not prohibit citizenship discrimination per se, citizenship discrimination does violate Title VII where it has the “purpose or effect” of discriminating on the basis of national origin. For example, a citizenship requirement would be unlawful if it is a “pretext” for national origin discrimination, or if it is part of a wider scheme of national origin discrimination.

The H-2A visa program’s requirement that an employer show preference for U.S. workers over workers whose eligibility for employment is based on a H-2A visa is based on the eligibility of the employer to work in the United States under United States immigration laws. As such, when the adverse action is taken against a worker using a H-2A visa for eligibility to work, the action is based on eligibility to work required by the I-9 verification rules, and not based on the ancestry, place or origin, race or other elements of national origin.

Whether or not dealing with a H-2A visa worker, however, employers still must tread carefully to conduct and document their employment actions with respect to workers to withstand scrutiny under both requirements in the event of a challenge on either or both fronts. Both doing the right thing and documenting throughout the process is critical as the “after acquired evidence” rules of evidence applicable to employment discrimination claims under the Civil Rights Act could prevent an employer from presenting documentation or other evidence to support an employer’s defense of a valid, nondiscriminatory business purpose to rebut discrimination claims in the event of litigation or a government investigation or charge.

About The Author

Cynthia Marcotte Stamer is a noted Texas-based management lawyer and consultant, author, lecturer and policy advocate, recognized for her nearly 30-years of cutting edge management work as among the “Top Rated Labor & Employment Lawyers in Texas” by LexisNexis® Martindale-Hubbell® and as among the “Best Lawyers In Dallas” for her work in the field of “Tax: Erisa & Employee Benefits” and “Health Care” by D Magazine.

Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer serves on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and as an editorial advisor and contributing author of many other publications. Her leadership involvements with the American Bar Association (ABA) include year’s serving many years as a Joint Committee on Employee Benefits Council representative; ABA RPTE Section current Practice Management Vice Chair and Substantive Groups & Committees Committee Member, RPTE Employee Benefits & Other Compensation Committee Past Group Chair and Diversity Award Recipient, current Defined Contribution Plans Committee Co-Chair, and past Welfare Benefit Plans Committee Chair Co-Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; International Section Life Sciences Committee Policy Vice Chair; and a speaker, contributing author, comment chair and contributor to numerous Labor, Tax, RPTE, Health Law, TIPS, International and other Section publications, programs and task forces. Other selected service involvements of note include Vice President of the North Texas Healthcare Compliance Professionals Association; past EO Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former Southwest Benefits Association Board of Directors member, Continuing Education Chair and Treasurer; former Texas Association of Business BACPAC Committee Member, Executive Committee member, Regional Chair and Dallas Chapter Chair; former Society of Human Resources Region 4 Chair and Consultants Forum Board Member and Dallas HR Public Policy Committee Chair; former National Board Member and Dallas Chapter President of Web Network of Benefit Professionals; former Dallas Business League President and others. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal control and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at Solutionslawpress.com such as:

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. ©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc. ™. All other rights reserved.

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Posted by Cynthia Marcotte Stamer

Health Plans Disclosing Data To State All Payer Data Banks Face HIPAA Risks

May 31, 2016

Self-insured employer or union sponsored health plans (Plans), their fiduciaries, third party administrative or other service providers, and sponsors should consult legal counsel for advice about whether their Plans might violate the Privacy Rule of the Health Insurance Portability & Accountability Act (HIPAA) by disclosing individually identifiable claims or other Plan records or data to a state “all payer” claims or other data base in response to a state law or regulation mandating those disclosures in light of the Supreme Court’s recent ruling in Gobeille v. Liberty Mutual, 136 S. Ct. 936 (2016).

Gobeille involved a challenge to a Vermont “all payer” law similar to laws enacted by at least 20 other states, that requires health plan payers, their administrators or both to disclose individually identifiable health claims and other claims data about Plan members to a state created all payer data base. The Vermont law challenged in Gobeille required health insurers and other payers to disclose treatment information about Plan members as well as other certain health care claim payment and other data to an all payer claims database, which under the law is made “available as a resource for insurers, employers, providers, purchasers of health care, and State agencies to continuously review health care utilization, expenditures, and performance in Vermont. See Gobeille at 941. Vermont’s law requires third party administrators of self-insured Plans and other payers to disclose the information regardless of whether the member resides or received the treatment in Vermont.

In Gobeille, the Supreme Court ruled that the preemption provisions of Section 514 of the Employee Retirement Income Security Act (ERISA) bar Vermont from requiring self-insured ERISA Plans

In addition to excusing self-insured Plans from the trouble and expense of complying with Vermont’s disclosure law, the Supreme Court’s ruling in Gobeille that Vermont cannot enforce the law against self-insured ERISA Plans raises a concern that the Privacy Rules of HIPAA may prohibit Plans from disclosing certain individually identifiable claims information. The HIPAA compliance concern arises because the claims information and other data that the Vermont and most other similar laws require Plans and other payers to disclose generally is or include information that qualifies as “protected health information” within the meaning of the HIPAA Privacy Rule. These laws generally are structured either to directly require self-insured Plans to disclose the claims data directly, indirectly compel the disclosure by requiring third party administrators of such Plans to disclose the claims information for Plans they administer, or both.

Under the HIPAA Privacy Rule, Plans and other HIPAA-covered entities and service providers acting as business associates of the Plans are prohibited from using or disclosing individually identifiable protected health information unless the use or disclosure is expressly authorized by the Privacy Rule. Since violations of the Privacy Rule trigger substantial civil or even criminal penalties under HIPAA, Plans, their fiduciaries, service providers acting as business associates and other members of their workforce need to verify that the disclosure meets all of the requirements to fall within an exception to the Privacy Rule’s prohibition against disclosure before allowing such a disclosure

Before Gobeille, many self-insured Plans and their administrators treated the disclosures of individually identifiable claims data of the Plans as permitted as a disclosure “required by law” Privacy § 164.512(a), which provides in relevant part:

a) Standard: Uses and disclosures required by law.

(1) A covered entity may use or disclose protected health information to the extent that such use or disclosure is required by law and the use or disclosure complies with and is limited to the relevant requirements of such law.

(2) A covered entity must meet the requirements described in paragraph (c), (e), or (f) of this section for uses or disclosures required by law.

The Gobeille ruling that that the Vermont law is unenforceable against self-insured Plans appears to eliminate the availability of this exception as a basis for allowing disclosures in response to the Vermont law as well as calls into question the ability of Plans to rely upon the “required by law” exception to the Privacy Rule to justify disclosures of protected health information to state all payer data bases in response to similar requirements enacted in the other 20 states that have enacted similar mandates. Plans that previously disclose or intend in the future to disclose protected health information to a state all payer data base in Vermont or another state generally will want to carefully document their justification, if any for making that disclosure under the Privacy Rule.

Unless the disclosure otherwise falls within another exception to the HIPAA Privacy Rule against disclosures without authorization, Plans, their sponsors, fiduciaries, third party administrators and other service providers and other members of the Plan workforce at minimum should be concerned that the HIPAA risks of disclosing protected health information in response to these state mandates after Gobeille. Plans that decide not to disclose information otherwise required by such state law requirements in light of the Gobeille ruling or HIPAA concerns may want to consult with qualified legal counsel about the steps, if any, that the Plan might want to take to document its ERISA preemption or other justifications for not providing the otherwise required disclosures.

Beyond evaluating the advisability of future disclosures in response to the Vermont or another similar all payer statute, Plans whose data previously was disclosed by the Plan or its administrator to an all payer data base under the belief that the disclosure was required by law also may want to seek the advice of qualified legal counsel about whether these prior disclosures triggered breach notification responsibilities under the Breach Notification rules of HIPAA with respect to any disclosures previously made. When electronic protected health information is used or disclosed in violation of HIPAA, the Breach Notification Rules of HIPAA generally require Plans and their business associates timely notify impacted individuals and the Department of Health & Human Services Office of Civil Rights (OCR) in accordance with the detailed requirements set forth in OCR’s implementing regulations. Furthermore, where a breach involves 500 or more individuals, the timetable for providing notification to OCR is accelerated and the Plan also is required to provide notification to the media and others.

About The Author

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer serves on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and as an editorial advisor and contributing author of many other publications. Her leadership involvements with the American Bar Association (ABA) include year’s serving many years as a Joint Committee on Employee Benefits Council representative; ABA RPTE Section current Practice Management Vice Chair and Substantive Groups & Committees Committee Member, RPTE Employee Benefits & Other Compensation Committee Past Group Chair and Diversity Award Recipient, current Defined Contribution Plans Committee Co-Chair, and past Welfare Benefit Plans Committee Chair Co-Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; International Section Life Sciences Committee Policy Vice Chair; and a speaker, contributing author, comment chair and contributor to numerous Labor, Tax, RPTE, Health Law, TIPS, International and other Section publications, programs and task forces. Other selected service involvements of note include Vice President of the North Texas Healthcare Compliance Professionals Association; past EO Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former Southwest Benefits Association Board of Directors member, Continuing Education Chair and Treasurer; former Texas Association of Business BACPAC Committee Member, Executive Committee member, Regional Chair and Dallas Chapter Chair; former Society of Human Resources Region 4 Chair and Consultants Forum Board Member and Dallas HR Public Policy Committee Chair; former National Board Member and Dallas Chapter President of Web Network of Benefit Professionals; former Dallas Business League President and others. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal control and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at Solutionslawpress.com such as:

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. ©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc. ™. All other rights reserved.

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Posted by Cynthia Marcotte Stamer

Obama Offers Grants To States To Boost Paid Leave Availability With State Grants

May 6, 2016

Employers concerned about Obama Administration efforts to expand existing unpaid family and medical leave requirements of the Family and Medical Leave Act to require paid family and medical leave also need to watch out for expanding state paid leave mandates as well as the much more widely recognized efforts by President Obama to impose federal paid leave requirements on employers.

Currently, the unpaid family and medical leave mandates of the Family & Medical Leave Act (FMLA) applicable to employers with 50 or more employees primarily define the obligation of private sector employers to provide family or medical leave.

As part of the Obama’s Administration’s efforts to fulfill President Obama’s campaign promise to expand the availability of paid family and medical leave before President Obama leaves office in January, 2016 in the face of continuing Congressional roadblocks to its efforts to enact a federal paid leave mandate, the Obama Administration is offering grants to help states develop paid family and medical leave laws and programs in their states.

On May 5. 2016, Department of Labor Secretary Thomas Perez announced the Department’s Woman’s Bureau is making available $1 million in grant funds for use in helping states, U.S. territories and possessions, counties and cities with at least 50,000 residents, and federally recognized Indian/Native American tribes with a population of at least 10,000 to fund the cost of developing and implementing paid family and medical leave programs at a roundtable discussion hosted to promote the Administration’s paid family and medical leave agenda with Nestlé, Spotify, and certain other employers.

The third year that the Department has offered such grants, the 2016 grant requirements and procedures are set forth in Woman’s Bureau Funding Opportunity Announcement. In furtherance of its efforts to promote interest by qualified government or other entities, the Labor Department also has announced that the Department of Labor’s Employment and Training Administration, along with the Women’s Bureau, will host a Prospective Applicant WebEx webinar on Thursday, May 12, at 2:00 p.m. EDT to provide interested entities with an opportunity to ask questions about the grant opportunity during the webinar. Interested prospective applicants must register for the webinar in advance here.

Alongside monitoring emerging proposals to enact federal or state paid leave legislation, employers and others concerned with paid leave mandates also need to keep a close eye on the actions that President Obama and government agencies take to require paid leave through executive action, government contracting mandates or other non-legislative efforts. President Obama already has used his executive powers to expand paid family and medical leave rights for federal government workers, to add paid leave mandates to federal contracting regulations and contracts applicable to government contractors, and otherwise

Even for the millions of employers that already voluntarily provide paid leave, the enactment of additional federal or state paid leave mandates inevitability will limit employer flexibility to structure its compensation and other leave and staffing as well as substantially increase the financial, regulatory and other obligations and risks of employers. For this reason, employers and others concerned about potential adverse effects of becoming subject to new or expanded paid family, medical or other leave requirements should carefully monitor both federal and state legislative and regulatory enforcement proposals and other activities, take into account these developments in their short and long range human resources budget, compensation and other business and human resources planning, and provide feedback and input to federal and state legislators and regulators about existing and proposed leave mandates. As part of their efforts to monitor and respond to state law developments, employers and others interested in more information about the Funding Opportunity Announcement can learn more here.

About The Author

A practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., Ms. Stamer’s more than 28 years’ of leading edge work as an practicing attorney, author, lecturer and industry and policy thought leader have resulted in her recognition as a “Top” attorney in employee benefits, labor and employment and health care law.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Cynthia Marcotte Stamer is a noted Texas-based management lawyer and consultant, author, lecturer and policy advocate, recognized as among the “Top Rated Labor & Employment Lawyers in Texas” by LexisNexis® Martindale-Hubbell® and as among the “Best Lawyers In Dallas” for her work in the field of “Tax: Erisa & Employee Benefits” and “Health Care” by D Magazine.

Ms. Stamer’s legal and management consulting work throughout her career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer helps management manage. Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well-known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

A Fellow in the American College of Employee Benefit Counsel, Ms. Stamer uses her deep and highly specialized knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions. In the course of this work, Ms. Stamer has accumulated an impressive resume of experience advising and representing clients on HIPAA and other privacy and data security concerns. The scribe for the American Bar Association (ABA) Joint Committee on Employee Benefits annual agency meeting with the Department of Health & Human Services Office of Civil Rights for several years, Ms. Stamer has worked extensively with health plans, health care providers, health care clearinghouses, their business associates, employer and other sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA and other information privacy and data security rules, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health plans, health insurers, health care providers, banking, technology and other vendors, and others. Beyond advising these and other clients on privacy and data security compliance, risk management, investigations and data breach response and remediation, Ms. Stamer also advises and represents clients on OCR and other HHS, Department of Labor, IRS, FTC, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She also is the author of numerous highly acclaimed publications, workshops and tools for HIPAA or other compliance including training programs on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.

Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see here or contact Ms. Stamer directly by email here or by telephone at (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also may be interested reviewing other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com such as:

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Posted by Cynthia Marcotte Stamer

Confirm Health Plan Contraceptive & Colonoscopy Coverage Meets Latest FAQ ACA Preventive Care Guidance

April 27, 2016

Employer and other group health plan sponsors, fiduciaries and administrators and individual and group health insurers should confirm their plan documents and practices comply with new additional guidance on when the Patient Protection and Affordable Care Act (ACA) preventive care mandates set forth in Public Health Services (PHS) Act section 2713, the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (the Code) require non-grandfathered group health plans to cover colonoscopies and Food and Drug Administration (FDA)-approved contraceptives as preventive services without co-pays or deductibles in light of yet more guidance on the preventive care rule jointly published April 20, 2016 by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the “Agencies”) in FAQs about Affordable Care Act Implementation (Part 31) (FAQ 31).

Employer and other plan sponsors, group health plan fiduciaries and insurers alike should make compliance with the ACA preventive care mandates a priority because violations of the preventive coverage rule not only exposes group health plans and insurers to potential liability for wrongful denial of benefits, breach of fiduciary duty for ERISA covered arrangements and other similar insurance claims for insurers under state law, noncompliance with these mandates generally triggers liability for an employer to self-assess, self-report on Internal Revenue Service Form 8928 an excise penalty of $100 per participant per day for each day of uncorrected violation. With most employers sponsoring plans facing a deadline to file Form 8928’s for any uncorrected disclosures soon, now is the time to review and correct any violations of the preventive care guidelines over the past year and preventing future deadlines.

ACA Preventive Care Mandate Overview

The preventive care mandates of ACA generally require that health insurance or plan coverage offered in the individual or group market cover the following items or services without imposing any cost-sharing requirements:

Evidence-based items or services that have in effect a rating of “A” or “B” in the current recommendations of the United States Preventive Services Task Force (USPSTF) with respect to the individual involved, except for the recommendations of the USPSTF regarding breast cancer screening, mammography, and prevention issued in or around November 2009, which are not considered in effect for this purpose;
Immunizations for routine use in children, adolescents, and adults that have in effect a recommendation from the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC) with respect to the individual involved;
With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration (HRSA); and
For women, evidence-informed preventive care and screening provided for in comprehensive guidelines supported by HRSA, to the extent not included in certain recommendations of the USPSTF subject to special rules with respect to coverage of contraceptive services for group health plans and group health insurance coverage provided in connection with group health plans established or maintained by religious employers.

See 1.26 CFR 54.9815-2713, 29 CFR 2590.715-2713, 45 CFR 147.130.

If a recommendation or guideline does not specify the frequency, method, treatment, or setting for the provision of a recommended preventive service, then the plan or issuer may use reasonable medical management techniques to determine any such coverage limitations. See 26 CFR 54.9815-2713(a)(4), 29 CFR 2590.715-2713(a)(4), 45 CFR 147.130(a)(4).

FAQ 31 On Coverage of Colonoscopies Pursuant to USPSTF Recommendations

Concerning colonoscopies, FAQ 31 states that because the Agencies view preparation for a preventive screening colonoscopy an integral part of the procedure, bowel preparation medications, when medically appropriate and prescribed by a health care provider, are an integral part of the preventive screening colonoscopy that group health plans and health insurers must cover without cost sharing, subject to reasonable medical management).

Coverage of Food and Drug Administration (FDA)-approved Contraceptives

FAQ 31 also supplements an already extensive list of Agency guidance concerning when group health plans and health insurers must cover contraceptives as preventive care without cost sharing under ACA stemming from the HRSA Guidelines’ inclusion of a recommendation of all FDA-approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity, as prescribed by a health care provider.

FAQs about Affordable Care Act Implementation (Part XII), Q14 (FAQ 12) previously released in 2013 states the HRSA Guidelines ensure women’s access to the full range of FDA-approved contraceptive methods including, but not limited to, barrier methods, hormonal methods, and implanted devices, as well as patient education and counseling, as prescribed by a health care provider. FAQ 12 also states group health plans and insurers may use reasonable medical management techniques to control costs and promote efficient delivery of care, such as covering a generic drug without cost sharing and imposing cost sharing for equivalent branded drugs provided that the plan or insurer accommodates any individual for whom a particular drug (generic or brand name) would be medically inappropriate, as determined by the individual’s health care provider, by having a mechanism for waiving the otherwise applicable cost sharing for the brand or non-preferred brand version.

In FAQs about Affordable Care Act Implementation (Part XXVI), Q2 and Q3 (FAQ26) subsequently published on May 15, 2016, the Agencies clarified that group health plans and health insurers:

Must cover without cost sharing at least one form of contraception in each of the methods (currently 18) identified for women by the FDA;
To the extent plans and issuers use reasonable medical management techniques within a specified method of contraception, must have an easily accessible, transparent, and sufficiently expedient exceptions process that provides for making a determination on the claim according to a timeframe and in a manner that takes into account the nature of the claim (e.g., pre-service or post-service) and ensures the medical exigencies involved for a claim involving urgent care is not unduly burdensome on the individual or provider (or other individual acting as a patient’s authorized representative, including a provider) to ensure coverage without cost sharing of any service or FDA-approved item within the specified method of contraception;
Must defer to the determination of the attending provider and cover a service or item without cost sharing a particular service or FDA-approved item that the individual’s attending provider recommends based on a determination of medical necessity with respect to that individual, where medical necessity could include considerations such as severity of side effects, differences in permanence and reversibility of contraceptives, and ability to adhere to the appropriate use of the item or service, as determined by the attending provider; and
In the case of health insurers required to provide essential health benefits (EHB) under the ACA, must have an exceptions process that meets the standards in 45 CFR 156.122(c).

FAQ 31 supplements this previous Agency guidance by confirming that group health plans and health insurers may develop a standard exception form with instructions that an attending provider may use to prescribe a particular service or FDA-approved item based on a determination of medical necessity with respect to the individual involved and suggests the Medicare Part D Coverage Determination Request Form as an appropriate model for the development of such forms.

Act To Verify Compliance, Leverage Opportunities

FAQ 31 and the other guidance presents a two-edged sword for health insurers and group health plans and their sponsors. On one hand, failing to design and administer their health benefit programs to comply with these and other rules and interpretations about the preventive care and other federal health plan mandates imposed by the ACA or other laws can trigger significant liability for insurers as well as group health plans and theirsponsoring employers. On the other hand, group health plans and insurers that carefully design and administer their arrangements to comply with the guidance also can take advantage of opportunities to manage utilization and costs using the narrow windows of opportunity offered within the guidance.

In either case, careful, well-documented efforts to verify compliance in response to the evolving guidance is important to prevent unanticipated violations and position group health plans, their sponsoring employers and fiduciaries and insurers to mitigate potential exposures in the event of a violation of existing or subsequently published guidance.

About The Author

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also may be interested reviewing other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com such as:

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Posted by Cynthia Marcotte Stamer

Business Associate Rule Violations Behind $750K HIPAA Settlement

April 21, 2016

Health Plans, Sponsors & Business Associates Should Verify Plan’s HIPAA Compliance

Employers and other health plan sponsors and the health plan fiduciaries and business associates providing services involving dealings on behalf of the plan with protected health information just received another reminder to confirm and be prepared to prove all required business associate agreements are in place and that the health plans otherwise properly are administering all policies, practices, safeguards and procedures for handling, using and disclosing electronic and other protected health information from the April 20, 2016 Department of Health & Human Services Office of Civil Rights (OCR) announcement of its latest resolution agreement settling Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rule charges OCR made against a HIPAA-covered entity for violating HIPAA’s business associate agreement rules.

OCR Charges Brought For Business Associate Agreement Violations

HIPAA’s Privacy Rules generally apply to “covered entities,” which under HIPAA are health plans and insurers, health care providers, health care clearinghouses (Covered Entities) and “business associates,” which are individuals or entities that perform services that aid the Covered Entity to perform its duties as a Covered Entity.

The Resolution Agreement and Corrective Action Plan (Resolution Agreement) with Raleigh Orthopaedic Clinic, P.A. of North Carolina (Raleigh Orthopaedic) announced by OCR on April 20th requires Raleigh Orthopaedic to pay $750,000 to settle charges OCR it violated the Privacy Rule by handing over protected health information of approximately 17,300 patients to a potential business partner without first executing a business associate agreement.

Raleigh Orthopaedic is a provider group practice that operates clinics and a surgery center in the Raleigh, North Carolina area. OCR initiated its investigation of Raleigh Orthopaedic after receiving a breach report on April 30, 2013. OCR’s investigation indicated that Raleigh Orthopaedic violated the Privacy Rules by releasing the x-ray films and related protected health information of 17,300 patients to an entity that promised to transfer the images to electronic media in exchange for harvesting the silver from the x-ray films. Raleigh Orthopaedic failed to execute a business associate agreement with this entity before turning over the x-rays and PHI.

OCR says this sharing of the x-ray files and other protected health information by Raleigh Orthopaedic violated the Privacy Rules.

Specifically, the Privacy Rules prohibit Covered Entities and their business associates from using, accessing and disclosing protected health information except as specifically permitted in the Privacy Rules. As part of these rules, the “Business Associate” requirements of the Privacy Rule prohibit Covered Entities from disclosing or allowing business associates to use, and business associates from receiving or using protected health information unless the parties first enter into a written business associate agreement that complies with the requirements of the Privacy Rules.

The Resolution Agreement settles OCR charges that Raleigh Orthopaedic violated this Business Associate Agreement requirement by sharing the x-rays and other protected health information with the service provider without first entering a business associate agreement. Under the Settlement Agreement, Raleigh Orthopaedic must pay a $750,000 payment, as well as revise its policies and procedures to: establish a process for assessing whether entities are business associates; designate a responsible individual to ensure business associate agreements are in place prior to disclosing PHI to a business associate; create a standard template business associate agreement; establish a standard process for maintaining documentation of a business associate agreements for at least six (6) years beyond the date of termination of a business associate relationship; and limit disclosures of PHI to any business associate to the minimum necessary to accomplish the purpose for which the Covered Entity hires the business associate.

Although the Resolution Agreement only addresses charges OCR brought against the Covered Entity, Raleigh Orthopaedic, business associates need to keep in mind that both Covered Entities and business associates now are responsible for ensuring compliance with the business associate agreement requirements of the Privacy Rules since the Stimulus Bill amended HIPAA to make most provisions of the Privacy Rule directly applicable to business associates as well as Covered Entities.

Take Aways For Covered Entities & Their Business Associates

OCR’s announcement of the Resolution Agreement includes a strong message for other Covered Entities and business associates of the importance of taking seriously their responsibility under the Privacy Rule to ensure that the business associate agreement requirements of the Privacy Rule are met before business associates are allowed to receive, access or use protected health information. The announcement quotes Jocelyn Samuels, Director of the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) as stating. “It is critical for entities to know to whom they are handing PHI and to obtain assurances that the information will be protected.” and “HIPAA’s obligation on covered entities to obtain business associate agreements is more than a mere check-the-box paperwork exercise.”

In light of the Business Associate Rule and Director Samuels’ comments, Covered Entities and business associates alike should review the adequacy of their documentation, policies and practices regarding dealings with service providers who are or could collect, receive or use electronic or other protected health information to propose or perform services in the capacity as a business associate. Certainly both Covered Entities and business associates to ensure that they possess and are able to produce if needed signed business associate agreements for each current business associate agreement as well as that appropriate policies, practices and procedures are in place to ensure that all required business associate agreements are implemented before any disclosure or use of protected health information to the business associate in the future. As part of these activities, both Covered Entities and business associates also should ensure their policies and practices appropriately provide for the retention of signed copies of all business associate agreements and other records, and the implementation of all other processes and procedures required to position the entity to be able to demonstrate it not only had policies requiring compliance, but appropriately implemented and administered those policies in accordance with the Privacy Rule.

When conducting this review, Covered Entities and business associates also generally should consider the advisability of also reviewing their business associate agreements and the adequacy of these arrangements in light of any other contractual confidentiality and or contractual rights and commitments, regulatory requirements and other operational and risk management concerns that impact or interrelate with the relationship between the business associate and the Covered Entity. It is important to ensure that appropriate steps are taken to evaluate and properly integrate the confidentiality and other commitments that the Privacy Rules mandate a business associate agreement include with audit, performance assessment, and other data access or disclosure, trade secrets, confidentiality, performance standards and guarantees, indemnity and other contractual obligations of other agreements that could impact or be impacted by the business associate agreements. Steps also should be taken to incorporate appropriate processes and procedures for ensuring that the Covered Entity and members of its workforce understand and consistently administer and document their use of appropriate processes to ensure that the business associate agreement and other requirements of the Privacy Rules are fulfilled. In the case of employer sponsored plans subject to the Employee Retirement Income Security Act of 1974, for instance, the selection and proper oversight of business associates and the management of plan data both are subject to the fiduciary responsibility rules of ERISA. Meanwhile, insurers, business associates and other plan vendors also generally should anticipate that beyond HIPAA, they also may be subject to data security, privacy and other mandates and exposures under state HIPAA-like rules for protected health information, as well as other obligations under insurance, data security, identity theft, breach, privacy and other state laws.

The process of evaluating the adequacy of current arrangement and considering the advisability of changes to tighten existing practices in many cases will result in the discovery and discussion of potentially sensitive information about the adequacy of current or past compliance with the Privacy Rules or other matters. For example, it is possible that in the course of review, parties may be unable to locate a signed business associate agreement governing a relationship that the Privacy Rules require be subject to a business associate agreement or in the course of review, information indicating breaches of protected health information or other Privacy Rule violations may have occurred. For this reason, most Covered Entities and their business associates will want to consider arranging for this review and analysis to be conducted within the scope of attorney-client privilege by or under the direction of qualified legal counsel with HIPAA experience that has entered into a business associate agreement with the Covered Entity or business associate.

About The Author

Throughout her career, Ms. Stamer has advised these and other clients about health care, health plan, financial information, trade secret, privacy and other related compliance, data breach response and remediation and related compliance, risk management and related concerns. In the course of this work, Ms. Stamer has accumulated an impressive resume of experience advising and representing clients on HIPAA and other privacy and data security concerns. The scribe for the American Bar Association (ABA) Joint Committee on Employee Benefits annual agency meeting with the Department of Health & Human Services Office of Civil Rights for several years, Ms. Stamer has worked extensively with health plans, health care providers, health care clearinghouses, their business associates, employer and other sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA and other information privacy and data security rules, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health plans, health insurers, health care providers, banking, technology and other vendors, and others.

Beyond advising these and other clients on privacy and data security compliance, risk management, investigations and data breach response and remediation and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She also is the author of numerous highly acclaimed publications, workshops and tools for HIPAA or other compliance including training programs on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also may be interested reviewing other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com such as:

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Posted by Cynthia Marcotte Stamer

Final Investment Advice Fiduciary Rules Mean Work For Employers, Fiduciaries & Advisors

April 12, 2016

Employer and other employee benefit plan sponsors, benefit plan committees and fiduciaries, and the broker-dealers, financial advisors, insurance agents and other plan service providers that provide investment-related platforms, advice, recommendations or other services for employee benefit plans need to reevaluate the fiduciary status of their service providers and begin restructuring as necessary their associated relationships, service provider commission or other compensation, service agreements and arrangements or other services in response to a new Regulatory Guidance Package (Rule) that explicitly classifies parties providing “covered investment advice” as fiduciaries subject to the conflict of interest and other fiduciary responsibility rules of the Employee Retirement Income Security Act (ERISA).

Supplementing existing precedent and EBSA’s already existing broad, functional definition of “fiduciary,” the Rule clarifies when individuals and entities that provide “covered investment advice” to plans, plan sponsors, fiduciaries, plan participants, beneficiaries and Individual Retirement Accounts (IRAs) and IRA owners are:

Fiduciaries of the Plan or IRA for purposes of Title I of ERISA;
Required to acknowledge their status and the status of their individual advisers as “fiduciaries” of the plan for purposes of ERISA;
Accountable as fiduciaries for making prudent investment recommendations without regard to their own interests, or the interests of those other than the plan or plan participant or beneficiary that is the customer;
Restricted to charging only “reasonable compensation” for their advice or service;
Prohibited from making misrepresentations to their customers regarding recommended investments; and
Prohibited from providing advice or making payments that involve any conflicts of interest prohibited by ERISA unless the arrangements fully complies with a prohibited transaction exemption issued by EBSA under ERISA Section 408 that otherwise complies with ERISA Section 404.

Concurrent with its adoption of final regulations implementing these new rules concerning investment advisors and their fiduciary responsibilities, the Rule also adopts certain new Prohibited Transaction Exemptions that define requirements that providers of covered investment advice and the plan fiduciaries that engage them generally will be required after April 7, 2017 to ensure are met for investment advisors to receive commission-based compensation for their services, to sell or purchase certain recommended debt securities and other investments out of their own inventories to or from plans and IRAs, or to receive compensation for recommending fixed rate annuity contracts to plans and IRAs.

Investment Advice Covered By The Rule

The final rule applies to “covered investment advice.” For purposes of the rule, “covered investment advice” generally includes:

A recommendation to a plan, plan fiduciary, plan participant and beneficiary and IRA owner for a fee or other compensation, direct or indirect, as to the advisability of buying, holding, selling or exchanging securities or other investment property, including recommendations as to the investment of securities or other property after the securities or other property are rolled over or distributed from a plan or IRA;
A recommendation as to the management of securities or other investment property, including, among other things, recommendations on investment policies or strategies, portfolio composition, selection of other persons to provide investment advice or investment management services, selection of investment account arrangements (e.g., brokerage versus advisory); or recommendations with respect to rollovers, transfers, or distributions from a plan or IRA, including whether, in what amount, in what form, and to what destination such a rollover, transfer, or distribution should be made.

Under the Rule, the fundamental threshold element in establishing the existence of fiduciary investment advice is whether a “recommendation” occurred. The Department has taken an approach to defining “recommendation” that is consistent with and based upon the approach taken by the Financial Industry Regulatory Authority (FINRA), the independent regulatory authority of the broker-dealer industry, subject to the oversight of the Securities and Exchange Commission (SEC).

The Rule specifies that a “recommendation” is a communication that, based on its content, context, and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action. Under the Rule, the more individually tailored the communication is to a specific advice recipient or recipients, the more likely the communication will be viewed as a recommendation.

The types of relationships that must exist for such recommendations to give rise to fiduciary investment advice responsibilities include recommendations made either directly or indirectly (e.g. through or together with any affiliate) by a person who:

Represents or acknowledges that they are acting as a fiduciary within the meaning of ERISA or the Internal Revenue Code (Code);
Renders advice pursuant to a written or verbal agreement, arrangement or understanding that the advice is based on the particular investment needs of the advice recipient; or
Directs the advice to a specific recipient or recipients regarding the advisability of a particular investment or management decision with respect to securities or other investment property of the plan or IRA.

Also, the Rule only applies where a recommendation is provided directly or indirectly in exchange for a “fee or other compensation.” “Fee or other compensation, direct or indirect” means any explicit fee or compensation for the advice received by the person (or by an affiliate) from any source, and any other fee or compensation received from any source in connection with or as a result of the recommended purchase or sale of a security or the provision of investment advice services including, though not limited to, such things as commissions, loads, finder’s fees, and revenue sharing payments. A fee or compensation is paid “in connection with or as a result of” such transaction or service if the fee or compensation would not have been paid but for the transaction or service or if eligibility for or the amount of the fee or compensation is based in whole or in part on the transaction or service.

Investment Advice Not Covered By Rule

While the Rule reaches broadly, not all communications with financial advisers are covered fiduciary investment advice under the Rule. As a threshold issue, if the communications do not meet the definition of “recommendations” as described above, the communications will be considered non-fiduciary. In response to requests from commenters, and for clarification, the final rule includes some specific examples of communications that would not rise to the level of a recommendation and therefore would not constitute a fiduciary investment advice communication under the Rule.

When evaluating the applicability and effect of these exemptions, however, it is important to keep in mind that by adding the new Rule, EBSA seeks to make clear that individuals or organizations that engage in activities described in the Rule as covered investment advice are fiduciaries subject to these requirements. Since the Rule does not revoke existing EBSA fiduciary guidance or judicial precedent, service providers and other parties with discretionary authority or responsibility over employee benefit plans not covered by the Rule still could qualify as fiduciaries if their authority, responsibility or actions functionally causes them to fall within the definition of a fiduciary under these other pre-existing definitions of fiduciary status. Subject to this cautionary proviso, the following are some of the activities that the Rule identifies as activities that might fall outside the Rule’s covered investment activities in the manner required by the Rule:

“Education” as defined and provided in accordance with the Rule;
“General communications that a reasonable person would not view as an investment recommendation;”
Simply making available a platform of investment alternatives without regard to the individualized needs of the plan, its participants, or beneficiaries if a plan fiduciary independent of the platform service provider actually decides what investment options are offered and the platform service provider also represents in writing to the plan fiduciary that they are not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity; and
Transactions with independent plan fiduciaries where the adviser knows or reasonably believes that the independent fiduciary is a licensed and regulated provider of financial services (banks, insurance companies, registered investment advisers, broker-dealers) or those that have responsibility for the management of $50 million in assets, and other conditions set forth in the Rule are met;
Communications and activities made by advisers to ERISA-covered employee benefit plans in swap or security-based swap transactions when the swap transaction meets certain conditions set forth in the Rule, which EBSA designed in coordination with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to avoid conflicts between the Rule and the swap and security-based swap rules promulgated by those agencies under the Dodd–Frank Wall Street Reform and Consumer Protection Act; and
Activities and communications of employees working in the payroll, accounting, human resources, and financial departments of the plan sponsor or its affiliated business who routinely develop reports and recommendations for the company and other named fiduciaries of the sponsors’ plans if the employees receive no fee or other compensation in connection with any such recommendations beyond their normal compensation for work performed for their employer.

New Prohibited Transaction Exemptions Published With Rule

Concurrent with its publication of the Rule, EBSA also is adopting the following new “Prohibited Transaction Exemptions to the otherwise applicable statutory list of prohibited conflict of interest transactions in ERISA Section 406 and the companion rules of the Internal Revenue Code (Code) applicable to qualified retirement plans.

Noncompliance with the Rule, including where necessary to avoid violating ERISA Section 406’s prohibited transaction prohibitions, by parties providing covered investment advice or the engagement or retention of such a service provider by an employer or other party exercising or with responsibility or authority to make that engagement carriers big legal risk. Advisers and financial institutions that don’t meet the BICE standards and other requirements of the Rule expose themselves to liability from breach of fiduciary duty claims under ERISA brought by ERISA plans, participants, and beneficiaries or in the case of IRAs or other non-ERISA plans, state law breach of contract or other state law claims brought by IRAs and other non-ERISA plans or accountholders. Likewise an employer, member of its management or other party responsible for or having authority to choose the service provider risks breaching its own fiduciary duties under ERISA by engaging a party that renders covered investment advice without complying with the Rule. In addition, to the extent that the engagement or activities of the service provider involves commission compensation payments, swaps or other activities that would constitute a prohibited conflict of interest under ERISA Section 406 not structured and conducted with an applicable prohibited transaction exemption, both the service provider and the fiduciary could bear personal liability for involving the plan or its assets in a prohibited transaction in violation of ERISA Section 406. For this reason, to help positions themselves to mitigate or defend against liability for such potential claims, advisors generally should take steps to ensure that the advisor can prove the advisor acted in their clients’ best interest by documenting their use of a reasonable process and adherence to professional standards in deciding to make the recommendation and determining it was in the customer’s best interest, and by documenting their compliance with the financial institution’s policies and procedures required by the Best Interest Contract Exemption.

“Best Interest Contract Exemption” (BICE)

ERISA and the Internal Revenue Code rules for qualified retirement plans generally prohibit individuals or entities providing fiduciary investment advice to plan sponsors, plan participants, and IRA owners to receive payments creating any of the listed statutory conflicts of interest listed in ERISA or the Code without a prohibited transaction exemption (PTE), employee benefit plan sponsors, benefit plan committees and other fiduciaries, and the broker-dealers, financial advisors, insurance agents and other plan service providers providing covered investment services to employee benefit plans also need to ensure that their compensation is structured to ensure that the compensation and other arrangements do not violate these prohibited transaction and conflict of interest prohibitions of the Code and ERISA, ERISA’s reasonable compensation rules, or the other requirements of ERISA.

Concerning ERISA Section 406’s party-in-interest and other conflict of interest requirements, EBSA issued in conjunction with its publication of the Rule a new “Best Interest Contract Exemption” (BICE), which provides a prohibited transaction exception that permits the payment of commission-based compensation to fiduciary investment advisors as long as the conditions specified in the BICE are met. Among other things, the BICE requires as a condition of the applicability of this exception that:

The financial institution to acknowledge in writing fiduciary status for itself and its advisers;
The financial institution and advisers to adhere to ERISA’s basic standards of impartial conduct, including giving prudent advice that is in the customer’s best interest, avoiding making misleading statements, and receiving no more than reasonable compensation;
The financial institution to have policies and procedures designed to mitigate harmful impacts of conflicts of interest; and
The financial institution to disclose specified information about their conflicts of interest and the cost of their advice.

The specified disclosures required to meet the conditions of the BICE include:

Descriptions of material conflicts of interest;
Descriptions of fees or charges paid by the retirement investor
A statement of the types of compensation the firm expects to receive from third parties in connection with recommended investments;
Notification that investors have the right to obtain specific disclosure of costs, fees, and other compensation upon request; and
A requirement that a website must be maintained and updated regularly that includes information about the financial institution’s business model and associated material conflicts of interest, a written description of the financial institution’s policies and procedures that mitigate conflicts of interest, and disclosure of compensation and incentive arrangements with advisers, among other information. However, the BICE currently does not require that the website include individualized information about a particular adviser’s compensation.

Noncompliance with the Rule by parties providing covered investment advice or the engagement or retention of such a service provider by an employer or other party exercising or with responsibility or authority to make that engagement carriers big legal risk. Advisers and financial institutions that don’t meet the BICE standards and other requirements of the Rule expose themselves to liability from breach of fiduciary duty claims under ERISA brought by ERISA plans, participants, and beneficiaries or in the case of IRAs or other non-ERISA plans, state law breach of contract or other state law claims brought by IRAs and other non-ERISA plans or accountholders. Likewise an employer, member of its management or other party responsible for or having authority to choose the service provider risks breaching its own fiduciary duties under ERISA by engaging a party that renders covered investment advice without complying with the Rule. In addition, to the extent that the engagement or activities of the service provider involves commission compensation payments, swaps or other activities that would constitute a prohibited conflict of interest under ERISA Section 406 not structured and conducted with an applicable prohibited transaction exemption, both the service provider and the fiduciary could bear personal liability for involving the plan or its assets in a prohibited transaction in violation of ERISA Section 406. For this reason, to help positions themselves to mitigate or defend against liability for such potential claims, advisors generally should take steps to ensure that the advisor can prove the advisor acted in their clients’ best interest by documenting their use of a reasonable process and adherence to professional standards in deciding to make the recommendation and determining it was in the customer’s best interest, and by documenting their compliance with the financial institution’s policies and procedures required by the Best Interest Contract Exemption.

Principle Transactions Exemption

The “Principal Transactions Exemption” published in connection with the Rule provides an exemption from the prohibitions of ERISA Section 406 to allow investment advice fiduciaries to sell or purchase certain recommended debt securities and other investments out of their own inventories to or from plans and IRAs where the requirements of the Exemption are met. As with the Best Interest Contract Exemption, the Principle Transaction Exemption requires, among other things, that investment advice fiduciaries adhere to certain impartial conduct standards, including obligations to act in the customer’s best interest, avoid misleading statements, and seek to obtain the best execution reasonably available under the circumstances for the transaction.

Existing PTE For Fixed Rate Annuity Contracts

In connection with its adoption of the Rule, EBSA also is amending existing exemption, PTE 84-24, which provides relief for insurance agents and brokers, and insurance companies, to receive compensation for recommending fixed rate annuity contracts to plans and IRAs. As amended in connection with the Rule, the requirements of PTE 84-24 are modified to provide increased safeguards for retirement investors while still providing “more streamlined conditions” than those required to meet the Best Interest Contract Exemption. Consistent with its enthusiasm for encouraging the offering and adoption of life time income products to retirees over the past several years, EBSA says these more streamlined conditions of PTE 84-24 are appropriate to “facilitate access by plans and IRAs to these relatively simple lifetime income products.” More complex products, such as variable annuities and indexed annuities, will be able to be recommended by advisers and financial institutions under the terms of the Best Interest Contract Exemption.

Other PTE Exemptions Modified To Raise Requirements

The Department is amending other existing exemptions, as well, to ensure that plan and IRA investors receiving investment advice are consistently protected by impartial conduct standards, regardless of the particular exemption upon which the adviser and the fiduciary engaging that advisor intend to rely upon to avoid violating of ERISA 406.

While the compliance deadline for the new Rule is not until April 8, 2017, the relief from ERISA Section 406 offered by the new Exemptions announced in connection with the Rule’s publication generally became available when EBSA published them in connection with the Rule on April 8, 2016. As this relief could provide helpful protection against fiduciary challenges or exposures that some service providers might already face under already existing fiduciary precedent or guidance, many service providers involved in dealings with plan or IRA investments may wish to take steps to position themselves to claim protection under one of these new PTE Exemptions even before the Rule takes effect. When evaluating this option, some service providers should be aware of the availability of transitional relief that may make it easier for some service providers to claim relief under the new BICE or Principal Transactions Exemption between April 8, 2017 and January 1, 2018 (Transition Period). In addition, parties that contemplate wishing to take advantage of the relief offered by the new BICE or Principal Transactions Exemption may benefit from taking advantage of reduced requirements for meeting these conditions during the phase in Transition Period. During this Transition Period, EBSA still will require firms and advisers to adhere to the Exemptions’ impartial conduct standards, provide a notice to retirement investors that, among other things, acknowledges their fiduciary status and describes their material conflicts of interest, and to designate a person responsible for addressing material conflicts of interest and monitoring advisers’ adherence to the impartial conduct standards; however compliance with certain other requirements is waived until January 1, 2018. Of course, full compliance with all requirements of the applicable Exemptions will be required as of January 1, 2018.

Rule Requires Action By Plan Sponsors, Fiduciaries & Service Providers

The new Rule creates lots of new work both for advisors and other service providers in, as well as plan sponsors, plan administrative committees or other fiduciaries responsible for selection, retention and oversight of those providing these services. All such parties have much to do to fulfill their ERISA responsibilities by the April 8, 2017 deadline for compliance with the new Rule and to deal with other likely fallout from the new Rule.

Fallout for Covered Investment Advisors & Other Service Providers

Clearly, advisors, financial institutions and other service providers providing covered investment advice and others with involvement with investments or investment platforms have much work to do to prepare for the new rule. However, compliance with the Rule is not merely a service provider problem. Employer or other plan sponsors, plan fiduciaries or other responsible for the credentialing, selection, retention, and oversight of service providers dealing with investments also need to ensure that the party or parties responsible for these vendor dealings fulfills its own fiduciary responsibilities in dealing with vendors and service providers that may be impacted by these requirements.

Advisers and financial institutions that don’t meet the requirements of the new Rule expose themselves to liability from breach of fiduciary duty claims under ERISA brought by ERISA plans, participants, and beneficiaries or in the case of IRAs or other non-ERISA plans, state law breach of contract or other state law claims brought by IRAs and other non-ERISA plans or accountholders. Obviously, advisors, financial institutions and other service providers providing advice or having dealings or involvement with IRA or employee benefit plan investments, their selection or administration will want to review and update their relationships and their associated compensation, contracts, disclosures and other arrangements and processes in light of the new Rule. Clearly, those that could be considered to offer or provide covered investment advice need to start revising contracts, compensation, policies, practices and other arrangements in anticipation of the Rule. At the same time, the Rule also is likely to create work for certain service providers with involvement or dealings with investments that the service provider considers to fall outside of the Rule:

To respond to changes in client requests for proposals, contracts or other due diligence in response to the Rule;
To respond to changes in response to the Rule by covered investment advisors to reconfigure services, relationships and contracts in response to the Rule;
To clarify and institutionalize and document communications by the uncovered service provider to clients and others of limits on the service provider’s services and capacity that are necessary or helpful to avoid or limit exposure of the service provider to coverage by or claims of liability arising out of the Rule; and/or
Otherwise.

Fallout For Plan Sponsors & Plan Fiduciaries Selecting & Overseeing Service Providers

Employer or other plan sponsors, plan fiduciaries or other responsible for the credentialing, selection, retention, and oversight of service providers dealing with investments also need to anticipate and be prepared to deal the effects of adoption of the Rule on their responsibilities and risks as they relate to the selection, retention, contracting, compensation and other dealings with service providers impacted by the Rule.

The Rule’s explicit designation as fiduciaries of certain service providers that previously may have been characterized as providing services as non-fiduciaries, much less its tightening of requirements for the investment advisors that are covered fiduciaries, creates a host of new responsibilities and considerations for employers sponsoring plans and its members of management that select, retain, contract with and oversee these service providers.

Under ERISA, parties designated in writing or function exercising discretionary authority or responsibility for the selection, retention, compensation and oversight of fiduciary or other service providers generally are considered fiduciaries for purposes of carrying out these responsibilities and bear personal liability for prudently selecting, retaining and monitoring the service provider in accordance with ERISA.

To fulfill this fiduciary obligation, those involved in selecting and retaining investment advisors covered by the rules should expect to bear responsibility for ensuring that the covered investment advisor is engaged in compliance with the Rule and the otherwise applicable requirements of ERISA, including that the engagement and compensation of the selected investment advisor will not involve the plan or its assets in a prohibited conflict of interest listed in ERISA Section 406. Furthermore, failing to ensure that the engagement of an investment advisor does not violate these conflict of interest rules also exposes a sponsoring employer of a qualified plan to excise tax liability under the Code’s companion party-in-interest rules applicable to such plans.

Accordingly, whether the employer itself retains and directly exercises the discretionary authority to select and retain a service provider or appoints a committee or member of its staff to perform these responsibilities as a designated fiduciary, an accurate understanding of which service providers, taking into account the rule, now will be considered fiduciaries and the requirements of the Rule flowing from this status is essential to understand and make appropriate provisions to ensure that proper steps are taken to ensure that the Rule and ERISA’s other requirements for prudent credentialing, bonding, contracting, compensation, and other dealings with the service provider and to budget for the proper conduct of the activities needed to fulfill these obligations.

In light of these and other exposures and obligations, employer and other plan sponsors, plan fiduciaries and plan service providers alike all should start preparing to respond to the new Rule.

To help positions themselves to mitigate or defend against liability for such potential claims, each party generally will want to take prudent and well-documented steps to evaluate the fiduciary status of each applicable service provider, as well as its own fiduciary status, capacity, responsibility and other exposures in light of the new Rule. Since ERISA fiduciary status attaches functionally based on the functional facts and circumstances, sponsoring employers, as well as service providers generally will want to consider taking appropriate steps to document this analysis and other compliance and risk management efforts to avoid violations of the Rule, as well as to position themselves to defend against other claims and liabilities.

In all cases, each impacted party should make an effort to apply and retain evidence documenting its efforts including, in the case of all service providers, whether or not covered investment advisors under the Rule, their efforts to act in their clients’ best interest by documenting their use of a reasonable process and adherence to professional standards in deciding to make the recommendation and determining it was in the customer’s best interest, and by documenting their compliance with the financial institution’s policies and procedures and applicable requirements of the law.

About The Author

Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, a Fellow in the American College of Employee Benefit Counsel, past Group Chair, past Welfare Benefit Committee Chair, and Current Defined Contribution Plan Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, a past ABA Joint Committee on Employee Benefits Council Representative Cynthia Marcotte Stamer is a practicing attorney, regulatory and public policy advocate, author, lecturer and industry and public policy thought leader recognized as a “Top” attorney in employee benefits, labor and employment and health care law for her more than 28 years’ of leading edge experience nationally and internationally providing practical and effective advice and representation to management.

Ms. Stamer’s legal and management consulting work throughout her career has focused on helping organizations and their management understand and use the law and process to manage people, performance, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative and pragmatic problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

As a key part of this work, Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements.

She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. In these and other engagements, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

Ms. Stamer also advises and represents clients on OCR and other HHS, Department of Labor, IRS, FTC, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. In the course of this work, Ms. Stamer has accumulated an impressive resume of more than 28 years’ of experience advising and representing clients on Title I and other ERISA fiduciary responsibility concerns including assisting and advising plan sponsors, plan fiduciary and plan service providers to design and administer fiduciary and other compliance and risk management policies and practices, conducting investigations of potential fiduciary or other breaches, and serving as special counsel, advising and representing these and other clients in connection with EBSA, IRS, SEC and other governmental audits, investigations and enforcement actions; in private disputes and litigation regarding plan investments or other fiduciary concerns between plan participant and beneficiaries, plans, plan fiduciaries, plan sponsors and plan service providers; or both.

Ms. Stamer also is deeply involved in helping to influence health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. Deeply involved in both U.S. statutory and regulatory pension and health care reform throughout her career, Ms. Stamer both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas. She also works as a policy advisor and advocate to health plans, their sponsors, administrators, insurers and many other business, professional and civic organizations.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see www.cynthiastamer.com, or http://www.stamerchadwicksoefje.com the member of contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also may be interested reviewing other Solutions Law Press, Inc. ™ resources at www.solutionslawpress.com such as:

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. ©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press. All other rights reserved.

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Posted by Cynthia Marcotte Stamer

Employers, Insurers & TPAS: Budget Time, $ For 2017 Summary of Benefits and Coverage Updates

April 11, 2016

Group health plans and group and individual health insurers (Health Plans) must add updating their 2017 Summary of Benefits and Coverage (SBC) forms to their 2017 to do list in response to the publication by the Departments of Health and Human Services (HHS), Labor (DOL) and Treasury (collectively “Agencies) of enhanced content requirements for the 2017 Summary of Benefits and Coverage (SBC) template and Uniform Glossary that the Patient Protection & Affordable Care Act (ACA) requires Health Plans to provide to Health Plan members. Health Plans must begin using SBCs updated to comply with the 2017 SBC template released by the Agencies on April 6, 2016 beginning on the first day of the first open enrollment period that begins on or after April 1, 2017.

The ACA requires Health Plans to provide covered persons a brief (4 page) summary of what the plan covers and the plan’s cost sharing along with a comprehensive uniform glossary of commonly used health coverage and medical terms with the detailed content and format dictated by the Agencies SBC regulations. Intended to help covered persons understand and compare coverage options by providing standardized information in a standardized format about each plan, the SBC and Glossary must include all required content in the type and format dictated by the SBC regulations. In addition to ensuring that their SBC and Glossary meet these requirements, Health Plans also may need to prepare and offer translations of the SBC and Glossary to comply with the ACA’s “culturally and linguistically appropriate” requirements.

The current and 2017 SBC Template along with instructions for its preparation and completion, model translation documents for certain forms, and other information about the SBC requirements are available here.

Currently, the dictated SBC format includes coverage examples that demonstrate the cost sharing amounts an individual might be responsible for in three common medical situations. In addition to the current coverage examples that address diabetes care and childbirth, the updated template for 2017 also will require a new coverage example that addresses coverage for a foot fracture so that a consumer understands what a plan covers in an emergency scenario.

Beyond dictating the emergency example, the 2017 templates also expand the information about cost sharing that SBCs much contain to include enhanced language to explain deductibles and a requirement that plans address individual and overall out-of-pocket limits in the SBC.

While the Agencies regulations dictate the required content, health insurers and employers or others serving as health plan administrators or sponsors need to use care to ensure that SBCs are prepared appropriately and provided when and how required. Failure to timely deliver the SBC not only can trigger penalties under ERISA against the plan administrator and/or against the insurer under the ACA market reform rules, noncompliance with the SBC requirements also is among the listed ACA compliance defects that can expose the sponsoring employer to excise tax penalties under the Internal Revenue Code.

In order to fulfill this and other important ACA and other federal health plan notice and reporting mandates, employer and other plan sponsors, administrators and fiduciaries generally must finalize their health plan design well in advance of the date the new health plan design is intended to take effect. The Agencies SBC regulations generally require that the SBC be provided before the first day of the enrollment period and that updated SBCs be provided whenever any material change in benefits or coverage is enacted after the delivery of the original SPB. The requirement to prepare and deliver the SBC is in addition to the current federal mandate that plan administrators provide written notice of material changes to a health plan at least 60 days before the effective date of the material change and a host of other health plan notice requirements imposed by federal law. Employers, insurers, third party administrators and health plan fiduciaries need to understand and make appropriate arrangements to ensure that these SBC and other notice and reporting requirements are timely and appropriately completed.

About The Author

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also may be interested reviewing other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com such as:

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Posted by Cynthia Marcotte Stamer

OSHA Raises Silica Safety Requirements

March 25, 2016

U.S. employers engaged in businesses that could expose workers to silica dust should begin preparing to comply a new final rule (Silica Rule) that requires employers to improve protections for workers exposed to respirable silica dust announced by the U.S. Department of Labor Occupational Safety and Health Administration (OSHA) that OSHA intends to curb lung cancer, silicosis, chronic obstructive pulmonary disease and kidney disease in America’s workers by limiting their exposure to respirable crystalline silica. Employers whose workers could be exposed to silica will need to update their practices to comply with the new standards set in the Silica Rule as soon as possible and no later than the applicable compliance deadline set in the Silica Rule.

The new Silica Rule is written as two standards, one for construction and one for general industry and maritime. Among other things, it generally will require that by as early as June 23, 2017, covered employers improve worker protection against silica exposures by:

Reducing the permissible exposure limit for crystalline silica to 50 micrograms per cubic meter of air, averaged over an eight-hour shift.
Requiring employers to use engineering controls (such as water or ventilation) and work practices to limit worker exposure; provide respiratory protection when controls are not able to limit exposures to the permissible level; limit access to high exposure areas; train workers; and provide medical exams to highly exposed workers.
Providing greater certainty and ease of compliance to construction employers – including many small employers – by including a table of specified controls they can follow to be in compliance, without having to monitor exposures.
Staggering compliance dates to ensure employers have sufficient time to meet the requirements, e.g., extra time for the hydraulic fracturing (fracking) industry to install new engineering controls and for all general industry employers to offer medical surveillance to employees exposed between the PEL and 50 micrograms per cubic meter and the action level of 25 micrograms per cubic meter.

Employers covered by the construction standard have until June 23, 2017 to comply with most requirements. Employers covered by the general industry and maritime standard have until June 23, 2018 to comply with most requirements; additional time is provided to offer medical exams to some workers and for hydraulic fracturing employers to install dust controls to meet the new exposure limit.

About The Author

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick│Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.

A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her nearly 30-year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see CynthiaStamer.com or StamerChadwickSoefje.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc. ™

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. ©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc. ™. All other rights reserved.

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Posted by Cynthia Marcotte Stamer

DOL “Persuader Rule” Changes Broaden Employer & Consultant Anti-Union Contract Disclosure Duties

March 23, 2016

By: Cynthia Marcotte Stamer

The Obama Administration is moving forward on yet another effort to empower union organizing efforts and disempower employer efforts to fight union organization efforts by changing its regulations implementing the “persuader rule” of the Labor-Management Reporting and Disclosure Act (LMRDA) to expand the circumstances under which the Labor Department’s “persuader rule” requires employers to disclose arrangements made with consultants to assist the employer to oppose union efforts by filing the Form LM-10 (employer report) and consultants providing anti-union services to file the Form LM-20 (agreement and activities report). See DOL persuader rule Fact Sheet, Overview/Summary and a Question and Answers. Employers, consultants and others involved in labor-management relations management or training will want to review and update their risk management and compliance practices in light of this impending change.

Current U.S. Department of Labor Office of Labor-Management Standards (Labor Department) regulations implementing Section 203 of the Labor-Management Reporting Disclosure Act (LMRDA) generally require employers and labor relations consultants to with the U.S. Department of Labor’s Office of Labor-Management Standards (OLMS) a Form LM-10 Employer Report, Form LM-20 Agreement and Activities Report, and Form LM-21 Receipts and Disbursements Report whenever the employer and the consultant enter into an agreement or arrangement for the consultant directly to undertake activities with either of the following objectives:

To persuade employees about exercising their rights to organize and bargain collectively or
To supply an employer with certain information concerning the activities of employees or a labor organization in connection with a labor dispute involving the employer.

Employer Report Form LM-10

Specifically, Labor Department Regulations generally require employers to report by filing with the Labor Department the Form LM-10 if they make certain expenditures or engage in certain activities, including entering into agreements or arrangements with any third party consultant, to persuade employees concerning their collective bargaining or organizing rights or to obtain certain information. Employers currently are not required to file Form LM-10 reports covering attendance at union avoidance seminars, though consultants who present at these seminars must file LM-20 reports, however. The Form LM-10 must be signed by the president and the treasurer or corresponding principal officers of the reporting employer, or by the sole proprietor, as appropriate. Employers also should be aware that Labor Department rules also require employers to report other items not related to persuader activities or expenditures on Form LM-10. Pursuant to LMRDA Section 203(a), employers must also file the Form LM-10 to report certain payments to unions and individuals affiliated with unions, including any officer, employee, shop steward, or agent of a labor organization. There are exceptions to the filing requirements, and these are noted in the Form LM-10 instructions. The Form LM-10 report must be filed electronically within 90 days after the end of the employer’s fiscal year. Employers are required to file only one Form LM-10 report each fiscal year covering all instances of reportable activity even if, for example, activity occurs at multiple locations or the employer enters into more than one consultant agreement

Consultant Report Form LM-20 and 21

In addition to the employer reporting requirements, Labor Department implementing rules for Section 203(b) requires any person, including a labor relations consultant, to file a report, Form LM-20, to disclose agreements or arrangements with any employer pursuant to which the person undertakes activities with the intent to persuade employees concerning their collective bargaining or organizing rights or to obtain certain information. The required LM-20 report is due within 30 days after entering into a reportable agreement, except for reports covering union avoidance seminars, which are due 30 days after the conclusion of the seminar. Such individuals or organizations must file a separate Form LM-20 for each agreement or arrangement they make with an employer, and attach a copy of any written agreement. The report must be signed by the president and the treasurer or corresponding principal officers of the consultant firm or, if the filer is self-employed, by the individual consultant.

Broadening Of Actions Subject To Persuader Rule

Presently, the Labor Department generally only required reporting of an employer-consultant agreement only if the consultant communicated directly to the workers. Under the new “persuader rule” scheduled for publication in the March 24, 2016 Federal Register, however, the Labor Department will expand the duty to report to include both direct communications and other “indirect” activities by a consultant to assist an employer with anti-union efforts.

As amended by the persuader rule, Labor Department regulations generally will require employers and their consultants to file the Form LM-10 employer report and the Form LM-20 agreement and activities report disclosing an anti-union employer-consultant agreement whenever a consultant engages “any actions, conduct, or communications that are undertaken with an object, explicitly or implicitly, directly or indirectly, to affect an employee’s decisions regarding his or her representation or collective bargaining rights.” The final persuader rule scheduled for publication on March 24, 2016 also will provide that consultant activities that trigger reporting include direct contact with employees with an object to persuade them as well as the following categories of indirect consultant activity:

Planning, directing, or coordinating activities undertaken by supervisors or other employer representatives, including meetings and interactions with employees;
Providing materials or communications for dissemination to employees;
Conducting a union avoidance seminar for supervisors or other employer representatives; and
Developing or implementing personnel policies, practices, or actions for the employer.

Prepare To Meet Broadened Requirements

Following its publication in the March 24, Federal Register, the persuader rule is scheduled to take effect on April 25, 2016 and apply to arrangements, agreements, and payments made on or after July 1, 2016.

The Labor Department’s final adoption of the persuader rule tomorrow comes despite widespread criticism by employers, management consultants and many management legal counsels as overly broad and potentially infringing on management’s attorney-client privilege rights with respect to advice provided by legal counsel to management. As a result of these and other concerns, most commentators expect the changes to the persuader rule to face widespread challenges in the courts.

Whether or not these challenges materialize, employers as well as consultants and legal counsel involved in anti-union organization efforts will need to carefully evaluate the revised reporting requirements to take into account the persuader rule’s expansion to the reporting requirements. Employers anticipating potential union activity or training and the lawyers and labor consultants and labor-management educators providing or offering services will want to carefully evaluate the changes and modify practices in light of the impending changes to the rule.

About The Author

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her nearly 30- year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see CynthiaStamer.com or StamerChadwickSoefje.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

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. ©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc. ™. All other rights reserved.

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Posted by Cynthia Marcotte Stamer

Learn Latest HIPAA Health Plan Rules In 3/30 SLP Webex

March 9, 2016

Solutions Law Press, Inc. ™ Invites You To A Special WebEx Briefing

HIPAA Update: The Latest On Security, Patient Access & Other HIPAA Developments

Wednesday, March 30, 2016

1:00 P.M.-2:00 P.M. Eastern | 12:00 P.M.-1:00 P.M. Central 11:00 A.M-12:00 P.M. Mountain | 10:00 A.M-11:00 A.M. Pacific

Health care providers, health plans, health care clearinghouses and their business associates (Covered Entities) face new imperatives to review and tighten their practices to ensure their practices comply with recently released guidance from the U.S. Department of Health & Human Services Office of Civil Rights (OCR)) emphasizing and clarifying the responsibilities of health care providers, health plans and the healthcare clearinghouses under the Health Insurance Portability & Accountability Act of 1996 (HIPAA) to provide access to individuals that are the subject of protected health information or “PHI” to access or copies of their PHI in accordance with HIPAA’s rules and other recent HIPAA guidance and enforcement. With OCR’s recent release of added guidance and OCR enforcement statistics continuing to show HIPAA access rule violations among the most common HIPAA violations and OCR stepping up HIPAA enforcement, health care providers, health plans, healthcare clearinghouses can expect heightened scrutiny and enforcement of these requirements. Additionally, Covered Entities also should evaluate the adequacy of their other practices in light of other recent OCR guidance and enforcement actions.

Solutions Law Press, Inc.™ invites to catch up on the latest guidance on HIPAA’s requirements to provide access to patients to PHI by registering here to participate in the Solutions Law Press, Inc.™ “HIPAA Update: The Latest On Security, Patient Access & Other HIPAA Developments” WebEx briefing from Cynthia Marcotte Stamer on Friday, March 18, 2016. During the Briefing, Ms. Stamer will provide participants with:

√ An update on OCR enforcement actiions and guidance over past 12 months

√ A detailed discussion of OCR’s new guidance about when Covered Entities must provide PHI access or copies to patients

√ Discuss rules and best practices for verifying the identity and credentials of an individual requesting PHI as a patient or personal representative of a patient

√ Share tips for contracting and dealing with business associates to facilitate administration of patient PHI access and security compliance activities

√ Share other practical considerations & best practices for compliance and risk management

√ Respond to participant questions on a time permitting basis

√ More

ABOUT THE SPEAKER

Recognized as “Legal Leader™ Texas Top Rated Lawyer” in both Health Care Law and Labor and Employment Law, a “Texas Top Lawyer,” and an “AV-Preeminent” and “Top Rated Lawyer” by Martindale-Hubble, singled out as among the “Best Lawyers In Dallas” in employee benefits 2015 by D Magazine;, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely recognized for her more than 28 years extensive work and pragmatic thought leadership, experience, publications and training on HIPAA and other privacy, medical records and data and other health care, health plan and employee benefits, workforce and related regulatory and other compliance, performance management, risk management, product and process development, public policy and other key operational concerns.

As a core component of her work as the Managing Shareholder of Cynthia Marcotte Stamer, PC, the Co-Managing Member of Stamer Chadwick Soefje PLLC, Ms. Stamer has worked extensively throughout her nearly 30 year career with health care providers, health plans, health care clearinghouses, their business associates, employers, banks and other financial institutions, their technology and other vendors and service providers, and others on legal and operational risk management and compliance including extensive involvement with HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and concerns; prevention, investigation, response, mitigation and resolution of known or suspected data or privacy breaches or other incidents; defending investigations or other actions by plaintiffs, OCR, FTC, state attorneys’ general and other federal or state agencies; reporting and redressing known or suspected breaches or other violations; business associate and other contracting; insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others. Ms. Stamer also has worked extensively domestically and internationally on public policy and regulatory advocacy on HIPAA and other privacy and data security risks and requirements as well as a broad range of other health, employee benefits, human resources, insurance, tax, compliance and other matters and representing clients in dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, HUD and Justice, as well as a state legislatures attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators as well supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness.

Beyond her extensive involvement advising and defending clients on these matters, Ms. Stamer also has served as the scrivener for the ABA JCEB’s meeting with OCR on HIPAA for many years. She returns as Chair of the Southern California ISSA Health Care Privacy & Security Summit for the third year in 2016, as well as speaks and serves on the steering committee of a multitude of other programs.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares shared her thought leadership, experience and advocacy on HIPAA and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association, Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Board Compliance Chair and Board member of the National Kidney Foundation of North Texas, current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Counsel, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management. Examples of her many highly regarded publications on these matters include “Protecting & Using Patient Data In Disease Management: Opportunities, Liabilities And Prescriptions,” “Privacy Invasions of Medical Care-An Emerging Perspective,” “Cybercrime and Identity Theft: Health Information Security: Beyond HIPAA,” as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see CynthiaStamer.com or the Stamer│Chadwick │Soefje PLLC or contact Ms. Stamer via email to here or via telephone to (469) 767-8872.

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Comments Off on Learn Latest HIPAA Health Plan Rules In 3/30 SLP Webex | Employee Benefits, Employer, Employers, health benefit, Health Benefits, health Care, Health Care Reform, health insurance, health insurance marketplace, health plan, Health Plans, HIPAA, HIPAA, Privacy, Protected Health Information, Uncategorized | Tagged: Business Associate, Health Insurance, Health Plan, HIPAA, Medical Privacy, PHI, Protected Health Information, third party administrator, tpa | Permalink
Posted by Cynthia Marcotte Stamer

Marketplace Data Deficiencies Signal Employer ACA Headaches

March 9, 2016

By: Cynthia Marcotte Stamer

Employers, health plans and individual taxpayers should be concerned about reports of deficiencies in the eligibility and enrollment tracking procedures of some health insurance exchanges or “marketplaces” created under the Patient Protection and Affordable Care Act (ACA) that are likely to identify individuals enrolling in health insurance coverage offered through the Healthcare.gov and certain state health insurance exchanges or “marketplaces” as eligible for subsidies who in fact are ineligible for subsidies.

As the Internal Revenue Service (IRS) and Department of Health & Human Services (HHS) rely upon Marketplaces’ eligibility and enrollment records to enroll Americans in health insurance coverage through the ACA created marketplaces, to help determine in individual Americans and employers are complying with the ACA shared responsibility rules, and to determine which individuals enrolling in coverage through marketplaces qualify for ACA subsidies, deficiencies in these practices and resulting errors in eligibility and enrollment records are likely to mean headaches for employer, health plans and individual Americans.

Marketplace Eligibility & Enrollment Data Critical To Administer ACA Reforms

Accurate eligibility and enrollment determination by marketplaces is critical to the administration of the ACA’s complicated web of reforms, including the determination the determination of whether the employee of a large employer who enrolls in coverage qualifies for a subsidy so as to trigger an obligation for the employer to pay an employer shared responsibility payment under IRC Section 4980H if the employee is not enrolled in group health coverage offered by the employer meeting ACA’s requirements.

As part of ACA’s massive restructuring of the health care payment system enacted by President Obama and the then Democrat-led Congress, most Americans now must pay an “individual shared responsibility payment” unless enrolled in “minimum essential coverage” one of the ACA-approved health coverage options. Along with this individual mandate, the ACA:

Dictates that all group and individual health insurance policies other than a narrow list of “excluded” plans include the rich and generally expensive package of ACA-mandated “essential health benefits,” pay a host of ACA-imposed taxes and assessments, and comply with a host of tight ACA market reforms;
Penalizes employers with 50 or more full-time employees (large employers) that fail to offer all full-time employees group health coverage for the employee and each of his dependent children (hereafter “dependent coverage”) through an employer-sponsored arrangement that provides minimum essential benefits at a cost not greater than 9.5 percent of the federal poverty level by providing that any large employer with at least 1 employee enrolled in subsidized health coverage offered through an ACA-established health insurance marketplace, to pay a monthly “employer shared responsibility payment” under Internal Revenue Code Section 4980H of:
- For any large employer not offering any group health plan employee and dependent coverage providing minimum essential coverage to each full-time employee, $150 per full-time employee per month; or
- For any other large employer, $250 per month for each full-time employee earning less than 400 percent of the federal poverty level enrolled in subsidized health insurance coverage through an ACA-established health insurance marketplace unless the employer shows the employer offered the employee the opportunity to enroll in employee and dependent coverage under a group health plan that provided the ACA-required minimum essential coverage at a cost not exceeding 9.5 percent of the employee’s adjusted gross income; and
Seeks to incentivize small employers (generally with fewer than 25 full-time and full-time equivalent employees) tax credits for offering minimum essential coverage under an employer-sponsored plan that meets the ACA requirements; and
Created a system of one federal and various state health care exchanges or “marketplaces” through which individual Americans and small employers can purchase an expensive package of “essential health benefits” from private health insurers offering “qualified health plans” (QHPs) through the their state “marketplace,” if any, or for Americans living in a state with that elected not to establish a state marketplace, the federal Healthcare.gov marketplace;
Uses federal tax dollars to subsidize a portion of the premiums paid by certain Americans earning less than 400% of the federal poverty level that enroll in coverage under a QHP through the marketplace applicable in their states unless the individual had the option to enroll in an employer-sponsored group health plan meeting the ACA’s “minimum essential coverage,” “minimum value” and “affordability” standards; and
Requires all employers, health plans and insurers and each Marketplace accurately and reliably to collect, maintain and report certain key data needed to coordinate and administer ACA’s individual coverage mandates, employer mandates and subsidy rules.

For proper administration and coordination with other plans and employers and the administration by the Internal Revenue Service of ACA tax subsidies payable to qualifying individuals obtaining coverage in a QHP through an exchange, HHS regulations require each marketplace to implement and administer reliably an application and enrollment process for enrollment in QHPs through the exchange.

To enroll in a QHP, an applicant must complete an application and meet eligibility requirements defined by the ACA. An applicant can enroll in a QHP through the Federal or a State marketplace, depending on the applicant’s State of residence. Applicants can enroll through a Web site, by phone, by mail, in person, or directly with a broker or an agent of a health insurance company. For online and phone applications, the marketplace verifies the applicant’s identity through an identity-proofing process. For paper applications, the marketplace requires the applicant’s signature before the marketplace processes the application. When completing any type of application, the applicant attests that answers to all questions are true and that the applicant is subject to the penalty of perjury.

After reviewing the applicant’s information, HHS expects the marketplace to determine whether the applicant is eligible for a QHP and, when applicable, eligible for insurance affordability programs. To verify the information submitted by the applicant, the marketplace is expected to use multiple electronic data sources, including those available through the Federal Data Services Hub (Data Hub). Data sources available through the Data Hub are the U.S. Department of Health and Human Services, Social Security Administration (SSA), U.S. Department of Homeland Security, and Internal Revenue Service, among others. The marketplace can verify an applicant’s eligibility for ESI through Federal employment by obtaining information from the U.S. Office of Personnel Management through the Data Hub.

Generally, when a marketplace cannot verify information that the applicant submitted or the information is inconsistent with information available through the Data Hub or other sources, HHS regulations require the marketplace to attempt to resolve the inconsistency in accordance with HHS regulations before treating the individual as ineligible. Because of the presumption of eligibility built into the system, individual’s who care not verified as ineligible are treated as eligible. As a result, inadequate verification practices by marketplaces are likely to result in the inappropriate characterization of individuals as eligible for enrollment with subsidies.

Audits Show Marketplace Eligibility & Enrollment Practices Deficient

Unfortunately, recent OIG reports raising concerns about the adequacy of the eligibility and enrollment verification procedures of various marketplaces are raising concerns about the reliability and adequacy of the eligibility and enrollment verification procedures and resulting data of various marketplaces. For instance, in its recently released report, Not All of the District of Columbia Marketplace’s Internal Controls Were Effective in Ensuring That Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements, HHS OIG Report A-03-14-03301 (the ”D.C. Report”), OIG reports that OIG’s audit of 45 sample applicants from the enrollment period for insurance coverage in the District of Colombia’s exchange for calendar year 2014 revealed that District of Colombia’s health insurance marketplace had ineffective internal processes and controls for:

Verifying an applicant’s eligibility for minimum essential coverage (both employer-sponsored insurance and non-employer-sponsored insurance;
Maintaining application and eligibility verification data;
Maintain identity-proofing documentation for applicants who apply for QHPs;
Verifying annual household income in accordance with Federal requirements;
Maintaining documentation demonstrating that it verified whether an applicant was eligible for minimum essential coverage under an employment based health plan; and
Ensuring that its enrollment system maintains application, eligibility, and documentation, including all electronic eligibility verifications from the Data Hub.

Deficiencies Create Likely Headaches For Employers, Plans & Individual Taxpayers

Given the importance of accurate subsidy eligibility and other marketplace enrollment information, marketplace audit results recently reported by the OIG finding certain federal and state health insurance marketplaces are not using effective internal controls to verify and administer eligibility and enrollment processes raises concerns not only concerns for taxpayers generally, but also could signal added headaches for employers and health plans.

Large employers and individual Americans receiving subsidies are likely to experience the greatest impact because of the reliance upon the IRS on marketplace data to determine employer and individual shared responsibility payment liability. However, all employers and health plans also could experience some fallout.

Large employers should be prepared to receive and defend against IRS assertions that the employer is liable for paying employer shared responsibility payment under IRC Section 4980H when an employee of the employer is one of those individuals that a marketplace improperly classifies as eligible to receive subsidies because of deficient marketplace eligibility or enrollment data collection and verification practices. In addition, all employers should be prepared to receive and respond to inquiries from marketplaces, the IRS or HHS seeking to investigate, verify and reconcile data relevant to the administration of the ACA market, subsidy, shared responsibility and other reforms of the ACA.

Meanwhile, employers, health plans and individual Americans alike should brace to receive inquiries from the IRS, HHS, marketplaces, health plans and others seeking to verify and reconcile marketplace data with data reported by health plans, employers and individual Americans. While timely and appropriate response to legitimate requests from the IRS, HHS, a marketplace or other appropriate party is important, all parties should be careful to verify the legitimacy of the request and the identity and credentials of the party making the request in light of the IRS and other agencies’ reports of the identity theft and other scams by opportunist criminals using the pretext of acting for the IRS or other legitimate purposes illegally to trick businesses or individuals into sharing sensitive tax, financial or other information. While all parties need to use care in responding to these requests, employers, health plans and their service providers also need to ensure that these procedures are appropriately conducted and documented to minimize their exposure to liability for violations of the confidentiality, privacy or data security requirements that may apply to the employer, health plan or other party under the IRC, the Health Insurance Portability & Accountability Act (HIPAA) or various other federal or state laws.

To help prepare for these potential inquiries, employers, health plans and other parties should ensure that their recordkeeping, enrollment and reporting practices under ACA are clean and ready to respond to these and other government or employee inquiries.

Employers and others concerned about the impact of these deficiencies on the liabilities of large employers, taxpayers or both may wish express concern to their elected representatives in Congress.

About The Author

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick│Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 28 years’ experience practicing at the forefront of employee benefits and human resources law.

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see CynthiaStamer.com or the Stamer│Chadwick │Soefje PLLC or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Comments Off on Marketplace Data Deficiencies Signal Employer ACA Headaches | 105(h), 4980D, 4980H, 6039D, ACA, Corporate Compliance, corporate governance, Cybercrime, Data Breach, Data Security, EBSA, employee, Employee Benefits, Employer, Employers, Employment, Employment Tax, ERISA, exchange, Excise Tax, Excise Taxes, fiduciary duty, health benefit, Health Benefits, health Care, Health Care Reform, health insurance, health insurance marketplace, health plan, Health Plans, health reform, HIPAA, HIPAA, Hiring, HR, Identity Theft, Income Tax, Insurance, insurers, Internal Controls, Internal Revenue Code, IRC, Obamacare, Patient Protection & Affordable Care Act, Patient Protection and Affordable Care Act, Pay, Premium Subsidies, Privacy, Protected Health Information, Reporting & Disclosure, Risk Management, third party administrators, Worker Classification, Workforce | Tagged: 4980H, ACA, group health plan, Health Care Reform, health insurance marketplace, Health Plans, Insurer, marketplace, Obama Care, shared responsibility payment | Permalink
Posted by Cynthia Marcotte Stamer

SCOTUS: States Can’t Require Reporting of ERISA Health Plan Data

March 2, 2016

Employer and union sponsored group health plans covered by the Employee Retirement Income Security Act of 1974 (ERISA) and their insurers are not required to comply with a Vermont state law that requires health insurers and certain other parties to report payments relating to health care claims and other information relating to health care services to a state agency for compilation in an all-inclusive health care database, according to the United States Supreme Court’s March 1, 2016 ruling in Gobeille v. Liberty Mutual Insurance Company.

In a 6-2 opinion authored by Justice Kennedy, the Supreme Court held in Gobeille that ERISA Section 514 preempts Vermont’s requirement that health insurers and other health benefit payers report health care claims and other information relating to health care services to a state agency for inclusion in an all-inclusive health care data base.

The lawsuit stemmed from a lawsuit challenging Vermont’s attempt to enforce the law against Liberty Mutual Insurance Company’s self-insured health plan (Plan). Liberty Mutual provides benefits under the Plan to its thousands of employees which are located in all 50 States of which only approximately 140 of which are located in Vermont. When Vermont sought to require the Plan’s third-party administrator, Blue Cross Blue Shield of Massachusetts, Inc. (Blue Cross) to transmit its files on the Plan’s eligibility, medical claims, and pharmacy claims for the Plan’s Vermont members to the state data base, Liberty Mutual was concerned that the disclosure of such confidential information might violate its fiduciary duties, It instructed Blue Cross not to comply and sued seeking a declaratory judgement that ERISA pre-empts application of Vermont’s statute and regulation to the Plan and an injunction prohibiting Vermont from trying to acquire data about the Plan or its members. After the District Court granted summary judgment to Vermont, the Second Circuit reversed, concluding that Vermont’s reporting scheme is pre-empted by ERISA as applied to the Plan.

When Vermont appealed the Second Circuit’s decision to the Supreme Court, the Supreme Court sided with Liberty Mutual. It upheld the Second Circuit’s ruling, holding that the preemption provisions of ERISA bar Vermont from enforcing the reporting requirement against ERISA-covered health plans or their administrators.

Righting for the Supreme Court Majority, Justice Kennedy explained that ERISA expressly pre-empts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C §1144(a). Commenting that this preemption reaches to any state law that has an impermissible “connection with” ERISA plans, Justice Kennedy took judicial notice that ERISA seeks to make the benefits promised by an employer more secure by mandating certain uniform reporting and other oversight systems and other standard procedures, Justice Kennedy said ERISA’s extensive reporting, disclosure, and recordkeeping requirements are central to, and an essential part of, this uniform plan administration system. He also wrote that ERISA’s uniform rule design also makes clear that it is the Secretary of Labor, not the separate States, that is authorized to decide whether to exempt plans from ERISA reporting requirements or to require ERISA plans to report data such as that sought by Vermont. Because Vermont’s law and regulation also govern plan reporting, disclosure, and recordkeeping, Justice Kennedy explained that pre-emption is necessary in order to prevent multiple jurisdictions from imposing differing or even parallel, regulations, creating wasteful administrative costs and threatening to subject plans to wide-ranging liability.

Justice Kennedy also found unpersuasive Vermont’s counterargument that respondent has not shown that the State scheme has caused it to suffer economic costs, stating that Liberty Mutual need not wait to bring its pre-emption claim until confronted with numerous inconsistent obligations and encumbered with any ensuing costs. In addition, Justice Kennedy wrote that the fact that ERISA and the state reporting scheme have different objectives does not transform Vermont’s direct regulation of a fundamental ERISA function into an innocuous and peripheral set of additional rules and that Vermont’s regime also cannot be saved by invoking the State’s traditional power to regulate in the area of public health. Furthermore, Justice Kennedy added that ERISA’s pre-existing reporting, disclosure, and recordkeeping provisions maintain their pre-emptive force regardless of whether the new Patient Protection and Affordable Care Act’s reporting obligations also pre-empt state law.

About The Author

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her 27 plus year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see CynthiaStamer.com or the Stamer│Chadwick │Soefje PLLC or contact Ms. Stamer via email to here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

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Posted by Cynthia Marcotte Stamer

Obama Administration Proposes Rules Giving Jobseeker Equal Opportunity Protections

January 26, 2016

In keeping with President Obama’s administration long agenda of expanding equal employment and discrimination protections and enforcement, the Obama Administration now is proposing new regulations that if adopted as proposed, would expand the equal employment and nondiscrimination protections applicable for individuals receiving services through federal apprenticeships and other programs or activities provided by partners at American Job Centers and other key workforce programs that aid jobseekers administered by the U.S. Department of Labor’s Civil Rights Center (CRC).

In a Notice of Proposed Rulemaking released by CRC on January 25, 2016, CRC proposed to revise its current regulations, which were originally adopted in 1999 both:

To implement the expanded nondiscrimination and equal opportunity obligations made under Section 188 of the Workforce Innovation and Opportunity Act (WIOA) signed into law in July 2014; and
To reflect the Obama Administration’s expansive interpretation, enforcement and other practices of protections for transgender, gender identity, pregnancy, limited English proficiency (LEP) and other individuals against discrimination implemented by the Obama Administration in its enforcement of other federal equal employment and other nondiscrimination laws.

WIOA Implementation Identified As Reason For Proposed Regulations

In the cases of the CRC’s proposed regulations, the CRC identifies its need to adopt regulations to implement the WIOA as the reason for its restatement of its equal opportunity regulations at this time.

The Obama Administration is using its adoption of implementing regulations for WIOA Section 188 to revise and update the CRC’s equal opportunity rules generally to reflect changes in the interpretation of federal employment and other nondiscrimination rules already adopted during Mr. Obama’s presidency in other federal equal rights and nondiscrimination laws and regulations.

WIOA Section 188 prohibits discrimination against individuals participating in any job training for adults and youth, apprenticeships, and programs or activities provided by partners at American Job Centers or other covered program or activity that receives financial assistance under Title I of WIOA because of the race, color, religion, sex, national origin, age, disability, or political affiliation or belief of the individual participating in the program and, for beneficiaries only, because of their citizenship status. The WIOA discrimination and equal opportunity rules apply to recipients of financial assistance under Title I of WIOA and to program partners at American Job Centers that offer programs or activities through the workforce development system including partners that conduct related programs or activities through the One-Stop delivery system such as Unemployment Insurance, Temporary Assistance for Needy Families, adult education, Trade Adjustment Assistance, and others. The CRC’s proposed regulations are the latest of the growing responsibilities and risks that private businesses and state and local government agencies increasingly face to lawsuits, agency audits and sanctions, program disqualification, and other enforcement actions under federal equal employment opportunity and nondiscrimination requirements, particularly in light of the expanded scope and applicability of disability and various other federal nondiscrimination laws implemented during the Obama Administration by statutory, regulatory, executive order or other federal action. The extension of these changes into the CRC regulations reflects the continuing commitment of the Obama Administration to implement and enforce these expansions as fully as possible before Mr. Obama leaves office.

Highlights of Proposed CRC Regulations

If adopted as proposed by the CRC, the proposed rule would update the equal opportunity and nondiscrimination requirements applicable to American Job Centers and other WIOA partners working within the workforce development system to:

Align the equal opportunity and nondiscrimination protections for individuals in WIOA programs with current regulations and guidance issued by the Departments of Justice and Education, the Equal Employment Opportunity Commission and other federal agencies regarding the following equal opportunity and discrimination laws:
- Title VI and Title VII of the Civil Rights Act of 1964;
- Title IX of the Education Amendments of 1972;
- The Americans with Disabilities Act of 1990 and the ADA Amendments Act of 2008; and
- Section 504 of the Rehabilitation Act of 1973.
Clarify that sex discrimination under the WIOA, as under the Pregnancy Discrimination Act of 1978, which amended Title VII of the Civil Rights Act of 1964, and Title IX of the Education Amendments of 1972, includes discrimination based on transgender status, gender identity, or sex-stereotyping as well as pregnancy, childbirth, and related medical conditions.
Clarify that discrimination based on national origin may include discrimination because someone has limited English proficiency (LEP) and strengthen the ability of the Labor Department and private plaintiffs to enforce this expectation by requiring recipients and partners to:
- Record the primary language of applicants, participants and beneficiaries in their programs;
- Take “reasonable steps” to ensure that LEP individuals have meaningful access to aid, benefits, services, and training;
- Notify participants about these rights, including offering oral interpretation and written translation of both hard-copy and electronic materials in non-English languages.
- The Proposed Rule also would clarify which CRC views as “vital” documents required to be translated and include an appendix describing promising practices to help recipients comply with their legal obligations and includes the components of a plan to facilitate meaningful access for individuals with limited English proficiency.
Change the equal opportunity notice or poster that the Labor Department requires recipients and partners to post to inform individuals participating in their programs and activities about their equal employment opportunity protections and rights to reflect these expanded rights and responsibilities by among other things, clearly state that “sex,” as a prohibited basis for discrimination, includes pregnancy, childbirth, and related medical conditions, transgender status, gender identity, and sex stereotyping and that discrimination against LEP persons may be a form of national origin discrimination.
Promote the ability of the Labor Department and private plaintiffs to enforce compliance by among other things:
- Implementing clearer and broader descriptions of recipient and partner responsibilities, more effective Equal Opportunity Officers, and enhanced data collection;
- Expanding recipient and partner recordkeeping and requiring other actions that will make proof of violations easier;
- Requiring annual monitoring, instead of the current “periodic” monitoring and other increased enforcement in accord with the Pregnancy Discrimination Act of 1978, which amended Title VII of the Civil Rights Act of 1964, and in accord with Title IX of the Education Amendments of 1972.

CRC Proposal Reflects Broader Agency Regulatory & Enforcement Agenda For All U.S. Businesses & State & Local Agencies

While the CRC’s proposed regulations most directly impact those providing services or programs to jobseekers and other assistance under CRC administered programs, the proposed regulations also are yet another strong sign for private businesses and state and local government agencies alike of the need to step up their compliance and risk management in light of expanded responsibilities and enforcement of federal equal employment opportunity laws under the Obama Administration. As a result, all U.S. businesses as well as state and local government agencies should exercise special care to prepare to defend their actions against potential disability or other Civil Rights discrimination challenges. All organizations, whether public or private need to make sure both that their organizations, their policies, and people in form and in action understand and comply with current disability and other nondiscrimination laws. When reviewing these responsibilities, many state and local governments and private businesses may need to update their understanding of current requirements as well as strengthen oversight and investigation practices, tighten vendor contracts, explore insurance or other options for planning for funding costs of defending investigations, litigation or other enforcement actions, and other heightened compliance and risk management strategies and practices.

About The Author

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her nearly 30- year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see CynthiaStamer.com or StamerChadwickSoefje.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

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Posted by Cynthia Marcotte Stamer

Strengthen Your Cyber Security By Sharing National Cyber Security Awareness Month Resources This Week

October 25, 2015

Halloween’s annual celebration of spooks and goblins peak is a perfect time to promote awareness and help American businesses and citizens build their skills to guard against the real and growing menace of identity thieves and other cybercriminals by getting involved with the 12^th annual National Cyber Security Awareness Month (NCSAM) in October, begin preparing to participate in the next annual “Data Privacy Day” on January 28, 2016 and joining in other activities highlighted through NCSAM and Data Privacy Day to help deter Cybercrime and identity theft threats. Even if your organization or family choose not to participate in any official or public way, checking out and using the many free resources provides an invaluable, free opportunity to raise your defenses against this rising risk.

With virtually every American business and citizen now connected to and using the Internet to conduct key personal and business transactions and the constant drive by government and business to digitize regular business transactions, no one agency, business or individual alone can truly know where and who has their sensitive data, much less reliably can defend this data against the identity and other theft and other cybercriminals lurking in the digital world’s virtual streets waiting to strike, then disappear in “Jack The Ripper” style into the darkness of the Internet. That’s why every American and American business should take time to participate and urge others to Get Involved in the 12^th Annual NCSAM activities this month and use the supportive resources offered through that involvement throughout the year.

Celebrated annually in October, NCSAM was created to provide resources to help Americans stay safer and more secure online through public-private collaboration between the U.S. Department of Homeland Security and industry led by the National Cyber Security Alliance (NCSA). NCSAM and its associated activities outreach to consumers, small and medium-sized businesses, corporations, educational institutions and young people across the nation. NCSAM 2015 particularly focuses on the consumer and his/her needs regarding cybersecurity and safety continuing the overall message of STOP. THINK. CONNECT. Campaign founded in 2010 and its capstone concepts: “Keep a Clean Machine,” “Protect Your Personal Information,” “Connect with Care,” “Be Web Wise” and “Be a Good Online Citizen.” NCSAM seeks to remind Americans to incorporate “STOP. THINK. CONNECT.” into their online routines and offers resources to help individuals understand and put these principles into practice into their online routine at the home, the office and elsewhere.

Designed to be accessible and understandable by consumers, many business and government organizations may want to support and promote their Cyber Security employee and customer training and awareness efforts by participating annually in NCSAM in October, signing up your organization to Data Privacy Day Champion and/or participating in Data Privacy Day on January 28, 2016, or otherwise using and sharing tips, tools and other resources in the Privacy Library such as:

General Privacy & Cyber Security Awareness

Be A Good Citizen On Line
Protect All Devices
Practice Good Online Safety Habits With These Tips & Advice
Spam & Phishing
Hacked Accounts
Check Your Privacy Settings
Privacy Tips for Teens – A video with STOP. THINK. CONNECT. tips to help teens be privacy-savvy and manage their online reputation.
“Perceptions of Privacy Online and in the Digitally Connected World,” a summary of the results of a 2013-2014 data privacy study conducted by the National Cyber Security Alliance’s Privacy Messaging Development Committee.
Data is Permanent Too – STOP.THINK. is this TMI? A short video created by the Intel Corporation.
Why Privacy Matters – The first in the series of explainers from Zero Knowledge Privacy Foundation.
The Fine Print of Privacy – The second in the series of explainers from Zero Knowledge Privacy Foundation.
“The Right to Fail in Citizenville,” a blog by David Hoffman, Director of Security Policy and Global Privacy Officer, Intel (March, 2013).
The Privacy Engineer’s Manifesto: Getting from Policy to Code to QA to Value, an e-book by McAfee’s Michelle Finneran Dennedy, Jonathan Fox, and Thomas R. Finneran.

Keep a Clean Machine/Cookies & Behavioral Tracking

Malware & Botnets
A video about cookies and why they matter created by the Wall Street Journal.
Information about the Network Advertising Initiative (NAI) offering opt-out of online behavior advertising and provides factual information about online behavioral advertising, privacy, cookies.

Health Privacy

What is HIPAA and Why Should You Care? A Patient’s Guide to HIPAA (Health Insurance Portability and Accountability Act)
Medical Records Privacy from Privacy Rights Clearinghouse
Understanding Health Information Privacy by the U.S. Department of Health and Human Services

Identity Theft Prevention & Clean Up

Links to resources at fraud.org about how to spot a scam, file a complaint and learn about scams.
“ID Theft & Account Fraud – Prevention & Cleanup” a helpful resource provided by Consumer Action offered in numerous languages.
Fighting Back Against Identity Theft and other information for consumers on how to deter, detect and defend against identity theft
IRS resources about how to report phishing.

Mobile App Privacy & Security

“Your Apps Are Watching You,” an investigative report from the Wall Street Journal found popular iPhone and Android apps are collecting and transmitting information without users’ awareness or consent.
Net Safety Tips On The Go app for Android phones app provides quick, practical, friendly advice one tip at a time.
Tips to help protect your privacy when using a mobile device provided by the National Cyber Security Alliance.
Microsoft’s “Location & Privacy: Where are we headed?” and “What Does Your Online Reputation Say About You?”
Protect your personal information while using public Wi-Fi with this video.
10 travel tips for protecting your privacy from PUBLIC WiFi.
Online Services – Banking, Dating & General Guidelines
Don’t Upload Financial Data to Questionable Sources video created by the Intel Corporation
The Perils and Pitfalls of Online Dating: How to Protect Yourself from the Privacy Rights Clearinghouse.
The Google Privacy Channel on YouTube offers a number of short informative videos on privacy issues including: interest-based advertising; use of privacy settings in Google Latitude; advertising privacy; and how to protect your privacy on Google Chrome.

Student & Educational Privacy & Security

I want to each online safety for Grades K-2, Grades 3-5 Middle and High School Higher Education and CSave Volunteer Lesson Plans & Materials
The Protecting Privacy in Connected Learning toolkit is an in-depth, step-by-step guide to navigating the Family Education Rights and Privacy Act (FERPA), the Children’s Online Privacy Protection Act (COPPA) and related privacy issues.
Securing Your Home Network
The Family Educational Rights and Privacy Act, or FERPA, is the main federal law that deals with education privacy, but there are a host of other laws, best practices, and guidelines that are essential to understanding education privacy. FERPA|SHERPA aims to provide service providers, parents, school officials, and policymakers with easy access to those materials to help guide responsible uses of student’s data.
General guidance for parents provided by the department of education Family Educational Rights and Privacy Act (FERPA)
Student Privacy 101: FERPA for parents and students – Ever have questions about your rights regarding education records? This short video highlights the key points of the family education rights and privacy act (FERPA).

Other Resources

About the Author

Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick │Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than years’ experience helping business and government organizations and their leaders manage. Ms. Stamer’s legal and management consulting work throughout her 28 plus year career has focused on helping organizations and their management understand and use the law and process to manage people, process, compliance, operations and risk including significant work in the prevention, investigation and remediation of data breach and other Cybercrime events.

Scribe responsible for leading the American Bar Association (ABA) Joint Committee on Employee Benefits (JCEB) annual agency meeting with the Department of Health & Human Services Office of Civil Rights,Scribe responsible for leading the American Bar Association (ABA) Joint Committee on Employee Benefits (JCEB) annual agency meeting with the Department of Health & Human Services Cynthia Marcotte Stamer’s practice has focused on advising and representing government and private technology, security, health care providers, health plans, health, schools and other educational organizations, insurance, banking and financial services, retail, employer and other organizations about privacy and data security compliance and risk management, breach and other investigations and enforcement, workforce and performance management and other risk management, compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

With data and technology use, protection and management imbedded in virtually every aspect of her client’s operations, data and other confidential information and systems use, protection, breach or other abuse investigation and response, enforcement and liability mitigation and defense and other Cybercrime and Cyber Security challenges are a continuous component of Ms. Stamer’s management work. Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce, data breach and Cybercrime, and other legal and operational crises large and small that arise in the course of operations. Ms. Stamer regularly helps clients design, administer and defend HIPAA, FACTA, data breach, identity theft and other risk management, compliance and other privacy, data security, confidential information and other data security, technology and management policies and practices affecting their operations. She also helps clients prevent, investigate and mitigate HIPAA, FACTA, PHI and other data breach hacking, identity theft, data breach, data loss or destruction, theft of trade secrets or other sensitive data, spoofing, industrial espionage, insider and other parties misuse of data or technology and other cybercrime and technology use concerns. Best-known for her extensive work helping health care, insurance and other highly regulated entities manage both general employment and management concerns and their highly complicated, industry specific corporate compliance, internal controls and risk management requirements, Ms. Stamer’s clients and experience also includes a broad range of other businesses. Her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external privacy and data security compliance, risk management, investigation and remediation, workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other legal and operational compliance, risk management, disaster preparedness and response, and liability defense and mitigation concerns arising out of organization’s operations.

Cindy also is widely recognized for her regulatory and public policy advocacy, publications, and public speaking on privacy and other compliance, risk management concerns. Among others, she is the author of “Privacy & Securities Standards-A Brief Nutshell,” “Privacy Invasions of Medical Care-An Emerging Perspective,” the E-Health Business and Transactional Law Chapter on Other Liability-Tort and Regulatory;” “Cybercrime and Identity Theft: Health Information Security Beyond HIPAA;” “Personal Identity Management Legal Demands and Technology Solutions;” “Tailoring A Records Management Plan And Process To Meet Your Legal And Operational Needs;” “Brokers & Insurers Identity Theft and Privacy Perils;” “HR’s Role In Personal Identity Theft & Cyber Crime Prevention;” “Protecting & Using Patient Data In Disease Management Opportunities, Liabilities And Prescriptions;” “Why Your Business Needs A Cybercrime Prevention and Compliance Program;” “Leveraging Your Enterprise Digital Identity Management Investments and Breaking though the Identity Management Buzz;” “When Your Employee’s Private Life Becomes Your Business;” and hundreds of other works. Her insights on privacy, data security, and other matters have appeared in The Wall Street Journal, Business Insurance, the Dallas Morning News, Spencer Publications, and a host of other publications. She speaks and has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, the American Bar Association, the Health Care Compliance Association, a multitude of health industry, health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer works with businesses and government organizations and their management, employee benefit plans, schools, financial institutions, retail, hospitality, and other organizations deal with all aspects of these and other operations performance and compliance management. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see here, or the Stamer Chadwick Soefje PLLC website here. To contact Ms. Stamer, e-mail her at here or telephone (469) 767-8872.

About Solutions Law Press, Inc.™

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Posted by Cynthia Marcotte Stamer

DOL Schools Halliburton With $18M+ Overtime Settlement; Other Employers & Executives Should Take Note

September 28, 2015

Oil and gas service giant Halliburton, has agreed to pay $18,293,557 to 1,016 employees nationwide to settle charges by the U.S. Department of Labor Wage and Hour Division (DOL) resulting from an investigation conducted as part of an ongoing, multi-year compliance initiative by the DOL targeting oil and gas industry employers in the Southwest and Northeast as part of the Obama Administration’s tough Fair Labor Standards Act (FLSA) enforcement stance against employers generally. One of the largest FLSA settlements in years, the investigation and resulting settlement with Haliburton illustrates the growing need for all employers generally, and oil and gas industry employers specifically to reexamine the defensibility of their worker classifications, wage, overtime and documentation practices under the FLSA and other minimum wage and overtime laws. With wage and hour and other FLSA and resulting judgements and penalties rising, oil and gas industry and other U.S. employers need to protect themselves and their leaders against growing FLSA exposures by tightening payroll classification, wage and hour pay and recordkeeping and other practices as well as take other steps to prepare their organizations to defend against potential DOL or private claims.

One of the world’s largest providers of products and services to the energy industry, Halliburton employs more than 70,000 employees, representing 140 nationalities in more than 80 countries worldwide. According to DOL, the new settlement stems from Halliburton’s failure to pay overtime to more than 1000 employees working in 28 job positions that Halliburton characterized as “exempt” which DOL says did not qualify for salaried treatment. DOL claims that its investigators found Halliburton violated the FLSA by incorrectly categorizing and failing to pay overtime to more than 1000 employees working as field service representatives, pipe recovery specialists, drilling tech advisors, perforating specialists and reliability tech specialists when they worked more than 40 hours in a workweek. As is often the case when a company misclassifies workers, DOL also charged Halliburton with failing to keep accurate records of hours worked by these employees.

The FLSA requires that covered, non-exempt employees be paid at least the federal minimum wage of $7.25 per hour 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. Employers must maintain accurate time and payroll records of all time worked by non-exempt employees as well as able to prove that workers treated as salaried actually in fact qualify as exempt under the FLSA.

Simply paying an employee a salary does not necessarily mean the employee is not eligible for overtime. While the FLSA provides an exemption from both minimum wage and overtime pay requirements for individuals employed in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees, employer relying on these exemptions currently must be prepared to prove employees are treated and paid as exempt by the employer earn at least $455 per week and also meet all requirements of the specific tests regarding their job duties required by DOL regulations to qualify for payment on a salary basis.

In response to certain long-standing industry practices that it views as prohibited by the FLSA, DOL has included oil and gas industry and a broad range of other employers among the industries that DOL is specifically targeting for investigation and enforcement of minimum wage, overtime and other FLSA violations as well as educational outreach to employers and employees in the industry. Beyond employers directly engaged in oil and gas production, the DOL says its industry enforcement initiative also focuses on a broad range of other related businesses including trucking, lodging, water and stone haulers, staffing companies and others — that support oil and gas industry operation.

The heightened emphasis on DOL investigation, enforcement and educational outreach create significant risks for businesses and their leaders. Settlements like the Halliburton settlement are painful for any employer and Halliburton is not the first industry leader caught by the DOL. Other DOL investigations target a broad range of other long standing and widely used industry practices. In 2014, for instance, a DOL investigation resulted in Shell Oil Co. and Motiva Enterprises LLC, which markets Shell gasoline and other products, agreeing to pay $4,470,764 in overtime back wages to 2,677 current and former chemical and refinery employees to settle DOL charges that the companies violated FLSA overtime provisions by not paying workers for the time spent at mandatory pre-shift meetings and failing to record the time spent at these meetings. In addition to paying backpay, Shell and Motiva committed to retrain managers, payroll personnel and human resources personnel on the FLSA’s requirements including the importance of requiring accurate recording and pay for all hours worked with emphasis on pre-and post-shift activities. See Shell Oil/Motiva Enterprises $4.5M FLSA Overtime Backpay Settlement Reminder To Pay Workers Properly , the DOL’s educational outreach to employees spells trouble for oil and gas industry and related employers that violate the FLSA.

Along with the direct investigation and enforcement activities by DOL, DOL’s educational outreach also are adding fuel to private litigation and demands based on alleged wage and hour, overtime and other FLSA and state minimum wage and overtime laws. Already a substantial concern following a reported 432% increase between 1994 and 2013, FLSA continued to rise in 2014 for the seventh year in a row. According to the Federal Judicial Center, a record 8,126 FLSA cases were filed between April 1, 2013 and March 31, 2014, a nearly 5 percent increase over the prior year’s period. See Record number of federal wage and hour lawsuits filed under the Fair Labor Standards Act; Wage and Hour Claims Among Top Threats to U.S. Employers. These risks promise to soar even higher of the Obama Administration is successful in its recently announced plan to increase the minimum weekly wage an employee must earn to meet the threshold test for classification as exempt and tighten other FLSA exemption requirements. See, e.g. Obama Administration Proposal Would Extend FLSA Minimum Wage & Overtime Requirements To 5 Million+ Workers.

Beyond recognizing and managing their business’ organizational exposures, business leaders also need to recognize the potential personal liability exposures that aggressive worker classification, wage and hour and overtime practices may create for members of management. With plaintiff’s and their attorneys increasingly are adding executives to the list of defendants named in their FLSA collective action claims, management should view appropriate FLSA compliance and risk management as critical to manage their own as well as their business’ liabilities. See U.S. Businesses & Their Leaders Face Rising FLSA Collective Action Liability Risks.

Furthermore, the risks and consequences of misclassification generally aren’t limited to wages. FLSA and other worker classifications usually have carryover implications on health and other employee benefit plans and their compliant administration. These risks are particularly acute for health plans, where the Patient Protection & Affordable Care Act (ACA) relies upon FLSA based hours and characterizations to determine the effect of its “employer pay or play” shared responsibility payment rules, default enrollment rules and various other requirements. As a result, employers as well as plan fiduciaries, insurers, and administrators also generally will want to evaluate the defensibility of an employer’s treatment of an employee as exempt or otherwise excludable for purposes of these and other key benefit rules, as well as the potential implications of these characterization on the plan, its administration and exposure.

Of course since liability insurers issuing employment practices, officers and director, fiduciary and other liability coverage often are exposed to defense and judgment costs and judgments resulting from challenged practices, carriers also generally should consider these rapidly expanding exposures and the advisability of taking steps to mitigate these risks.

Employers, Plans & Liability Insurers Should Strengthen Practices For Defensibility

Because of these and other significant risks, businesses and their management leaders should act quickly to 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:

Require all workers – whether exempt or non-exempt – to record and report all hours worked as a backstop against potential reporting and other liabilities in the event a worker is reclassified, as well as to capture critical data about hours worked by salaried or other non-hourly workers the business may need to mitigate ACA employer shared responsibility and other risks and liabilities.
Critically evaluate the defensibility of the characterization of each position current classified as exempt to assess its continued sustainability and retain documentation showing these efforts and justification of the use of 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 as well as exempt employees;
Explore available options and alternatives for calculating required wage payments to non-exempt employees;
Re-engineer of work rules and other practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures;
Carefully review and contract with subcontractors, staffing and leasing, and other parties supplying workers to require compliance with and the provisions of supporting records and documentation needed to prove compliance with applicable FLSA wage, overtime, and documentation requirements, the ability to access critical documentation and cooperation in the event the DOL or private litigation challenges the treatment of these contractors’ employees as employees of the business or make other claims of liability, suitable indemnification, and other safeguards against potential imputed liability claims for actions of contractors;
Trace and evaluate results and implications on these characterizations on health and other employee benefit plan rights and potential liabilities resulting in the event of recharacterization;
Evaluate and secure appropriate employment practices, fiduciary liability and other liability protection to help ensure the availability of coverage for potential claims and litigation; and
More.

For Help With Investigations, Policy Updates Or Other Needs

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick │Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her 28 plus year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms.Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.

Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations. Best-known for her extensive work helping health care, insurance and other highly regulated entities manage both general employment and management concerns and their highly complicated, industry specific corporate compliance, internal controls and risk management requirements, Ms. Stamer’s clients and experience also include a broad range of other businesses. Her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

Ms. Stamer also uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities.

As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others.

She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

She also currently or previously served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see www.cynthiastamer.com, or www.stamerchadwicksoefje.com the member of contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

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Posted by Cynthia Marcotte Stamer

Businesses Must Confirm & Clean Up Health Plan ACA & Other Compliance Following Supreme Court’s King v. Burwell Decision

June 25, 2015

With the Supreme Court’s much anticipated June 25, 2015 King v. Burwell decision dashing the hope that the Supreme Court would provide relief for businesses and their group health plans from the Patient Protection and Affordable Care Act (ACA) mandates by striking down ACA, U.S. businesses that offered health coverage in 2014 and those continuing to sponsor health coverage currently swiftly to act to review and verify the adequacy of their 2014 and current group health plan’s compliance with ACA and other federal group health plan mandates as well as begin their finalizing their group health plan design decisions for the upcoming year.

King Decision Nixes Hope For Meaningful Judicial Relief For Businesses, Plans For Existing ACA Violations

Prompt action to assess and verify compliance is particularly critical in light of much overlooked the “Sox For Health Plans” style rules of Internal Revenue Code (Code) Section 6039D, which generally require group health plans that violated various federal group health plan mandates to self-identify and self-report these violations, as well as self-assess and pay the excise taxes of up to $100 per day per violation triggered by uncorrected violations. While applicable prior to 2014 for uncorrected violations of a relatively short list of pre-ACA federal group health mandates, ACA broadened the applicability of Code Section 6039D to include ACA’s group health plan mandates beginning in 2014. see SOX FOR HEALTH PLANS? IRS Excise Tax Requirements For Failing to Report Plan Violations Who Must File the IRS Form 8928, Requirement for Self-Reporting? This means that in addition to any other liability that the company, its group health plan and its fiduciaries might bear for violating these rules under the Employee Retirement Income Security Act, the Code, the Social Security Act or otherwise, the sponsoring business also will incur liability for the Code Section 6039D excise tax for uncorrected violations, as well as late or non-filing penalties and interest that can result from late or non-filing.

Many employers have significant exposure to these Code Section 6039D excise tax liabilities since many plan sponsors or their vendors have delayed reviewing or updating their group health plans for compliance with some or all of ACA’s mandates. In many cases, businesses delayed in hopes that the Supreme Court would strike down the law, Congress would amend or repeal it, or both. In other cases, limited or continuing changes to the regulatory guidance about some of ACA’s mandates prompted businesses to hold off investing in compliance to minimize compliance costs. Regardless of the past reasons for such delays, however, businesses sponsoring group health plans after 2013 need to recognize and act to address their uncorrected post-2013 ACA violations exposures.

While many businesses as well as individual Americans have held off taking long overdue steps to comply with ACA’s mandates pending the Supreme Court’s King v. Burwell decision, the three agencies charged with enforcement of its provision – the IRS, Department of Labor and Department of Health and Human Service has been gearing up to enforce those provisions of ACA already in effect and to finalize implementation of others in the expectation of today’s ruling in favor of the Obama Administration. As a practical matter, businesses sponsoring group health plans and other ACA opponents need to recognize that the Supreme Court’s King decision realistically gives these agencies the go ahead to move forward with these plans for aggressive implementation and enforcement.

While technically only addressing a challenge to the Obama Administration’s interpretation of the individual tax credit (“Individual Subsidy”) ACA created under Code Section 36B, the Supreme Court’s decision realistically eliminates any realistic hope for that the Supreme Court will provide businesses or their group health plans with any meaningful past or current ACA violations by striking down the law itself. Of all of the currently pending challenges to ACA working their way to through the courts, the King case presented the best chance of a Supreme Court ruling that would wholesale invalidate ACA’s insurance reforms, if not the law itself, because of the importance of the Individual Subsidy to the intended workings of those reforms. By upholding the Obama Administration’s interpretation of Code Section 36B as allowing otherwise qualifying individuals living in states without a state run ACA health insurance exchange to claim the Individual Subsidy for buying health care coverage through the federal Healthcare.gov health insurance exchange, the Supreme Court effectively killed the best possibility that the Supreme Court would invalidate the insurance reforms or ACA itself. While various challenges to the law or certain of the Obama Administration’s interpretations of its provisions, none of these existing challenges present any significant possibility that the Supreme Court will strike down ACA.

While the Republicans in Congress have promised to take Congressional action to repeal or reform ACA since retaking control of the Senate in last Fall’s elections, meaningful legislative reform also looks unlikely. Its narrow majority in the Senate means that Republicans alone do not have sufficient votes to override President Obama’s promised veto of these efforts. Consequently, prospects for meaningful legislative relief or repeal of ACA’s mandates remain extremely dim even with Republicans holding the majority in both the House and Senate.

Deadline To Self-Report, Pay Excise Tax Penalties For 2014 Health Plan Violations Rapidly Approaching

In light of these developments, businesses must prepare both to meet their current and future ACA and other federal health plan compliance obligations and defend potential deficiencies in their previous compliance over the past several years. The importance of these actions take on particular urgency given the impending deadlines under the largely overlooked “Sox for Health Plans” rules of Code Section 6039D for businesses that sponsored group health plans after 2013.

Under Code Section 6039D, businesses sponsoring group health plans in 2014 must self-assess the adequacy of their group health plan’s compliance with a long list of ACA and other federal mandates in 2014 and to the extent that there exist uncorrected violations, to self-report these violations and self-assess on IRS Form 8928 and pay the required excise tax penalty of $100 for each day in the noncompliance period with respect to each individual to whom such failure relates. For ACA violations, the reporting and payment deadline generally is the original due date for the business’ tax return. Absent further regulatory or legislative relief, businesses providing group health plan coverage in 2014 or thereafter also should expect to face similar obligations and exposures. As a result, businesses that sponsored group health plans in 2014 or thereafter should take affirmative steps to act quickly to verify the adequacy of their group health plan’s compliance with all ACA and other group health plan mandates covered by the Code Section 6039D reporting requirements. Prompt action to identify and sel-correct covered violations may mitigate the penalties a company faces under Code Section 6039D as well as other potential liabilities associated with those violations under the Employee Retirement Income Security Act (ERISA), the Social Security Act, or other federal laws. On the other hand, failing to act promptly to identify and deal with these requirements and the potential reporting and excise tax penalty self-assessment and payment requirements imposed by Code Section 6039D can significantly increase the liability the business faces for these violations substantially both by triggering additional interest and late payment and filing penalties, as well as forfeiting the potential opportunities that Code Section 6039D otherwise might offer to qualify to reduce or avoid penalties through good faith efforts to comply or self-correct.

While current guidance allows businesses the opportunity to extend the deadline for filing of their Form 8928, the payment deadline for the excise taxes cannot be extended. Code Section 6039D provides opportunities for businesses to reduce their excise tax exposure by self-correction or showing good faith efforts to comply with the ACA and other group health plan mandates covered by Code Section 6039D. Businesses need to recognize, however, that delay in identification and correction of any compliance concerns less likely to qualify for this relief. Accordingly prompt action to audit compliance and address any compliance concerns is advisable to mitigate these risks as well as other exposures.

Other Enforcement & Liability Risks

Beyond the impending Form 8928 excise tax responsibilities, employer and other health plan sponsors, fiduciaries, insurers and administrators also need to update their health plan compliance and risk management in anticipation of other challenges. Many health plan sponsors, fiduciaries, administrators, insurers and other vendors and advisors have allowed ongoing challenges and debates about ACA in the Courts, Congress and the media to lull them into delaying investing the money and other resources required to review and update of their programs for compliance with ACA and a host of other federal rules and court decisions impacting their programs and its associated risks. With their impending Form 8928 disclosures providing invaluable admissions of potential exposures and the Obama Administration and plaintiff’s bar likely to take King as a green light to enforce ACA and other group health plan mandates, plan sponsors, fiduciaries, insurers and administrators can expect greater scrutiny and challenges of their health plan design and administration by private plaintiffs, the Department of Labor, Department of Health & Human Services, IRS, and in the case of insured arrangements, state insurance regulators. Officers, directors and management leaders of employer or other sponsors of plans facing expenses from delayed or flawed compliance efforts, as well as their health plan insurers, administrative service providers, brokers, consultants, stop los insurers, auditors and other vendors and advisors also should brace for demands and other painful pushback from employers or health plan fiduciaries looking to shift liability to advisors or vendors for costs and damages resulting from claims or other enforcement liabilities resulting from delayed enforcement in alleged reliance upon the advisor or vendor. Strategic actions taken now could help mitigate potential exposures and other fallout of these and other health plan compliance delays.

Liabilities Make Advisable Engaging Legal Counsel For Privilege & Other Risk Management Assistance.

Businesses preparing to conduct audits also are urged to consider seeking the advice from qualified legal counsel experienced in these and other group health plan matters before initiating their audit as well as regarding the evaluation of any concerns that might be uncovered. While businesses inevitably will need to involve or coordinate with their accounting, broker, and other vendors involved with the plans, businesses generally will want to preserve the ability to claim attorney-client privilege to protect all or parts of their audit investigation and analysis and certain other matters against discovery as well as assistance with proper evaluation of options in light of findings and assistance from counsel to document the investigation and carefully craft any corrective actions for defensibility.

For Legal or Consulting Advice, Legal Representation, Training Or More Information

If you need help responding to these new or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, help updating or defending your workforce or employee benefit policies or practices, or other related assistance, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick │Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.

A Fellow in the American College of Employee Benefit Counsel and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms.Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy. Ms. Stamer uses her deep and highly specialized knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

Ms. Stamer helps management manage.Ms. Stamer’s legal and management consulting work throughout her 27 plus year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see www.cynthiastamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

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Posted by Cynthia Marcotte Stamer

OSHA Rules Requires New Construction Industry Close Space Safeguards

May 1, 2015

The Occupational Safety and Health Administration today issued a final rule to increase protections for construction workers in confined spaces. Compliance assistance material and additional information is available on OSHA’s Confined Spaces in Construction Web page. The new Rule imposes new safety standards for construction work in small spaces.

OSHA says manholes, crawl spaces, tanks and other confined spaces are not intended for continuous occupancy. They are also difficult to exit in an emergency. People working in confined spaces face life-threatening hazards including toxic substances, electrocutions, explosions and asphyxiation. For instance, last year two workers were asphyxiated while repairing leaks in a manhole, the second when he went down to save the first — which is not uncommon in cases of asphyxiation in confined spaces.

“In the construction industry, entering confined spaces is often necessary, but fatalities like these don’t have to happen,” said Secretary of Labor Thomas E. Perez. “This new rule will significantly improve the safety of construction workers who enter confined spaces. In fact, we estimate that it will prevent about 780 serious injuries every year.”

The rule will provide construction workers with protections similar to those manufacturing and general industry workers have had for more than two decades, with some differences tailored to the construction industry. These include requirements to ensure that multiple employers share vital safety information and to continuously monitor hazards — a safety option made possible by technological advances after the manufacturing and general industry standards were created.

“This rule will save lives of construction workers,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. “Unlike most general industry worksites, construction sites are continually evolving, with the number and characteristics of confined spaces changing as work progresses. This rule emphasizes training, continuous worksite evaluation and communication requirements to further protect workers’ safety and health.”

The guidance reflects the growing emphasis of OSHA on construction safety. Construction employers should take steps to immediately comply with these new requirements as well as review the adequacy of their other safeguards for compliance with the ever-tightening mandates of OSHA for construction industry employers.

For Advice, Representation, Training & Other Resources

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law, Ms. Stamer is a practicing attorney Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, author, pubic speaker,management policy advocate and thought leader with more than 25 years’ experience advising government contractors and other employers, their management, benefit plans and plan fiduciaries, vendors and service providers and others about OFCCP, EEOC, and other employment discrimination, government contracting compliance, and other workforce and operational performance, compliance, risk management, compensation, and benefits matters. As a part of this involvement, Ms. Stamer throughout her career specifically has advised and represented a broad range of employers across the U.S., their employee benefit plans and plan fiduciaries, insurers, health care providers and others about the implications of DOMA and other rules relating to rights and expectations of LBGT community members and others in federally protected classes under Federal and state employment, tax, discrimination, employee benefits, health care and other laws.

In addition to her extensive client work Ms. Stamer also is a widely published author, management policy advocate and thought leader, and management policy advocate on these and other workforce and related matters who shares her experience and leadership in a wide range of contexts. A current or former author and advisory board member of HR.com, Insurance Thought Leadership, SHRM, BNA and several other the prominent publications, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, former President of the Richardson Development Center Board of Directors, and the former Board Compliance Chair of the National Kidney Foundation of North Texas, An American College of Employee Benefit Counsel, American Bar Association (ABA) and State Bar of Texas Fellow, Martindale Hubble Premier AV Rated (the highest), Ms. Stamer publishes and speaks extensively on these and other staffing and human resources, compensation and benefits, technology, health care, privacy, public policy, and other operations and risk management concerns. Her publications and insights appear in the ABA and other professional publications, HR.com, SHRM, Insurance Thought Leadership, Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC 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 www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update here including:

About Solutions Law Press, Inc.™

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Posted by Cynthia Marcotte Stamer

Congress Passess Joint Resolution Overturning NLRB “Quickie Election Rule”

March 27, 2015

The new Republican Majority in Congress is moving quickly to attack and overturn a series of pro-union rules implemented under the leadership of the Obama Administration. Today, for instance, a Joint Resolution that seeks to invalidate the National Labor Relations Board (NLRB) “election now, hearing later” “quickie election rule” was presented for signatures to President Obama.

Passed by the Senate March 4, 2015 and the House on March 19, 2017 and presented to the President on March 27, 2015, S.J.Res.8 provides Congressional disapproval of, and specifies that the quickie election rule is to have no force and effect on union representation case procedures.

Adopted by the NLRB December 12, 2014 at 79 Fed. Reg. 74308 (Dec. 15, 2014), the quickie election rule would make it more difficult for employers to oppose union organizing elections by subjecting employers to what some commentators refer to as “ambush elections.” The procedural changes to NLRB election procedures implemented by the quickie election rule place employers at a significant disadvantage when faced with a union demand for an election,

Incorporating most of the procedures contained in a 2011 NLRB proposal previously invalidated by the District of Columbia’s district court in Chamber of Commerce of the United States v. NLRB, 879 F. Supp. 2d 18, 21, 25, 30 (D.D.C. 2012), the quickie election rule as finalized by the NLRB among other things requires that:

Union elections generally be held within 10 to 21 days after the petition filing, rather than the previous rule’s 42 days;
Any pre-election hearings occur eight days after the petition filing;
Employers to file before the pre-election hearing a position statement addressing threshold issues such as unit appropriateness, bargaining unit exclusions, and the proposed date, time and location of the election;
Scheduling of post-election hearings 14 days after the filing of objections;
Employers seeking a pre-election hearing to provide the union with two lists identifying employees in the challenged petitioned-for unit and in what the employer argues is the appropriate unit;
Within two days after the unit is decided, the employer to provide an electronic list of employees including names, addresses, phone numbers, work locations and classifications. Employees’ personal phone numbers and email addresses must be provided if available to employer.
Once a union is certified, barring employees from seeking to decertify the election until the later of one year or the expiration of the first collective bargaining agreement.
At the pre-election hearing, the parties generally to litigate issues necessary to determine the appropriateness of conducting an election but allowing deferral of the decision of certain eligibility and inclusion issues decided by an NLRB regional director until the post-election stage.

The Joint Resolution to overturn the quickie election rule is part of an ongoing battle between Republicans, who following the November 2014 elections now hold a slim majority of the seats in both the House and Senate, and President Obama and Congressional Democrats, who since Mr. Obama’s election have acted aggressively to promote and expand union rights and safeguards. Since the November, 2014 elections, President Obama has promised to act aggressively to continue to promote pro-union and other policies opposed by Republications by executive order, rulemaking, veto and enforcement authority. Look for more battles over these and other contested policies in the months ahead.

For Help or More Information

Cynthia Marcotte Stamer is recognized among the “Top Rated” Labor & Employment Lawyers in Texas in the 2014 LexisNexis® Martindale-Hubbell® list of Top Rated Lawyers. An AV® Preeminent™ (the highest Peer Review Rating available) rated lawyer, Ms. Stamer earned the “Top Rated” Distinction based on confidential Martindale-Hubbell Peer Review Ratings opinions about her skills and experience submitted by other AV® Preeminent™ lawyers and members with professional knowledge of her work.

A noted Texas-based management lawyer and consultant, author, lecturer and policy advocate, Ms. Stamer is nationally and internationally known for her innovative leadership and work helping businesses, governments, and communities manage workforce and other performance and other labor and employment, employee benefits and workforce related challenges

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, and a Fellow in the American Bar Association, Texas Bar Association, and the American College of Employee Benefit Counsel, Ms. Stamer’s legal and management consulting work focuses on helping employers, insurers, employee benefit plans and their administrators, fiduciaries and advisors, community leaders and governments manage people, process and risk. Throughout her more than 26 year career,

Ms. Stamer has helped management deal with all aspects of human resources and workforce management, including employment and outsourcing contracting and performance management, reengineering and other change management, internal controls, compliance and risk management, compensation and employee benefits, communications, worker classification, tax, government relations, enforcement and litigation defense, and other related matters. Drawing upon her extensive knowledge base of knowledge and wealth of practical skills, Ms. Stamer helps businesses and their leaders manage their employees and other workers and service providers, their performance, compliance, compensation, benefits, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and operations crises large and small that arise in the course of operations.

In addition to her more traditional legal, internal controls and other management consulting work, Ms. Stamer also extensively works with a broad range of business and government clients on health care, pension, social security, workforce, insurance and many other related policy matters critical to their business success and liability management. She both only helps her clients anticipate, monitor and cope with emerging laws, regulations and enforcement and respond to and resolve government investigations and enforcement actions, she also helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American College of Employee Benefit Counsel, the American Bar Association (ABA) and the State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting. She also works as a policy advisor and advocate to many business, professional and civic organizations.

Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA,HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. She also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves as Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Committee and its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its representative to the ABA Joint Committee on Employee Benefits; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division and as a faculty member, editorial advisory board member, speaker and author for numerous human resources, employee benefits, insurance, technology and data security and other professional associations, programs, and publications. She previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early retirement intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association.

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Posted by Cynthia Marcotte Stamer

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